updated 3/5/2013 11:48:33 AM ET 2013-03-05T16:48:33

THE LAST WORD WITH LAWRENCE O`DONNELL
March 4, 2013

Guests: James Carter IV, Karen Finney, Ezra Klein, Brian Stelter, Steve Clemons


LAWRENCE O`DONNELL, HOST: Mitt and Ann Romney have been spending a
lot of quiet time at home with their secret tax returns since the
presidential election. This weekend, they decided to take what seems to be
their nightly dinner table conversation why Mitt lost to FOX News -- which
means I owe the Romneys a small debt of gratitude to the Romneys for
serving up tonight`s first segment on a Romney silver platter.

(BEGIN VIDEOTAPE)

MITT ROMNEY (R), FORMER PRESIDENTIAL CANDIDATE: Good morning, y`all.
Good to be with you.

RICK SANTORUM (R), FORMER PRESIDENTIAL CANDIDATE: He is the worst
Republican in the country.

CHUCK TODD, NBC NEWS: Mitt Romney sat down for his first interview.

MARTIN BASHIR, MSNBC HOST: They`ve proven only one thing.

MITT ROMNEY: My heart said we were going to win.

ANN ROMNEY, MITT ROMNEY`S WIFE: The great "Princess Bride" line,
mostly dead.

UNIDENTIFIED MALE: You`re friend here is mostly dead.

ANN ROMNEY: I`m mostly over it.

MITT ROMNEY: I went through a number of my mistakes.

Corporations are people, my friend.

I`m not concerned about the very poor.

Any old girlfriends here.

I`m speaking, I`m speaking.

(CROSSTALK)

MITT ROMNEY: Had to be careful.

TAMRON HALL, MSNBC ANCHOR: He still can`t quite explain that 47
percent comment.

UNIDENTIFIED FEMALE: The enduring legacy of his campaign.

MITT ROMNEY: What I said is not what I believe.

Not familiar with what I said, but I stand by what I said, whatever it
was.

UNIDENTIFIED MALE: Mitt Romney --

MITT ROMNEY: I`m Mitt Romney.

UNIDENTIFIED MALE: -- was viewed by suspicion by conservatives in the
last election.

SANTORUM: You take any other Republican in the country.

NEWT GINGRICH (R), FORMER HOUSE SPEAKER: Can we drop a little bit of
the Pius Baloney?

ROMNEY: Come on, guys. Focus.

GINGRICH: The fact is, you ran in `94 and lost.

SANTORUM: He is the worst Republican in the country.

ANN ROMNEY: If Mitt were there, we would not be facing sequestration.

BILL MAHER, COMEDIAN: Sequester day.

ANN WAGNER, MSNBC ANCHOR: Shaking off a sequester hangover.

MAHER: The two parties could not agree.

CHRIS JANSING, MSNBC ANCHOR: The sequester is now in effect.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: I don`t know whether
it`s going to hurt the economy or not.

TOM BROKAW, NBC NEWS: Are the two sides playing chicken with each
other.

WAGNER: The bleeds.

BOEHNER: The president got his tax hikes. So, the president got his
tax hikes. He got his tax hikes.

WAGNER: Revenue was no longer on the table.

JANSING: What about the next budget fight to avoid a government
shutdown?

GENE SPERLING, WHITE HOUSE ECONOMIC ADVISER: The president doesn`t
believe in manufacturing another crisis.

UNIDENTIFIED MALE: They won`t do battle to fund the government. So,
it takes the prospect of a government shutdown completely off the table.

(END VIDEOTAPE)

O`DONNELL: Mitt and Ann Romney gave their first interviews since the
presidential election, in which they proved beyond a reasonable doubt that
the best man won.

(BEGIN VIDEO CLIP)

ANN ROMNEY: It was not just the campaign`s fault. I believe it was
the media`s fault as well, is that he was not given -- being given a fair
shake, people weren`t allowed to see him for who he was.

(END VIDEO CLIP)

O`DONNELL: Mitt insisted that this was not who he really was.

(BEGIN VIDEO CLIP)

MITT ROMNEY: There are 47 percent of the people who will vote for the
people no matter what. There are 47 percent who are with him, who are
dependent upon government. And so my job is not to worry about those
people. I`ll never be able to convince them they should take
responsibility and care for their lives.

Yes, it was a very unfortunate statement I made. It`s not what I
meant. I didn`t express myself as I wished I would have.

(END VIDEO CLIP)

O`DONNELL: But then, just as he was trying to leave the 47 percent to
take far behind him, Mitt just couldn`t resist this.

(BEGIN VIDEO CLIP)

MITT ROMNEY: Obamacare was very attractive, particularly to those
without health insurance. And they came out in large numbers to vote.

