updated 1/4/2013 10:44:04 AM ET 2013-01-04T15:44:04

THE ED SHOW with ED SCHULTZ
January 3, 2013

Guests: John Garamendi, Michael Tomasky; Monica Byrne; Katrina Vanden Heuvel

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

The Republican propaganda effort on the debt ceiling ends here
tonight.

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

(BEGIN VIDEOTAPE)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: In a couple of months,
the president will ask us to raise the nation`s debt limit.

SCHULTZ (voice-over): The debt limit fight has begun, and so has the
deception on the right.

MCCONNELL: No need for drama. And we don`t want any.

SCHULTZ: Tonight, my breakdown of the Republican strategy to hijack
the economy, and how Democrats plan to fight it.

REP. LOUIE GOHMERT (R), TEXAS: We cannot be about business as usual,
and that`s what my vote was.

SCHULTZ: The 113th Congress is sworn in, and the circus is already in
full swing.

Richard Wolffe on today`s bizarre vote for speaker of the House and
how the 113th Congress could crash the economy.

Plus, the Sandy relief disgrace continues.

UNIDENTIFIED MALE: Your two senators packed this with pork. The
speaker made the right decision.

SCHULTZ: I`ll talk to a business owner who can`t survive until House
Republicans act quickly.

And the president has called Bill O`Reilly`s bluff and raised his
taxes.

BILL O`REILLY, FOX NEWS: If Barack Obama begins taxing me more than
50 percent, which is very possible, I don`t know how much longer I`m going
to do this.

SCHULTZ: Tonight, we bid a fond farewell to the mayor of cable news.

O`REILLY: I like my job, but there comes a point when taxation
becomes oppressive.

(END VIDEOTAPE)

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

The next fight over our economic future is under way. Republicans are
making sure the fight is dirty. President Obama and congressional
Democrats do not have any time to celebrate the fiscal cliff deal they
reached earlier this week. In about two months, the country will reach its
spending limit.

Republicans already announced their intentions to hold the debt
ceiling hostage once again.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: I think there`s going to be a whole
new field of battle when the debt ceiling rolls around. Most of us have
pledged that we`re going to have to -- before we vote again to raise the
debt ceiling, even though it may be at great political cost, we`ve got to
address spending, and that means entitlements.

(END VIDEO CLIP)

SCHULTZ: Well, there you have it. Republicans are treating the debt
ceiling as a bargaining chip.

The Senate Republican leader thinks he has a winning hand here. Mitch
McConnell is leading the charge to get major concessions out of the
president of the United States in exchange for a vote to increase the debt
ceiling.

McConnell wrote an op-ed for Yahoo News today, saying the fiscal cliff
fight represented, quote, "the last word on taxes. That debate is over.
The strategy is only increase the debt limit if there is an equal amount of
spending cuts. We simply cannot increase the nation`s borrowing limit
without committing to long overdue reforms to spending programs that are
the very cause of our debt."

That`s what makes my blood boil. It is the wars that started all of
this that they never paid for. So, according to McConnell, there will be
no new revenue to reduce the deficit, just cuts to spending programs like
the big three. He wants the president to play ball, or else the country
will default on its debts, its good faith, and the United States across the
world.

McConnell told his caucus members this: "We will have the opportunity
to put our country back on sound financial footing and there`s no excuse
not to seize it."

But the only way McConnell can make this strategy work is if he goes
out and lies about the president`s role when it comes to the debt ceiling.

(BEGIN VIDEO CLIP)

MCCONNELL: By demanding the power to raise the debt limit whenever he
wants by as much as he wants, he showed what he`s really after is assuming
unprecedented power to spend taxpayer dollars without any limit at all.

(END VIDEO CLIP)

SCHULTZ: Oh, yes. He wants to be a dictator. So let`s just put this
all in perspective here. Hold on a second.

Let`s be clear about what Mitch McConnell is actually saying.
McConnell claims the president wants to raise the debt ceiling so that he
can spend whatever money he wants at any time he wants.

I want to make sure we all understand who Mitch McConnell is.

McConnell is a law school graduate. He served as deputy assistant
attorney general under Gerald Ford. He`s been around Washington a long
time. He is the longest-serving U.S. senator from the state of Kentucky.

The Republican leader ain`t a "Johnny come lately" to this game. He`s
no dummy when it comes to what the Constitution says or how the Congress
works.

So, McConnell is intentionally lying to the American people about the
president and the debt ceiling. According to the United States
Constitution, "Congress is the only branch of government with the power to
tax or spend." Mitch McConnell knows this.

The debt limit is not part of the Constitution. You know what it is?
It`s a statute from a 1917 law about liberty bonds. According to the
statute, well, only Congress can raise the debt limit. So if the debt
limit is raised, the president can`t do spending more money, can`t do it on
his own. We`re talking about money that has been borrowed, appropriated
and spent by the Congress.

McConnell`s lie is being spread by other congressional Republicans.

(BEGIN VIDEO CLIP)

REP. CYNTHIA LUMMIS (R), WYOMING: The fact that the president is
making unprecedented power grabs for the executive branch and now not only
wants the authority to make laws through the rule-making process but wants
the opportunity to borrow money in unlimited amounts anytime and anywhere
he chooses.

