updated 11/29/2012 11:13:40 AM ET 2012-11-29T16:13:40

THE ED SHOW with ED SCHULTZ
November 28, 2012

Guests: Lee Saunders, Lew Prince, Steve Israel, Bob Shrum, Luis Gutierrez

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

President Obama is using every tool in the tool box to protect the
middle class. It is starting to work.

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

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If we can get a few
house Republicans to agree as well, I`ll sign this bill as soon as Congress
sends it my way. I`ve got to repeat. I`ve got a pen.

SCHULTZ (voice-over): A major Republican says he is ready to take the
president`s deal on taxes. House Speaker John Boehner is not happy.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Hell, no, you can`t!

SCHULTZ: And anti-tax crusader Grover Norquist attacking the wives of
Republican congressman?

GROVER NORQUIST, ANTI-TAX LOBBYIST: I hope his wife understands that
commitments last a little longer than two years.

SCHULTZ: Tonight, Lee Saunders on the grassroots blast to pass the
middle class tax cuts.

Small business owner, Lew Prince, on his meeting with the president.

And Congressman Steve Israel on the Democratic momentum on the fiscal
cliff.

Plus, Karen Finney on the new bizarre attack on Ambassador Susan Rice.

UNIDENTIFIED MALE: All of the sudden, we are the bell of the ball.
We are here to say, it`s time to start to dance.

SCHULTZ: Latino voters help put President Obama over the top. Now,
the Hispanic Caucus says they want action. Representative Luis Gutierrez
joins me tonight.

(END VIDEOTAPE)

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

President Obama is selling his economic agenda and using all the right
tools. The president was surrounded today by middle class taxpayers at the
White House as he pushed for an extension of the tax cuts for income below
$250,000. He was quick to highlight the break in the ranks with the
Republicans.

(BEGIN VIDEO CLIP)

OBAMA: I am glad to see, if you`ve been reading the papers lately,
that more and more Republicans in Congress, seem to be agreeing with this
idea that we should have a balanced approach. So, if both parties agree we
should not raise taxes on middle class families, let`s begin our work with
where we agree.

(END VIDEO CLIP)

SCHULTZ: President Obama isn`t talking about some moderate Republican
or some blue dog Democrat. He is talking about conservative Republican
Oklahoma Congressman Tom Cole.

Cole is the first Republican to openly call for agreeing to middle
class tax cuts.

(BEGIN VIDEO CLIP)

REP. TOM COLE (R), OKLAHOMA: We all agree that we are not going to
raise taxes on people that make less than $250,000. We should just take
them out of this discussion right now. Continue to fight against any rate
increases, continue to try to work honestly for a much bigger deal.

(END VIDEO CLIP)

SCHULTZ: Democratic Senator Patty Murray jumped on the Tom Cole
bandwagon on MSNBC.

(BEGIN VIDEO CLIP)

SEN. PATTY MURRAY (D), WASHINGTON: I really respect Representative
Cole for saying the obvious, that there is no need to hold 98 percent of
our middle class families and 97 percent of our small businesses hostage
just in order to protect the wealthiest Americans.

(END VIDEO CLIP)

SCHULTZ: And later, Congressman Cole explained the logic of his
position to Chris Matthews this evening.

(BEGIN VIDEO CLIP)

COLE: What I think a lot of people forget is look, these tax rates
are going up automatically unless Congress acts. I favor acting to save as
many of them as possible.

(END VIDEO CLIP)

SCHULTZ: I mean, this is what I have been saying for weeks. The
president is giving the Republicans a hell of a deal. They are going to be
able to go home to their constituents and say, hey, I didn`t raise your
taxes. Ninety-eight percent of you, everything is going to be just fine.

House Speaker John Boehner, he doesn`t know how to handle this. He
was forced to respond and wasn`t quite sure what to say.

(BEGIN VIDEO CLIP)

BOEHNER: I told Tom earlier in our conference meeting that I
disagreed with him. He is a wonderful friend of mine and a great supporter
of mine. But raising taxes on the so-called top 2 percent, half of those
taxpayers are small business owners.

(END VIDEO CLIP)

SCHULTZ: Actually, Congressman Cole agrees with the same thing. Cole
doesn`t want to raise on the top 2 percent either.

Boehner is spinning his wheels right now. This is why President Obama
is in such a strong negotiating position. He`s got the country behind him.
He could be pushing these guys all the way until the break.

The president reminded the country of the stakes today. And there was
a sense of urgency in the president`s message today.

(BEGIN VIDEO CLIP)

OBAMA: If we get this part of it right, then a lot of the other
issues surrounding deficit reduction in a fair and balanced and responsible
are going to be a whole lot easier. And if we get this wrong, the economy
is going to go south.

We don`t have a lot of time here. We`ve got a few weeks to get this
thing done. We could get it done tomorrow. Now, optimistically, I don`t
think we are going to get it done tomorrow.

(END VIDEO CLIP)

SCHULTZ: The White House is using all social media resources to get
the message out and put pressure on the Republicans.

(BEGIN VIDEO CLIP)

OBAMA: Today, I`m asking Congress to listen to the people who sent us
here to serve. I`m asking Americans all across the country to make your
voice heard. Tell members of Congress what a $2,000 tax hike would mean to
you. Call your members of Congress, write them an e-mail, post it on their
Facebook walls.

