'The Last Word with Lawrence O'Donnell' for Wednesday, April 24th, 2013

THE LAST WORD WITH LAWRENCE O`DONNELL
April 24, 2013

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

Guests: Richard Wolffe, Howard Dean, Frank Smyth


LAWRENCE O`DONNELL, HOST: The mother of the suspects in the Boston
marathon bombing has told NBC news that a man known as Misha was a good
friend, who visited their home in the United States. Investigators now
want to know how that good friend may have influenced the bombing suspects.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES OF AMERICA: Terrorist
as a weapon is losing.

UNIDENTIFIED FEMALE REPORTER (1): Vice President Joe Biden will head
to Cambridge, Massachusetts later today.

VICE PRESIDENT BIDEN: They can never defeat us. They can never
overthrow us.

UNIDENTIFIED FEMALE REPORTER (1): For MIT police officer Sean
Collier --

ANN CURRY, NBC NEWS HOST: A memorial service is being held for Sean
Collier.

VICE PRESIDENT BIDEN: Boston, you send a powerful message.

UNIDENTIFIED MALE REPORTER (1): Boston Boylston Street reopens to the
public.

UNIDENTIFIED FEMALE REPORTER (2): Bostonians have already turned it
into a makeshift memorial.

VICE PRESIDENT BIDEN: We have not yielded to our fears.

UNIDENTIFIED MALE REPORTER (2): There`s still the outstanding
question, who radicalized them?

MIKA BRZEZINSKI, MSNBC NEWS HOST: There are also questions about the
FBI`s prior contact with the alleged bomber.

PETE WILLIAMS, NBC NEWS ANCHOR: That`s the question that some members
of congress are asking.

REP. SHEILA JACKSON LEE, (D) TEXAS REPRESENTATIVE: We did not connect
the dots.

UNIDENTIFIED MALE REPORTER (3): How in the world could we have missed
all of this?

UNIDENTIFIED MALE REPORTER (4): It`s not working.

UNIDENTIFIED FEMALE REPORTER (3): A serious concerns are being raised
this morning.

UNIDENTIFIED FEMALE REPORTER (4): A new details on the communications
between Russia and the U.S.

UNIDENTIFIED FEMALE REPORTER (3): About whether the U.S. agency
shared information.

SEN. JACKSON LEE: The dots were not connected.

WILLIAMS: It`s not like they don`t each know what the other has.

BRZEZINSKI: There are legal limitations to factor in here.

WILLIAMS: In fact they all know.

UNIDENTIFIED MALE REPORTER (5): The Russians contact the FBI.

WILLIAMS: FBI gets a request in early 2011 from the Russians.

UNIDENTIFIED MALE REPORTER (5): A requesting information about
Tamerlan Tsarnaev.

WILLIAMS: The FBI checks it out, finds nothing negative.

UNIDENTIFIED MALE REPORTER (5): The Russians send their same request
to the CIA.

WILLIAMS: They both ask the Russians several times for more
information. They never get any.

UNIDENTIFIED FEMALE REPORTER (1): Is this going to become a major
political issue?

VICE PRESIDENT BIDEN: Terrorism as a weapon is losing.

UNIDENTIFIED MALE REPORTER (5): Vice President Joe Biden insisted.
They`re driven by nothing but fear.

VICE PRESIDENT BIDEN: This is a diverse campus.

UNIDENTIFIED MALE REPORTER (6): The vice president really describes
not just MIT campus, but America all over.

VICE PRESIDENT BIDEN: It`s black, it`s white, it`s Muslim, it`s
Christian, it`s Jewish, it`s Hindu. That`s who we are. You are their
worst nightmare.

(END VIDEO CLIP)

O`DONNELL: The mother of the bombing suspects spoke to NBC news
today. She said both Russian and U.S. authorities asked her about Misha.
They asked whether he was an extremist and whether he was part of any
organization. She confirmed Misha is, quote, "a good friend. He came to
the house," end quote. He is in the U.S. She said he is a young man and
has red hair. She thinks he may be Armenian. She did not give a family
name. She described him as a new believer and an intelligent man.

The mother is not traveling to the U.S. anytime soon, according to
this NBC report. Previously, she has mentioned to NBC that she has
financial difficulties. The father of the suspects is going to Boston the
day after tomorrow. That would be on Friday, going to Boston. The mother
will be having a press conference tomorrow.

Today, the FBI interviewed the parents of the suspects in this Boston
marathon bombing case. That interview took place in a government building
in Dagestan. Russian television is reporting that the parents are
cooperating with the FBI in their investigation. NBC news Pete Williams
has developed the following chronology of the family`s prior contact with
the FBI, according to U.S. officials.