(END VIDEO CLIP)

SCHULTZ: Listen to this Republican congressman -- misunderstand what
a blank check is while saying the president has unilateral power over the
debt ceiling?

(BEGIN VIDEO CLIP)

REP. JOHN FLEMING (R), LOUISIANA: The president really asked for a
blank check here. And when you`re talking about $1.65 trillion annual
deficits, we`re not talking about small movement. It`s very important. In
fact, it`s probably the most important threat to this nation`s economy
today is our debt ceiling and what we do with it.

(END VIDEO CLIP)

SCHULTZ: Republicans will stop at nothing to spread this lie like
wildfire. And, as of now, the president is standing strong. DNC
chairwoman Debbie Wasserman Schultz, the congresswoman from Florida, says
the debt ceiling will not be on the table.

(BEGIN VIDEO CLIP)

REP. DEBBIE WASSERMAN SCHULTZ (D-FL), DNC CHAIRWOMAN: Debt ceiling is
a separate issue. The bottom line is Congress incurs bills, they have to
be paid, and the debt ceiling is not going to be a component of these
negotiations.

(END VIDEO CLIP)

SCHULTZ: So, now, the president and the Democrats need to make sure
that they hold the line. Liberals want him to do just that.

President Obama already has a mechanism in place to engage Americans.
He can go directly to the American people. The president already plans to
use the bully pulpit of his State of the Union Address to make the case.

He`s also pushing forward with other reforms like immigration.
Administration officials do not want the president`s second term to be
sidelined by a financial brawl.

But while the president engages Republicans on other legislative
agendas, the country needs to stay invested in this economic fight on
Capitol Hill. Democrats and progressives, they know this fight. They did
it well in the 2012 campaign. They fought hard during the fiscal cliff
fight and won that, clearly.

This is basically the start of a new campaign. If you don`t stay
focused, if we don`t stay focused, if we don`t make sure that everybody in
this country knows exactly what the Republicans are up to, who knows where
we`re going to go.

They`re after the big three. That`s what they want. You can fight
for the big three. But you`ve got to get engaged.

Get your cell phones out. I want to know what you think. Tonight`s
question, will the American people fall for the Republican lies about the
debt ceiling? Text A for yes, text B for no to 622639.

We`ll bring you the results later. You can always go to our blog at
Ed.MSNBC.com.

Joining us tonight is Congressman John Garamendi of California.

Congressman, always a pleasure to have you on THE ED SHOW.

REP. JOHN GARAMENDI (D), CALIFORNIA: The pleasure is mine, Ed.

SCHULTZ: Here we go. The 113th off to a roaring start.

And the question is: do you think the Republicans, to save their own,
to save their own agenda, will they take us into default? What do you
think?

GARAMENDI: They certainly sound like they are. And I`ve got to
believe the American public is so sick of this holding them, the American
public, hostage. That`s really what it`s all about.

And what McConnell said is the hostages that he wants to take with the
seniors, those people that have paid for years into their retirement
program called Social Security and also into their medical program called
Medicare.

How in the world he thinks he can win this by holding seniors hostage
on the things that they have paid year after year for, I don`t understand.
The American public should be really, really sick of this kind of thing.
We`ve got work to do.

SCHULTZ: But, John, do you think they don`t fear the consequences of
defaulting on the country`s debt? I mean, they`re very risque with their
language, and they`re also very direct that they don`t even seem to care at
this point.

GARAMENDI: Well, I think they`re going to care. Their supporters --
let`s talk about their supporters, big business. Big business relies
heavily upon the solvency of the American government, on the ability of
American government to pay its bills, and if they`re going to somehow take
us over a new cliff on the debt limit, those folks are going to get really
upset.

We`re talking about Wall Street here. They`re the ones that are going
to come after these Republicans and say, hey, wake up, guys, this is us
you`re hurting. To say nothing of the rest of America and indeed the world
who has invested in American bonds.

SCHULTZ: You think Wall Street will be behind the Democrats in this
fight?

GARAMENDI: Yes, I do. They`re the ones that sell these bonds, that
process this system. They`re the ones that have invested in their own
various portfolios and funds.

American bonds are extraordinarily important. And if for some reason
they`re downgraded, as they were in the last fight, the hurt goes to Wall
Street. It goes to the international bankers.

They`re going to come after these Republicans. But the American
public ought to be fed up with this kind of hostage taking.

SCHULTZ: Sure. But this is a key point here. Are the Republicans
willing to do irreparable harm to their own party if their own kind, Wall
Street, maybe even the Chamber of Commerce, is not going to like to see the
United States default on its debts because it`s going to disrupt business,
there`s going to be hordes of unemployment, it`s going to have a global
effect.

And you`re talking about the public. I get that. The public would
even be even more infuriated.

So is this the bargaining chip the president has? Knowing that they
really don`t want to injure themselves generationally in the political
arena like this. Your thoughts?

GARAMENDI: Well, history is usually a good place to look for what
might happen in the future. In recent history, just this week, we saw what
happens when the Republicans tried to hold again America hostage over the
fiscal cliff so they could get their way. They lost.

SCHULTZ: They got to deal. Yes.