You can tweet it using the #my2k -- not y2k, my2k. We figured that
would make it a little easier to remember.

(END VIDEO CLIP)

SCHULTZ: Now, the president was laughing, but the strategy, seriously
effective. The #my2k was one of the top trends on Twitter all day long.

Republicans -- well, they aren`t too happy. They are getting
outflanked. Listen to Mitch McConnell complained about the president`s
upper hand.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: If the president really
wants to reach an agreement, he needs to be talking with the members of his
own party right here in Washington, trying to broker an agreement, not out
there firing up crowds and giving speeches.

(END VIDEO CLIP)

SCHULTZ: And the folks on FOX News were also crying about the
president taking the message to the people.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: And so, now, we are back out on the campaign
trail and we are having people make Twitter announcements and making
YouTube videos about what they think about the fiscal cliff. At least
that`s what this administration is asking people to do to try and then
convince their members of Congress to vote in a certain way.

What about saving all that time and actually doing the job that we
elected you to do, which is to sit in a room and get something done?

(END VIDEO CLIP)

SCHULTZ: Is FOX News admitting that they are just so yesteryear? I
mean, get with the program. This is how people communicate. Motivate,
motivate, motivate.

You see, bullies don`t like it when you hit back.

The president isn`t just hitting the campaign trail for a victory lap.
He is mobilizing his base, like labor leaders and grassroots organizers.

Today, leaders from top labor groups were on Capitol Hill meeting with
lawmakers to push for an extension of the middle class tax cuts. They also
want to make sure that social benefits are protected, because that`s what
this election was about -- benefit cuts rejected on November 6th.

The new poll by "The Washington Post" and ABC News shows all Americans
oppose major changes to Medicare benefits, including Republicans and
conservatives. I mean, Boehner can`t win. Of course, the most important
poll was on November 6th.

President Obama ran on raising taxes on the wealthiest Americans and
not hitting beneficiaries of Medicare, Medicaid and Social Security. This
is his leverage.

(BEGIN VIDEO CLIP)

OBAMA: This shouldn`t be a surprise to anybody. This was a major
debate in the presidential campaign and in congressional campaigns all
across the country. And a clear majority of Americans, not just Democrats
but also a lot of Republicans and a lot of independents agreed we should
have a balance approach to deficit reduction that doesn`t hurt the economy
and doesn`t hurt middle class families.

(END VIDEO CLIP)

SCHULTZ: And, of course, Republicans spent the last four years saying
that President Obama doesn`t understand the economy. Well, voters said
that they were wrong.

Now, John Boehner has really worked himself into a position. He is
really in an untenable position. He is going against the majority of
Americans here.

He is willing to say, our ideology is more important than the way you
think and the way the majority thinks in this country. You know what the
Democrats ought to do right now? They ought to resource his district. You
know that Boehner ran unopposed?

Maybe if Boehner knew that the full throat of the Obama team was going
to work in that district to get a great candidate and resource it and go
after John Boehner, maybe if he knew he might lose his job in two years, he
might think a little bit different down the stretch.

If you`ve got resources, you got the social networking, I think
they`ve got to use it on Boehner. He is the problem right now.

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

Tonight`s question: Should Republicans cave in and pass tax cuts for
the middle class? Text A for yes, text B for no, to 622639. You can
always go to our blog at Ed.MSNBC.com and we encourage you to leave a
comment there, and we`ll bring you the results later on in the show.

I`m joined tonight by Lee Saunders. He is the president of AFSCME.

And Lew Prince is with us, a small business owner from St. Louis,
Missouri, who met with the president yesterday.

Gentlemen, great to have you with us tonight.

You first, Mr. Saunders. What kind of reaction did you get on Capitol
Hill today? How much enthusiasm is really there?

LEE SAUNDERS, AFSCME PRESIDENT: Well, there is a lot of enthusiasm
from our trade union and members who lobbied on Capitol Hill today. They
not only lobbied on the Senate side and the House side. But they lobbied
Democrats and Republicans.

And our message is very clear, and the message of the American people
is very clear. It was very clear on November 6th.

And that is tax the 2 percent. Make sure that they pay their fair
share. Give tax breaks to the 98 percent who are trying to play by the
rules every single day. That includes 97 percent of small business owners.

So, we`re sending that message out loud and clear. Protect Medicaid,
protect Medicare, protect Social Security and have the rich pay their fair
share.

SCHULTZ: Mr. Saunders, why don`t the Democrats target John Boehner?
How can he run unopposed? How can he just wheel all this power and be so
much against the mainstream and majority of Americans? Why don`t Democrats
and labor groups and everybody across the country, get together and get a
great candidate to start working to get rid of this guy, because he might
be thinking and acting differently?

SAUNDERS: Well, one of the things that we`re doing, Ed, is that we
are going to the communities, to our communities and we`re visiting those
district offices and we`re making our voices heard. I mean, the American
public made a strong statement on November 6th. We`ve got to go to those
districts, not only of Democrats and Republicans and make sure that they
understand what that message is.

