updated 11/19/2012 11:49:49 AM ET 2012-11-19T16:49:49

THE ED SHOW with ED SCHULTZ
November 16, 2012

Guests: Lawrence Wilkerson, Chris Van Hollen, Nick Hanauer, John Nichols,
Greg Bell

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

Breaking news tonight: three Republican senators want Watergate-style
hearings on Benghazi. Harry Reid is slamming the door on that idea.

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

(BEGIN VIDEOTAPE)

SEN. JOHN MCCAIN (R), ARIZONA: General Petraeus` briefing was
comprehensive. I think it was important and it added to our ability to
make judgments about what is clearly a failure of intelligence.

SCHULTZ (voice-over): A week after stepping down from the CIA,
General David Petraeus testifies on Capitol Hill.

Tonight, Colonel Lawrence Wilkerson separates fact from fiction and
has strong words for John McCain.

President Obama meets with House and Senate leadership to avoid the
fiscal cliff.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think we`re all aware
that we have some urgent business to do. And I think all of us agree on
this -- is action.

SCHULTZ: We`ll have Congressman Chris Van Hollen here to expose Mitch
McConnell`s real problem.

Obamacare stands. But Governor Scott Walker joins Rick Perry in hands
off opposition. "The Nation`s" John Nichols joins us with the latest.

Secessionists are coming out of the woodwork.

UNIDENTIFIED MALE: This is a petition asking the government to let
Alabama succeed from the union.

SCHULTZ: Just wait until you hear their reasons.

(END VIDEOTAPE)

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

The right wing attempt to gin up a scandal against the Obama
administration basically is falling apart. For weeks, Republicans claimed
the president is trying to cover up information about the attack on the
U.S. consulate in Benghazi, Libya. Republicans gave us a pretty good
pregame of show of accusations this week -- don`t you think? --
specifically involving United Nations Ambassador Susan Rice. Some House
members say this is worse than Watergate?

(BEGIN VIDEO CLIP)

REP. DANA ROHRABACHER (R), CALIFORNIA: This is not simply a cover-up
of a third-rate burglary. We have four of our diplomatic personnel dead
and it has not a McCarthy era tactic to demand accountability and demand
that the American people are no misinformed about it to the point that they
don`t know what the threat is.

(END VIDEO CLIP)

SCHULTZ: The biggest loud mouths this week were Senator Lindsey
Graham of South Carolina and John McCain of Arizona, who spent the last
three days disparaging Ambassador Rice for her public remarks about
Benghazi early on.

(BEGIN VIDEO CLIP)

MCCAIN: Susan Rice should have known better. If she didn`t know
better, she`s not qualified. She should have known better. I will do
everything in my power to block her from being the United States secretary
of state. She has proven that she either doesn`t understand or she is not
willing to accept evidence on its face.

(END VIDEO CLIP)

SCHULTZ: These Republicans were certain -- they were absolutely
certain Susan Rice was not telling the truth.

(BEGIN VIDEO CLIP)

REP. PETER KING (R), NEW YORK: So when the president says that Susan
Rice was giving out -- talking about the most updated, fully documented
intelligence that intelligence community had, that`s not true.

(END VIDEO CLIP)

SCHULTZ: Enter General David Petraeus. The disgraced former CIA
chief testified behind closed doors to the House and Senate Intel
Committees today.

Petraeus destroyed one major Republican conspiracy early on just by
showing up. Republicans were convinced Petraeus resigned last week to
avoid testifying about Benghazi.

He destroyed another conspiracy by confirming what we already knew,
the talking points from the CIA given to Ambassador Rice and members of
Congress were the same and read as follows: "The currently available
information suggests that the demonstrations in Benghazi were spontaneously
inspired by the protests at the U.S. embassy in Cairo and evolved into a
direct assault against the U.S. diplomatic posts in Benghazi. There are
indications that extremists participated in the violent demonstrations."

Petraeus testified that he and others knew al Qaeda-aligned terrorists
were involved in the attack, but ultimately, they removed the language from
the declassified talking points that Susan Rice used.

NBC terrorism expert Michael Leiter says this is a common practice in
intelligence briefings.

(BEGIN VIDEO CLIP)

MICHAEL LEITER, NBC NEWS NATIONAL SECURITY ANALYST: It`s a place the
intelligence community has to be is having classified information and
having to talk about that publicly, because you lose nuance, you lose
context. And those unclassified statements often appear to be misleading,
but what they are really doing is protecting the sensitive information
which is in the classified realm.

(END VIDEO CLIP)

SCHULTZ: After today`s testimony, Senator Kent Conrad told it like it
is.

(BEGIN VIDEO CLIP)

SEN. KENT CONRAD (D), NORTH DAKOTA: What is very clear is that
Ambassador Rice used the talking points that the intelligence committee had
all signed off on. That is very, very clear. She used the unclassified
talking points that were signed off on by the entire intelligence
community. So criticisms of her are completely unwarranted. That is very
clear.