In January 2011, the Russian government asked the FBI for information
about Tamerlan, the older brother, saying he planned to visit Russia and
that both Tamerlan and his mother may have become radicalized. The FBI
asked the Russians for more information, but the Russians did not respond.
The FBI checked their terror databases and found nothing.

FBI agents interviewed Tamerlan and his family in Cambridge then, and
the agent`s conclusion was nothing negative found. That conclusion was
then reported to Russian officials. Eight months later in September of
2011, Russian officials asked the American government for information on
Tamerlan and his mother again, but this time, they put their request
directly to the CIA. Like the FBI before then, the CIA asked the Russians
for more information. And the Russians did not provide any more
information.

The answer back to Russia from the CIA was identical to the one given
by the FBI months earlier. Nothing negative found. But, Tamerlan`s name
was entered into the federal government`s master terrorism database. So,
U.S. officials kept a record of his travel to Moscow in 2012. Also, under
investigation tonight is that man known only as Misha, who reportedly
steered the older brother toward religious extremism.

The associated press spoke to members of the suspect`s family and
report under the tutelage of a friend known to the Tsarnaev family only as
Misha. Tamerlan gave up boxing and stopped studying music. And, his
family said, "He began opposing the wars in Afghanistan and Iraq. He
turned to websites and literature claiming that the CIA was behind the
terrorist attacks of September 11th and Jews controlled the world."

"Somehow, he just took his brain," said Tamerlan`s uncle who recalled
conversations with Tamerlan`s worried father about Misha`s influence. The
bombing suspects reportedly told a man whose car they hijacked that they
had just killed a police officer that night. That officer, Sean Collier,
of the MIT campus police, was honored in a memorial today on campus. Vice
President Joe Biden was among the speakers.

(BEGIN VIDEO CLIP)

VICE PRESIDENT BIDEN: There`s Al-Qaeda central out of the FATA or two
twisted perverted cowardly knockoff Jihadist here in Boston. Why do they
do what they do? I`ve come to the conclusion, which is not unique to me,
but I do -- they do it to instill fear. It infuriates them that we refuse
to bend, refuse to change, refuse to yield to fear. The doctrine of hate
and oppression, they have found out, cannot compete the values of openness
and inclusiveness. And, that`s why they`re losing around the world.

(END VIDEO CLIP)

O`DONNELL: The vice president`s wife Dr. Jill Biden was among the
first visitors today to the reopened section of Boylston Street at the
finish line of the marathon where the bombing occurred. Joining me now
from Boston, NBC News National Investigative Correspondent Michael Isikoff
and NBC News terrorism analyst Roger Cressey. Roger Cressey, I just want
to go to a phrase that the Vice President used today just in the speech we
just saw him give. He referred to them as knockoff Jihadist. What do you
make of his use of that phrase?

ROGER CRESSEY, NBC NEWS TERRORISM ANALYST: Lawrence, I think that`s
just a reference to that they were not part of an organized part. They
were not part of the broader network, self-radicalized, lone wolfs, or as
Brian Jenkins, a longtime terrorism analyst who called them, stray dogs.

And, so I think he was trying to drive home the point that even if you
have individuals who have done such heinous acts, while they may be part of
a broader movement in a general sense, they pose a threat, but it`s a
threat we can deal with. And of course, resiliency in Boston has been the
watch -- has been the keyword since the attacks last Monday.

O`DONNELL: Let`s listen to what Secretary of State John Kerry said
today in Brussels.

(BEGIN VIDEO CLIP)

JOHN KERRY, SECRETARY OF STATE: We just had a young person, who went
to Russia and Chechnya, who blew people up in Boston. So, he didn`t stay
where he went, but he learned something where he went and came back with a
willingness to kill people.

(END VIDEO CLIP)

O`DONNELL: And that statement wasn`t out for very long before the
state department issued this adjustment to it. Let`s listen to that.

(BEGIN VIDEO CLIP)

PATRICK VENTRELL, ACTING DEPUTY SPOKESPERSON: The secretary was
simply expressing broad concern about radicalism and not necessarily
offering any more specific information about this case. But, the context
of how that came up is really radicalism broadly understand is how the
question came up, but this isn`t about any new information or conclusion
about law enforcement details of the case.

(END VIDEO CLIP)

O`DONNELL: Michael Isikoff, state obviously had to issue that sort of
response to what the secretary said, but he said very clearly that he
learned something where he went, and he came back with a willingness to
kill people. What is the likelihood that Secretary Kerry was working with
inadequate information when he said that?

MICHAEL ISIKOFF, NBC NEWS CORRESPONDENT: Well, I think the secretary
was reflecting the suspicions of a lot of law enforcement officials and
others about just the mere fact that we know that Tamerlan Tsarnaev spent
six months in Russia, traveled to Dagestan, traveled to Chechnya, both
hotbeds of Islamic radicalism.