GARAMENDI: They lost big-time.

But, Ed, there`s one other thing here. The American public`s like
that horse you that talked about that you used to ride to go out and take
care of the cattle. That horse had power. It was ready to go. It needed
a sense of direction.

If we in Congress can give the public a clear sense of direction,
there`s just going to be a takeoff in this economy because they`re ready to
build this economy --

SCHULTZ: Yes.

GARAMENDI: -- ready to hire people.

But all this uncertainty is really, really detrimental.

SCHULTZ: This is how Republican Congresswoman Cynthia Lummis
described how the debt ceiling works. Here it is.

(BEGIN VIDEO CLIP)

LUMMIS: When the president runs up the credit card, and when that
credit card hits its debt limit, its limit, he gets to pull another credit
card out of his pocket and start spending again.

(END VIDEO CLIP)

SCHULTZ: Does your colleague not understand the powers of Congress,
or is she intentionally misleading the American people?

GARAMENDI: Well, I think they get caught up in their own talking
points, Ed. You know, the talking points sound good until you actually
read the Constitution. The president has absolutely no authority to
appropriate money, or to spend the money. He has to follow the laws pass
the by Congress, the taxes raised by Congress. He has no authority beyond
that.

The debt limit simply tells the Treasury that they cannot refinance
the bonds, they cannot sell additional notes. But it is in fact the
Congress who has over time, and you mentioned it --

SCHULTZ: Sure.

GARAMENDI: -- ten years of war that was never paid for, that has
authorized the deficit. It is us, the members of Congress that do that.

And we can do this. We can put together a plan that over time
actually gets this deficit down. But you can`t do it month by month and
threat by threat.

SCHULTZ: Congressman John Garamendi of California, great to have you
with us tonight. Thanks so much.

GARAMENDI: Always, Ed. Thank you.

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

Coming up, John Boehner got a good scare today during the vote for
House Speaker. Richard Wolffe tells us what today`s circus means for the
country going forward.

But, first, today was the official swearing in day for the Senate.
Vice President Joe Biden did the honors. And he also did some glad-handing
with the families of senators. This is how he handled meeting Republican
Wyoming Senator John Barrasso and his mother.

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: Hey, ma.

MOM: Hey.

BIDEN: How are you? Good to see you. I`m Joe Biden. Well, I --

SEN. JOHN BARRASSO (R), WYOMING: She liked Cheney better, she told
me.

MOM: I`m 90 years old, so take care. Watch where you`re walking.

BIDEN: Would you take a picture of this?

UNIDENTIFIED FEMALE: Tell him.

(LAUGHTER)

BIDEN: Now I`ve got evidence, guys.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

SCHULTZ: And the new House will vote on part of a Hurricane Sandy
relief bill tomorrow. Aid can`t come fast enough for those affected by the
storm. I`ll ask the small business owner how the delay has hurt recovery.

And later, Connecticut Governor Dan Malloy calls on Washington to get
its act together on gun laws. But Republicans are already saying no to new
legislation.

And you can listen to my radio show on Sirius XM Radio channel 127,
Monday through Friday, noon to 3:00 p.m.

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

We`re coming right back.

(COMMERCIAL BREAK)

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

House Speaker John Boehner squeaked out re-election today. Boehner
retained his position as speaker of the House but it wasn`t pretty.
Boehner got only a few more votes than he needed. There wasn`t a coup but
there were 10 protest votes, which by House standards is actually a lot.

Here are some of those dissenting votes.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Bridenstine?

REP. JIM BRIDENSTINE (R), OKLAHOMA: Eric Cantor.

UNIDENTIFIED FEMALE: Cantor.

REP. PAUL BROUN (R), GEORGIA: Allen West of Florida.

UNIDENTIFIED FEMALE: Allen West of Florida.

Gohmert?

GOHMERT: Former Congressman Allen West of Florida.

UNIDENTIFIED FEMALE: Allen West of Florida.

Yoho?

REP. TED YOHO (R), FLORIDA: Eric Cantor.

UNIDENTIFIED FEMALE: Cantor.

(END VIDEO CLIP)

SCHULTZ: You don`t have to be a member of the House to be elected
speaker, but votes for former Congressman Allen West pretty much are far
out, don`t you think?

Here`s Congressman Louis Gohmert`s explanation.

(BEGIN VIDEO CLIP)

GOHMERT: We cannot be about business as usual, and that`s what my
vote was. It was a statement we can`t be about business as usual.

(END VIDEO CLIP)

SCHULTZ: Congresswoman Michele Bachmann of Minnesota introduced the
first bill to repeal Obamacare in its entirety. In other words,
Republicans wasted no time getting the circus going again. But at least
there were fewer of them.

In the House, there`s going to be 233 Republicans and 200 Democrats,
with Democrats gaining seven seats. In the Senate 55 in the Democratic
caucus and 45 Republicans, with Democrats gaining two seats.

The 113th Congress has 101 women, or about one in five lawmakers.
There is also a greater minority representation than ever before, almost
all of it from the Democratic side of the aisle. And this is the more
progressive Congress as well. No doubt about it.

Let`s turn to Richard Wolffe, MSNBC political analyst and vice
president and executive editor of MSNBC.com.