(END VIDEO CLIP)

SCHULTZ: Let me paraphrase President Obama. Could you say that a
little louder, Senator Conrad?

(BEGIN VIDEO CLIP)

CONRAD: What is very clear is that Ambassador Rice used the
unclassified talking points, the unclassified talking points that the
entire intelligence community had signed off on. And so, she did
completely the appropriate thing.

(END VIDEO CLIP)

SCHULTZ: It`s amazing what happens in hearings, isn`t it?

The demeanor of the Republican committee members after the hearing
made it clear there`s no bombshell. Check out John McCain. He was a pit
bull all week. Today, a little different story.

(BEGIN VIDEO CLIP)

MCCAIN: We described his actions and that of his agency and their
interaction with other agencies, and I appreciate the service and his
candor.

REPORTER: Senator, did the story changed from the previous briefing?

REPORTER: Did he tell you about the (INAUDIBLE)?

(END VIDEO CLIP)

SCHULTZ: Congressman Peter King admitted General Petraeus OK`d the
final talking points given to Ambassador Rice.

(BEGIN VIDEO CLIP)

REPORTER: Did he say why it was taken out of the talking points that
it was al Qaeda related?

KING: He didn`t know.

REPORTER: He didn`t know? How could he not know?

KING: They were not involved -- it was done, the process was
completed and they said, "OK, go with both those talking points." Again,
it`s interagency -- I got the impression that seven, eight, nine different
agencies.

REPORTER: Did he give you the impression that he was upset it was
taken out?

KING: No.

REPORTER: You said the CIA said "OK" to the revised report --

KING: No, well, they sad in that, after it goes through the process,
they OK`d it to go. Yes, they said, "OK for it to go."

(END VIDEO CLIP)

SCHULTZ: No apology for Ambassador Susan Rice? None whatsoever,
after a full week of just trashing her?

These Republicans have a lot of explaining to do for their behavior
this week, don`t you think?

Ambassador Rice has been exonerated, it took one day. Although if you
watch FOX News, there`s still a conspiracy afoot.

(BEGIN VIDEO CLIP)

KING: Nothing about the attack, nothing about al Qaeda, nothing about
that they were definite that al Qaeda was involved. So, to me, the
question right now is: who changed those talking points and why?

MEGYN KELLY, FOX NEWS ANCHOR: That is the big question at this hour.

KING: Yes.

KELLY: Who changed the talking points and why?

(END VIDEO CLIP)

SCHULTZ: Republicans are doing whatever it takes to fake a scandal in
the Obama administration. Paul Waldman of "The American Prospect" calls it
scandal envy. "Nixon had Watergate, Reagan had Iran-Contra, Clinton had
Lewinsky, and Obama -- well, he`s gotten off scot-free. And it`s making
the Republicans livid," he writes.

Republicans are not going to get the Watergate this time around.
Senator Harry Reid wrote a letter to Senators John McCain and Lindsey
Graham saying a select committee for investigation simply will not happen.

The time for phony outrage is over, Republicans. Republicans need to
get back to the real problems facing Americans.

Get your cell phones out. I want to know what you think.

Tonight`s question: will the GOP stop their witch hunt on Benghazi?
Text "A" for yes, text "B" for no to 622639. You can always go to our blog
at Ed.MSNBC.com, and leave a comment. We`d like to have you do that
tonight. And, of course, we`ll bring you results of the poll later on in
the show.

Joining me now is retired Army Colonel Lawrence Wilkerson, former
chief of staff at the State Department during General Colin Powell`s term.
Currently, a Pamela Harriman visiting professor at the College of William &
Mary.

Colonel, good to have you with us tonight.

COL. LAWRENCE WILKERSON, U.S. ARMY (RET): Good to be here, Ed.

SCHULTZ: Take us down the road of talking points. I mean, do we see
unified talking points? Is this common practice that the intel committee
will get together to brief agent or to brief the Congress and to brief the
country? And is it -- is it usual they might leave out information and not
spill everything? Take us down that road.

WILKERSON: Absolutely. Let me just say first that I took your last
comments aboard and I was thinking Barbara Bush, the grand lady of the GOP,
put it very eloquently today. She said, "They won. Get over it. Move
on."

That`s some tremendously good advice for my political party. This is
still the political high season for guys like Lindsey Graham and John
McCain who, using Richard Armitage once description of Newt Gingrich seemed
to be off their meds and out of therapy a little early.

They need to get their act together. As you pointed out, there are
challenges this country needs to confront and it needs to confront them in
a reasonably unified way. And that means the Republicans have to
participate.

But to your question -- yes, this is the way it happens. When a
crisis occurs, the president, his ministers and others turn to the
intelligence committee, normally through the director of national
intelligence now, and they say what happened? And the talking points come
forward.

