'The Last Word with Lawrence O'Donnell' for Wednesday, November 28th, 2012

THE LAST WORD WITH LAWRENCE O`DONNELL
November 28, 2012

Guests: Ryan Grim, Patty Murray

LAWRENCE O`DONNELL, HOST: John Boehner knows that the president is
right on taxes. He knows it, but he`s afraid to say that now, so he`s
sending one of his loyal soldiers out there to say it for him.

(BEGIN VIDEOTAPE)

ALEX WAGNER, MSNBC ANCHOR: There may be a debate over whether it`s a
cliff or curb.

UNIDENTIFIED MALE: The fiscal cliff or the fiscal slope.

UNIDENTIFIED MALE: Bump in the road.

UNIDENTIFIED MALE: Fiscal bluff.

UNIDENTIFIED MALE: More of a curve or a mole hill.

UNIDENTIFIED MALE: There is no cliff.

WAGNER: But there is one indisputable fact.

CHRIS JANSING, MSNBC ANCHOR: The clock is definitely ticking.

CHUCK TODD, MSNBC ANCHOR: The White House and Republicans are ramping
up their P.R.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: It`s time for the
president and Democrats to get serious.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The Senate has already
passed the bill. I`ve got a pen. I`m ready to sign it.

UNIDENTIFIED MALE: At the end of the day, this is about compromise.

UNIDENTIFIED MALE: Some signs of compromise.

WAGNER: Congressman Tom Cole.

TAMRON HALL, MSNBC ANCHOR: The Republican from Oklahoma.

WAGNER: Urged his colleagues to get in line behind President Obama.

GROVER NORQUIST, ANTI-TAX LOBBYIST: I`m sorry. That`s just silly.

UNIDENTIFIED MALE: That`s crazy.

UNIDENTIFIED FEMALE: Scared me a little bit.

BOEHNER: I told Tom earlier that I disagreed with him.

NORQUIST: Shame on him.

HALL: It may not always be wise to sign a pledge.

ALAN SIMPSON (R), FORMER U.S. SENATOR: Why would you do that? It`s
like selling your soul.

REP. PETER KING (R), NEW YORK: A pledge you signed 20 years ago is
for that Congress.

NORQUIST: I hope his wife understands.

KING: He brought my wife into it?

NORQUIST: That commitment lasts a little longer --

KING: I think he`s never met me. Certainly, he never met my wife.

NORQUIST: His wife.

KING: And he better hope he doesn`t, she`ll knock his head off.

NORQUIST: Some of these people have had impure thoughts.

ANDREA MITCHELL, MSNBC ANCHOR: Do you have any impure thoughts about
Grover Norquist?

SIMPSON: Grover-babe is losing a person a day.

REP. ERIC CANTOR (R-VA), MAJORITY LEADER: It is not about that
pledge.

UNIDENTIFIED MALE: I`m not obligated on the pledge.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: I will violate the pledge.

NORQUIST: Kind of deja vu all over again.

SIMPSON: He will be irrelevant.

NORQUIST: Deja vu all over again with the end of the world, there`d
be dragon. That would be interesting, except it`s not true.

SIMPSON: He will be irrelevant.

NORQUIST: It`s not true.

SIMPSON: He will be irrelevant and he knows it.

(END VIDEOTAPE)

O`DONNELL: What started as a very bad week for the most famous Grover
since President Cleveland has now gotten worse. The former chair of the
House Republicans Campaign Committee, Oklahoma Republican Tom Cole, who
could always be relied upon to march in lock step with Republican
leadership has said he now agrees with President Obama on taxes.

(BEGIN VIDEO CLIP)

REP. TOM COLE (R), OKLAHOMA: I always want to, you know, do a good
deal for the American taxpayers, including 98 percent of them. We agree
with the president on that.

(END VIDEO CLIP)

O`DONNELL: Congressman Cole said that he thinks the House of
Representatives should simply pass the bill that has passed the Senate,
preserving the current tax rates for all except those in the top brackets,
which would revert to the Clinton tax rates. The current rates are
expected to expire on New Year`s Eve, all of them, and Congressman Cole has
decided it`s time to face reality.

(BEGIN VIDEO CLIP)

COLE: 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)

O`DONNELL: The newest Republican defector from Grover Norquist`s
anti-tax increase pledge has instantly become as good a sales man for
higher top tax rates as any Democrat.

(BEGIN VIDEO CLIP)

OBAMA: Right now, as we speak, Congress can pass a law that would
prevent a tax hike on the first $250,000 of everybody`s income --
everybody`s.

Even the wealthiest Americans would still get a tax cut on the first
$250,000 of their income. So, it`s not like folks who make more than
$250,000 aren`t getting a tax break, too. They`re getting a tax break on
the first $250,000, just like everybody else.