Well, meet the new boss. Same as the old boss.

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Right.

SCHULTZ: Are we going to -- is the 113th going to be like the 112th?
Any similarities?

WOLFFE: Well, lots of similarities here. Under --

SCHULTZ: In operation.

WOLFFE: Right. Look, the interesting thing is hearing, frankly, this
crazy stuff come out of people, saying -- they were making a statement, a
very public humiliating statement about trying to get a House Speaker who`s
no longer a member of Congress.

What planet are they on? They`re humiliating someone as they elect
them their leader. And this is John Boehner`s problem.

It`s a job that no one else wanted. It`s a job where he`s only got
power because they voted him into it but they won`t vote for anything he
agrees with the president.

So they undercut him one week and then promote him back to his old job
the next week. It`s an impossible situation. If he was a different
person, you might have some sympathy for him.

SCHULTZ: He`s been damaged badly in the past month, in the past year,
actually. But nobody wanted the job.

WOLFFE: Nobody else wanted the job.

And look, there`s a bigger question for Republicans that I think Mitch
McConnell understands, which is: are they ready for government? Can they
project out they`re responsible and can take the series of problems this
country faces and deal with them?

What you`ve got is a house caucus that is more interested in
opposition. Even if that is opposition to their own opposition, right?
Being an opponent to John Boehner if you`re Eric Cantor is the sweet spot.

SCHULTZ: Well, their target before was to make sure that President
Obama didn`t get re-elected. Now, they`re kind of searching for a target
right now.

And I thought there was a lot of frustration today being shown by
Republicans. They know they lost on the fiscal cliff, and now they`re
getting beat up big-time in the arena of public opinion when they start
talking about using the debt ceiling as leverage.

Boehner is reportedly done negotiating one on one with President
Obama. An aide said, "He is recommitting himself and the House to what
we`ve done, which is letting the house work its will."

What`s the translation there?

WOLFFE: Which is not leading, right? Not leading.

Look, he`s cut out all future negotiations with the White House. He
can say I`m not going to negotiate with the White House. There`s no reason
for the White House to negotiate with him either. They can negotiate
directly with Mitch McConnell, watch them try to jam it down the house
because who does he represent?

The problem is they cannot get to yes. The House Republicans are only
united in saying no.

SCHULTZ: Will they default -- will they default on the debt ceiling?

WOLFFE: I don`t see how they can. I mean, they will be in a world of
pain. They will bring it down on the rest of the country.

I think that`s an impossible position. They blinked. Remember, in
any negotiating, in any hostage taking, you cannot blink as they have
repeatedly and still maintain credibility.

SCHULTZ: All right. In the Senate, filibuster reform is in doubt
because Senate Majority Leader Harry Reid is g looking for a bipartisan
agreement. Is this a pipe dream?

I mean, it`s like Harry is trying to be the gentleman right now, going
to give them as much time as he possibly can, but is he going to go down
that road?

WOLFFE: Harry Reid is a creature of the establishment, and he wants
to maintain his position if he`s in the minority, whether he`s the leader
or not. I think he should do more than just tweak the rules, which is what
they`re pretending to do here. There`s a significant group of senators,
and you`ve interviewed them, who really believe the time is right for
change.

You know, for Harry Reid, if you`ve grown up manipulating the rules --
and by the way, doing it very well as minority --

SCHULTZ: Why not do it now, though? Why not do it now?

WOLFFE: Because he -- you know, being minority leader in the Senate
is a much better job than being majority leader, because you get to mess
with the other side much more effectively. The cards are with the minority
in the Senate, in a way that they are not in the House.

SCHULTZ: But the function of the senate has frustrated Americans --
filibuster after filibuster. And the president doesn`t deserve, that
especially after being elected twice, you know, by arguably a mandate, the
Electoral College and also in the popular vote as well. So why wouldn`t
Harry do this to give the president some latitude to get some things done?

WOLFFE: Because he has been in the minority and because he worked it
very effectively against President Bush. That`s the pure, simple, cold
hard truth of it.

And, you know, there`s a fear element to it, which is frankly
stymieing the will of the people and the Congress.

SCHULTZ: All right. Richard Wolffe, great to have you with us.
Happy New Year.

WOLFFE: And to you, too.

SCHULTZ: Thanks for coming in. You bet.

Next, the House will vote on just a small part of the hurricane Sandy
relief package tomorrow. But is it too little too late? I`ll talk with
one small business owner in Brooklyn, to assess the damage. It`s hurt a
lot of folks.

First, back to the Senate, where today, Vice President Joe Biden did
the swearing in for Senator Heidi Heitkamp of the great state of North
Dakota. And after the deed was done he had a little fun with the senator`s
husband.

(BEGIN VIDEO CLIP)

BIDEN: All right. Here we go.

PHOTOGRAPHER: Drop your hands to the side.

BIDEN: Spread your legs, you`re going to be frisked. Drop your hands
to your sides.

You say that to someone in North Dakota, they think it`s a frisk.
Drop your hands to your sides, you believe you`re in trouble, right? Drop
your hands to your side.

UNIDENTIFIED MALE: Thank you.