The diplomats don`t know in the U.N. exactly what happened on the
ground in Benghazi. They trust the intelligence community and others in
the government to give them the talking points and then they give those
talking points feeling that they are giving the truth to the American
people.

SCHULTZ: So what it comes down to early on here, can we come to the
conclusion that the Republicans didn`t like the talking points and they
didn`t think there was enough information in them and so now they are
saying there is cover-up?

WILKERSON: I think it`s more serious than that, Ed. I think they
don`t like Susan Rice so they have fabricated some attacks to try to keep
her from, as they think is a possibility, being nominated to be the
replacement for Secretary of State Hillary Clinton at State. So they are
starting their attack early.

And this very idea that one single senator, this used to gall me at
the State Department, it galled me at the Defense Department, too. That
one single senator can exercise his will and stop the appointment of a
president`s secretary or assistant secretary or cabinet secretary is
nonsense. We have to get beyond this sort of thing.

SCHULTZ: Well, John McCain and Lindsey Graham aren`t beyond it.
Would you term them as being overzealous this week and out of bounds?

What about their behavior as senators? I mean, they were ready to
condemn the administration and Susan Rice before any testimony was heard.

WILKERSON: There were and as I said, it`s still a political season.

Again, get over it. The Democrats won. Let`s get on with the
nation`s business. And the nation`s business -- you know, we have lost
more diplomats than we have generals. That will tell you something about
how dangerous it is to be a diplomat.

Ryan Crocker, Ambassador Ryan Crocker, for whom I had infinite
respect, made a comment yesterday. These people work in dangerous
territory. That`s not to say we shouldn`t investigate the circumstances
under which they get injured or lose their lives, but this is a dangerous
job.

George W. Bush had 3,000 Americans killed on his watch and we didn`t
even get to the commission that investigated him until 2004. And there was
incompetence there and there was intelligence failure there, but we got
beyond that. And we need to get beyond this, because, Ed, we have got some
serious challenges confronting this country right now.

SCHULTZ: Yes, we do. John McCain said to the reporters there at
Capitol Hill today after this hearing that there were intelligence
failures. Where are the intelligence failures? I mean, isn`t the fog of
war accounting for some of the chaos that took place here?

I mean, it`s like they want an absolute perfect report in the midst of
a terrorist attack, and Petraeus knew early on it was a terrorist attack,
but he certainly wasn`t going to tell the country about it.

WILKERSON: The director of the CIA is under an obligation to keep
Black Ops black. He can`t go out and start spilling the beans on them. He
endangers people`s lives and he endangers sources and methods. He
endangers contacts, fragile contacts that have been in Libya.

We got a real mess in northern Mali right now. Al Qaeda is resurgent
there, in league with the Tuareg.

So we got a real problem. And I`m sure they were setting up some sort
of operation there that kind of monitor that problem and do something about
it.

You can`t go on the television and start spilling the beans to the
American people when you got people in harm`s way.

So, this is not necessarily an intelligence failure. It`s simply a
political move by my party to try to capitalize on what they think are the
deficiencies of a president who just beat the daylights out of them.

SCHULTZ: Colonel Lawrence Wilkerson, great to have you with us
tonight on THE ED SHOW. Thanks so much for your expertise. Appreciate it.

WILKERSON: Thanks for having me, Ed.

SCHULTZ: Remember to answer tonight`s question there at the bottom of
the screen. Share your thoughts on Twitter @EdShow, and on Facebook. We
always want to know what you think.

Coming up: party leaders said the fiscal cliff meeting with President
Obama was constructive. But if you listen carefully to Mitch McConnell,
folks, we`ve got trouble brewing. Congressman Chris Van Hollen joins me.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, congressional leaders say they had a constructive
meeting with the president today. But will it lead to progress on the
fiscal cliff? Congressman Chris Van Hollen weighs in next with the
details.

Then, Governor Scott Walker is one refusing to implement Obamacare
provision in his state. John Nichols explains why that is a very good
thing.

And this is a story that burns me. The Post Office suffers record
losses because of Republican legislation and Republican inaction. Greg
Bell of the Postal Workers Union joins me to discuss how the Postal Service
can be saved in this lame duck session.

Share your thoughts with us on Facebook, and on Twitter using #EdShow.

We`re coming right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIPS)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: We have a very
constructive meeting with the president.

SEN. HARRY REID (D-NV), MAJORITY LEADER: So, I think it was a very
constructive meeting.

REP. NANCY PELOSI (D-CA), MINORITY LEADER: It was a very constructive
meeting.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: I can only echo the
efforts of the other leaders it was a constructive meeting.

(END VIDEO CLIPS)

SCHULTZ: Welcome back to THE ED SHOW.