(END VIDEO CLIP)

O`DONNELL: Congressman Cole first said this in a closed door meeting
with Republicans yesterday. He said basically exactly what President Obama
just said. And when it was leaked to reporters, he then expanded on his
comments instead of denying them or refusing to comment at all, which he
could have done.

House Speaker John Boehner, who needs other loyal Republicans to start
talking sense to crazy Tea Party Republicans, had to pretend today that he
was outraged by his friend`s suggestion.

(BEGIN VIDEO CLIP)

BOEHNER: Now, I told Tom earlier in our conference meeting that I
disagreed with him. You`re not going to grow the economy if you raise tax
rates on the top two rates. We`re willing to put revenue on the table as
long as we`re not raising rates.

(END VIDEO CLIP)

O`DONNELL: But that didn`t stop Congressman Cole from going on
"HARDBALL" at the end of the day today and continuing to sell the idea of
making peace with the president for the sake of 98 percent of American
taxpayers.

(BEGIN VIDEO CLIP)

COLE: If the president`s willing to accept 80 percent of the Bush tax
cuts for 98 percent of the American people and make them permanent, I think
that is a point we should agree on.

(END VIDEO CLIP)

O`DONNELL: Tom Cole also made it clear he is still a Boehner
loyalist.

(BEGIN VIDEO CLIP)

COLE: I fully support him. What he`s trying to achieve, which is no
rate increase, but try and meet the president partway on revenue. I
support that.

I suspect he`ll negotiate a good deal. At the end of the day, he`ll
come back and ask us to support him. I`ve helped him on every other tough
vote and this will be a tough one, and I`ll probably help him again.

(END VIDEO CLIP)

O`DONNELL: OK, so, what did Boehner loyalist Tom Cole do after they
said that on "HARDBALL" at 5:00?

Now, remember, John Boehner heard him say that on "HARDBALL" or his
staff instantly reported to him exactly what Tom Cole just said on
"HARDBALL" and Boehner could have grabbed the phone, got Cole and told him
to shut up. In fact, he could have told him to shut up before "HARDBALL."

Boehner had the power before and after "HARDBALL" to tell Tom Cole
that his feature as a Republican in the House of Representatives depended
on him shutting up right now. And Tom Cole would have shut up the second
John Boehner told him to.

So, again, what did Tom Cole do after "HARDBALL"?

He went on CNN three hours later and said exactly the same thing, And
when he was asked what reaction he is getting from his fellow Republicans
in the House, he said this.

(BEGIN VIDEO CLIP)

COLE: I think the reaction is mixed. Some support it, some don`t.
Some have more questions about it.

(END VIDEO CLIP)

O`DONNELL: That is as positive a reaction as he could have reported.
There are 241 Republicans in the House of Representatives. The Democrats
need only 25 of them. To vote the way Republican Tom Cole is now
advocating that they vote.

John Boehner very clearly wants at least 25 of his members to go the
president`s way now on taxes and he is very clearly happy to have
Congressman Tom Cole lead the -- what now could be called the pro-Obama
wing of the House Republicans and solve this tax problem for the Republican
Party.

Joining me now are MSNBC`s Krystal Ball, and "Huffington Post`s" Ryan
Grim.

Krystal, that House of Representatives is a Soviet-style institution.
The leadership has those people locked in, especially the traditionalists,
the loyal soldiers like Cole. Boehner needs him saying this and that`s why
he hasn`t shut him down. He`s pretending, oh, I don`t want Tom to say it.
But this is the biggest step they have made yet toward the president.

KRYSTAL BALL, "THE CYCLE" CO-HOST: Yes, I think that`s right. And
frankly, their position is untenable because it put them in a very
difficult position of saying, look, let`s all agree that we want to keep
the rates where they are for the middle class and we can talk about this
other piece. How can you defend holding hostage the middle class tax cuts
so that you can ensure getting the tax cuts for the rich?

So I think you`re absolutely right. Tom Cole not only needs to signal
that Republicans are reasonable, that they want to make the president, he
also has to start setting expectations with his base that they`re going to
have to compromise and John Boehner has been sort of the image of the guy
who wants to reach across the aisle in terms of House Republicans, who`s
been stymied and he`s really tried in these negotiations to -- as much as
possible, signal to his base, we`ve got to be tough, put Obamacare on the
table. That`s the line he has to walk and he has to get other members of
the party to essentially set expectations for people that they`re going to
have to give on things they don`t want to.

O`DONNELL: Ryan Grim, are we hearing any House Republicans from the
Tea Party wing saying, absolutely not, no way, we should not compromise?

RYAN GRIM, HUFFINGTON POST: Sure, and, you know, Rand Paul on the
Senate side who speaks for a lot of Tea Partiers said that today. He said,
we shouldn`t compromise, we shouldn`t even compromise on deductions.