I think that we ought to look at challenging some of these politicians
who are standing in our way, standing in the way of making sense across
this country --

SCHULTZ: Yes.

SAUNDERS: And taxing those that can afford to pay those taxes and
give some tax breaks to the middle class and then to rebuild this country
by creating good jobs all over this country.

SCHULTZ: Mr. Prince, I was struck by your comment outside the White
House yesterday when you said basically raising taxes on the job creators
is the wrong thing to do. I think you made a direct hit right there on the
Republican philosophy.

But to the brass tacks of your business, how does this tax deal affect
you and other small businesses?

LEW PRINCE, OWNER, VINTAGE VINYL: Well, to me, the middle class tax
cut puts money in the hands of consumers. And our economy is consumer-
driven. And the more consumers who have the more money, the better it is
for small businesses like me.

You know, this puts $2,000 to $3,000 in the hands of regular, ordinary
working people who will spend it. The lower taxes on the rich just sends
more money outside of our community, outside of our country, to make
bankers in the Cayman Islands happy.

SCHULTZ: All right.

PRINCE: I`m really happy to see the president ask regular Americans
to write their and contact their legislators.

SCHULTZ: Lew, what was your pulse yesterday? I mean, do you feel
like the president is really committed to holding the line and making this
thing happen?

PRINCE: Yes, I really got the feeling that they understood the stakes
here. And while they really wanted to hear from us, what they heard from
the dozen small business people in the room who represented about 150,000
in our various progressive small business organizations was don`t raise
taxes on the middle class, tax the rich more.

There were even calls in that room for higher minimum wages. Clearly,
no one wants to cut out the safety net that working people are promised for
their lives of diligence, using their brains and brawn to build our
country.

SCHULTZ: And, Mr. Prince, Republicans claim that the president`s plan
is bad for small business. Why do you think they are wrong?

PRINCE: Let me tell you. The president`s plans so far have helped my
business. You know, when -- from 2008 to 2011, things were very flat.
Sales were flat or even down.

As the stimulus started to kick in, we started seeing month to month,
every month since 2000 -- since late 2010, our sales go up. And it`s
consumers having more confidence, having more money in their hands.

I can tell you also for my business, the ACA, Obamacare, was huge. I
provide health insurance for all my employees. And the ACA is underwriting
small businesses doing that, helped me absorb a huge increase because I
have a couple of folks who work for me who are going through some illness
problems.

SCHULTZ: Lee Saunders, your members of AFSCME, will be financially
hurt if we go over the fiscal cliff. What does that mean? I mean, can you
absorb this for a while until they come to a deal? How important is it to
get it done now?

SAUNDERS: Well, it`s got -- it`s extremely important. But we`ve got
to stick to what we believe in. And the president has got to use his bully
pulpit and say the things that are necessary to move this agenda.

And we believe he is saying the right things. He`s saying that the
middle class needs relief. He`s saying that the top 2 percent who are
controlling wealth in this country need to pay their fair share and pay a
little bit more, help small businesses, help working families, help and
support the middle class.

And that`s what we are going to continue to stand for. That`s what we
are mobilizing around all across this country. We are going to continue to
do so.

SCHULTZ: Lee Saunders, president of AFSCME, and also, Lew Prince,
small businessman from St. Louis -- great to have you both with us. Thanks
so much.

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: Grover Norquist is seeing his hold on the Republican Party
slip away and for good reason. Congressman Steve Israel joins me for the
discussion next.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, Senator Susan Collins joins the smear campaign
against Ambassador Susan Rice, questioning the ambassador`s knowledge of
embassy attacks back in 1998? We`ll have the details.

And Mitt Romney finally gets a chance to head over to the White House.
We`ll have the details of his upcoming lunch with the president.

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

We`re coming right back.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

One good thing is definitely coming out of the fiscal cliff mess, and
that`s the demise of Grover Norquist and his anti-tax pledge. He is a
conservative industry in Washington. He has managed to intimidate people
with a certain degree of power but it is starting to unravel, don`t you
think?

Republican senator -- former senator, Alan Simpson, may be wrong on
many things but he has nailed Grover Norquist.

(BEGIN VIDEO CLIP)

ALAN SIMPSON, FORMER U.S. SENATOR: He was gathering up those
signatures back in the `80s and early `90s when inflation was zip, when
unemployment was zip, and anybody who would sign anything before they come
to Congress and hear the debate and participate in it hopefully. I mean,
why would you do that? It is like selling your soul. Let me tell you.

He is becoming irrelevant. You can see it in his eyes. He knows the
game is up, because good people of good faith have decided instead of being
Republicans or Democrats, they are Americans.

(END VIDEO CLIP)

SCHULTZ: According to Norquist, Republicans only need to worry if
they violate the pledge.

(BEGIN VIDEO CLIP)

GROVER: It is possible if the Republicans lose in such a way that
they`ve got their fingerprints on the murder weapon, then you have a
problem.

(END VIDEO CLIP)

SCHULTZ: Murder weapon?

Norquist also takes cheap shots in defending his anti-tax pledge.