The weakness that our campaign had, and I had, is that we weren`t
effective in taking my message primarily to minority voters, to Hispanic-
Americans, African-Americans, other minorities, that was a real weakness.

We did well with the majority of the population, not with minority
populations, and that was a -- that was a failing. That was a real
mistake.

CHRIS WALLACE, FOX NEWS: Why do you think that was?

ROMNEY: Well, I think the Obama care attractiveness and feature was
something we underestimated in -- particularly among lower incomes. And we
just didn`t do as good a job of connecting with that audience as we should
have.

(END VIDEO CLIP)

O`DONNELL: Romney did resist the temptation to join the conservative
chorus condemning Chris Christie`s praise of how President Obama handled
hurricane Sandy.

(BEGIN VIDEO CLIP)

MITT ROMNEY: Chris did what he thought was best for the people of his
state.

WALLACE: Honestly, as we sit here right now, do you wish he would
have been a little less effusive in his support of President Obama which
made him seem more presidential?

MITT ROMNEY: I`m not going to worry about how Chris was doing what he
thought was best for the people of his state. I lost my election because
of my campaign, not because of what anyone else did.

(END VIDEO CLIP)

O`DONNELL: Joining me now, MSNBC`s Krystal Ball and Steve Kornacki.

I want to play that last line of what Mitt Romney just said. I just
want to hit that last sentence one more time.

(BEGIN VIDEO CLIP)

ROMNEY: I lost my election because of my campaign, not because of
what anyone else did.

(END VIDEO CLIP)

O`DONNELL: Krystal, that`s the whole story right there.

KRYSTAL BALL, MSNBC`S "THE CYCLE": That is the whole story right
there. He didn`t seem to totally buy into that story. I mean, the truth
is, he still can`t explain his 47 percent comment. And in fact, it`s
because he still really believes that.

And I think the Obamacare comment is so interesting, Republicans for
so long thought that Obamacare was the albatross that would be hung around
the president`s neck. It would be their key to winning the election. Now,
apparently Romney has decided that Obamacare was the golden goose that he
was able to give all these gifts to minority voters and that was the key to
victory. I mean, it was kind of a fascinating look at his psychology.

O`DONNELL: Steve Kornacki, nothing in there about -- well, gee, I
guess I was wrong on tax policy, and maybe it wasn`t so great to have these
secret tax returns and Cayman Islands accounts and foreign accounts and all
that stuff, that no one -- we`ve never seen a presidential candidate in
modern times, who didn`t release their tax returns and had all these sleazy
foreign accounts that he never explained.

There are some unique factors about the Romney campaign, that the two
Romneys don`t seem to understand are unique to them.

STEVE KORNACKI, MSNBC`S "THE CYCLE": Well, Romney did manage to --
win or lose, he did manage to get through the entire campaign outputting
out any more of his tax returns. I don`t think he`s going to start now.

I do think we can talk about whether it`s health care, whether it`s 47
percent, whether it`s the tax returns, all the wealth gaffes he committed
during the campaign and the interview yesterday. You know, he didn`t help
himself in so many different ways.

But one thing he didn`t say, and I haven`t heard Republicans saying in
the wake of the November election, you know, is that actually, they spent
two years of that campaign basically assuming they were going to win
because the economy was going to be so bad, and no incumbent president
could win with the economy in that condition.

The thing they ignored for the entire campaign and they`re continuing
to ignore is that, you know, most political scientists who looked at the
2012 campaign, in the months, you know, a couple of months before the
elections said, you know what, actually, these economic conditions are
probably favorable enough for the incumbent to get re-elected. The economy
is actually growing, yes, the unemployment rate is high, but it`s not as
high as it was a year ago. And, generally, it`s not a great recovery by
any means, the economy was moving in the right direction, and Obama was
favored to win that election pretty much all along.

O`DONNELL: Let`s listen to more of Ann Romney complaining about
everything except the actual governing positions that were proposed by Mitt
Romney in the campaign.

(BEGIN VIDEO CLIP)

ANN ROMNEY: The thing that was frustrated to me is that people didn`t
really get to know Mitt for who he was.

WALLACE: Well, I`m going to pick up on that because there were
reports that you and your oldest son Tag were frustrated with the Romney
campaign, that they didn`t, quote, "Let Mitt be Mitt." That they didn`t
let him show his more open, compassionate side. True?

ANN ROMNEY: Well, of course, it was -- partly it`s true. But it was
not just the campaign`s fault, I believe it was the media`s fault as well,
is that he was not being given a fair shake. That people weren`t allowed
to see him for who he really was.