Yes, I thought your Kremlin analogy was pitch perfect because just
like Kremlin, there`s a lot more going on inside than you can tell from the
outside. And the last couple of years, there`s actually been a ton of
pressure from rank-and-file Republicans on leadership saying, look, we`re
getting killed at home over these millionaire tax cuts. Why don`t we just
take what Charles Schumer offered, extend it for everybody but a million
above, let`s just take that and get this off the table and move on?

And leadership was able to unify their conference the last two years
around no tax cuts for anybody at any time. But now that, you know, Tom
Cole is out now, now that the situation has changed a little bit, I think
you`re going see a lot of that pressure, which was mostly unreported and
mostly behind the scenes the last few years start to bubble up a lot more.

O`DONNELL: Tom Cole was asked tonight on CNN about defying Grover
Norquist and the pledge. Let`s listen to that.

(BEGIN VIDEO CLIP)

COLE: I admire Grover Norquist. I think he`s done a lot of good. I
signed that pledge. I`m honored to do it. I don`t think in this case we
would be breaking it by making what are temporary tax cuts permanent. I
think we`d be doing the right thing.

(END VIDEO CLIP)

O`DONNELL: Krystal, Tom Cole is trying to do Grover a favor. He`s
trying to keep him relevant by saying if we do this, it won`t be breaking
your pledge. Therefore, your pledge still exists.

I mean, that`s about as big a favor as he can do him at that point.

BALL: Yes, he`s trying throw poor Grover a lifeline. But I think the
damage has been done in a lot of respect because you`ve had so many people
come out and basically say, you know, Lindsey Graham saying, I would
violate the pledge, end of story.

O`DONNELL: Yes.

BALL: And I also think the American public has become more aware of
the pledge, of what it is, of how much it`s dictated Republican policy.
And that has also made it untenable because they`ve said, wait a minute.
You know, you guys aren`t supposed to be beholden to this one dude. You`re
supposed to be answering to us, the voter.

So I think that has in addition to the fact that keeping these tax
cuts in places so unpopular, I think just the idea itself of the pledge has
become very politically toxic.

O`DONNELL: I just want you to listen to one more thing Cole said on
CNN today about holding the American people hostage. He -- Ryan, he sounds
like he`s actually checking Democratic talking points before he says this.

Let`s listen to this.

(BEGIN VIDEO CLIP)

COLE: Frankly, I don`t think you ever use the American people as a
hostage in a negotiating type situation.

(END VIDEO CLIP)

O`DONNELL: Now, Ryan, where did he hear that before? I don`t think
he ever heard that in a Republican Caucus meeting.

(CROSSTALK)

GRIM: I mean, you know, I don`t even -- who knows where to even start
on something like that?

O`DONNELL: Yes, exactly.

GRIM: They didn`t just hold the American taxpayer hostage with the
debt ceiling crisis, they held the entire global economy hostage, and in
fact, it did actual damage to it. You know, they did -- you know, I think
the estimate was like, they cost $18 billion in taxpayer money, plus, they
got credit downgrade. The stock market took a hit.

I mean, the idea that it`s preposterous that they would hold the
taxpayer hostage is like nobody watching when they were threatening the
government shutdowns. I mean, where do you even start?

O`DONNELL: Well, that`s why I think it`s so important that it`s Tom
Cole, that`s an Oklahoma Republican, a straight party guy.

This is not one of these New England Republicans, you know, who`s
defecting.

BALL: Right.

O`DONNELL: And so, when he says that -- when he echoes a Democratic
talking point word for word like that, Krystal, it seems to me that he
watched this campaign. He believes that this presidential campaign and
this congressional campaign has taught some lessons that the Republicans
must now observe.

BALL: I think that`s right. I mean, the playing field is
fundamentally altered. They went to every length they possibly could to
keep the president from succeeding in the first term with the hope of
keeping him a one-term president and that strategy failed. And it failed
miserably across the board, both at the presidential level and the Senate
level.

So, he is realizing that they have to reassess that strategy. They
can`t just be the party of no. They can`t be a party of standing in the
way of good government.

Look at Chris Christie`s approval ratings in the wake of both reaching
across the aisle. But also really being a champion in the wake of
hurricane Sandy of effective government. People don`t want just knee jerk
no government or believing that government doesn`t work. They actually
want a government that really does work.

O`DONNELL: And a "Washington Post" poll today showing 60 percent of
Americans support what is now the -- in effect the Tom Cole/Barack Obama
position on raising incomes on over $250,000 in income.

And, Ryan, when you look at these polls the Republicans are reading,
when you look at the totality the way this is coming in, the point that
"The Wall Street Journal" editorial board has been driving home and what
Tom Cole tried to drive home today is, look, the rates are going up. Let`s
face it, the rates are going up. Now, what are our options?

And he`s saying our best option is actually what the president has
laid out.