(BEGIN VIDEO CLIP)

NORQUIST: Two things. The pledge is not for life but everybody who
signed the pledge, including Peter King, who tried to weasel out of it --
shame on him as "The New York Sun" said today. I hope his wife understands
that commitments last a little longer than two years or something. The
commitment for the pledge as Peter King well knows when he signed it is
that as long as you are in Congress, you will rein in spending and reform
government, not raise taxes.

(END VIDEO CLIP)

SCHULTZ: Hold it right here. This is -- they are just going right
back at one another aren`t they, boom, boom! These are Republicans, all of
the sudden, just at each other`s throats.

Republican Congressman Peter King responded.

(BEGIN VIDEO CLIP)

REP. PETER KING (R), NEW YORK: The fact he brought my wife into it.
He`s never -- I don`t think he has ever met me, certainly never met my
wife. And he better hope he doesn`t. She will knock his head off.

(END VIDEO CLIP)

SCHULTZ: King also explained why Norquist is wrong on substance.

(BEGIN VIDEO CLIP)

KING: I did sign a pledge back in 1996, during the whole conflict
with the Clinton administration over the government shutdown. And I was
totally opposed to any tax increases at that time. But to say that a
pledge on an issue like taxes would last for a lifetime is absolutely
ridiculous. Ronald Reagan raised taxes a number of times because that`s
what he had to do to close the deal.

(END VIDEO CLIP)

SCHULTZ: When Norquist started his anti-tax pledge back in 1986, the
deficit was $220 billion. Now, it tops $1 trillion.

This is a turning point I think for the GOP or at least it could be.

The other thing you need to know about is the money trail. In 2010,
66 percent of funding for Americans for Tax Reform, Norquist`s group, came
from two billionaire groups, according to an investigation by "The Nation"
magazine, Karl Rove`s group, Crossroads GPS, gave $4 million. The Center
to Protect Patients Rights, one of the front groups for the Koch brothers,
gave over $4 million to Norquist`s group.

Joining me tonight, Congressman Steve Israel of New York.

Congressman, good to have you with us tonight.

REP. STEVE ISRAEL (D), NEW YORK: Hi, Ed.

SCHULTZ: I think that just tells you all you need to know. Norquist
group is simply another front for millionaires and billionaires that don`t
want to see their taxes go up at all under any circumstances. Republicans
who sign the pledge and stick with it are signing away any shred of
principle that they have, all for the sake of protecting the rich.

What are your thoughts on this and is this the beginning of the end
for Grover Norquist of sorts?

ISRAEL: Well, Ed, I think as a result of the recent election where a
Democrat was reelected president, the Democrats retain control of the
Senate and Democrats actually picked up seats in the House, there are some
Republicans, a few Republicans, who are seeing the handwriting on the wall
instead of the handwriting in the pledge. And they are starting to peel
off of that pledge. And that`s a good thing.

But, here is what worries me. For as long as John Boehner is speaker
of the House, for as long as the Republicans control the majority, they are
going to continue to support, protect and defend millionaires and K Street
and special interests even if it cost the middle class more money.

In five weeks, I and my Democratic colleagues will stand on the floor
of the House of Representatives and take our oath to the Constitution of
the United States of America and still most Republicans will take their
oath to Grover Norquist. And that`s the fundamental difference between us.

SCHULTZ: Here is Senator Lindsey Graham of South Carolina on
Norquist. Here it is.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: I agree with Grover we
shouldn`t raise rates but I think Grover is wrong when it comes to we can`t
cap deductions and buy down debt. What do you do with the money? I want
to buy down debt and cut rates to create jobs. But I will violate the
pledge, long story short, for the good of the country, only if Democrats
will do entitlement reform.

(END VIDEO CLIP)

SCHULTZ: All right. What does this mean? Does this mean that you
have to put Medicaid, Medicare on the table to get these folks to think
your way? I mean, Graham isn`t going far enough. But other Republicans
like Congressman Tom Cole, they`re willing to see the light and see what
people want.

Is this starting to crack? And are we seeing a trend?

ISRAEL: Well, first of all, Democrats have already supported, passed
the Budget Control Act which cut spending by nearly $1 billion. We were
willing to support a compromise last August that would further reduce
spending in exchange for revenues from the rich.

So, we have already agreed to compromise and we agree that we`ve got
to reduce debt and we`ve agreed to spending cuts. What we will not
negotiate is the end to Medicare. We will negotiate reforms and
improvements to Medicare. We will not negotiate the end of Medicare.

I don`t know what it is with these Republicans, why they are so
obsessed with asking senior citizens on Medicare to be the very first to
sacrifice the most.

SCHULTZ: Yes.

ISRAEL: We ought to be looking at other priorities first.

SCHULTZ: And, Congressman, we talked -- we asked the question a lot
about the White House holding their ground. What about Boehner, what if
Boehner gives in on this issue? What do you think that does to him
politically? Does it enhance his position, because he could always say,
well, the majority of American people want these tax cuts for the 98
percent, or does this make him toxic?

ISRAEL: You know, I think that there is a time for politics and a
time for governing. We are now approaching this fiscal cliff. It is time
to govern.

This election was a mandate for solutions. It was a mandate for
consensus and compromise.

House Democrats have already said we would compromise. We want to get
to higher ground with the Republicans. I hope that Speaker Boehner will
also see the handwriting on the wall and enforcing discipline in his own
caucus and try and meet us in a compromise that reduces spending smartly,
that pays down our deficit, that protects the middle class and that grows
this economy again.