(END VIDEO CLIP)

O`DONNELL: Krystal, David Letterman invited Mitt to come on the show
and be Mitt. And he was just refusing all sorts of opportunities like
that.

BALL: Well, and even now, he still can`t sort of be comfortable, be
introspective and let people in in anyway. But I will say, if Ann Romney
wants to blame the media at all. She should be looking at conservative
media, because conservative media allowed them and the Republican Party to
delude themselves, as Steve was just indicating, into thinking that this
president was so weak, he could be beaten by a toaster oven, and that this
was going to be a landslide, and deluded them into believing that the
president was hated and they could run on this just anti-Obama message
without offering any of their own ideas and win.

So to the extent that she wants to look in that direction, I think
that would be a worthy place to place at least a little bit of blame on the
media.

O`DONNELL: Steve Kornacki, you know who I think did the most
important post election interview of a Republican?

KORNACKI: I think I know who this is going to -- but no, who?

BALL: Ooh, ooh, I know.

O`DONNELL: It`s Mr. Steve Kornacki. Your Newt Gingrich is, by far,
the most interesting post-mortem by a Republican. Gingrich as we know, can
think, and every once in a while, he`s willing to do that, fairly,
honestly, publicly. You got him to do it brilliantly.

He said to you, among many other fascinating things, I think
conservatives in general got in the habit of talking to themselves to some
extent, the degree to which we believed the other side was kidding
themselves. It turned out in the real world, we were kidding ourselves.

KORNACKI: Yes. And I mean, obviously, that`s that whole echo chamber
Krystal was talking about, you know, Gingrich talked about in classic
Gingrich fashion in the wake of the election. He came up with like the
Gingrich 25 thesis and he gave them to the Republican National Committee,
the 25 sort of guiding principles he came up with, for reforming the party
in the wake of the election.

You know, and some of them are, you know, sort of bashing Washington.
Some talk more about, you know, reaching out to minority voters, reaching
out to nonwhite voters. You know, this sort of thing.

But one thing that he did mention to me in the interview was, you
know, how surprised he was on Election Day. I think he said like 5:30 he
got calls with exit polls, and just -- he`s sitting there with his wife,
and they`re seeing these numbers come in from all these different states.
There`s this sense of, wow, we totally, completely, got this wrong.

If you listened to Gingrich in that interview, he said he thinks that
people, conservatives are a lot more skeptical of their media outlets now.
You can make your own judgment about whether that`s case. I`m not as sure
as he is. But it is interesting to hear and be that introspective.

O`DONNELL: Now, with the Republicans speeding as fast as they can,
away from Mitt Romney, let`s listen to Governor Jeb Bush this morning with
Matt Lauer declining to rule out running for president.

(BEGIN VIDEO CLIP)

JEB BUSH (R), FORMER FLORIDA GOVERNOR: I want to share my beliefs
about how the conservative movement and the Republican Party can regain its
footing, because we`ve lost our way.

MATT LAUER, NBC NEWS: But you clearly have not ruled out, you will
not definitively rule out a run for president in the year 2016?

BUSH: I won`t, but I`m not going to declare today either, Matt.

(END VIDEO CLIP)

O`DONNELL: Krystal, that is in effect a declaration of running for
president?

BALL: Yes, he sure sounds like he`s running. He definitely sounds
like he`s running. And the immigration plan that he released also I think
shows some positioning for a Republican primary, endorsing a path to
citizenship -- not a path to citizenship, but just a path to legal status I
think is a way to undercut some of the other Republicans who have taken
further to the left positions on immigration.

So he definitely looks like he`s positioning himself, although
politically, I think he would have been a lot better off at this moment,
just keeping his mouth shut on the whole thing.

O`DONNELL: Krystal Ball and Steve Kornacki, the man who got Newt
Gingrich to tell the truth -- thank you both very much for joining me
tonight.

BALL: Thanks, Lawrence.

O`DONNELL: Coming up, more on Mitt Romney, from the man who gave us
the 47 percent take video, James Carter IV. The MVP of 2012 will join me
in a LAST WORD exclusive.

And in the rewrite tonight, breaking news on a political sex scandal.
Two prostitutes who told a right wing Web site that they spent professional
time with a Democratic senator now say that that was a lie and they were
reading from a prepared script of lies they were asked to tell about that
senator.

And later, the diplomatic skip skills of Dennis Rodman. And seriously
-- seriously -- why shouldn`t the president call the nut who`s running
North Korea and ask him to be not so crazy? That`s coming up.

And you have sent in some great suggestions on where Dennis Rodman
should go next. I`ll pick the winner, coming up.

(COMMERCIAL BREAK)

O`DONNELL: Keep sending me your ideas on Twitter or Facebook about
where Dennis Rodman should go next. I`ll pick a winner coming up.

