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'The Last Word with Lawrence O'Donnell' for Monday, May 13th, 2013

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THE LAST WORD WITH LAWRENCE O`DONNELL
May 13, 2013

Guests: Nia-Malika Henderson, Sen. Al Franken, Linda Greenhouse

LAWRENCE O`DONNELL, HOST: Tonight here in Washington, the one senator
who never, ever, ever, ever, ever does national TV, the one senator who is
always getting invited on every national television show and not just
political shows, news shows, Jay and Dave would love to have him as a
guest, too -- and, in fact, he used to be a regular guest on all the late
night comedy shows -- the senator who is by far, by far the most sought
after TV guest in Washington has become all the more sought after by his
relentless refusal to do any of this kind of TV, that very shy senator is
going to make his primetime cable news debut tonight here on THE LAST WORD.

That`s right. Senator Al Franken will join me.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I`ve got no patience
with it, I will not tolerate it. We will make sure exactly what happened
on this.

CHRIS JANSING, MSNBC ANCHOR: The president could face grilling over
the IRS scandal.

UNIDENTIFIED FEMALE: IRS employees singled out conservative political
groups.

UNIDENTIFIED MALE: The administration is under fire.

UNIDENTIFIED FEMALE: Prior to the 2012 election.

UNIDENTIFIED FEMALE: But is it all just partisan politics?

OBAMA: I`ve got no patience with it. I will not tolerate it.

UNIDENTIFIED FEMALE: This is not a new problem.

UNIDENTIFIED FEMALE: We had these before. Where were the Republicans
in 2004?

UNIDENTIFIED FEMALE: George Bush had NAACP audited.

UNIDENTIFIED MALE: There`s absolutely no targeting.

TAMRON HALL, MSNBC ANCHOR: The IRS commissioner Douglas Shulman was a
Bush appointee.

UNIDENTIFIED MALE: There`s absolutely no targeting.

UNIDENTIFIED FEMALE: This is not a new program.

UNIDENTIFIED MALE: This is the back and forth that happens when
people apply for 501(c)(4).

UNIDENTIFIED MALE: They should take away the designation or make it
full disclosure.

HALL: So, what needs to happen next.

OBAMA: The whole issue of this -- of talking points.

UNIDENTIFIED MALE: He`s real passion came with Benghazi.

OBAMA: Frankly, throughout this process, it`s been a sideshow.

CHRIS MATTHEWS, MSNBC HOST: I`ve never seen quite that look.

MARTIN BASHIR, MSNBC ANCHOR: The president`s anger and frustration.

UNIDENTIFIED MALE: This was a terrorist attack.

DAVID CORN, MOTHER JONES: Focusing more on the talking points than
substantive issues.

OBAMA: No acts of terror will ever shake the resolve of this nation.

UNIDENTIFIED MALE: And act of terror is different than a terrorist
attack.

GEORGE W. BUSH, FORMER PRESIDEN: The nation prays for those who have
been injured in this unbelievable act of terror.

UNIDENTIFIED MALE: An act of terror is different than a terrorist
attack.

OBAMA: And the fact that this keeps getting churned out.

UNIDENTIFIED MALE: It`s easy politics. It`s an easy political hit.

OBAMA: Frankly has a lot to do with political motivations.

UNIDENTIFIED FEMALE: Benghazi is John Boehner`s biggest fixation.
Boehner is obsessed with it.

UNIDENTIFIED MALE: They`re not obsessed with Benghazi. They`re
obsessed with Obama.

(END VIDEOTAPE)

O`DONNELL: If you`ve been anywhere near a news source today, you know
that tonight the Internal Revenue Service is officially out of control and
that all of Washington is scandalized by the out of control IRS.

But no one in Washington seems to understand that the IRS has been out
of control on the matter in question since 1959 when Republican Dwight
Eisenhower was president. It was in 1959 that the IRS decided to change
the meaning of the English language in a very important way, and that
change was created, created what is called a scandal in Washington today,
but is really just the IRS doing its job.

Here is what President Obama said about the scandal as it has erupted
the last few days.

(BEGIN VIDEO CLIP)

OBAMA: If in fact IRS personnel engaged in the kind of practices that
have been reported on and were intentionally targeting conservative groups,
then that`s outrageous. There`s no place for it. And you know, they have
to be held fully accountable. I have no patience with it, I will not
tolerate it, and we`ll make sure that we find out exactly what happened on
this.