SCHULTZ: OK.

ISRAEL: We can do this if he is willing to compromise. Today, he
said, once again, he is not willing to compromise.

SCHULTZ: Here we go, round 14 or whatever it is.

Congressman Steve Israel, great to have you with us tonight. Thanks
so much.

The Republican smear campaign against Ambassador Susan Rice continues
as more senators pile on. Karen Finney weighs in on what`s the next best
move.

Then, the time is now to find out why the new push for immigration
reform is making Republicans very uncomfortable.

Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: Susan Rice has done a great job
as our ambassador to the United Nations. This decision about my successor
is up to the president but I`m very happy he has the opportunity with a
second term to make a decision.

(END VIDEO CLIP)

SCHULTZ: Secretary of State Hillary Clinton today coming to the
defense of her possible successor, U.N. Ambassador Susan Rice.

Yet, the smear campaign against Susan Rice continues as more
Republicans pile on. Rice had another tough day on Capitol Hill today.
And now, Senate Republicans are blaming Rice for yet another security
failure -- the U.S. embassy bombings in Kenya and Tanzania 14 years ago.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS, R-MAINE: What troubles me so much is the Benghazi
attack in many ways echoes the attacks of those embassies in 1998, when
Susan Rice was head of the African region for our State Department.

(END VIDEO CLIP)

SCHULTZ: Senator Bob Corker of Tennessee had a warning for the
president.

(BEGIN VIDEO CLIP)

SEN. BOB CORKER, R-TENN.: I would just ask the president to step back
for a moment and realize that all of us here hold the secretary of state to
a very different standard than most cabinet members.

(END VIDEO CLIP)

SCHULTZ: And while Republicans say they are concerned about Susan
Rice advancing bad intel on Benghazi, they didn`t think twice about
confirming Condoleezza Rice as secretary of state, even after she`s put
forth bad intel on Iraq as national security adviser. Susan Collins,
Lindsey Graham and John McCain all voted to confirm Condoleezza Rice. So
who would Republicans support as the next secretary of state?

(BEGIN VIDEO CLIP)

COLLINS: I think John Kerry would be an excellent appointment and
would be easily confirmed by his colleagues.

(END VIDEO CLIP)

SCHULTZ: A-ha. If John Kerry is nominated and confirmed, it would
pave the way for a special election in Massachusetts, and would provide
another opportunity for Scott Brown to run, and they could pick up another
Republican seat.

Democrats aren`t worried, pointing to Brown`s eight-point loss to
Elizabeth Warren. Meanwhile, the president is not backing down from his
support of the ambassador.

(BEGIN VIDEO CLIP)

QUESTION: Mr. President, do you think that the Hill is being fair to
Susan Rice in these meetings?

OBAMA: Thank you so much, guys.

Susan Rice is extraordinary. Couldn`t be prouder of the job that she
has done at USUN.

(END VIDEO CLIP)

SCHULTZ: Let`s bring in Karen Finney, MSNBC political analyst and
former communications director for the DNC. Well, is this a communications
problem right now with the American people? I mean, you look at this, I
mean, it just continues to drip. The Republicans will not give up on this.
Now, it is Susan Collins, Bob Corker. They are in on the fray to smear
Susan Rice. Where is it going?

KAREN FINNEY, MSNBC CONTRIBUTOR: I just want to take one step back,
Ed, on this 1998 business that Susan Collins was talking about, because if
we really, truly want to go there, let`s remember that those attacks in
1998 were kind of when Osama bin Laden really came to the fore and we
really had a clear sense of what he was about and what he was attempting to
do. So if we are going to go there, then let`s talk about the massive
intelligence failure on 9/11. I mean, knowing that you had that happening
in `98, how could you miss what happened on 9/11, which resulted in the
deaths of 3,000 people? If we`re going to talk about missing the
opportunity and gathering intelligence, I don`t think that`s the door that
they want to open. I think --

SCHULTZ: Karen, but what does this signal about the Republicans, that
they will go to seemingly endless lengths to try to discredit Susan Rice?
Why are they doing this?

FINNEY: I think -- obviously some people think that it has to do with
this Senate race in Massachusetts. Think how appalling that is, that they
are willing to trash a person`s reputation, a person of Susan Rice`s, you
know, stellar reputation. This is a woman who has served this country
honorably for a very long time. For a Senate seat? I think it makes the
Republicans look incredibly small and incredibly petty. I think it is very
sad, if you look at it. This to me is part of the demise of John McCain.
He comes across I think as just bitter and angry. This feels more like a
grudge match. Then, you have got Lindsey Graham actually already using
this in his upcoming race for re-election. I mean, it is pretty disgusting
stuff.

SCHULTZ: Well, it is the politics of personal destruction, no
question about it, but it is also distortion politics. There`s not a whole
lot of positive things out there for the Republicans right now. They are
really on the defensive. They are looking for something negative to put on
the president. I mean, that`s how I see it. And the president twice now
has publicly supported Susan Rice. And now Secretary Clinton did that
today. You can`t get any more aggressive than that. Can you?