And, it is not unreasonable to conclude, but there was some context
there that would have fed his evolution towards Jihadi thinking. But, we
also know that the Russian report -- the Russian request to the FBI came
before he even made that trip. And, the Russians already clearly had some
information that gave them cause for concern.

It is very likely if you read what we know exactly about what the FBI
has said about the Russian request, that he`s changed. They said he`s a
different man. He`s changed radically. And, he`s now a father of radical
Islam. That does suggest they had some sort of informant, some direct
information that was reporting to the Russian FSB, the intelligence
service, that Tamerlan Tsarnaev had become a radical Jihadi. We don`t know
for sure.

But, my point is that, that was before he even made the trip. So,
right now, here`s what we know. We know that Dzhokhar Tsarnaev has said,
"There were no others involved," that they did this on their own; that they
were motivated by a desire to defend Islam because of the U.S. wars in Iraq
and Afghanistan; that they learned to build the bombs in -- over the
internet.

But, clearly, something -- some -- there were some radicalization
here. Somebody radicalized them. We have the comments from the family
about this mysterious Misha of Armenian descent, who is supposed to have an
untoward influence over Tamerlan.

We don`t know who Misha is. We don`t know when this happened. We
don`t know how this evolution took place. There are a lot of unanswered
questions here that as far as I can tell, the FBI is still trying to sort
out and doesn`t have real hard answers at this point.

O`DONNELL: Roger Cressey, is Misha at this point in the
investigation, the second most important character to the suspect in
custody?

CRESSEY: Lawrence, I have to assume that Misha actually exist.

O`DONNELL: Right.

CRESSEY: I think the -- What the family tells us is important. It`s
one stream of data. But, the bureau -- the FBI is going to corroborate
everything here that is claimed in interviews and try to paint a factual
basis. And, to what mike just said, this is so early on in putting the
pieces together that any statements we get right now, we have to take with
a grain of salt.

Now, I do think the family dynamic here is particularly interesting,
and how it led to the attacks last Monday and who was an influence on
Tamerlan and ultimately, how he was an influence on his younger brother.
The role of the mother, as we talked about before, is fascinating. Did she
have some sort of role here? We`re going to have to find that out as well.

But, let me just add one thing to what Mike talked about. When you
look at what has been reported to this -- up to this stage and what the FBI
had in its -- had in its possession, if in terms of preliminary inquiry,
they really could not go much further because the attorney general
guidelines prevent anything more because of concern about civil liberties
and a whole host of understandably -- understandable constraints based on
the constitution.

So, the bureau did what it was supposed to do. The connecting the
dots question, which I still think is way too premature to draw conclusions
on, is going to involve interagency coordination more than anything else.

O`DONNELL: Roger, quickly, before we go. On your experience with
these kinds of things, one of the spots here that I think is of interest to
viewers is the Russians asked for information on this guy from the FBI.
Then they do it again through the CIA. Each time, the FBI and the CIA --
each time, says back to the Russians, could you give us more information
about him before we try to find what it is you`re looking for? And the
Russians do not respond to that. How strange is that to your ear?

CRESSEY: It`s not strange because the dynamic between U.S./Russian
counterterrorism cooperation is uneven to be generous. And, because they
did not provide that follow-up information, it really prevented the FBI and
local law enforcement for taking that next step. Had the Russians had
something actionable and gave that to us when Tamerlan returned. Then when
he started posting Jihadi videos, they would have been in a position to do
something about it. That`s a significant gap in information that we didn`t
get from the Russians, Lawrence.

O`DONNELL: Michael Isikoff and Roger Cressey, thank you both for
joining me tonight.

CRESSEY: Thanks.

O`DONNELL: Coming up, republicans are pulling out their terrorism
scorecards. You knew they were going to do that. They said president bush
kept us safer than President Obama, but the republican scorecards have a
very peculiar footnote on them.

And, Hillary Clinton went back to work tonight in the same city where
the George W. Bush Presidential Library and Museum will be dedicated
tomorrow. And in the rewrite tonight, a graduate student rewrites the work
of a couple of Harvard professors and in the process upsets government
leaders around the world, including more than a few in Washington, D.C.

(COMMERCIAL BREAK)

O`DONNELL: It turns out there is some price for a senator to pay for
voting against what the people want. In the first poll since voting
against background checks on firearms in the United States senate, New
Hampshire`s Republican Senator Kelly Ayotte has significantly pushed up her
disapproval rating.

Public policy polling found in October that she had a 48 percent
approval rating and a 35 percent disapproval rating. Today, public policy
polling shows her with a 44 percent approval rating and a 46 percent
disapproval rating in New Hampshire. 75 percent of New Hampshire voters
including a majority of republicans, say they support background checks.
And 50 percent of voters in that state say Ayotte`s no vote will make them
less likely to support her in the future. Big surprise. Up next, the
politics of terrorism.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ERIC BOLLING, HOST OF "THE FIVE": I will tell you one thing. From
September 12, 2001 till the time President Obama raised his right hand in
January of 2009, the man kept us safe. And, there -- And, you certainly
can`t say that since President Obama has taken the oath of office.