(END VIDEO CLIP)

O`DONNELL: Well, yes, sure. If the IRS personnel intentionally
targeted conservative groups, that would be bad. But what if IRS personnel
were correctly examining political organizations` applications for tax-
exempt status? That is not scandalous because that`s the IRS` job, they
must do it. They cannot just grant tax-exempt status to anyone that asks
for it. And the IRS has a specific guideline for granting that tax-exempt
status.

Section 501(c)(4) of the Internal Revenue Code, which defines social
welfare organizations for tax-exempt purposes defines them this way, "Civic
leagues or organizations not organized for profit but operated exclusively
for the promotion of social welfare."

Then the IRS code does a magic trick and changes the meaning of the
word exclusively. "To be operated exclusively to promote social welfare,
an organization must operate primarily to further the common good and
general welfare of the people of the community."

Do you see that? The IRS changes the meaning of the word
"exclusively" to the word "primarily", exclusively means exclusive. That`s
all you can do. You can`t do anything else.

The law`s intent is that tax-exempt status be granted to civic leagues
or organizations, not organized for profit, but operated exclusively for
the promotion of social welfare. It was in 1959 that the IRS on its own
added the notion that exclusively really just means primarily.

So, for 54 years the IRS has gotten away with the crime of changing
the word "exclusively" to "primarily". The IRS changed the law. The IRS
took a hard, clear word like "exclusively", a word with legal meaning, and
changed it to the soft word "primarily" that means nothing. Left it open
to IRS agents then to determine if your organization was primarily
concerned with the promotion of social welfare.

And then in 2010, there`s suddenly a flood of organizations applying
for tax exempt status, saying that they are primarily for the promotion of
social welfare, and their titles include the words Tea Party.

What planet do you have to be from to know that Tea Party
organizations are not operated exclusively for promotion of social welfare
as the words of the law require? And what planet do you have to be from to
know that Tea Party organizations are not even, quote, primarily to further
the common good and general welfare, which is the IRS scandalous
interpretation of the words "exclusively for the promotion of social
welfare."

Tea Party organizations are primarily, and many of them exclusively,
for the promotion of Republican political candidates. Tea Party
organizations are primarily devoted to attacking congressional legislation,
such as the Affordable Care Act and attacking Democratic Party candidates,
including the Democratic Party`s candidate for president of the United
States. Tea Party organizations are purely political organizations, under
no reasonable reading of the law governing 501(c)(4) organizations would
Tea Party organizations be granted tax exempt status, and yet they were!

And that is not the scandal that Washington sees. The scandal that
Washington sees is that Tea Party and other phrases were used by the IRS to
search out at some point the kind of applications that required more
questions from IRS agents. That was before the IRS decided to use more
neutral terms to search this out.

This is what the IRS does all the time with every tax return it
receives. The IRS knows that they can`t possibly audit every tax document
they receive, so they use red flags to pull tax returns out of the pile for
more scrutiny.

The home office deduction is a classic red flag that the IRS has been
using for decades. If you deduct the cost of part of your home for office
space, it increases the likelihood that your tax return will be pulled for
audit because in the IRS` experience, it marginally increases the
likelihood that your tax return is not, shall we say, perfectly accurate.

There`s like a lot of cheating around the home office deduction and
the IRS knows it. And because there are very, very few people who claim
the home office deduction who actually fulfill the strict requirements for
the home office deduction, then most of you don`t even realize what those
requirements are, that becomes one of the many, many red flags that the IRS
uses in its enforcement procedures. They try to develop indicators of
where the cheating might be in tax filings.

And there`s a very different likelihood in how much cheating there
might be in, say, a Little League Baseball organization applying for tax-
exempt status and a political organization applying for tax-exempt status.
And if in 2010 there was a flood of Tea Party applications for tax exempt
status and many, many fewer applications for tax-exempt status from liberal
political groups, then it only makes mathematical sense that more questions
would be directed at the Tea Party applications.

So what we have here in this horrifying scandal are IRS agents doing
their jobs, doing exactly what they`re supposed to do. Now, what we are
not yet sure of is how balanced their approach was to that, how politically
balanced, whether they showed proportionally the same sort of concern to
liberal political groups applying for tax exempt status.

But the real scandal is what the IRS did in 1959 when it changed the
meaning of the English language, and the IRS decided tax exempt-status
could be granted, even if an organization was not exclusively for the
promotion of social welfare, but simply primarily for the promotion of
social welfare. And that change from "exclusively" to "primarily" allowed
political organizations to buy political advertising in support of
candidates or as an attack on other candidates and do so under a tax-exempt
provision in the law that was never, never intended for them to hide
behind. And that is truly scandalous.