FINNEY: No, you can`t, and look, you know, some recent polling
actually shows that whereas Americans don`t like the way Benghazi was
handled, they don`t believe that the administration intentionally was
trying to mislead the American people. And that is a very important point.
I think that`s what the Republicans are trying to say, at the end, they are
trying to say that the president somehow didn`t want us to know how bad
that the threat from al Qaeda really was. When actually, what we know from
General Petraeus`s testimony is that the decision was made to modify those
talking points because we didn`t want the enemy to know what was going on,
not because there was an attempt to mislead the American people.

SCHULTZ: All right. There is a report out that Ambassador Susan Rice
has a major financial stake in the Keystone pipeline. If she becomes
secretary of state, first of all, if she is nominated by the president, I
would assume this would be a problem in her confirmation hearings. Let`s
say she is secretary of state. Wouldn`t this be somewhat of a conflict of
interest, that she would have to approve this pipeline that she clearly has
an investment in?

FINNEY: Potentially, it could be. And I think that would be a valid
question in the course of if she were put forward for nomination. But
let`s also take a step back. She has complied with, it is my
understanding, all of the rules and regulations to the position of -- her
current position as ambassador to the United Nations in terms of
disclosure. If she were to be nominated for any additional position,
obviously, there again, I am sure she would follow all of the rules and
regulations, not just with regard to disclosure but again, dealing with
this as a conflict of interest, if potentially that`s what they thought it
was.

SCHULTZ: And NBC News reporting that former Republican Senator Chuck
Hagel being vetted for a possible foreign policy post. So we`ll see how it
all goes. Karen Finney, great to have you with us tonight. Thank you.

Lots more coming up in the next half hour of "THE ED SHOW." Stay
right with us.

(BEGIN VIDEO CLIP)

REP. LUIS GUTIERREZ, D-ILL.: All of the sudden, we are the belle of
the ball. Well, we`re here to say, it is time to start the dance.

(END VIDEO CLIP)

SCHULTZ: Latino voters helped put President Obama over the top. Now,
the Hispanic Caucus says they want action.

Congressman Luis Gutierrez joins me next.

It`s a night at the movies for the GOP with the screening of
"Lincoln."

(BEGIN VIDEO CLIP)

DANIEL DAY-LEWIS, ACTOR: Now, now, now!

(END VIDEO CLIP)

SCHULTZ: But can a look at the greatest Republican of all time help
them learn a lesson?

And tomorrow, Mr. 47 percent is taking a free lunch from the
president. Here is a tip. Don`t insult the cookies.

(BEGIN VIDEO CLIP)

FORMER GOV. MITT ROMNEY, R-MASS.: Do you think those (inaudible)?
No, they came from the local 7/11.

(END VIDEO CLIP)

SCHULTZ: Bob Shrum will preview the meeting, ahead.

(COMMERCIAL BREAK)

SCHULTZ: And we are back. You are just hearing there from
Congressman Luis Gutierrez delivering a powerful message to the Republicans
today. He says the time for immigration reform is now. And he could be
right. Overwhelming support from Latino voters lifted President Obama to
victory on election day. And this is part of the reason Latinos voted
Democrat. The president took action after years of failed attempts at
reforming immigration. In June, President Obama issued a directive to end
the deportation of illegal students and military veterans. A Bloomberg
poll showed 64 percent of Americans agreed with the policy. Independents
backed it more than 2-1. The Hispanic Pew Center estimates the president`s
directive affected 1.4 million people, but that`s only 12 percent of the 11
million undocumented immigrants currently in the United States. So today,
members of the Congressional Hispanic Caucus spelled out their expectations
for permanent change. They say the time has come for comprehensive
immigration reform.

(BEGIN VIDEO CLIP)

GUTIERREZ: America`s immigrants have every right to feel anger about
how they have been treated, ignored, mocked, lied to and ridiculed. We
need to set that anger aside.

(END VIDEO CLIP)

SCHULTZ: We will find out if the Republicans can set aside their
differences or if they will disappoint a vital and very important voting
block, the Hispanic community.

I am joined tonight by Congressman Luis Gutierrez of Illinois.
Congressman, good to have you with us tonight.

GUTIERREZ: Thanks, Ed.

SCHULTZ: Your caucus laid out nine principles for immigration reform.
First, I understand that you want undocumented immigrants to register with
the government, give fingerprints and get background checks. You also want
them to learn English to get citizenship. Is this in many respects -- I
think some conservatives would agree with this. I want your take on this
proposal.

GUTIERREZ: Look, we want to get them right with the law. I want them
to fulfill the same responsibility that you, Ed, and I do as citizens of
the United States of America.

The only thing is, I want to guarantee them an opportunity to be able
to pay taxes, to learn English, to learn about our Constitution, to
embrace.

You just showed a clip from a swearing-in ceremony. I was there with
Mayor Rahm Emanuel. We swore in 47 new citizens of the United States.
They came from every continent of America. And this story is as old as
America.

I can just imagine that when the first Pilgrims arrived here and they
saw a boat off in the Atlantic Ocean, they are saying, oh, more people
coming, we found this nice place. We`ve always had this fighter struggle.
But in the end, every new immigrant that has come here has faced the
challenge of coming to our nation, and in the end, you know what we did,
Ed, we embraced them. And they have made our nation a stronger, more
diverse place. And they made us the wonderful democracy we are today.