Also, next, the most valuable player in the 2012 presidential
campaign, the man who brought us the Mitt Romney 47 percent video will join
us. That`s next.

(COMMERCIAL BREAK)

O`DONNELL: The man who brought us the most important piece of video
of the presidential campaign is about to join us. I for one never grow
tired of seeing that video. So, let`s take a look at the most important 26
seconds of the last presidential campaign.

(BEGIN VIDEO CLIP)

MITT ROMNEY: There are 47 percent of the people who will vote for the
president no matter what. All right? There are 47 percent who are with
him, who are dependent upon government, who believe that they are victims,
who believe that government has the responsibility to care for them, who
believe they are entitled to health care, to food, to housing, you name it.

So, my job is not to worry about -- I`ll never convince them they
should take responsibility and care for their lives.

(END VIDEO CLIP)

O`DONNELL: Joining me now, the grandson of the 39th president of the
United States, James Carter IV. James, I know you`ve said that you
discovered this video by searching online. Where did you find it on
someone`s Facebook page?

JAMES CARTER IV, DISCOVERED ROMNEY 47 PERCENT VIDEO: No, just on
YouTube, actually.

O`DONNELL: It was on YouTube and you tracked down through YouTube who
actually made that video?

CARTER: It was a combination of YouTube and Twitter. Yes, I tried to
-- I found other clips from the same event. They all had a weird static
filter or blurry filter on them. I found a couple other clips, I tried to
send messages through YouTube, through all of the various account names,
and then I was tweeting everything I found out about it, and it attracted
the person who did it.

And they followed me on Twitter, and I recognized that their Twitter
name was the same as one of the YouTube user names. And so I got in touch
-- I direct messaged them over Twitter and that`s how we hooked up.

O`DONNELL: And how -- the process you described took how long?

CARTER: Four days.

O`DONNELL: And so it was one person who had put all this stuff out
there online?

CARTER: Yes.

O`DONNELL: And you`ve said it was not someone who paid $50,000 to
attend the event, which kind of leaves us anyone who`s been on one of these
fundraisers, knows that everyone else there is working there, they are
serving in some capacity there?

CARTER: Right.

O`DONNELL: OK. So that`s as far as we`re going to narrow it down,
it seems like. What is the incentive for this person to remain anonymous
at this point?

CARTER: I`m not sure about that really. I know that making the video
and getting it out the way they did took a certain amount of guts. And I
think it takes incredible discipline not to want to come out and be famous.

O`DONNELL: Yes, I`m ready to shower that person with glory at the
moment --

CARTER: Exactly.

O`DONNELL: -- any moment that person wants to step forward. As I
think any other network is. It`s a fascinating case of anonymity in that
sense.

And now, you had a recent meeting, encounter with President Obama, in
which, according to your grandfather, he has said publicly that the
president gave you a big hug and kind of in some way acknowledged how
valuable your work was to this campaign?

CARTER: Well, I was standing in line for a handshake and a picture.
There was a line of us, before an event that was in Decatur, Georgia. And
my cousin, who`s a state senator in Georgia was in front of me in line.

And after his picture, he turned around and introduced me to Obama as
the Carter grandchild who had found the 47 percent video. Obama said, "Get
over here", and put his arm around me, and thanked me several times for my
support during the campaign, and then after all the pictures and stuff,
thank me again, and went straight from that into now that we have a second
term, we can work on getting these kids what they need. It was an event
for his pre-K proposal.

So, you know, the reason why I do this is because I think Democratic
policies are better. The fact that he tied it into a policy thing was -- I
thought it was great.

O`DONNELL: And, look, the 47 percent video is a policy video. It is
an indictment of Republican policy and intent. It`s a very serious piece
for us to have.

But, James, before we go, I want to go back to anonymous, because I
find this so absolutely intriguing. Is it your sense that he put all --
whoever this is, he or she -- put all this material out there in the hope
that you or someone like you would find it, would track it down. And would
get it this kind of attention?

CARTER: Well, I don`t think anybody could have imagined the kind of
attention that finally came to it. But I think, yes, he was definitely --
they were definitely trying to get it out there.

O`DONNELL: Well, it got out there and it is my sense and many
people`s sense that it absolutely changed the nature of the campaign from
that point forward.

James Carter IV, an honor to have you joining us tonight. And as long
as the person who made the video remains anonymous, you remain the only MVP
of the 2012 campaign who we know by name. I`m ready to make you number two
as soon as that other person comes forward.

James, thanks very much.

CARTER: Thank you for having me.