BIDEN: I`m a little too formal, I know.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

With $60 billion in relief money on the line, the Senate had done its
job. So, earlier this week, it was up to the House to pass a disaster
relief package for the victims of hurricane Sandy. And believe me, there`s
a lot of them. Yet, at the last minute, John Boehner pulled the bill from
consideration, catching lawmakers by surprise.

Congressman Peter King of New York made the TV rounds yesterday, at
one point telling folks at home to stop donating money to the House GOP`s
campaign committee.

(BEGIN VIDEO CLIP)

REP. PETER KING (R), NEW YORK: I`m saying anyone from New York and
New Jersey who contributes one penny to the Republican Congressional
Campaign Committee should have their head examined. I would not give one
penny to these people based on what they did to us last night.

(END VIDEO CLIP)

SCHULTZ: Well, a short time later, Boehner met with lawmakers and
assured them he would put the bill on Sandy relief back on the schedule
today. Congressman King was singing a different tune.

(BEGIN VIDEO CLIP)

KING: What`s done is done. The fact is when the money was on the
line, yes, when the decision had to be made. John Boehner made the right
decision. John Boehner agreed to put it all on the calendar.

John is really a voice of reason in our conference. Despite some of
the things I said yesterday.

(END VIDEO CLIP)

SCHULTZ: All right. Whatever it takes. The vote may be on the
calendar. But it still will take time to pass. The House will vote on
just $9 billion in flood aid tomorrow. In two weeks, the House will vote
on the rest of the package, some $51 billion.

The Senate will need to approve both measures in the meantime.

Real people are hurting. Small businesses are struggling to survive.
Many will close. This has disrupted thousands of lives in this part of the
country. Victims of Sandy have waited how long? Sixty-seven days for some
type of congressional action. Their wait continues.

I`m joined tonight by Monica Byrne, a small business owner in the Red
Hook section of Brooklyn, New York, and head of the organization Restore
Red Hook.

Monica, good to have you with us tonight. Right to it.

*
ED SCHULTZ, MSNBC ANCHOR: I`m joined tonight by Monica Byrne, a small
business owner in the red hook section of Brooklyn, New York and head of
the organization restore red hook.

Monica, good to have you with us tonight. Right to it. You own a
wine and bar restaurant in Brooklyn. We`ve got some pictures of the damage
caused by Sandy to your restaurant. What is your situation right now?
What`s happening here with you?

MONICA BYRNE, SMALL BUSINESS OWNER: Well, my situation and that of
all the other small businesses in Red Hook is pretty dismal. We are slowly
trying to rebuild. We founded an organization called restore Red Hook to
raise money to do that because there are absolutely no other resources for
us.

There are few loans that are available to us, but that`s it. The rate
of approval for those loans are 40 percent, which means 60 percent of the
small businesses that have been devastated by this crisis are not going to
get the funding they need to rebuild. And even those who do get it are
incurring new debt. There`s absolutely no other help, and it`s a serious,
serious crisis.

SCHULTZ: What do you need the government to do? What do you want
them to do?

BYRNE: The government needs to start providing funds. There needs to
be a retention fund set up in the areas affected by this devastation so
that the businesses can retain. They can stay. They can rebuild. And
they can become part of their communities again.

Every one of these small mom-and-pop businesses like my own that has
anywhere from five to 20 employees, it`s our jobs. It`s their jobs. It`s
the services we provide to the community. It is how we affect the
communities overall as a whole. And right now in my community we`re at a
point where most of us will probably get our doors open again, but will we
sustain the debt that we`ve incurred as a result? Will we start seeing
people closing within eight to 16 months because they were never able to
fully recover, they were never able to get back again? And that`s what
we`re really looking at. It`s the teeny businesses that are going to peel
off one by one that no one will notice because we`re too small to save.

SCHULTZ: And this is disrupting a lot of lives. You`ve got employees
who aren`t getting a paycheck right now, is that correct?

BYRNE: Absolutely. And we`re very lucky. We have a few who are
super loyal and have been extremely patient. But how are people in the
restaurant industry supposed to wait six, eight weeks without a job?

SCHULTZ: How frustrated are you with congress?

BYRNE: I`m sorry?

SCHULTZ: How frustrated are you with congress?

BYRNE: Words fail me. I mean, it`s reprehensible. This is not a
time for partisan politics. This is a time for people to be coming
together the way that people are in the communities. Congress should be
ashamed of themselves. John Boehner should be definitely ashamed of
himself.

SCHULTZ: What would be the best type of funds that would -- could
come to your district and this little organization you`ve put together to
help these businesses recoup that would seem to me that business recovery
funds would certainly be in order? I mean, you pay federal taxes. Why
can`t you get some of it back in the wake of a disaster like that? Would
that be asking too much?

BYRNE: That`s exactly what`s needed. And you know, there are large
places there. You know, the NYU medical center will get over $100 million
to rebuild. And while I completely agree that that`s crucial, it`s the
small businesses that won`t get any assistance in rebuilding and it`s the
small businesses that are the backbone of our communities.

SCHULTZ: Why is this happening now? We have always taken care of our
next-door neighbor in hurricanes, tornadoes, floods. But all of a sudden
this. What do you make of that?