BRET BAIER, FOX GUEST HOST SPECIAL REPORT: The one thing that the
Bush Administration and the presidency did is it kept us safe, but not only
in its own seven years. It established the entire infrastructure. It
looks as if in this administration it has all fallen apart.

(END VIDEO CLIP)

O`DONNELL: As was inevitable in republican world in the age of Obama,
some republicans are pulling out their terrorism scorecards and rating
President Obama much worse than George W. Bush as protector in chief of the
homeland.

Of course, all republican terrorism scorecards begin the day after the
biggest and worst terrorist attack in our history, the day we lost 2,977
people at the world trade center, the pentagon, and Shanksville,
Pennsylvania. And on that day, the president of the United States was
George W. Bush. Today, in the house of representatives, Republican
Congressman Tom Cotton of Arkansas produced his terrorism scorecard.

(BEGIN VIDEO CLIP)

REP. TOM COTTON, (R) ARKANSAS REPRESENTATIVE: And, barely four years
in office, five Jihadists have reached their targets in the United States
under Barack Obama, the Boston marathon bomber, the underwear bomber, the
Time Square bomber, the Fort Hood shooter, and in my own state, the little
rock recruiting office shooter. In over seven years after 9/11, under
George W. Bush, how many terrorists reached their target in the United
States? Zero.

(END VIDEO CLIP)

O`DONNELL: Joining me now, MSNBC`s Richard Wolffe and former
democratic governor of Vermont, Howard Dean. Governor Dean, I think we can
all remember after 9/11 that no democrats, exactly no democrats went to the
floor of the house of representatives seven days later to assign blame to
the president of the United States about what the country was going
through. But, after this Boston marathon bombing, here they are. They`re
out there making this case.

HOWARD DEAN, (D) FORMER VERMONT GOVERNOR: Yes. I mean, it`s
extraordinary, the decay of these people in congress, who claim they
represent anybody other than people who just hate the president. This is
ridiculous. This is so childish, like Benghazi. It`s silly. It`s
juvenile. It`s not going to get them anywhere. As in fact, they`re
keeping -- they, you know, these people keep making the republican party --
they keep saying they want to rebrand it.

There was a state legislator in New Hampshire yesterday, who claimed
that the government of the United States was responsible for the Boston
bombing. Her name, I figured was -- her name was Betty Kelly, or something
like that. These people aren`t just mean spirited, they`re crazy. And, I
don`t know anything about Mr. Cotton, but he sure looked like a nut case
sitting here on the floor saying all that stuff, didn`t he?

O`DONNELL: Yes. And, I want to listen to something that Rudy
Giuliani and Dana Perino said, this was before this. This was a common
chant among republicans. Let`s listen to this.

(BEGIN VIDEO CLIP)

RUDY GIULIANI, MAYOR OF NEW YORK: We had no domestic attacks under
Bush. We had one under Obama.

DANA PERINO, FOX NEWS POLITICAL CONTRIBUTOR: We did not have a
terrorist attack on our country during President Bush`s term.

O`DONNELL: O`DONNELL: Richard, they would say this. They would say
this repeatedly and they weren`t putting in any clarification about 9/11.
They actually were saying it that way. And, that`s the thing they`re
trying to drill into the public. None under President Bush, except the
biggest one in history.

RICHARD WOLFFE, MSNBC NEWS CONTRIBUTOR: They except that. And, you
know, it`s one thing to try and spin the public, as Dana Perino did pretty
successfully, and know that it`s spin and it`s another thing to believe
your own spin. Just because you say something over and over again does not
mean it`s true.

And by the way, if they actually believed their own storyline, you
couldn`t just say that 9/11 came out of nothing. It wasn`t a total
surprise because in their narrative, Bill Clinton and by extension, all
democrats somehow lost the plot. They didn`t take terrorism seriously
because there was the "USS Cole." There were the African Embassy bombings.
Al-Qaeda was there, and they didn`t take it seriously because they were
doing the loyalty stuff about respecting the rule of law and not torturing
people.

And, so President Bush came on the scene and historically understood
the danger, only he understood it after, after he ignored all of the
warnings about Al-Qaeda wanting to attack the homeland. So, they don`t
understand their own story. They believe a certain selective piece of
their own spin, and now they`re projecting it on another president, who by
the way has a pretty good record when it comes to killing terrorists.