O`DONNELL: Coming up, the diplomacy of Dennis Rodman. I`ll be joined
by "The New York Times" reporter who pieced together the story of how
Dennis Rodman got into North Korea. And we`ll discuss the Rodman proposal.
President Obama actually picking up the phone and calling North Korean`s
dictator.

And in the rewrite tonight, two prostitutes rewrite their story about
a senator.

(COMMERCIAL BREAK)

O`DONNELL: In tonight`s rewrite, sex, lies and videotape. We have
breaking news in a Senate sex scandal -- and yes, we do have the videotape.
That`s coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: None of this is
necessary. It`s happening because Republicans in Congress chose this
outcome over closing a single, wasteful tax loophole that helps reduce the
deficit. Just this week, they decided that protecting special interest tax
breaks for the well-off and the well-connected is more important than
protecting out military and middle class families from these cuts.

There`s a caucus of common sense out there. And I`m going to keep
reaching out to them to fix this for good, because the American people are
weary of perpetual partisanship and brinkmanship.

(END VIDEO CLIP)

O`DONNELL: In the Spotlight tonight, President Obama and the caucus
of common sense. It sounds like John Boehner isn`t quite ready to join
that caucus.

(END VIDEO CLIP)

DAVID GREGORY, MODERATOR, "MEET THE PRESS": You like defense
spending. And that`s going to be cut arbitrarily. You agree that this is
stealth spending in the tax code. Why not give on this? Why not allow
some revenues to come from tax reform? You protect defense spending and
you unlock the key to getting the kind of entitlement cuts the president
says he would give you if you would just give revenues on tax reform.

REP. JOHN BOEHNER (R), HOUSE SPEAKER: I want tax reform. Republicans
want tax reform. We want to bring rates down for all Americans, so that
we`ve got a fairer tax code. But to arbitrarily pull out a couple tax
expenditures and say, we ought to use that to get rid of the sequester --
listen, every American knows Washington has a spending problem.

GREGORY: The president, is he not committed to spending? Does his
deal that was still on the table not include over 900 billion dollars in
spending cuts over 10 years?

BOEHNER: The president has asked for 1.3 trillion dollars worth of
increases in revenue, and only put up 850 billion dollars worth of spending
cuts. Everybody in Washington knows what the problem is, but nobody wants
to address it.

Listen, I`ve been here for 22 years. And I`ve watched presidents from
both parties, I`ve watched leaders from both parties kick this can down the
road.

(END VIDEO CLIP)

O`DONNELL: Well, that`s what John Boehner looks like when he`s lying.
In fact, 20 years ago, President Clinton, with Democratic votes only --
John Boehner voted against this -- President Clinton passed what was then a
huge deficit reduction bill that included 50 percent tax increases and 50
percent spending cuts, one to one tax increases to spending cuts, including
Medicare And Medicaid spending cuts, and then, pushed by Newt Gingrich when
the Republicans won back the House and the Senate, President Clinton signed
even more Republican spending cuts into law.

The team of Clinton and Gingrich in the 1990s did not kick the deficit
can down the road. They kicked it out of the budget. They effectively
eliminated the deficit, and had us on the way to actually building a budget
surplus, a surplus that was going to be necessary to help finance future
government spending, including, it turned out, two wars that no one knew
were coming.

And that surplus was wiped out in the stroke of a pen when President
Bush signed his tax cuts into law, the tax cuts that have contributed
mightily to our deficit and debts, tax cuts that were, of course, voted for
by John Boehner.

Joining me now are Karen Finney, former DNC communications director,
and Ezra Klein, columnist for the "Washington Post." Both are MSNBC
analysts.

Karen, this is an article of faith among Republicans. And of course,
it eliminates history that they lived through themselves, that some of them
deserve credit for, which was what they actually did do in fighting
deficits during the 1990s, that Newt Gingrich and President Clinton both
contributed a great deal to that effort.

KAREN FINNEY, FORMER DNC COMMUNICATIONS DIRECTOR: Right, but that`s
not the strategy now. The strategy now seems to be driven far more by
their fear of the Tea Party. And I mean that sincerely. There`s no reason
that John Boehner -- I mean, if he wanted to, he could stand up to the far
right in his party, and he could be making those kinds of deals with
President Obama. There are enough Democratic votes. There are enough
moderate Republicans, as we`ve seen time and again, to get those things
done.

Time and again, he seems like a man who is treading water, trying to
stay one step ahead. They`re -- on the Senate side, these guys who are up
for re-election are terrified of being primaried from the right. In the
House, John Boehner can barely control his caucus. And they really have to
get their act together and decide what are they for, instead of just being
against President Obama, which has been the primary strategy, which is,
what am I against? Not what are they for, despite the rhetoric.