So my Republican friends should take a lesson from the election. What
the electorate said is, stop pitting one group against another. We are
ready to make ourselves safe. The only way to make ourself safe is by
allowing people to come out of the shadows and register with the government
and be good citizens and be good partners and be committed people.

SCHULTZ: You know, Congressman, obviously, the economy has taken top
priority. But what about this? Do you have assurances from the president
that this is the path he is going to travel in his second term?

GUTIERREZ: I have absolutely no doubt that this administration --

SCHULTZ: And are you going to get what you want, do you think?

GUTIERREZ: I think the president is going to roll up his sleeves in
an unprecedented manner and make sure. For two reasons. No. 1, he saw
what happened on election day. He saw Colorado. He saw Arizona. Even
Arizona, where we may have lost, he saw the gains that we made there. In
New Mexico and in Nevada and Florida. He saw a community come forward and
embrace him in his position, No. 1.

Plus, this president knows, it is the right thing to do. It is the
right thing to do, to allow people to come out of the shadows. And as
Democrats, we are going to allow everyone.

One of our principles today that we made sure of is that when we look
at family, we look at same-sex marriage families as families too. We see
those partnerships as valuable partnerships. We want a holistic approach.
We are Democrats. We are going to stand up for what`s right and we are
going to stand up for a country that is more inclusive and more respectful
of everybody.

SCHULTZ: Congressman Luis Gutierrez, good to have you on "The Ed
Show" tonight. Thanks so much.

GUTIERREZ: Thank you.

SCHULTZ: Republicans think a movie, a night at the movies might get
them set straight on some of the issues they are facing. I will show you
how they have done this in the past. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: We love hearing from our viewers on Twitter @edshow, and on
our Facebook page. Many of you are telling Congress to reject austerity
cuts and tax the rich instead.

On Twitter, laugh out loud GOP jokes. "If we only just had a big
election to decide if the rich should pay more taxes." Ken Oliver says we
are on our way to following Europe down the austerity toilet. The first
priority should be jobs and growth, instead of cutting spending. And
Benjamin Kanon says, "President Obama needs to call the Republican bluff.
Let us go over the fiscal cliff if necessary."

Keep sharing your thoughts with us on Facebook and on Twitter using
the hashtag edshow.

Still to come, one of the richest men in America is getting a free
lunch at the White House tomorrow. Find out what Mitt Romney could bring to
the table if the White House wants him to. We will be right back.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to the ED SHOW. House Majority Whip Kevin
McCarthy has organized a motivational movie night for the Republican
troops. Just as they gear up for negotiations to avoid the fiscal cliff,
McCarthy will be hosting a screening of the movie "Lincoln," Steven
Spielberg`s portrayal of the Republican Party`s most honored president.
Now, this is not the first time they`ve done this. Last year, during the
debt ceiling debate on Capitol Hill, McCarthy tried to rally Republicans
behind John Boehner`s plan with this clip from "The Town."

(BEGIN VIDEO CLIP)

BEN AFFLECK, ACTOR: I need your help. I can`t tell you what it is.
You can never ask me about it later. And we are going to hurt some people.

UNIDENTIFIED MALE: Whose car are we going to take?

(END VIDEO CLIP)

SCHULTZ: And if you haven`t seen the movie, the two characters go on
to beat up some guys. So to clarify, to convince the Republicans to vote
for Boehner`s bill, McCarthy showed a clip where a thief emphasized not
asking questions in a situation where people were going to get hurt.

McCarthy also organized the Republican screening of "Moneyball," the
Brad Pitt baseball movie about using math over conventional wisdom to win
the game. Remember? This is the party that laughed at Nate Silver. This
is the party that continues to argue that tax cuts for the wealthy are the
key to growing the economy, despite years of evidence to the contrary. The
only math Republicans like is the math that fits their version of reality.
So maybe it is appropriate Republicans turn to the movies. They already
live in a fantasy world. So how is this all going to play out? Because
I`ve seen the movie "Lincoln." And what struck me about that movie was
compromise. And that`s just something the Republicans don`t do. I wonder
if he is serving popcorn with a whole bunch of butter on it tonight. He
should.

Tonight in our survey, I asked you, should Republicans cave in and
pass tax cuts for the middle class? 98 percent of you say yes. 2 percent
of you say no.

Coming up, it`s the Mitt Romney`s big day. He is getting a free lunch
from the president, and he is planning on moving his office into a private
equity firm. Democratic strategist, Bob Shrum, is here with reaction.
Stay tuned.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

QUESTION: Is Governor Romney here tomorrow in some kind of cabinet
level position, some kind of audition for that position?

CARNEY: The president does not have a specific assignment in mind for
the governor.

(END VIDEO CLIP)

SCHULTZ: Breaking news, there is no job for Mitt Romney in the Obama
administration, but Mitt Romney will get to fulfill a lifelong dream
tomorrow. He is going to walk into the White House, OK. Not the way he
wanted it, but President Obama is keeping a promise that he made on
election night by having a private lunch with Romney on Thursday. A few
weeks ago, President Obama said Romney could actually bring something to
the table.