Ezra Klein, this is one of those Washington scandals where there`s a
scandal here but I don`t think it`s what they`re talking about.

EZRA KLEIN, THE WASHINGTON POST: No, the intuition here that people
have I think is exactly on. I`m glad you focused on the word "primarily",
because it comes up in another place -- 501(c)(4)s are special. One thing
you mentioned is that they`re tax-exempt. The other thing, they`re
anonymous. You can`t get at who the donors are, it`s a very unusual
designation.

And the other primarily in the law around them is they cannot be
primary political. They cannot be primarily political. And so that meant
they can`t spend more than 51 percent of their money on political ads, open
secret --

(CROSTALK)

KLEIN: Yes.

O`DONNELL: That`s an interesting thing.

KLEIN: Yes.

O`DONNELL: Nowhere in the dictionary does it say the word "primarily"
means 51 percent of something.

KLEIN: No. It`s not even clear that`s how they`re defined.

O`DONNELL: To me, "primarily" would mean, I don`t know, 75 percent,
something different from 51.

KLEIN: It`s not even clear about how they`re defining it.

O`DONNELL: Right.

KLEIN: This is the scandal at the IRS. And I think it gets at what
you were talking about in the beginning here. The intuition people have in
Washington now is that what would have been right is for the IRS to let
every single one of these Tea Party groups go right through, and without
any kind of a look, nobody reviews your application. That`s exactly the
opposite of the truth.

It`s not just they shouldn`t be unusually strict towards Tea Party
groups against other political groups. But Crossroads GPS should never
have been run by Karl Rove. It should never have been permitted as a
501(c)(4). Organizing for America, the Obama administration associated
group never should be a 501(c)(4). Priorities, they`re 501(c)(4).

There has been a disgusting, appalling explosion in these anonymous
groups. The reason is because they have incredibly privileged status and
because the IRS was terrified going back a couple years now of getting into
a fight like this one, where somebody accused them of being politicized.
So what they did was they offered no truly clear guidance to people. They
did nothing about them.

And now, the cruel irony of this scandal is they`re going to get that
much more afraid, back off that much more, these things will be more
underrated to undermine our democracy.

O`DONNELL: And, by the way, the word "attack" for the IRS has always
traditionally meant audit. That`s what Nixon did in the Watergate scandal,
people tried to compare it to that. Of course, there`s no -- Nixon, the
president of the United States was saying let`s use the IRS to audit my
enemies, to grab their tax returns and challenge them about what`s on it.

This is way before you ever get to any issue of audit. This is just
you`re applying for very special status and we would like to ask you some
questions.

KLEIN: I don`t -- I think Nixon is important context. It`s why we
treat it so special.

O`DONNELL: Yes.

KLEIN: Because we are afraid what it can become if the IRS is
politicized. Yes, this is a special designation you don`t need to operate,
you needed to get a special subsidy, and it should be clear, when an
organization is tax-exempt, what that means effectively is that your tax
dollars and my tax dollars are subsidizing it. We are paying for the
groups like Organizing for America and the Tea Party groups and all these
other groups snuck in under this designation, that they should not have
because they`re not under any stretch of the imagination none political.

We are paying them to operate. That`s why there`s a higher level of
scrutiny. And it`s why this scrutiny should have been applied equally
across the board left and right. But it should have been applied to reject
the groups, to not allow them to sneak in, get our taxpayer dollars.

O`DONNELL: And Washington reaction is funny to me, because they just
hear IRS, political unfair, and attack, and most of the commentators on
television about this, who many of them are much more careful about other
subjects, they just need those words. Once they hear those words --
outrageous, outrageous, outrageous.

KLEIN: It rings the alarm bells of scandals --

O`DONNELL: Yes. And I get -- I mean, to be fair, and I do and I
think we both completely understand from the Nixon presidency what the
worry is. But no one in Washington seems to be taking time to say, OK, let
me take a look here, what are we really talking about?

KLEIN: And this gets to the underlying issue here, too, which is that
there`s something dangerous for the democracy happening. There`s something
the IRS is supposed to be stopping.

O`DONNELL: Yes.

KLEIN: There is something. We are upset about the thing they`re
doing, we should be upset about the thing they are not doing, just as they
can attack democracy, they also have a role defending it. And one of the
roles is to not let these groups sneak in, where they are both taxpayer
subsidized and completely anonymous. That is not these (ph) political
groups.