Now all the niceties are out of the way, we hope that the fiscal cliff
talks will be constructive and we won`t be all about seeing Democrats
caving into a bad deal. This morning, President Obama met with
congressional leaders to begin negotiations on the so-called fiscal cliff.
The president said the parties need to work together, find some common
ground and make some tough compromises -- whatever that is -- and build
some consensus.

Well, it appears that House Speaker John Boehner got the message.

(BEGIN VIDEO CLIP)

BOEHNER: To show our seriousness, we have put revenue on the table,
as long as it`s accompanied by significant spending cuts.

(END VIDEO CLIPS)

SCHULTZ: Senate Majority Leader Harry Reid and Democratic Leader
Nancy Pelosi sounded equally positive.

(BEGIN VIDEO CLIP)

REID: We have the cornerstones of being able to work something out.
We`re both going to have to give up some of the things that we know are a
problem.

PELOSI: We understand that it has to be about cuts, it has to be
about revenue, it has to be about growth.

(END VIDEO CLIPS)

SCHULTZ: Then came Senate Minority Leader Mitch McConnell. So, we
might have a fly in the ointment. Here it is.

(BEGIN VIDEO CLIP)

MCCONNELL: I can say on the part of my members that we fully
understand that you can`t save the country until you have entitlement
programs that fit the demographics of the changing America in the coming
years. We`re prepared to put revenue on the table, provided we fix the
real problem.

(END VIDEO CLIP)

SCHULTZ: The real problem?

Let me tell you something, Senator McConnell. The real problem is two
unfunded wars from the Bush years, the Bush tax cuts that nobody added,
and, of course, the giveaways to big pharma in the Bush prescription drug
program.

So, Senator McConnell -- it seems to me like he`s up to something
here. He knows how far Senator Bernie Sanders and other Democrats are
going to defend the big three -- Social Security, Medicare and Medicaid.
Senator McConnell I think is hoping to get the Democrats fighting one
another on this, over the entitlement reform.

But do we have common ground here on day one?

Let`s bring in Congressman Chris Van Hollen of Maryland.

Congressman, great to have you with us tonight.

REP. CHRIS VAN HOLLEN (D), MARYLAND: Ed, always good to be with you.

SCHULTZ: You bet. Do we have positive move forward? We`re hearing
Republicans say they will give up some revenue. Your take on it?

VAN HOLLEN: Well, as you said, Ed, most of them are saying the right
thing, but the devil is always in the details. And it`s important to
remember that we already had a trillion dollars worth of cuts to the budget
as part of the Budget Control Act. Now it`s time to take the balanced
approach and that`s why it`s important to put revenue on the table. And we
have to ask higher income earners to contribute more.

So that`s what the president talked about during the presidential
campaign. He got a good majority. We know the exit polls support the
president. And that we just got to move forward.

And Republicans need to make sure they wake up to this fact before
January 1st would be best, but they need to recognize that come January
1st, if they`re not willing to deal with this revenue piece, the president
is going to be able to the American people and say, hey, you know what? We
want to give tax relief to 98 percent of the American people, but
Republicans are holding everyone hostage until they get those bonus tax
break for folks at the very top.

SCHULTZ: OK.

VAN HOLLEN: And I don`t think that`s sustainable for them.

SCHULTZ: All right. So the Democrats have been very clear. Got to
have some revenue on the table, it`s got to come from the wealthiest
Americans.

Republicans are saying, yes, we get some revenue, too. We want to
some spending cuts. And then they`re going to look right at entitlements
as you heard Mitch McConnell right there. In fact, he said this is the
real problem.

Are Democrats willing to buy into that, that the real problem is the
big three and you`re going to have to serve up some revenue in those
programs?

VAN HOLLEN: No, what Democrats have said with respect to Medicare is
that we can build on the approach that we took in the Affordable Care Act,
which is different than the Republican approach. The Republican approach
has been -- let`s pass on the costs and risk of higher health care prices
to seniors. They would do it through the voucher program. They would do
it through other mechanisms.

We`ve always said that`s the wrong approach. If you want to save
money in Medicare, you need to bring down health care costs overall, you
need to end the overpayments to the private insurance companies, which is
what we did in Obamacare.

And there are additional ways to save money by improving the
incentives in the Medicare system to end these overpayments. But we do not
support the Republican approach of transferring those costs on to seniors.
That doesn`t solve the problem.

SCHULTZ: Yes.

VAN HOLLEN: We need to contain healthcare costs throughout the
system, not just pass those costs on to seniors.

SCHULTZ: Can you keep Social Security off the table?

VAN HOLLEN: We have said and we have been very clear about this.
Social Security cannot be part of the deficit reduction talks. We are
willing to consider Social Security on its own merits to strengthen Social
Security, remembering that Social Security can pay 100 cents on the dollar
until the year 2034. After that, you do have a shortfall --

SCHULTZ: OK.

VAN HOLLEN: -- of about 25 cents on the dollar. We should plan
sooner rather than later, but that should not be part of the deficit
reduction equation.