DEAN: I they think they`re down right unpatriotic to do this to the
president of the United States at the time when the president needs all of
the patriotism he can get. But, we can disagree about Obama`s Health
Care Policy whatever you want. But, you know, our country has been
attacked. These people have forgotten that they`re supposed to be
representing the United States of America and not the right wing of the
republican party. That`s a fact.

O`DONNELL: And, I want to listen to the way the argument is being
made tonight on Fox News by Rudy Giuliani. Let`s listen to that.

(BEGIN VIDEO CLIP)

GIULIANI: This guy was an Islamic Jihad terrorist.

UNIDENTIFIED MALE: And, why won`t they say that? Why, I don`t get
that? Help me out.

GIULIANI: I don`t understand why they don`t say it. At least, before
9/11, you couldn`t say we were unnoticed about all this things. But, now
we`re on notice about it, you don`t have the excuses that existed before
9/11 about -- that you don`t understand the full implication of this.

(END VIDEO CLIP)

O`DONNELL: Richard Wolffe, this guy is the mayor of New York. That
was the second attack on the World Trade Center by this kind of terrorist.
There was the bombing of the World Trade Center, which was a horrible
disaster that occurred about eight years earlier. He doesn`t seem to know
that.

WOLFFE: Like I said, they have forgotten their own storyline. Al-
Qaeda was a present and clear danger. I don`t know if he actually watches
any news. I mean even Fox News at least recognized that the president
called this man a terrorist. The White House has not been shy about
calling the two brothers terrorists. They actually charged them with
weapons of mass destruction. What more do they want?

O`DONNELL: We`ve got to go, but before we do. Governor Dean, the
name I`m told -- the control room is telling me that the name of the
representative in New Hampshire who said that crazy stuff is Stella
Trembley.

DEAN: Yes, Stella Trembley. I apologize if there`s a Kelly -- I
apologize --

O`DONNELL: OK.

DEAN: And, I did it a lot faster than CNN. I apologize if I did
identify the wrong person --

O`DONNELL: No. We understand. We just want to make sure the correct
name out there. Richard Wolffe and Howard Dean, thank you both very much
for joining me tonight.

DEAN: All right, thank you.

WOLFFE: Thank you.

O`DONNELL: Coming up, how the NRA uses its money in politics. We`ll
show you how that money can defeat the wishes of 90 percent of the American
public.

(COMMERCIAL BREAK)

O`DONNELL: In the Spotlight tonight, Hillary Clinton goes back to
work. For a reported 200,000 dollars, Hillary Clinton spoke to real estate
executives who could easily afford that at a dinner in Dallas tonight. Her
speech to the National Multihousing Counsel`s board of directors was closed
to the press. Speaking in the same city today was another potential 2016
contender, Jeb Bush.

(BEGIN VIDEO CLIP)

JEB BUSH, FORMER GOVERNOR OF FLORIDA: Looking for how do we create a
legal system where young, aspirational people of varying skills come to our
country, learn our language, embrace our values and pursue their dreams
with a vengeance. That ought to be the aspirational goal of the United
States. And guess what, you don`t have to be a visionary to understand
what the benefits of that are because it is who we are. It is embedded in
our DNA.

The American experience is the immigrant experience. It`s what
separates us from the rest of the world. It`s what makes us truly
extraordinary and exceptional. And it`s not the time to be abandoning it.

(END VIDEO CLIP)

O`DONNELL: The Clinton and Bush Dallas speeches today came on the eve
of the dedication of the George W. Bush Presidential Library and Museum
tomorrow in Dallas. Here`s what the former president had to say about
Hillary Clinton and his brother maybe running in 2016.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: He would be a
marvelous candidate if he chooses to do so. He doesn`t need my counsel
because he knows what it is, which is run.

UNIDENTIFIED FEMALE: Your brother versus Hillary Clinton?

G. BUSH: It would be a fantastic photo. I`m fascinated by all of the
gossip and stuff that goes on. But the field won`t become clear until
after the midterms.

(END VIDEO CLIP)

O`DONNELL: Krystal Ball, he`s fascinated by all that goes on. So
he`s watching right now about this discussion about what`s going to happen
here. What was your reaction to Jeb Bush`s attempt to clarify his position
today on immigration?

KRYSTAL BALL, MSNBC POLITICAL ANALYST: Well, it`s good that he`s come
back to being in the right place, apparently. I think he really has done
himself a disservice when he initially wrote this book about immigration.
Prior to that, he really was a leader in the Republican party on this
issue. He was a thought leader. He was out in front in terms of what they
should do.

Then he came out with this book that not only took a step back, but
also felt very politically calculated, which is never a good thing. He
sort of muddled his own message and messed things up. He no longer holds
that plank. And he also hasn`t appeased the right wing, if that was what
he was trying to do with the book.