BYRNE: I really can`t even tell you. I think we have a crisis where
relief is concerned in general. And I think that truthfully, if you start
to look back at stories about Haiti and stories about Katrina people are
wondering where is the money and why didn`t it get into the hands of the
people who needed it most, the victims, instead of going to various NGOs
with well-intentioned programs, et cetera, that aren`t really helping
people rebuild their lives.

SCHULTZ: It just seems to me that politically sandy just happened at
the wrong time, which is just absolutely outrageous, that that would even
be a consideration.

BYRNE: Unquestionably. Christine --

SCHULTZ: Monica Byrne, we`ve got to run. Thank you for joining us
tonight. Keep the faith. Keep going. It`s Americans like you that keep
our economy going and Congress needs to act.

There`s a lot more coming up in the next half hour of "the Ed Show."
Stay with us.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We`re creating this sense of economic dependence,
which to me is a form of modern 21st century slavery.

RON PAUL (R), FORMER PRESIDENTIAL CANDIDATE: I would like to restore
your right to drink raw milk anytime you wanted to.

SCHULTZ: There`s a new congressional circus in town. So tonight we
say good-bye to some of the retiring clowns.

UNIDENTIFIED MALE: This pisses me off!

SCHULTZ: New gun laws are introduced in the house and Senate. Guess
how many Republicans support them.

BILL O`REILLY, FOX NEWS ANCHOR: If Barack Obama begins taxing me more
than 50 percent, which is very possible, I don`t know how much longer I`m
going to do this.

SCHULTZ: And President Obama signed the bill. So where`s bill
O`Reilly`s two-week notice?

O`REILLY: This fair share garbage has got to stop.

SCHULTZ: Michael Tomasky is here to deflate the hot air.

(COMMERCIAL BREAK)

SCHULTZ: Thanks for staying with us tonight. The 113th Congress did
not vote on or even debate any gun legislation today. They didn`t even
have to think about it. But the children who survived the massacre at
Sandy Hook elementary school had to confront their fears and go back to
school.

It`s been only 21 days since a gunman slaughtered 20 first-graders and
seven adults. Republicans have remained quiet while Americans set a record
for gun purchases last month. The Bushmaster, like the one Adam Lanza used
at Sandy Hook, is reportedly a hot seller. But the latest poll shows 58
percent of Americans want stricter gun laws. Support for gun control is up
15 percent since October. You would think the calls for reform would
convince congress.

The Democrats in the House plan to introduce a bill to ban the sale of
magazines which hold more than ten rounds at a time. Senator Dianne
Feinstein will introduce a similar bill that would ban certain firearms
with magazines holding over ten rounds.

We`re not talking about banning the average gun here, folks. We`re
talking about banning the kinds of assault weapons Eric Harris and Dylan
Klebold used to murder fellow students in Columbine. We`re talking about
the kinds of weapons designed specifically to kill people.

These guns don`t require a lot of expertise to operate. We`re talking
about big drums packed with ammo. This guy managed to fire off 100 rounds
in about a minute.

The latest poll shows that 62 percent of Americans favor a ban on
these massive ammo drums and magazines. Democrats are asking for the bare
minimum. A simple ban on high-capacity clips. But congress`s newest
Republicans are already saying no.

The incoming head of the Judiciary Committee says gun control is not
going to be something I support. Other Republicans with key leadership
support won`t take a stand or say ha they`ll consider any gun ban at all.
One actually tried to outlaw background checks and waiting periods in his
home state. This is your incoming class of Republicans.

Congress members, congressional members have to choose. They can give
in to the NRA or they can protect America`s children with reasonable
reform.

I`m joined tonight by Katrina Vanden Heuvel, editor and publisher of
"the Nation" magazine and Jonathan Alter, MSNBC political analyst and
columnist for Bloomberg view.

Great to have both of you with us tonight.

KATRINA VANDEN HEUVEL, EDITOR, PUBLISHER, THE NATION MAGAZINE: Thank
you.

SCHULTZ: The pulse of the country has changed. Katrina?

VANDEN HEUVEL: The pulse has changed, but one thing we must do is end
the NRA`s stranglehold on our politics. You know, I think it`s important
to remember, Ed, that the NRA has some four million members but there are
100 million gun owners in this country who support common sense legislation
to reduce gun violence. The NRA represents the gun industry more than it
does its rank and file members who, according to a poll by Republican Frank
Luntz, support, NRA members support common sense gun control legislation.

I think we need to make this moment, a moment where Americans are
angry, are outraged, make it into a movement. And we need Americans to
tell their legislators they`re fed up, enough, we don`t want to see guns
out of control, more guns, more bullets mean more kids dead.

SCHULTZ: Jonathan, a lot on the table here. How heavy a lift is
this?

JONATHAN ALTER, MSNBC POLITICAL ANALYST: Well, these bills that are
introduced right now aren`t going to go anywhere. The big action is going
to be after vice president Biden reports back his findings to the president
and then in February or March they introduce what will be a holistic anti-
violence package. It will not be a gun control measure. In fact, nobody,
especially those like Katrina and me who really want a campaign against the
NRA, a movement against the NRA, none of us should call it gun control.
All that does is play into that. We should ban the phrase "gun control."
If we`re going to talk about guns at all it should be common sense gun
safety with common sense preceding everything. A lost it`s about language,
Ed.