SCHULTZ: Well, this is going to be the big fight, because the
Republicans want to privatize it. They`re going to go down that road and
when they say reform, they`re talking about cuts. So, that`s something we
got to follow.

You know, I get a little nervous, Congressman, when I hear about
framework and targets because it sounds like that might be an opportunity
to kick the can down the road. Straighten me out on that. Tell our
audience that this is just -- that you can feel confident in a framework
that we can move on.

VAN HOLLEN: Yes, look, you`re absolutely right. This is the moment
to deal with this issue because the Bush tax cuts expire by law at the end
of December. And it is time now to say to the country, we`re going to be
serious about the deficit in a sense we`re going to ask everybody to share
responsibility.

We already did these cuts. Now higher-income people have to
contribute more because if they don`t, the math gets pretty simple. That`s
when you do have big hits to people on Medicare. That`s when you cut
dramatically into our kid`s education.

So we said you got to share responsibility in this. And we should not
be kicking the can down the road when it comes to asking higher-income
people to pay more toward the deficit.

SCHULTZ: All right. Congressman Chris Van Hollen -- thanks for
joining us tonight on THE ED SHOW.

VAN HOLLEN: Thank you, Ed.

SCHULTZ: And Democrats better not cave in the fiscal cliff
negotiations. They have a mandate and they should use it. The political
analysis coming up on that.

Then they want the federal government to stop calling the shots. So,
why are so many governors asking the federal government for help in
implementing Obamacare? John Nichols of "The Nation" will weigh in.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Thanks for watching tonight.

The fiscal cliff negotiations began today and a key point is asking
the wealthiest Americans to pay a little more. That`s why a group calling
itself the Patriotic Millionaires went to Washington this week to say: tax
us, we can take it.

This deal shouldn`t be done on the backs of the elderly and disabled
in this country. It is vitally important to protect Medicare. If the
current trend continues -- get this -- employers will cover less than 10
percent of retirees` health care costs by the year 2031. The figure used
to be as high as 50 percent.

So when someone retires, it`s not like the company is going to be
there with health care coverage for you. It`s going to be less than 10
percent by that year I just said.

That`s a big problem. That`s why we have to protect it.

Let`s turn to Nick Hanauer, partner with the Second Avenue Partners
and part of the group Patriotic Millionaires who went to Washington, D.C.
yesterday to call for higher tax on wealthy Americans. And Tara Dowdell is
with us tonight, Democratic consultant.

Great to have both of you with us.

Nick, you first.

NICK HANAUER, SECOND AVENUE PARTNERS: Thank you for having us.

SCHULTZ: What kind of impact do you think you can have on lawmakers?
I know you have quite a group put together, wealthy Americans who have
said, look at my finances, this is what we can do, this is what we`ve got
to do. What kind of impact can you have?

HANAUER: I think it`s important to make the argument to these
lawmakers that not only are we willing to be taxed more, but more
particularly that the prosperity of the country depends on us being taxed
more.

Look, this fiscal cliff issue and the campaign itself was an argument
between two competing ideas about where prosperity and jobs come from. The
Republican trickle-down idea, that if you pour money into somebody like me,
like an ingredient, jobs will pop out of us like donuts, or the
alternative, which is middle out economics, the idea that in a capitalist
economy, prosperity comes from investing in the middle class. And when the
middle class thrives, so do business people like me.

And that argument needs to be made. It`s not just that we want to pay
more taxes because we love the country. We actually have a huge stake in
the middle class. The better they do, the better we`ll do. And that`s why
high tax rates for wealthy people are correlated actually with higher rates
of growth.

SCHULTZ: Tara, the politics of this, the president has on the table a
proposal. Let`s do the deal for 98 percent of Americans right now.
Doesn`t that arm Republicans with the talking points to be able to go back
home and say, hey, to 98 percent of you, I didn`t raise your taxes. Why
won`t they take that deal.

TARA DOWDELL, DEMOCRATIC CONSULTANT: Well, the Republicans are being
obstinate as they have always been since this president took office. I
mean, the bottom line here, Ed, is that the Democrats, we have all the
cards to play. Right now, the Republicans don`t have the cards to play.

So the Democrats need to stand firm on this and not give into anymore
obstructionism. And as I`ve always like to say, we don`t have a rich
people aren`t rich enough problem in this country. We have is a working
poor people who are no longer working problem and the middle class is
shrinking problem.

So Democrats need to continue to pound home the message, because that
message and those policies that we propose are the policies that resonate.
And I think what the president is doing is taking -- continuing to take
that message public. And he needs to continue to do this and put pressure
on the Republicans, because we have to be careful. They are saying they
are going to work with the Democrats, but their track record, as we know,
has not been a good one.