O`DONNELL: Steve Kornacki, Jeb Bush in Dallas today speaks to the
World Affairs Council, a nonprofit. No word on whether he was paid or not.
Hillary Clinton speaks to the National Multihousing Council`s board. Here
is what they are -- for 200,000 dollars. They are -- this is their own
description of themselves. Based in Washington, D.C. -- oops right away,
lobbying operation. MMHC is a national association representing the
interests -- I believe Democrats call that special interests --
representing the interests of the larger and most prominent apartment firms
in the U.S.

These are big-money real estate people, big, wealthy, residential
apartment developments all over the country. And that`s the first place
the Democratic front runner goes to pick up a paycheck, which, excuse me,
she doesn`t need.

STEVE KORNACKI, MSNBC ANCHOR: Right, she doesn`t need it in part
because her husband --

O`DONNELL: He`s out there with checks from the same operation.

KORNACKI: He`s had his share. Maybe she wants to know what that
experience is like. Obviously, she is -- to the extent she continues to do
these and this becomes a staple of what she does for the next year or two
years or whatever it is, if she does end up running in 2016, this becomes
something I`m sure her primary opponents will be using against her right
away.

O`DONNELL: Taking that check from those people sounds to me like, we
believe there will not be primary opponents, because it won`t be a big
problem against a Republican, but among Democrats --

KORNACKI: If it`s a calculation at all, it could also be a
calculation of sure, Martin O`Malley is going to say, you know, I cashed in
when I stopped being secretary of state in 2013. In January 2016, sure,
he`ll say that. If that`s the best he`s got against me, I`m fine.

BALL: I actually agree with that. I do think that they would try to
use it. I don`t know how much it would stick. I don`t know how much it
would resonate for voters. Even though it is an interest group, I don`t
think it sounds like particularly scary to voters. And in a way, this is
very safe for her because the environment is very controlled. She gets to
say exactly what she wants to say. She doesn`t have to let the press in.
She can make news or not depending on how she wants to play it. And
frankly, these are the people who have the ability write those sorts of
checks.

O`DONNELL: This kind of interest group has more interests in more
pages of the tax code than most. What they`re in there trying to get on
depreciation of commercial buildings and all of this stuff is nonstop. I
think one of the interesting things about this is taking this kind of money
is perfectly OK, as long as in your campaign there isn`t anything that is
clearly something these people want.

KORNACKI: And by the way, she is doing this at the time that -- in
terms of fiscal policy, the debate in 2013, potentially 2014 in Washington,
is going to be involving tax reform.

O`DONNELL: Right. These guys got a bunch of loopholes in the code.

KORNACKI: She is right now on pace -- I don`t know what her timetable
would be, but she`s on pace to be able to sort of duck out of this
conversation and avoid having to answer. If Obama makes some kin a tax
reform deal, right now, she could probably not weigh in on that at all.
The potential deal that could divide the Democratic party, she could be
above all that.

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

KORNACKI: Sure.

BALL: Thanks, Lawrence.

O`DONNELL: Coming up, one of the most important economic theories of
our time, our time being the last few years, was debunked last night on
Stephen Colbert`s show. That`s coming up in the Rewrite.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MARK SANFORD, CANDIDATE FOR CONGRESS IN SOUTH CAROLINA: You need to
hold Nancy up. A little higher, little higher. Yeah, right up -- let me
guide you here. Right about right there. She`s not that much taller than
I am. Let`s pull her back a bit. Right about there, OK. All right, OK.
All right. You ready?

(END VIDEO CLIP)

O`DONNELL: No, no, no. Absolutely nothing desperate about that.
That is former south Carolina governor and current Republican Congressional
candidate Mark Sanford at the beginning of a press conference in
Charleston, South Carolina, where he pretended to debate a cardboard
version of Nancy Pelosi, instead of his actual opponent, Democrat Elizabeth
Colbert Busch who he will actually debate on April 29th.

(BEGIN VIDEO CLIP)

SANFORD: Nancy Pelosi happens to be her biggest benefactor; 370,000
dollars roughly has come in thus far. Since Elizabeth won`t debate, we`ll
have to debate Nancy.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, "THE COLBERT REPORT": OK, so you got your girlfriend
to peer review your work, and then took it to professors and they said,
yeah, we`ll publish this. Here`s my worry about you, young man. You
realize that you have upset some people in the austerity crowd, OK? You
know that, right?

THOMAS HERNDON, UNIVERSITY OF MASSACHUSETTS GRADUATE STUDENT: It`s
true.

COLBERT: Okay. These are very important and sometimes very powerful
people who are using the arguments of Jekyll and Hyde over there to, you
know, make austerity measures all over the world. Do you have someone
starting your car for you right now?

(END VIDEO CLIP)

O`DONNELL: Stephen Colbert is worried that that 28-year-old graduate
student at the University of Massachusetts, Thomas Herndon, needs someone
to start his car for him now because he Rewrote the work of two Harvard
economics professors, work that until now has been the intellectual basis
for the austerity drive in governments around the world, including this
one.