GRIM: Right. That`s right and so, John Boehner has asked himself, how
do we get to that place and I think you were right earlier, that he`s
allowing Cole to go out there and everyone knows Cole is a good friend of
his. And, you`re right, this is -- this is not a rogue warrior out there.

So, how do we get to a final deal? And everybody knows that if they
do come to some type of deal, it`s going to require some Republicans and a
ton of Democrats in the House. But it`s going to require a significant
number of Republicans, not four or five. You know, it may be as many as 50
to 100 because the Democrats are going to insist we`re not going to do this
completely alone or even largely alone like they mostly did the bailout in
2008.

So this is kind of paving the way for that to happen. Like, this
might be the best deal that we can get. How do we make that happen? Put
Tom Cole out there and maybe we can get 30 or 40 Republicans. You know,
you combine that with the Democratic caucus and then you can get there.

O`DONNELL: And that is very powerful from Boehner. He now gets to
use Cole as a club against Eric Cantor or any crazy Tea Party Republicans
who refuse to go along with a reasonable outcome here. He can say to them,
look, if you guys hold into that position, the Cole wing is going to do
this with the Democrats without us.

GRIM: That`s right.

O`DONNELL: Krystal Ball and Ryan Grim, thank you both for joining me
tonight.

BALL: Thanks, Lawrence.

GRIM: Thank you.

O`DONNELL: Coming up, Senator Thelma joins me to talk about the
fiscal curb.

And Mitt Romney`s headed to the White House the only way he can.

And in the "Rewrite" tonight, a very big and important victory for the
First Amendment and a big loss for bad cops.

O`DONNELL: There`s only one way Mitt Romney can get in the White
House and that`s with an invitation from the man who just denied him his
life`s dream. That`s coming up.

And the real Senator Thelma, the first senator to say she was willing
to go off the cliff if necessary to get a good deal, Patty Murray, will
join me about what is really the fiscal curb.

And later, thanks to the United States Supreme Court, bad cops in
America have something new to fear tonight.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: Democrats said they
think it`s a good idea to drive the economy off what economists are calling
America`s fiscal cliff this coming January. You might call this Thelma and
Louise economics, right off the cliff.

(END VIDEO CLIP)

O`DONNELL: Joining me now, Senator Thelma, the incoming chair of the
Senate Budget Committee, Democratic Senator Patty Murray.

Thanks for joining us tonight, Senator.

SEN. PATTY MURRAY (D), WASHINGTON: Well, great to talk to you.

O`DONNELL: Senator, you`ve been the leader on how the Democrats
should be approaching the so-called "off the cliff" drama and I just want
to play something you said leading on this back on July 16th at the
Brookings Institute. Let`s listen to that.

(BEGIN VIDEO CLIP)

MURRAY: If we can`t get a good deal, a balanced deal that calls on
the wealthy to pay their fair share, then I will absolutely continue this
debate into 2013.

(END VIDEO CLIP)

O`DONNELL: Right after that, Senator McConnell called that Thelma and
Louise economics. And that`s when I started doing my "Off the Cliff"
segments here on this show.

Tell us why this cliff is not as disastrous a cliff to go off as the
one that Thelma and Louise went off?

MURRAY: Well, first of all, no one wants to go off any cliff or hill
or slope. There is a responsible way to revolve this. But if we take a
bad deal and say that all of the nation`s fiscal problems are to be
balanced on the back of middle class families and the wealthy don`t
participate, that`s a bad deal that we cannot and should not live within
this country.

O`DONNELL: Senator, shortly before your public comments about this,
this past summer, I was hearing off the record from Democratic senators
that they believed they were going to have to go off the cliff because at
that time, they couldn`t conceive of any other way for Republicans to
violate their pledge to Grover Norquist, that in January, once you`re off
the cliff, what everyone would be voting for under any circumstances would
be called a tax cut, would not in any way be considered a tax increase.

And so they thought they were going to have to do that. Is there now
a growing feeling among Democrats that the Republicans are breaking up with
Grover Norquist in such numbers, that they might actually be able to do
something reasonable before New Year`s Eve?

MURRAY: Yes. Well, the fact is if we can`t get a good deal and the
Bush tax cuts expire, when we come back in January, anything we do will be
a tax cut and the Grover Norquist pledge won`t apply. So it puts the
Republicans in a better box. But I think there`s a growing understanding
among Republicans that putting us in that position doesn`t help them at
all, the country at all and does put us in jeopardy.

So accepting that now, which the country spoke out on in the election,
the president won on this issue. The Democratic Senate won on this issue,
numerous people talked about this. It wasn`t hidden subject. Everyone
said those earning over $250,000 a year should pay -- go back to the
Clinton era taxes and pay their fair share.

So, I think there`s a growing number of Republicans to realize this is
a dead end argument for them.