SCHULTZ: Listening to Mitch McConnell today wasn`t very encouraging.
He`s talking about entitlement cuts or he`s not going to serve up any
revenue. Let`s talk about the Bush tax cuts for a moment for the
wealthiest Americans. Almost one trillion is saved over 10 years, 42
billion in the first year alone, if we go back to the old rates. Here`s a
healthy sum. That`s a pretty dog gone healthy sum.

But, Nick, is that really where we have to go? Should we go further
than the old rates?

HANAUER: Absolutely. I mean, I think that it`s good that the rate is
going to go up. But we have to eliminate the carried interest deduction
that is just an abomination in our tax code, this 15 percent rate that
private equity people and venture capital people like myself get. We have
to let dividends go back up to the same rate that working people pay on
taxes.

SCHULTZ: So address the unearned income is what you`re talking about.

HANAUER: Absolutely. The unearned income is a problem that`s -- it`s
equally pernicious, unfair. And it robs the Treasury of really important
funds.

But if I could make one more point, people think that the Republicans
are afraid -- that the economy will be harmed when tax rates go up on the
rich. It`s the opposite of the truth. They are terrified that when tax
rates go up on the rich, it`s not going to harm the economy. And 30 years
of ridiculous orthodox are going to go down the drain with it.

SCHULTZ: All right, I want to play this sound byte by Mitch McConnell
today. Here it is.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MINORITY LEADER: I can say on the part of
my members that we fully understand that you can`t save the country until
you have entitlement programs that fit the demographics of the changing
America in the coming years. We`re prepared to put revenue on the table,
provided we fix the real problem.

(END VIDEO CLIP)

SCHULTZ: So Tara, Senator McConnell is angling for a fight amongst
Democrats over entitlements. Is it going to work?

DOWDELL: I think obviously he hopes it will work. I don`t think it
will work this time. The bottom line here is that the public has made
their choice in this election. And President Obama was very clear
throughout this election. He`s been clear that he did not want -- that he
did not want to continue the Bush tax cuts for the top income earners.

So I do think, though, the one thing I want to see more Democrats do
is those of us who are, you know, not in Congress, we need to be out there
pushing too. Because last time what happened was the president got elected
and everyone acted like he was going to be a magician and that he could
rule single handedly and do all these things.

And we need the public to push back and also let them know that we are
not going to stand for this anymore. People have to sacrifice.

SCHULTZ: There is no political off season is what I`m hearing. Nick
Hanauer, Tara Dowdell, great to have you with us tonight. Thanks so much.
>

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

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: If President Obama wins, will you move forward
with the health care exchange?

GOV. SCOTT WALKER (R), WISCONSIN: We are going to go forward in a way
that ultimately looks out for the best interests of the people of the
state.

(END VIDEO CLIP)

SCHULTZ: He was telling the truth. Governor Scott Walker announced a
hands-off approach to Obamacare. "The Nation`s" John Nichols will tell us
why it`s good news for Wisconsinites.

Tonight, I`ll blow the top off these secessionists.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is a petition asking the government to let
Alabama secede from the union.

(END VIDEO CLIP)

SCHULTZ: We`ll take a look at his wishy washy reasons.

I`ll tell you what`s behind the fake fiscal cliff at the U.S. Postal
Service. Greg Bell of the American Postal Workers is here with the latest.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Governors on the Republican
side, what they wanted to do was to oversee the Supreme Court overturn the
law. Right? They just couldn`t stand Obamacare. They thought, well, the
Supreme Court`s going to do something about this.

When that didn`t work out, they believed that Mitt Romney would become
president and he would repeal it. That didn`t work out either. So the
Affordable Care Act remains the law of the land. And now these same
Republican governors are left -- what -- they are scrambling.

And today was a big day. Today was the day that states were supposed
to let the Obama administration know whether or not they would be forming
their own health insurance exchanges.

Here we go. It`s a component to the law. It will allow millions of
middle class households as well as small businesses to shop for private
insurance. And yet many states have dragged their feet on the deadline,
perhaps expecting a different outcome to the presidential election.

After the Republican Governors Association requested a deadline
extension, states now have until mid-December to make their decision. If a
state chooses not to set up an exchange, it can either share responsibility
with the federal government or let the fed`s handle it completely in their
state. You`d think that the conservative governors around the country
would denounce the idea because of federal control, that they would want to
set up their own state exchange. Well, think again.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Scott Walker has decided to let the federal
government implement health insurance exchanges.

(END VIDEO CLIP)

SCHULTZ: There`s that government takeover. But it was Walker who
made the decision. And you know what, he`s not alone. Bob McDonnell of
Virginia, why would he do that? He`s also letting the federal government
set up his state`s health exchange. How about that?

Who is that? John Kasich of Ohio is doing it too? And Nikki Haley of
South Carolina and Rick Perry of Texas? Folks, the list goes on and on. I
think you get the idea. Walker explained his reasoning for leaving it up
to the fed`s earlier.