In a 2010 paper, "Growth in a Time of Debt," professors Carmen
Reinhardt and Kenneth Rogoff reported that they had found the tipping point
in national debt, the spot where the size of the debt seems to harm
economic growth. And that tipping point was 90 percent. A national debt
of 90 percent of GDP seemed to reduce economic growth, according to their
findings.

Therefore, policymakers all said no country should allow its debt to
be greater than 90 percent of GDP. Now, in home economic terms, this would
mean no family should allow their debt to be more than 90 percent of annual
income. So in a household with say two earners and a total income of
100,000 dollars, a debt above 90,000 dollars would be a very serious
problem.

Now this is one of those rare instances in which the home economics
example I just used is actually somewhat informative to the national
economy that Reinhardt and Rogoff were studying. And I remember thinking
when this came out, this 90 percent came out, when they said that the
tipping point was 90 percent -- I remember thinking the home economic
example is so contrary to that. I was realizing what they were saying, in
effect, was that a household is capable of carrying much, much more debt
than a government.

Because it is not at all unusual in this country for households to
have debt double or triple or quadruple their annual income, and still be
economically healthy. They can carry that size debt in the form of
mortgages. A family with 100,000 dollar income can often, very reasonably,
afford to buy a 400,000 dollar home, depending obviously on what their
other expenses are. And I was surprised that the debt tipping point for
government would be so much lower than it is in home economics.

But I didn`t mention that to anyone because home economic examples,
for a million reasons, usually have absolutely no application in national
economic models. But the 90 percent thing just felt funny to me. I
understood completely why politicians, both Democrat and Republican,
instantly latched out to the 90 percent figure as the reason why we must
get our national debt under control right now. Depending on how you count
our national debt, and that`s a whole other subject, by the time this paper
came out, debt to GDP was already at least 80 percent and approaching 90
percent.

Because this was the only paper out there that suggested a specific
tipping point, and because it was produced by one of the leading if not the
leading economist department in the world, it was immediately adopted in
austerity talking points.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I go back to the Reinhardt/Rogoff study. Their
conclusion, when you have a gross debt of over 90 percent of GDP, future
economic growth is diminished.

REP. PAUL RYAN (R), WISCONSIN: Economists who have studied sovereign
debt tell us that letting total debt rise above 90 percent of GDP creates a
drag on economic growth and intensifies the risk of a debt fueled economic
crisis.

UNIDENTIFIED MALE: This is very dangerous territory. According to
economist Carmen Reinhardt and Kenneth Rogoff, public debt burdens above 90
percent of GDP are associated with one percent lower economic growth.

SEN. JEFF SESSIONS (R), ALABAMA: Huge debt can impact economic growth
today. They say when your debt reaches 90 percent of GDP, your debt is
that much, that it can slow growth by one to two percent. Do you think
it`s possible that their study, based on empirical data, might be telling
us that the debt right now, because it weakens confidence and drains
investment capital -- that our debt now could be slowing our economy?

UNIDENTIFIED MALE: I think it`s very clear.

(END VIDEO CLIP)

O`DONNELL: Can you imagine how thrilling that is for social
scientists to have their findings instantly adopted as truth in the ruling
doctrine of governing? That never happens. And that 90 percent figure was
the brick wall standing in the way of arguments by Nobel Prize winning
economist Paul Krugman and others that the government should do more to
spend its way out of the economic slump. Krugman may have a Nobel, but
Reinhardt and Rogoff had a study. They had a number. They are the only
economists who had numbers, the numbers on this question.

And when you are the only economists who have run the numbers on any
important policy question, you will probably get a lot more respect than
you deserve, because in order to really base policy numbers -- base policy
on numbers, we need a lot of people to run a lot of numbers. No matter how
many times academics try to tell politicians that they should not base
policy action on any one study in any area of social sciences or natural
sciences, politicians refuse to learn that lesson.

Republicans loved the 90 percent number because, for once, they had
some science behind what they were saying. It wasn`t hard science. It
wasn`t organic chemistry or biology. It was the soft science of economics,
the dismal science, as Carlyle called it in 1849. And last week, that
science collapsed because someone else ran the numbers, a graduate student
at U-Mass. Thomas Herndon, who you just saw with Stephen Colbert, actually
used the very same numbers that Reinhardt and Rogoff used. And the rest is
history, as delightfully told to Stephen Colbert last night.

(BEGIN VIDEO CLIP)

COLBERT: You went to replicate these findings and then what happened?

HERNDON: Well, you know, I tried to build the data myself from all of
the publicly available sources. But I just couldn`t replicate their
negative average.

COLBERT: Did you try to reach out to these guys?