VANDEN HEUVEL: I think that`s fair.

ALTER: You have to reframe the debate.

VANDEN HEUVEL: I agree. You have to reframe the debate so it`s not
individual freedom versus government control, it`s about public safety.
But you know what I think? Potent allies in this, Ed, are the mayors
against illegal guns. Seven hundred mayors in cities and towns, suburban
towns across this country, police chiefs. There is a reason that vice
president Biden in the first meeting of his task force brought in police
chiefs, who don`t want these assault weapon guns that are for battlefields,
not --

ALTER: Sure. Also, four million in the NRA is not very big. The
AARP has many more. President Obama has 16 million names in organizing for
America. Those people can be mobilized --

VANDEN HEUVEL: Make it a movement.

ALTER: To change this and reframe it. And you can throw in some
things about mental health. It doesn`t just have to be about guns. You
can have elements of this package that appeal to other --

SCHULTZ: Could the president take some executive action?

VANDEN HEUVEL: Yes. And I think you saw the mayors against illegal
guns in 2009 drew up a set of steps the president could take after the
Gabby Giffords shooting it`s reported the department of justice at its
bequest did. So, you could see a ban on assault weapons. You could see
simple things like could we get in a director of alcohol, firearms,
tobacco? There hasn`t been one for six years because of Republican
obstruction. Tracking of criminal weapons. Interstate strike forces so
you don`t have these illegal guns floating --

ALTER: The single most important --

VANDEN HEUVEL: You may need to without a filibuster reform. You may
not be able to get it through the Senate without even some - you know, like
Manchin of West Virginia and Warner of Virginia have been traditionally
unwilling to move. They`re now --

ALTER: Manchin`s starting to move. A lot of this is just legislative
skill. But it`s very important to focus on that gun show loophole because
40 percent of gun sales are done around regulation, these private gun
sales. It needs to be turned into a felony if you make an illegal gun
sale, and the gun show loophole has to be closed, otherwise --

VANDEN HEUVEL: I just think we have to remember, yes, we need safety,
we need public safety. But don`t remember that the NRA is really made up
of Republican operatives, lobbyists like Grover Norquist. They don`t even
represent the rank-and-file members, let alone the 100 million gun owners
in this country who seek common sense --

SCHULTZ: Yes, there`s only a fraction of gun owners in this country
that are even associated with the national rifle association.

VANDEN HEUVEL: That`s right.

SCHULTZ: But they`re a political arm and they`re a force to be
reckoned with and they`re already making headways in getting teachers
armed. And that is another discussion that we`ll bring you back and talk
about. It`s crazy. But that`s exactly where they are.

Katrina Vanden Heuvel and Jonathan Alter, great to have you with us
tonight.

It`s a new year and a new Congress. Next, we say good-bye to the few
memorable folks of the 112th. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Hey, at "the Ed Show," we love hearing from our viewers on
twitter and our facebook page. Many of you are talking about the new
Congress in Washington.

John Foster Wade tweets, I fear we`re in for two more years of no
compromise. But this time with nothing to lose President Obama will take
care of business.

Justin Latimore says, there are many similarities between Clint
Eastwood`s empty chair and the house GOP. Nothing gets done.

And Morgan Lefey tweeted out, it seems like the Republicans` answer to
everything is always no. Except for repealing health care.

Keep sharing your thoughts with us and like us on facebook and use the
#edshow on twitter.

Coming up, Bill O`Reilly said he`d have to quit his job if President
Obama raises taxes. We`ll see if he kept his promise. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Well, it`s a new year and a new congress. That means we`re
not going to be hearing from Joe Lieberman anymore or Jim DeMint for that
matter. We won`t have to listen to any more of Allen West`s conspiracy
theories. You know, President Obama wants to enslave you. Most house
Democrats are communists. Reasonable statements like that.

We won`t be hearing from Congresswoman Jean Schmidt of Ohio either.
Schmidt was determined to free us from tyranny of Obama care. She was on
the front lines as the country awaited the Supreme Court verdict on
affordable care act when something got lost in translation.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: What else?

UNIDENTIFIED MALE: Speak.

UNIDENTIFIED FEMALE: No! They took it away. No!

UNIDENTIFIED MALE: The mandate was struck down.

UNIDENTIFIED MALE: The mandate was struck down.

(END VIDEO CLIP)

SCHULTZ: Ah. Priceless. We won`t be hearing from Joe Walsh of
Illinois. The tea party congressman nerve served in the military himself
yet he repeatedly attacked his Democratic opponent, Iraq war veteran Tammy
Duckworth, and questioned her patriots. Duckworth lost both of her legs in
combat. But showing restraint wasn`t one of Walsh`s talents. At a meeting
with constituents he yelled at anyone who did not see things his way.

(BEGIN VIDEO CLIP)

REP. JOE WALSH (R), ILLINOIS: Don`t blame blanks and don`t blame the
marketplace for the mess we`re in right now! I am tired of hearing that
crap. This pisses me off! Too many people don`t listen. Quiet for a
minute. Quiet for a minute.