O`DONNELL: As you said, you don`t want to go off the cliff, but
you`re willingness to go off the cliff in order to get the best deal and
the president`s willingness to do that is the Democrats` leverage here.
You have Grover Norquist now running scared on how to strategize.

Let`s listen to what he said today about what he`s hoping for now.

(BEGIN VIDEO CLIP)

NORQUIST: To get towards the end and if the Republicans have played
it right, they say, look, let`s push it out a month or two weeks while we
finish this and so that you should never actually go over the thing (ph),
just as you do with continued resolutions.

(END VIDEO CLIP)

O`DONNELL: Senator, what`s your response to that?

MURRAY: I`m not sure what he said.

O`DONNELL: Well, he seems to be saying that you can just kick the can
down the road and you`ll make some sort of continuing resolution deal to
avoid ever hitting the cliff.

MURRAY: Well, you know, I honestly, truly, do not know what he`s
talking about.

What I do know is that right now, everyone, Republicans and Democrats,
agree that we should extend the Bush tax cuts for those people earning less
than $250,000 a year. In fact, on all income less than $250,000 a year and
go into the next year dealing with the larger issues that we know are on
the table.

The Republicans in the House can pick up that bill and pass it right
now, which puts us in a much better position, to then really deal with the
challenges we all know we have to face.

O`DONNELL: Senator, you voted for the Clinton tax rates, which is
what we would revert to on January 1st back in 1993. And now, the
Democrats only want to preserve the top end of the Clinton tax rates. Are
we really going to be able to fund the government long-term without
eventually returning to the full package of the Clinton tax rates?

MURRAY: Well, I think everybody really understands that a budget is
more than just a document. It really is about our priorities in this
country. We have talked for a number of years now about the challenges we
have in terms of the debt and deficit and our long term programs.
Everybody knows that we have to deal with that in a realistic way.

But we have not talked about the investments that are needed in this
country that will help make us stronger in the future. Whether we`re
talking about education or job training or investment in our infrastructure
or providing the services for our veterans when they come home or those
kinds of things that we can`t just continue to talk about cutting
government.

That we have to have a country that actually is strong in the
underpinnings and that is a balanced approach that I think we need to be
taking.

O`DONNELL: Senator Murray, before we go, I just want to turn to one
other piece of Senate business, this oddity involving Susan Rice. And I
just -- we can make this quick. It can just be a one word answer. It`s
just a simple question about John McCain and Lindsey Graham.

And John McCain and Lindsey Graham, do you think they are crazy and
you can answer yes or maybe?

MURRAY: What I believe is that Susan Rice is an incredible person
with a great deal of intelligence and integrity and no ought to be taken
for her word. I think it`s really unfortunate for her and for all the work
she`s done for her to become the linchpin keystone thing that everybody is
going after right now.

O`DONNELL: I don`t think senators are crazy in my experience. So
I`ve been theorizing that this is about opening up the secretary of state
job for John Kerry, so that they then reopen a Massachusetts Senate seat
for Scott Brown. Is that your sense of the game that`s being played?

MURRAY: I have no idea. You are much more Machiavellian in thinking
than I am.

O`DONNELL: All right. Well, that`s what I do here.

Thank you very much for joining us, Senator.

MURRAY: You bet. Thanks.

O`DONNELL: Coming up, we`ll find out how Machiavellian Ari Melber can
be when he gives us his take on the attacks on Susan Rice.

And guess who`s coming to dinner? Well, he couldn`t actually get a
dinner invitation, so he`s coming to lunch. Mitt Romney`s last chance to
get into the White House is coming up.

(COMMERCIAL BREAK)

O`DONNELL: What could they possibly have to talk about? Well, maybe
they can reminisce about their days at Harvard Law School, where Barack
Obama was president of the Harvard Law Review, and Mitt Romney wasn`t.
Mitt Romney`s trip to the White House tomorrow, where Barack Obama is
president and Mitt Romney isn`t. That`s coming up with Jonathan Capehart
and Richard Wolffe.

And in "The Rewrite," the Supreme Court comes down on the side of the
people and against bad cops. That`s coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: In the weeks ahead, I also look forward to sitting down with
Governor Romney, to talk about where we can work together to move this
country forward.

(END VIDEO CLIP)

O`DONNELL: That was President Obama being characteristically
magnanimous in his victory speech on election night, and so tomorrow, at
lunchtime, the president will have to do his charming best to feign
interest in the words he will hear from the least influential person of the
year, the losing Republican presidential candidate, who will likely never
be invited to the White House again by any president of either party.

In the spotlight tonight, lunch with Mitt. There will be no press, no
campaign handlers, no moderators, just the president of the United States
and a deluded man who chose someone to head his presidential transition
team on June 3rd, just five days after he secured the Republican nomination
for president. The president, who can spin with the best of them when he
has to, had this to say about their lunch a couple of weeks ago.