O`DONNELL: Ezra, I think there`s some confusion in the public when
they hear the president say, I`m for tax reform, and then they hear John
Boehner say, I`m for tax reform. Isn`t the difference that they both are
willing to get rid of a loophole, so called, things like that in the tax
code, but the Republicans want to use the revenue from that to actually
then lower tax rates, and the Democrats would not use the revenue for that
purpose.

Is that basically the difference on tax reform, what they would each
do with the revenue gained from it?

EZRA KLEIN, "THE WASHINGTON POST": Right. President Obama is for
revenue to cut the deficit. And Republicans are for revenue only to cut
taxes anew. It`s a baffling thing. I honestly have found -- I`ve spent a
lot of time talking to Republican policy people about it. I have found it
very hard to understand the underlying logic of the Republican position on
the sequester.

As David Gregory said to John Boehner, the Republican budget says
these tax expenditures, these things that Barack Obama wants to cut, that
President Obama wants to cut, that they are equivalent to spending. So he
can take these things out of the tax code that are equivalent to spending,
and get, in return, Medicare cuts and Social Security cuts and protect
defense, and get a greater total quantity of deficit reduction.

And instead, they will get none of those things and they will get a
smaller total amount of deficit reduction. But they will be able to say
they didn`t break Grover Norquist`s pledge. It is an amazing moment of
completely losing sight of all of all of the end policy objectives.

O`DONNELL: And Karen, Ezra did the breakthrough reporting last week
on this when he found a prominent member of the House, who remains unnamed
as of now, who did not realize what the president has actually been
offering in terms of deficit reduction packages, including on the spending
side, for example, chained CPI adjustments to -- basically ways of changing
the increases in Social Security pay outs, that sort of thing.

Ezra discovered that they even don`t know what the president has very
loudly and, to his own risk within his party, proposed.

FINNEY: No, they don`t know. They just know what the talking points
are. And as we know, the talking points from the Republicans are not
factual based, right? They`re not based in reality. So they not only know
what the president is offering, this is also part of this sort of semantic
mumbo jumbo that they have twisted themselves in knots. It`s a lot like we
were going through in the fall when we were having this semantic argument
about whether or not letting tax cuts lapse, is that raising taxes or is
that just letting tax cuts lapse? What can we call it? Whatever we call
it, we`re going to have to live with it. And gee, if we`re raising taxes,
we are going to anger Grover Norquist.

This is the kind of ideological games that these guys are playing,
rather than sitting down and saying, well, let`s see what`s in this
package. Let`s just see if we can live with any of this.

O`DONNELL: And Ezra, thanks for filling in for me last week. I
watched your Friday show where you I just think brilliantly laid out this
point about the exaggerated notions in Washington about the power of the
presidency in this crazy questioning that the president got last week about
leadership from the press, and like why aren`t you leading, where the press
very conveniently forgets the design of government, and just how powerful
the Congress is. And I know of no way -- there`s nothing I`ve seen in what
we`re seeing in Washington that indicates anyway that I can see how the
president can persuade John Boehner to come to some kind of agreement, or
force him or do anything, as the president said, the whole Jedi mind meld
thing.

KLEIN: Well, first, thank you for letting me host the show. And you
should take your Fridays actually off instead of watching it.

O`DONNELL: Ezra, I watched the show in extreme comfort.

KLEIN: As long as you were comfortable. I always think, Speaker John
Boehner, he is elected by his own constituents. He`s a grown man with his
own ideas that he`s been pursuing in politics for a very long time. On the
most basic level, I think the people when they hear this, sort of the
president should simply lead, should do a little bit of introspection.
Just ask, how often have they taken some of these beliefs, something their
entire life, and through the simple force of their persuasion changed their
mind entirely, getting them to go back on their business interests, getting
them to put their career in jeopardy, and getting them to possibly put
their job in jeopardy, to entirely flip their minds on this?

The president is not a king, and he`s not a dictator. And he does not
have some sort of magic power over Speaker Boehner. There will be a
compromise in our political system when the Republicans want to compromise
and not before. Because that is how it was designed to work.

O`DONNELL: Ezra, I`ve been saying that for the 20 years since I
worked in the Senate. And I never said it as clearly as you have. Karen
Finney and Ezra Klein, thank you both very much for joining me tonight.

KLEIN: Thank you.

FINNEY: Thanks.

O`DONNELL: Coming up, the diplomacy of Dennis Rodman. And in the
Rewrite tonight, sex, lies and videotape. We will show you the video of
the latest Senate sex scandal that might not actually turn out to be so
scandalous. That`s coming up.