(BEGIN VIDEO CLIP)

WALKER: It`s like you`re going to get a house, but the federal
government is going to design the interior, all the amenities, the
furniture, everything else. And the only thing left is they ask you
whether you want blinds or curtains, but yet you`re getting -- you`re co-
signing the mortgage.

(END VIDEO CLIP)

SCHULTZ: Governor Walker, you`re not whining are you? Folks, you
know what this means? This means that these Republican governors who do
not want Obamacare, and they are going to turn it over to the fed`s -- what
they are doing is they are setting up an exchange and setting up the system
for us to down the road go to universal health care. Brilliant move by the
Obamacare folks, don`t you think?

Joining me now is John Nichols, Washington correspondent of "The
Nation" magazine and author of the book "Uprising."

John, good to have you with us tonight. By rejecting the state-run
exchanges, are these Republicans paving the way for universal health care?
What`s happening here?

JOHN NICHOLS, "THE NATION": Well, I sure hope they are paving the way
for universal health care. It`s a great idea. But the fact of the matter
is they are actually harming their own states. You know, states are
different. They have different levels of commitment to health care. Many
states have actually built out their own systems.

And Governor Walker, who spoke about this building of a house, was
exactly wrong. In most states, you already have the outlines of a house.
What the federal government gave states the opportunity to do was to outfit
that house as they chose, to use what they already have in place.

Instead, these governors are choosing a one-size-fits-all solution
that will actually be, in some cases, worse. They are also turning money
back to the federal government. At a time when we are supposed to be
broke, when we`ve got all these financial problems, these states that
refuse to set up their own exchanges are turning tens of millions of
dollars back to the federal government. And they are doing it for only one
reason. And that is out of spite. They are mad at Barack Obama.

SCHULTZ: They are. But when it comes to the delivery system and the
money that can be saved in the long haul, if the federal government comes
into a state and sets up all of the mechanisms in place, doesn`t it make it
easier to get universal health care when that time comes?

NICHOLS: Absolutely, it does. And you know, this is the bizarre
thing about their choice. The fact is that they could create unique and
different systems in different states. When the Affordable Care Act was
passed, it was passed with an idea that there would be maximum flexibility.

The authors of the act actually thought that letting states establish
their own exchanges would get buy-in from conservatives. Instead, out of
spite, they are refusing this. And the end result is, yes, we are going to
have a much more nationalized program.

It`s going to be good for some states, Ed. There are some states that
have not done enough on health care. And those states will have better
quality. But some states that have done a lot on health care, these
governors are cutting off their nose to spite their face.

SCHULTZ: Meanwhile, Congressman Phil Gingery says it would be
pointless to keep voting on full repeal of Obamacare. Instead, they would
try to chip away at pieces of the law. Is this going to be successful?

NICHOLS: Well, it`s a little bit like we see on Social Security and
Medicare. There are folks who have never liked Social Security and
Medicare. So they are always trying to starve it, to cut it, to privatize
it, to undermine it in some ways. This is the strategy that they seem to
be adopting as regards to the Affordable Care Act.

But remember this, Social Security, Medicare and Medicaid have grown
to be incredibly popular programs. And the Affordable Care Act will, in
short order, be a very popular program.

SCHULTZ: Well, these governors who are turning it back and not
implementing it, there`s going to be some states that do implement it.
Then the stories are going to start crossing state lines about who really
has the best health care delivery system. I think that these Republican
governors down the road are going to pay a political price for not doing it
the way they should be doing it.

John Nichols, great to have you with us tonight. Have a good weekend.
Thanks.

Coming up, talk of secession is so 1860. But that`s not stopping
thousands of Americans from petitioning to leave the union. I`ll introduce
you to the man behind Alabama`s exit, please. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: We are back on THE ED SHOW. Since President Obama`s
reelection last week, I think we`ve witnessed conservatives making their
way through the stages of grief: denial, anger. Now many have seemed to
hit the bargaining stage.

Conservatives have resorted to petitioning the Obama administration to
let the individual states just get the hell out of the union. Citizens
like Derrick Belcher.

(BEGIN VIDEO CLIP)

DERRICK BELCHER, PETITIONING TO SECEDE FROM USA: I don`t think that
the federal government is being fair with the American people. I think
they are being overbearing. They are taxing us to death. And they are
taking our freedoms away at a break-neck speed.

(END VIDEO CLIP)

SCHULTZ: Belcher is a truck driver, knife collector, libertarian and
former business owner from the great state of Alabama. He filed a petition
for secession on November 9th, which has gathered over 29,000 signatures.
Belcher -- well, he has several reasons for wanting to break off from the
United States.

The most personal stemming from his loss of a business in 2001. "The
government ripped my business away and now they are choking America to
death with rules and regulations."

What business was Belcher in? Well, for a decade, he owned Euro
Details, a topless car wash. That`s right, a car wash that featured
topless women. We have a problem here, folks. In 2001, Belcher was
arrested and charged with obscenity by city officials. Not federal, city.
And the business, of course, had to shut down.