(BEGIN VIDEO CLIP)

OBAMA: I do think he did a terrific job running the Olympics. He
presented some ideas during the course of the campaign that I actually
agree with. I`m not either prejudging what he`s interested in doing, nor
am I suggesting I`ve got some specific assignment. But what I want to do
is to get ideas from him and see if there`s some ways that we can
potentially work together.

(END VIDEO CLIP)

O`DONNELL: All with a straight face. Today, Jay Carney was asked
what the president meant when he said work together.

(BEGIN VIDEO CLIP)

QUESTION: Is Governor Romney here tomorrow in some kind of cabinet
level position? Is it an audition for a--

CARNEY: No.

(LAUGHTER)

QUESTION: Beyond that, if there is some kind of reorganization in the
Commerce Department, where Governor Romney could play a role?

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

(END VIDEO CLIP)

O`DONNELL: Mitt Romney, as is his style, has not been as generous
about the president in his comments since the election.

(BEGIN VIDEO CLIP)

FORMER GOV. MITT ROMNEY, R-MASS.: What the president`s campaign did
was focus on certain members of his base coalition, give them extraordinary
financial gifts from the government, and then work very aggressively to
turn them out to vote.

(END VIDEO CLIP)

O`DONNELL: Jonathan Capehart, you wrote today, and I`m sure you
thought about this. "I would hand over my entire tie collection just to be
in the room." Now --

JONATHAN CAPEHART: Oh, absolutely. Absolutely.

RICHARD WOLFFE, MSNBC CONTRIBUTOR: That`s a big tie collection.

CAPEHART: Yes, it is.

O`DONNELL: Has the president seen your entire tie collection?

CAPEHART: No, he has not.

O`DONNELL: Does he know what this offer really consists of?

CAPEHART: No, no, he has not seen the tie collection, but there are
people around him who know about my tie collection. So --

WOLFFE: National security thing.

O`DONNELL: It`s been passed along. Why? Why? Here`s what I think.
Here is what I think. I think the whole lunch could be on CSPAN, and while
it was going on, you would actually start reading other stuff. This is
wicked boring.

CAPEHART: You know what, and it probably will be. As I wrote, I bet
the president will talk to him about the fiscal cliff, and they`ll talk
about entitlement reform and they`ll talk about maybe tax reform. But the
one thing I don`t think the president will do, because the president is a
gentleman is say, yo, what was up with the 47 percent and what was up with
gifts? I gave gifts to people? He`s not going to go there with Mitt
Romney. One, as I said because he`s gentleman, but two, he doesn`t have
to, because Mitt Romney is coming there not as president of the United
States, but guest of. And that`s the best --

O`DONNELL: I now have a solid prediction. He will not once say the
word yo.

CAPEHART: That was me, that was my own --

(CROSSTALK)

O`DONNELL: Your artistic representation.

CAPEHART: Yes.

O`DONNELL: Richard, what I think, what I`d love to watch -- the only
thing I`d find great about this, watching Obama the actor. As we just saw
with that thing, oh, I thought he did a terrific job at the Olympics, I
loved watching that stream of I`m not sure what you call it, but it`s
acting. And he does not -- it`s not coming from the heart.

WOLFFE: He does it very sincerely, and you know, look, we may never
know what happens inside those quiet rooms that they`re going to be having
their meeting in, but here`s what we do know. Mitt Romney has an
incredible capacity to completely reverse himself in the moment. Did it in
those debates. No matter what he said before about this president being a
complete loser and the person who was corrupting America, he may now find
that there may be a presidential role of some kind that might interest him,
in addition of course to being a very wealthy venture capitalist once more.

And here`s what we know about the president, and this was an
incredibly shocking thing. For all the people who jeopardized their
careers by campaigning with him in 2008, as soon as the election was over,
he turned his entire transition over to people who were loyal to Hillary
Clinton. And when people saw that, they saw John Podesta, Hillary Clinton,
Rahm Emanuel, running that transition office, they said what is this about?
The president, as president-elect and in the White House, has the capacity
to reinvent himself repeatedly, and maybe magic will happen. Maybe they`re
going to come out of this and say here`s my new health secretary, because
he knows so much about implementing this thing.

(CROSSTALK)

O`DONNELL: Too much magic to hope for, but I`ll bite. There is a
possible teasing moment here, given everything that Romney said about
health care during the campaign, and given Romney`s actual history in
Massachusetts. If the president were to say to him, to actually ask him
for advice about setting up these operations in each state, you know, how
did you do it in Massachusetts? What should we know about how to do it?
Since Romney said I am going to prevent this from happening, to actually
sit there and teasingly ask -- because he could actually have advice about
that.

CAPEHART: He could have advice, or the president could say, wait a
minute, no, we met with all your advisers, we actually know what you would
tell us, so never mind. How`s the weather?