(COMMERCIAL BREAK)

O`DONNELL: In tonight`s Rewrite, the "Washington Post" Rewrote a
story of politics and prostitution that first ran on a Washington website
just days before the last election. You know how when a politician gets
caught in a sex scandal and has a spokesperson put out a statement saying,
we`re not going to respond to a completely false accusation? Sometimes the
accusation is completely false.

On November 1st of last year, five days before the election, the
conservative Republican website "The Daily Caller" did everything it
possibly could to stop New Jersey Senator Bob Menendez from being re-
elected by posting a story with this headline: "Women: Senator Bob Menendez
Paid Us For Sex in the Dominican Republic."

Oh, my God. That story was accompanied by a video of a "Daily Caller"
reporter asking a couple of questions through an interpreter of women who
identified themselves as prostitutes about their experiences with Senator
Menendez, after showing them a photograph of the senator.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

UNIDENTIFIED MALE: because she was paid money to be with him.

UNIDENTIFIED MALE: (SPEAKING FOREIGN LANGUAGE)

UNIDENTIFIED MALE: Easter. Easter. Yes.

UNIDENTIFIED FEMALE: (SPEAKING FOREIGN LANGUAGE)

UNIDENTIFIED MALE: She was promised 500, and she was paid only 100.
No, she said he gave money to another guy who gave her money. But --

UNIDENTIFIED FEMALE: (SPEAKING FOREIGN LANGUAGE)

UNIDENTIFIED MALE: Yes, he -- she -- she saw him give money to the
person she knows who connected the two, and that person is the one that
gave her the money.

(END VIDEO CLIP)

O`DONNELL: That`s exactly how "The Daily Caller" presented the video,
with the face blocked out like that. "The Daily Caller" got what it really
wanted when local media, seen by New Jersey voters, picked up that story.
And that is when Senator Menendez` spokesperson issued the statement to
"The Daily News," "we`re not going to respond to a completely false
accusation."

That is normally, word for word, what politicians say when they`re
completely guilty of the accusations. They usually want to respond when
they`re not guilty of the accusation. But when a bomb like this goes off
just five days before the election, it is a horrible problem for the
candidate. The senator runs the risk that responding will actually make it
a bigger story, the risk that responding will make more New Jersey voters
find out about that story.

And so the Menendez re-election campaign carried on as best it could
as if nothing happened. And on November 6th, Senator Menendez won re-
election with 59 percent of the vote, a 20 point lead over his Republican
challenger. "The Daily Caller" kept pushing prostitution stories about
Senator Menendez after the election. And for the most part, the mainstream
media, including this program, continued to ignore them, because, as you
can see in that video, the journalistic standards applied to the case at
"The Daily Caller" were, shall we say, unorthodox and experimental.

There has been much coverage in the "New York Times" and elsewhere of
Senator Menendez` ethics problem, as a February 8th "New York Times"
editorial called them. The Times and others have covered the senator`s
uncomfortably close relationship with a campaign contributor. But the
Times has not included any -- any of the hooker stuff in their description
of Mr. Menendez`s ethics problems.

And then late today, the "Washington Post" posted this headline:
"Escort Says Menendez Prostitution Claims Were Made Up." The story, by
Carol D. Leonnig and Ernest Londono -- what is it? It`s on the screen.
You guys read it. I can`t. This print is too small for me -- tells us,
quote, "an escort who appeared on a video claiming Senator Robert Menendez
paid her for sex has told Dominican Republic police that she was instead
paid to make up the claims in tape recordings and has never met or seen the
senator before, according to court documents and to people briefed on her
claim. The woman identified a lawyer who approached her and a friend to
make the videotape, according to affidavits obtained by the Post. That man
has, in turn, identified another lawyer who gave him a script for the tape
and paid him to find women to fabricate the claims, the affidavits say."

The Post goes on to report, "in an affidavit obtained Monday, one of
the women on the tape, who describes herself as an escort, said she and a
colleague were offered money by a lawyer to read from a script. The woman
said she was surreptitiously videotaped implicating Menendez."

Now let`s look at that video again.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: (SPEAKING FOREIGN LANGUAGE)

(END VIDEO CLIP)

O`DONNELL: Ernesto Londono is the other author of that piece -- the
"Washington Post" piece. Now when she was reading that, when she was on
that video, because we can`t see her face, we can`t really quite tell. Was
she looking down? Was she looking to her left reading a script? I don`t
really know.

And if you`re going to do a crazy video like this, you might want to
try to add credibility to it by widening the frame, for example, by showing
us as much as you can. And yes, maybe hiding the face if that`s necessary.
But seeing the face in this case would also be very helpful in answering
the question of whether or not she was actually reading a script.