But here`s the catch. In 1998, the great state of Alabama enacted a
law prohibiting private clubs and businesses from allowing breasts to be
shown for entertainment, a law so broad the film "Titanic" and even some
Broadway shows could be illegal in Alabama.

Sure sounds like freedom to me. What Mr. Belcher doesn`t get, the
federal government had nothing to do with the state law that cost him his
business. And the people parroting the talking points about freedom and
taxes are more likely to be the ones instituting the laws that brings down
topless car washes.

And we all know in America topless car washes are really a problem.

Tonight in our survey, I asked you will the GOP stop their witch hunt
on Benghazi. Six percent of you say yes; 94 percent of you say no.

Coming up, the Post Office is in big financial trouble and Republicans
are doing nothing to help. In fact, they are the problem. And I will
explain when we come back.

(COMMERCIAL BREAK)

SCHULTZ: In the big finish tonight, thanks to Republicans in
Congress, the United States Postal Service is in danger of collapse. How
nice of them. The Republican philosophy is privatization. We know that.
They are destroying the Postal Service to get their way. The Post Office
reported a 15.9 billion dollar loss through their fiscal year ending
September 30th, 2012.

It`s important to keep in mind the Post Office is losing money because
of a 2006 law passed in a lame duck session of the Congress by the
Republicans. The law requires the Post Office to prefund employee`s
retirement accounts for the next 75 years in a 10 year window. I wonder if
Mitt Romney would say that`s a good business plan.

These overpayments make up 11 billion dollars of this year`s net loss.
Now the other five billion is because of the decline in mailing that`s
taken place in operations. But it would have been manageable. Both of
these problems can easily be fixed.

In April, the Senate passed a bill allowing the Postal Service to
regain !1 billion dollars in overpayments to its retirement account. The
bill, of course, went nowhere. Speaker John Boehner in the House, he
didn`t want anything to do with it.

Meanwhile, the revenue problem can be solved by modernizing the Postal
Service. The great Bernie Sanders says here is what we can do about it.
Here`s the plan.

(BEGIN VIDEO CLIP)

SEN. BERNIE SANDER (I), VERMONT: Clearly the Postal Service has to
change. It has to be much more entrepreneurial, much more pro-business,
much more pro-consumer. In our state of Vermont, we have many rural Post
Offices. People want to go there to get letters copied. Can`t do that.
They want to get letters notarized, against the law. They want a fishing
license. They want a hunting license. Against the law.

There are many areas where the Postal Service can expand, bring in
substantially more revenue.

(END VIDEO CLIP)

SCHULTZ: And this is breaking news. No tax dollars go to the
operation of the Postal Service. That`s right, zero dollars. These
solutions are simple, but Republicans are against helping the Post Office
because they want to see it eliminated, bust the union, privatize it, make
a dollar on the side for their buddies. The longer nothing is done, more
jobs are lost and the economy suffers.

Currently, the Postal Service has plans to close 260 Post Offices
around the country. So that`s what`s happening to the one in your town.
This means that an additional 35,000 postal jobs are at risk if nothing is
done by this session -- lame duck session of the Congress. Republicans`
inaction on this issue is absolutely shameless.

They have had all year to come to the table to work with the
Democrats, but of course they haven`t done it. They are hell bent on
seeing the U.S. Postal Service die, even if it means destroying a great
American institution in the process. They don`t care. They want it
privatized.

It`s wrong. Let`s turn to Greg Bell, vice president of the American
Postal Workers Union. Mr. Bell, good to have you with us tonight. What`s
the number one thing that can be done right now to save the Postal Service
as we know it?

GREG BELL, PRESIDENT, AMERICAN POSTAL WORKERS UNION: The one thing
that must be done is to eliminate the unrealistic mandate that the Postal
Service currently has to prefund retiree -- future retiree health care
benefits for a 75-year period within a 10-year period. That`s number one.
That`s the main cause of the Postal Service problems.

As a matter of fact, that is the cause. If you remove that liability,
the Postal Service, as you stated, would be able to assume the
responsibility without any type of additional funds.

SCHULTZ: I want to emphasize here that this is going to financially
butcher small business in America, in rural America. What are they going
to do? Their shipping costs are going to go through the roof. Their line
item is going to go off the page, because all of the privatization is not
going to be able to cover and service rural America, which the Post Office
does right now for many of these companies.

Mr. Bell, it`s good to have you with us. It`s a story that I want to
tell over and over again. I want this lame duck session of the Congress to
do something about this. It`s unfair. Mitt Romney would never run any of
his businesses like that. That`s what you Republicans need to know.

That`s THE ED SHOW. I`m Ed Schultz on this Friday night. "THE RACHEL
MADDOW SHOW" starts right now. Good evening, Rachel.

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

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