(BEGIN VIDEO CLIP)

OBAMA: I do think he did a terrific job running the Olympics. That
skill set of trying to figure out how do we make something work better
applies to the federal government.

(END VIDEO CLIP)

SCHULTZ: Turns out, Romney doesn`t have an eye on helping the
country. Romney is expected to move right on into an office at his son
Tagg`s private equity firm. It is unclear what role Mitt is going to be
playing at the firm.

Here is the man who spent the last seven years running to serve his
country, and now he is going right back to the private sector. So much for
serving. He is not out serving the public or helping the country move
forward. And I think this just underscores everything that we thought
about Mitt Romney. All he cares about is money. Good for him.

Meanwhile, Romney campaign chief strategist, Stuart Stevens is
complaining about the loss. He wrote in an op-ed today saying that Mitt
Romney carried the majority of every economic group except those with less
than $50,000 a year in household income. That means he carried the
majority of middle-class voters.

Stuart is pretty far off base with this claim. There are a number of
ways to define the middle class in this country. The fact is, median
household income is currently just over $50,000. We will never forget the
47 percent comment or when Romney said President Obama gave out gifts to
win the election, and even three weeks after the election, Romney`s
campaign continues to prove just how out of touch they really are as to why
they lost.

For more, let`s turn to Bob Shrum, professor of public policy at NYU
and contributor to the Daily Beast. Bob, good to have you with us tonight.

BOB SHRUM, DEMOCRATIC STRATEGIST: Glad to be here.

SCHULTZ: You bet. This meeting tomorrow, it is rather Lincolnesque
of President Obama to do this, to bring in someone totally opposite of him
when it comes to ideology and thinking about how to run the country. Is
this going to be a serious discussion or is this just a friendship lunch?

SHRUM: My guess is that it is largely symbolic. But it is good for
democracy, it`s good for the president, and it`s good for Mitt Romney, who
is leaving the national stage. We won`t have Romney to kick around
anymore, and the reason he was getting kicked so hard is not because he was
defeated, but because of what he said afterwards, when he tripled down or
doubled down on that 47 percent comment.

So he can come out of the White House, he can make a statement. He is
never going to live there, but at least he is going to get to visit.

It is good for the president because he is reaching across the aisle.
He is being bipartisan. And it is good for democracy because it ratifies
the results.

By the way, it is not all that common. The fact is, George Bush, for
example, didn`t do this with John Kerry in 2004. It is a grace note.

SCHULTZ: Well, is there a chance that Mitt Romney might contribute to
this administration for the good of the country when it comes to business?
He obviously made it very clear that he didn`t think that President Obama
knew anything about business or the economy, and he was the expert. So why
not help out?

SHRUM: Well, I wouldn`t make him treasury secretary.

(LAUGHTER)

SHRUM: You wouldn`t want to have that tax plan put into effect.

SCHULTZ: No, but he could be in charge of building new business or
something, huh?

SHRUM: Look, it`s -- this is a moment when American democracy
functions. And it`s rare, as I said before, that presidents do this or
that the winning candidate does this. There is the iconic picture of
Kennedy and Nixon in 1960, when Nixon went to visit the president-elect in
Palm Beach.

More common is what happened, for example, with Franklin Roosevelt,
who is sitting in the car with Herbert Hoover on his way to the
inauguration. Hoover is glowering. He won`t speak to Roosevelt at all.
Roosevelt finally in desperation points up at the steel on the Commerce
Department building and says, "isn`t that a remarkable superstructure."
Hoover just keeps glowering, and Roosevelt finally decides he is going to
wave at the crowds, and the crowds are cheering.

So what we are going to see tomorrow is more civility than you
sometimes see after these elections.

SCHULTZ: The president has met with CEOs, the fraternal order that
Mitt Romney subscribes to. And now, he is going to meet the guy that they
wanted to be in the Oval Office instead of the president. It is really a
collection of ideas on the part of the president right here. Do you think
he would take any ideas from these folks that see the world differently
economically than he does?

SHRUM: You know, I think he does have a remarkable capacity to listen
to other people, to hear their points of view, to take them on board, and
to see what he thinks. But on the fundamental issues of this election,
whether we stand up for the middle class or whether we have trickle-down
prosperity, whether we have a politics of tolerance or whether we have a
politics of exclusion, I don`t think the president is going to move at all.
I mean, you read that Stuart Stevens piece today, it is remarkable. He
said, look, we won the whiter and wealthier people. You know, despite
voter suppression, as far as I know, we long since got rid of
qualifications of property and race for voting in this country.

SCHULTZ: You have 10 seconds worth of advice for Stuart Stevens?

SHRUM: Look, the Republican Party wants Romney to go away. He only
existed as a presidential candidate, a presidential possibility. My guess
is, right now, there is not a lot of clamor for Stuart to be involved in
another presidential campaign. But I feel sorry for him. Look, you lose,
it is a short, painful thing, but it lasts a long time.

SCHULTZ: Bob Shrum, good to have you on THE ED SHOW. And that is THE
ED SHOW. I`m Ed Schultz. "THE RACHEL MADDOW SHOW" starts right now.

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

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