Now there are a lot of good questions to ask Bob Menendez about his
relationship to that donor mentioned in that "New York Times" editorial,
which is why the Times has called for a Senate Ethics Committee
investigation. Those questions involve the senator flying on the
contributor`s private plane and various favors the senator appears to have
done involving the contributor`s business interests with the federal
government.

But tonight, none of the good questions that reporters should be
trying to ask Senator Menendez involve hookers.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DENNIS RODMAN, FORMER NBA BASKETBALL PLAYER: He want Obama to do one
thing, call him.

UNIDENTIFIED MALE: He wants a call from President Obama?

RODMAN: That`s right, he told me that. He said, if you can, Dennis,
I don`t want to do war.

He loves basketball. I`ll say the same thing I said, Obama loves
basketball. Let`s start there. Let`s start there.

(END VIDEO CLIP)

O`DONNELL: Here`s the White House`s oh so serious response to
freelance diplomat Dennis Rodman`s suggestion that the president call the
dictator who starves the people of North Korea.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The United States has direct
channels of communications with the DPRK. Instead of spending money on
celebrity sporting events to entertain the elites of that country, the
North Korean regime should focus on the well being of its own people who
have been starved, imprisoned and denied their human rights.

The United States has channels of communications directly with the
DPRK. And those are the channels we choose to employ.

(END VIDEO CLIP)

O`DONNELL: Joining me now, Brian Stelter of the "New York Times," and
Steve Clemons, Washington editor of "The Atlantic."

Brian, you got the story today for the "New York Times" of exactly how
Dennis Rodman got in the country. How did they do that?

BRIAN STELTER, "THE NEW YORK TIMES": They fought like diplomats. The
people advice, the staff who wanted to get back in North Korea -- they had
visited twice before. They wanted to go back. They thought, what would
the regime in North Korea want? Well, they love basketball. They love the
Chicago Bulls. What about Dennis Rodman?

There they brought him. They did an exhibition basketball game and we
know the rest.

O`DONNELL: These were producers of a show -- an upcoming series on
HBO that were trying to do this, right?

STELTER: That`s right. Vice is commissioned to do a news magazine
for HBO. In fact, HBO kicked in a little bit extra money to help may for
the trip. Although they say this is a Vice Production. They`re
independent and they`re doing their own thing.

O`DONNELL: I`m sure HBO wishes that show was premiering this week.
But Steve Clemons, let`s go to the Rodman proposal. Why shouldn`t the
president just pick up the phone and call this guy and try to get a
conversation going?

STEVE CLEMONS, "THE ATLANTIC": Well, look, there are two issues here.
One is, on the serious side, before the United States normalized with
China, many years ago under Nixon, of course, we had ping-pong diplomacy.
That`s what`s been bouncing around in my mind while we scoff and mock about
this incident. There are sometimes these unusual moments that give
themselves and lend themselves to very unique moments of potential
diplomacy.

Why this is the wrong moment is that North Korea just had a third
nuclear test, and there are many things that Kim Jong-Un, who`s a new
leader in North Korea, although he happens to be the longest tenured of any
of the leaders around, whether it`s China, Japan, South Korea -- everybody
else is newer than he is, that, nonetheless, he could have issued through
Rodman or even by letter a very -- a more sophisticated note on how he
would like to stand down on the nuclear front, how he would like to stand
down on some of the posturing on South Korea.

There are many things he could have done to make this serious. He`s a
pop culture guy. He`s a young man. We have to ask ourselves, is he trying
to do what he knows, which is pop culture? And as inadequate and as kind
of silly as it sounds, maybe there`s something deeper there. I personally
don`t think there is, but Barack Obama needs to respond to serious
initiatives and not just the pop culture ones.

And the leader of North Korea needs to learn that.

O`DONNELL: But Steve, here`s what I don`t get about these diplomatic
niceties. Why isn`t this the best time to call, after North Korea has done
something that we really don`t want and we really want them to stop doing
it? I mean, the Soviet missiles were in Cuba, and so President Kennedy was
communicating as directly with Nikita Khrushchev as he possibly could.
They didn`t think, I`m not going to talk to him now, now that he`s done
something that bothers me.

CLEMONS: Look, honestly, the problem is that the Soviet Union and the
United States were two great powers vying for global control. North Korea
is a small state that exists through extortion, by misbehaving and trying
to extract resources from other nations in the world, by threatening the
rest of the nation and by wanting to be nice to get resources.

You can`t reward that behavior too quickly. I think Barack Obama is
probably calling it right here by keeping some distance.

O`DONNELL: Brian Stelter, thank you very much for getting the story
on how this all happened. Thank you very much for joining us tonight.
Steve Clemons, thank you. "THE ED SHOW" is next.

END

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