WOLFFE: Seriously, there is this body called the Independent Payments
Advisory Board, which is designed to save money out of Medicare, spread
best practice. Who better, who better than Mitt Romney, whose greatest
achievement as governor of Massachusetts, good enough to put in his
portrait in Massachusetts, of him as governor, health care, his experience
of implementing it. Who better to bring Republicans into this cost cutting
health expansion? Mitt Romney.

O`DONNELL: I know about 75 staffers on these Senate Finance
Committee--

WOLFFE: I`m trying.

(CROSSTALK)

O`DONNELL: -- who are all better at anything involving that than this
guy. But, so there`s going to be the driveway moment. Right? Romney
doesn`t have to do the driveway microphones moment, but that`s an
interesting choice for him. Does he do it? Does he not do it?

CAPEHART: Apparently, that`s not going to happen. If you read Jay
Carney`s announcement of this, this will be a private lunch in the private
dining room. It will be closed press. I mean --

O`DONNELL: But you do have to enter and exit the building and --

(CROSSTALK)

WOLFFE: -- driveway on the west lobby or on the side, he could get
exposed. Look, every reporter in the White House tomorrow is going to be
waiting for him to come out of those doors. So he ignore the questions. He
did it for about two years as a candidate.

O`DONNELL: So what`s our sense of how long it will take to leak, what
went on with these two people in that room?

WOLFFE: Two principals in a room without aides, we may never know.
Look, the president and the departing President Bush had many important
moments together. Trying to find out what happened between the two of them
is state secret stuff.

O`DONNELL: So what`s your bet? You think Romney`s not going to leak?
You think President Obama`s not going to leak?

CAPEHART: I don`t know.

WOLFFE: It`s also other people who will leak.

CAPEHART: That`s the thing, that`s it.

O`DONNELL: Bob Woodward`s going to be standing right outside.

(CROSSTALK)

O`DONNELL: 12:30 is the lunch.

(CROSSTALK)

O`DONNELL: We will be sort of watching, even though we won`t be able
to. Jonathan Capehart and Richard Wolffe, thank you both for joining me
tonight.

Coming up, the Supreme Court does the right thing and throws a big
scare into bad cops. That`s in "The Rewrite," and later, what Ari Melber
has to report on the Republicans scheming to prevent Susan Rice from
becoming secretary of state. That`s coming up.

(COMMERCIAL BREAK)

O`DONNELL: You have a choice, a simple choice. Republicans John
McCain and Lindsey Graham are either crazy or they have a real political
motive for attacking Susan Rice. We`ll get Ari Melber`s report on the
latest on this whole thing coming up. And next, in "The Rewrite," the
single most important advance in the history of American police work for
catching bad cops doing bad things is the video recorder, and this week,
the United States Supreme Court recognized that. That`s next in "The
Rewrite."

(COMMERCIAL BREAK)

O`DONNELL: Bad cops learned an important lesson when they saw this
video in 1991. As bad cops watched along with the rest of the world LAPD
Sergeant Stacy Coon -- and yes, that is the man`s unforgettable name. As
bad cops watched LAPD Sergeant Stacy Coon supervise the near death beating
of Rodney King, bad cops throughout this country realized that they would
have to expand their contempt for the people they were supposed to serve
and protect. Expand it to include anyone with a video camera aimed at
them.

One night last year on this program when we showed you this video, I
learned something I didn`t know and had trouble believing.

(VIDEO CLIP, SCREAMING)

O`DONNELL: The most important thing I learned the might we showed
that Occupy Wall Street video was not on the show. It came right after the
show, when one of the staff here told me that in Chicago, it was a crime to
videotape police officers. I couldn`t believe it, because that`s clearly
unconstitutional, but checked it out and found it was true.

After the Rodney King beating, Chicago police decided to use an old
anti-eavesdropping law to protect themselves, a law which basically made it
a felony to record a conversation, unless all parties agreed to be
recorded. That in effect meant you couldn`t shoot video of Chicago police,
because of course video recording normally includes sound recording.

A constitutional challenge to the Illinois law finally made its way to
the United States Supreme Court on Monday, and the court refused to hear
the case, which in this instance was a huge victory for the First
Amendment, because that means that the lower court`s ruling stands.

The Seventh U.S. Circuit Court of Appeals rewrote the old law out of
existence. The opinion written by Judge Dianne Sikes (ph), who was
appointed by President George W. Bush, says, "the Illinois eavesdropping
statute restricts far more speech than necessary to protect legitimate
privacy interests. It likely violates the First Amendment`s free speech
and free press guarantees."

The people of Illinois had tired of this obviously unconstitutional
law before the U.S. Supreme Court finally officially disposed of it this
week. In August of last year, a woman was prosecuted for recording Chicago
police internal affairs investigators who she believed were trying to
persuade her not to file a sexual harassment complaint against a Chicago
police officer. The woman went to trial and was found not guilty by a jury
of her peers.