UNIDENTIFIED MALE: What did I say --

WALSH: Quiet for a minute! Or I`m going to ask you to leave. You
need to listen. Or I`m going to ask you to leave.

(END VIDEO CLIP)

SCHULTZ: Thankfully, Illinois voters asked Mr. Walsh to leave
instead. I don`t know about you. But I think all these departures put a
lot of pressure on Michele Bachmann to pick up the slack.

Tonight in our survey I asked you will the American people fall for
the Republican lies about the debt ceiling? Seventeen percent of you say
yes, 83 percent of you say no.

Coming up, I`ll revisit Bill O`Reilly`s tantrum over taxes and tell
you why Ari Fleischer says he`s planning to donate less to charity.
Michael Tomasky joins me for the conversation next. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

O`REILLY: But if you tax achievement, some of the achievers are going
to pack it in. Again, let`s take me. My corporations employ scores of
people. They depend on me to do what I do so they can make a nice salary.
If Barack Obama begins taxing me more than 50 percent, which is very
possible, I don`t know how much longer I`m going to do this. I like my
job, but there comes a point when taxation becomes oppressive.

(END VIDEO CLIP)

SCHULTZ: Well, it sounds to me like Bill O`Reilly has got a decision
to make. President Obama has signed the American tax relief act into law,
raising taxes on couples earning $450,000 and above.

Now, if we`re to believe the threat in that self-important tantrum you
just witnessed, Bill O`Reilly should be quitting any day now. Because if
O`Reilly stands by his word, he`d rather pull the plug on his own show than
pay his fair share of taxes. In spite of those scores of people who depend
on him. Remember, this is the guy who`s looking out for you.

And he`s not the only conservative with this kind of self-centered
logic. On Tuesday Ari Fleischer, former White House press secretary under
George W. Bush, tweeted out "I increased donations to charities in 2012.
This deal limits my deductions so I and many others will likely donate less
in 2013."

I didn`t know that Ari Fleischer was speaking for so many other
people. The cap Fleischer is talking about will apply only to individuals
making $250,000 or more and married couples making $300,000 or more. And
it could save the government, I know they`re not concerned about this, but
it could save the government some $50 billion in tax breaks.

Ari Fleischer`s tweet shows he`s only motivated to do good if it
benefits him. And he admits it. He`s not alone. A word to the people.
If you`re donating just for a government handout, you`re doing it for all
the wrong reasons.

Joining me tonight, Michael Tomasky, special correspondent for
"Newsweek" and "the Daily Beast." All these threats, if they were only to
come true.

Michael, what`s your reaction to this kind of public whining about the
new tax law, particularly the high-income earners?

MICHAEL TOMASKY, SPECIAL CORRESPONDENT, NEWSWEEK, DAILY BEAST: My
first reaction is obviously what you just said, Ed. Bill O`Reilly has no
idea. Can only imagine how many of his fellow citizens would be delighted
to see him stop working. So that`s reaction number one.

But look. This is from both of them. This is really straight
randianism. It`s straight from Ayn Rand. It`s straight tea party stuff.
Its straight, you know, takers versus makers stuff. And it`s just amazing
to see it gain -- I don`t know if you can even call this traction. But
it`s amazing in a way even to see it aired seriously outside of the pages
of the insane novel "atlas shrugged."

SCHULTZ: Well, I mean, if you do the math, he`s at 39.6 percent in
2013. Plus the state taxes, plus the Manhattan taxes, plus the user taxes.
I mean, he`s over 50 percent. I`m waiting for the press conference. Do
you see Bill O`Reilly following through on his threat to call it quits?

TOMASKY: Yes, somehow I don`t. And I don`t see anyone actually
following through on that and I don`t see anyone except a very small number
of very strangely motivated people following Ari Fleischer`s advice,
either.

O`Reilly, remember, on his first $450,000 of taxable income, he`s
going to get the tax cuts. He`s only going to pay 4.6 percent more on
money above 450,000. Now, in his case that might be several million
dollars, although I`m sure he`s got it, you know, shuffled and hidden and
pays in different ways. And has some of it not directly as compensation.
But it`s silly.

SCHULTZ: What does Ari Fleischer`s tweet say about the way he and
other high-income earners view charitable donations? Don`t you give to
charities to help people out? Or you do it just to get the tax break out
of it?

TOMASKY: Of course you give to charities to help people out and you
give what you can. The average American gives what they can and is pretty
generous and doesn`t even know what the tax implications are of giving
money and has no idea how much this changes things. And this is not going
to change the behavior of 99 percent of the people. It`s only -- I don`t
even think -- I doubt if it`s even really going to change Ari Fleischer`s
behavior. He just wants to whip up something against Obama.

SCHULTZ: Sure he does, because he just joined the RNC initiative
group to grow Republican party and future -- improve future campaigns. And
so he`s off to a blistering start. He proves one thing. The selfish arena
is still full of Republicans. And charitable giving, I don`t think is
going to be changed at all. It all comes from the heart and the soul of
what you do as Americans to be fortunate enough to operate in our country
and this economy.

Michael Tomasky, great to have you with us tonight. Appreciate your
time.

That`s "the Ed Show." I`m Ed Schultz. 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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