HERNDON: Yeah, I did. It took a couple e-mails. And they were
finally polite enough to give me their spreadsheet. Once I got the
spreadsheet, I was able to identify the error pretty quickly.

COLBERT: Uh-huh, uh-huh. Did they -- it was fine with them for you
to have the spreadsheet? You could do what you want with it?

HERNDON: They told me that I should feel free to like publish
whatever results I had.

COLBERT: Then you had the balls to actually publish whatever results
you had.

HERNDON: Yes. I thought it was a really important message and a
really important story. So I wanted the profession to hear about it.

COLBERT: At first when you saw these, you must have thought, I got to
be wrong, right?

HERNDON: That`s really exactly what I thought. I couldn`t really
believe my eyes. So I asked my girlfriend, Kyla Walters, who is also a
researcher in sociology, to look at the spreadsheet with me.

COLBERT: Why ask her?

HERNDON: She`s had a lot of statistical training as well. And she`s
just really sharp and pays a lot of attention to detail.

COLBERT: Did she learn Excel spreadsheets?

HERNDON: Yes, yes. It`s pretty standard.

COLBERT: That seems like it would help.

(END VIDEO CLIP)

O`DONNELL: Among the mistakes that Herndon found in the professor`s
original paper is that they forgot to include the following countries,
Australia, Austria, Belgium, Denmark, and a place called Canada. Now,
forgetting to include Canada in any study you do that you think is
applicable to the United States is like a doctor forgetting to ask about
your siblings in taking your family history. Canada is our biggest trading
partner. Canada is located very, very close to the United States.

I mean, there are actually some places in this country where you
really can see Canada from your house. It is the other place in the world
that most looks like the United States of America in every way, including
economically. Canada is the other economic laboratory on this planet that
most resembles our economic laboratory. And so with Canada included in the
spread sheet, and with the numbers run correctly, it turns out that
economies with a debt of 90 percent were actually growing and not
shrinking.

And so now the definitive economic paper on this matter is actually a
term paper that Thomas Herndon wrote for his Econometrics class. The
Herndon paper says "contrary to the Reinhardt/Rogoff average, GDP growth at
public debt to GDP ratios of over 90 percent is not dramatically different
than when debt to GDP ratios are lower."

And that is the economic term paper heard around the world.

(COMMERCIAL BREAK)

O`DONNELL: "The Hill" reports that the National Rifle Association
spent about 800,000 dollars in lobbying efforts against gun legislation in
the first quarter of the year. Gun Owners of America, another pro-gun
group, spent more than 313,000 dollars. The only gun safety group to come
close to rivaling the gun lobby was Michael Bloomberg`s Mayors Against
Illegal Guns, which spent 250,000.

Joining me now, Frank Smyth, the investigative journalist who has gone
inside the NRA and a contributor to MSNBC.com. Frank, the money seems
really lopsided here on lobbying. What about campaign contributions, that
sort of thing?

FRANK SMYTH, MSNBC.COM CONTRIBUTOR: Well, Lawrence, 88 percent of
Republicans in this Congress have received money from the National Rifle
Association at some point in their career. And 42 out of the 45 senators
who recently voted against gun safety legislation have received NRA money
in their last election cycle. So it`s clear that these senators and other
legislators in the House have been following the dictates of the gun lobby.

What is different now is that Mayor Bloomberg has entered the field,
and with a number of groups, including the group set up by Gabby Giffords
and her husband Mark, and are starting to raise funds looking toward to the
2014 elections. The NRA is already concerned about the 2014 elections and
has made it clear, quoting President Obama, that the fight has only begun.

So I think what we saw over the past few months in this debate over
gun safety legislation that failed in Congress will pick up again in the
run-up to the 2014 elections and perhaps even beyond.

O`DONNELL: Frank, the Gabby Giffords group announced tonight that
they`re going to be running radio ads thanking Senator John McCain for his
vote and running ads against Senator Ayotte and Mitch McConnell. But you
did an assessment of the last, oh, it looks like 20 years of spending, and
it looks like the NRA outspends gun safety people by about 10 to one on
campaigning.

SMYTH: Ten to one, if not a great deal more. There are exponential
differences in terms of the NRA spending, tens of millions dollars a year,
14 million over the past 15 years, where gun reform organizations, gun
safety organizations have spent closer in the neighborhood of just 5,000
dollars -- or 50,000 dollars, excuse me.

So it`s a very -- the numbers are completely disproportionate. And I
think that the gun reform movement has seen the NRA as being something they
can`t challenge. And now I think that`s changing, and the NRA is going to
find itself being challenged in the next election.

O`DONNELL: Frank Smyth gets tonight`s LAST WORD. Thanks, Frank.

SMYTH: Thank you, Lawrence.

O`DONNELL: Chris Hayes is up next.

END

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