The good police officers in this country, which is to say most of the
police officers in this country, have no problem with the Supreme Court`s
decision this week. You can videotape them all day and you won`t find them
doing anything wrong.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (inaudible), thank you.

(END VIDEO CLIP)

O`DONNELL: But tonight, thanks to federal judges appointed by both
Democratic and Republican presidents, some Chicago cops, the bad cops, have
something new to fear. Your video camera.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

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

(END VIDEO CLIP)

O`DONNELL: That was President Obama today at his first cabinet
meeting since winning reelection. Today, Ambassador Rice received this
praise from Secretary of State Hillary Clinton.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: Susan Rice has done a great job
as our ambassador to the United Nations. And of course, this decision
about my successor is up to the president.

(END VIDEO CLIP)

O`DONNELL: Today, Republican senators continued to try to open up a
Massachusetts Senate seat that Scott Brown could run for.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS, R-MAINE: I think John Kerry would be an excellent
appointment and would be easily confirmed by his colleagues.

SEN. JOHN BARRASSO, R-WYO.: If the president wants an easy
confirmation hearing and an easy confirmation process, what he would do is
nominate John Kerry, who is eminently qualified to be secretary of state,
and I believe he would sail through in the nominating process.

(END VIDEO CLIP)

O`DONNELL: Joining me now, MSNBC`s Ari Melber, former national
staffer on John Kerry`s 2004 campaign.

Ari, you`re coming to us tonight from Kerry country, Boston, and I`ve
got to think this is a horrible moment for Senator Kerry. You don`t want
to be the guy who gets praise from the mindless attackers of Susan Rice.

ARI MELBER, MSNBC: Yes, I don`t think he wants any part of this very
weird boomerang play the Republicans are openly trying to practice. He has
made that very clear publicly by defending Susan Rice. He knows her well,
because as chairman of Foreign Relations Committee, he oversees the State
Department, looking at the diplomacy and the ambassadors and working with
Secretary Clinton and Ambassador Rice.

O`DONNELL: Well, today, Ambassador Rice continued her meeting. She
met with Republican Senators Susan Collins and Bob Corker, and here, here
are the lies that those senators told after the meeting.

(BEGIN VIDEO CLIP)

COLLINS: I continue to be troubled by the fact that the U.N.
ambassador decided to play what was essentially a political role at the
height of a contentious presidential election campaign.

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. We want someone of
independence.

(END VIDEO CLIP)

O`DONNELL: OK, Ari, that`s Bob Corker lying about these mythical
standards for secretary of state. And Susan Collins -- Condoleezza Rice as
secretary of state campaigned for George W. Bush. This is crazy stuff that
they`re talking about.

MELBER: Condoleezza Rice after Stanford was a political adviser to
George W. Bush, and it`s not a problem as long as you take the role
seriously. The expectation is about what you do once in office.

I do think it`s sad. I also think it`s a misunderstanding of the
Senate`s role, what some of these Republican senators are saying. They do
have a role to advise and consent under the Constitution. They don`t have
a role to block and filibuster endlessly. When they have tried to block
nominees, for political reasons, I would point out it has boomeranged on
them. That`s why Elizabeth Warren from this state is now in the Senate,
because they played so many games thwarting her nomination. She ultimately
withdrew and did them one better -- she knocked one of their colleagues
out.

I don`t think that is the same -- of course the same situation here.
But again, you showed the clip just earlier of the president praising Susan
Rice. She was in the cabinet meeting in that footage because Democratic
administrations typically make the U.N. ambassador a cabinet level
position. Republican administrations typically do not. They make it a
sub-cabinet position, answerable to the secretary of state, and again, that
goes back to the fact that there are some very different historical views
here about how the parties look at the U.N. and its role for diplomacy, but
there`s no doubt that the president knows Susan Rice, has had confidence in
her over the tenure, and if he chooses to go with her, it will be
continuity in his foreign policy.

O`DONNELL: Ari, what`s the talk in Massachusetts about a possible
Senate race if John Kerry were to go in the cabinet, because there`s still
speculation that he might go to defense if he didn`t go to state.

MELBER: You hear this about defense. The folks I know who worked for
John Kerry, past and present, are much more focused on the fit with the
State Department should he be asked, because that is of course what he
oversees on his committee. He`s qualified I think for both positions, just
like he`s qualified to be president, but they`re not as focused on that.
If he did vacate, the problem in Massachusetts is, that Scott Brown did
just spend a lot of money on running, and there aren`t as many big
candidates out there that are seen with statewide potential.

O`DONNELL: THE LAST WORD`s closer, Ari Melber, gets tonight`s last
word. Thanks, Ari.

MELBER: Thanks, Lawrence.

O`DONNELL: "THE ED SHOW" is up next.

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

END

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