O`DONNELL: Ezra Klein, thank you for bringing sense to this thing.

KLEIN: Thank you.

O`DONNELL: Coming up, President Obama`s response to Washington`s
other big scandal.

And Justice Ruth Bader Ginsburg wishes she could rewrite Roe versus
Wade. What does that tell us about how she will rule in same sex marriage
cases? That`s going to be in the rewrite.

And in the spotlight tonight, the most prominent public official in
Washington who has never done a primetime cable news interview. Senator Al
Franken will join me.

(COMMERCIAL BREAK)

O`DONNELL: Senator Marco Rubio sent an angry letter to Treasury
Secretary Jack Lew today demanding resignation of the IRS commissioner. "I
strongly urge that you and President Obama demand the IRS commissioner`s
resignation effective immediately."

The problem for Senator Rubio is that there is no IRS commissioner.
The IRS commissioner who Senator Rubio is so mad at, Doug Shulman, was
actually appointed by George W. Bush and resigned in November of 2012.
Since then, there has been no IRS commissioner.

Up next, what President Obama said today about the controversy
surrounding what happened in Benghazi and Senator Al Franken will be here.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: The whole issue of this -- of talking points frankly
throughout this process has been a sideshow. The fact that this keeps on
getting churned out frankly has a lot to do with political motivations.
We`ve had folks who have challenged Hillary Clinton`s integrity, Susan
Rice`s integrity, Mike Mullen and Tom Pickering`s integrity, it`s a given
mine is challenged by the same folks. They`ve used it for fund-raising.

(END VIDEO CLIP)

O`DONNELL: That was President Obama pushing back against Republican
claims of a Benghazi cover up.

"Politico" reports today that John Boehner has told leadership
colleagues when they`re focusing on the terrorist attack, they`re fighting
on their political ground. This is all John Boehner, said one senior
Republican aide, of the focus on Benghazi. He is obsessed with it, brings
it up all the time.

Nia-Malika Henderson, when did John Boehner get obsessed with this?
Because the word was months ago, he kind of wanted it to go away. They
played it for all it was worth.

NIA-MALIKA HENDERSON, THE WASHINGTON POST: That`s right. I mean,
this has been the whole iteration, right? At first, you had Romney playing
it for all it was worth for a while during the 2012 campaign. Eventually,
he sort of let it go.

O`DONNELL: Getting a little embarrassed in the presidential debate
will quiet you down on that subject.

HENDERSON: Much to the dismay of John McCain and Lindsey Graham who
wanted to push further. But John Boehner very much realizes that the base
has been chomping at the bit around Benghazi for the last eight months.

You had the president come out today say there is no there there. And
that is true. As much as they pushed this investigation along, had these
hearings, you had Issa two or three years ago say that he felt like this
administration is one of the most corrupt administrations in American
history, so here he goes with the Benghazi hearings to sort of prove his
initial assessment.

But again, there isn`t much there that has come out of these latest
hearings around this. And I think what you have here is we`re seeing sort
of a bureaucratic knife fight, right, between the CIA and State Department
changing the talking points, one to cover, you know, each other`s backs
essentially.

But, you know, the president well knows at this is political and I
think Boehner does smell blood quite frankly for 2014 because he thinks
he`s going to be able to gin up the base around this issue going into that
election.

O`DONNELL: You know, the so-called talking points issue of this memo
about what it was really about, I for one thought talking points were
ridiculous when I heard them. I never believed the movie was the
provocation for this. I never allowed it -- I never said on this show the
movie did this.

HENDERSON: Right.

O`DONNELL: And for the first several days, everybody on all of the
shows, FOX shows were saying it is the movie, it is the movie. The movie
thing never made sense to me.

So, you can talk about the talking points, and that does become just -
- OK, these are the people that put it together, why did they put it
together? That doesn`t seem to be worthy of this much investigation but
fine, let them have it.

The other day, last week, it was OK, what happened that night? And
what you discover happened that night is there was no way for any military
intervention from distances where they were. Now you have former Defense
Secretary Gates backing them up on that. No one has come out with any
contradiction to the idea that it was impossible to get military assets
there.

HENDERSON: That`s right. I think we`re still trying to figure out
what happened there. You have the release of some suspects, photographs of
some suspects that they pulled from some of the surveillance video there.
So, still there is a mystery about what went on, on the ground there, who
actually was involved.

And you have this president be cautious in jumping to conclusions
about any of these sorts of international incidents. I think the
Republicans have always felt this was a president who was soft on terror,
loathe to use the word "terrorism". So, this is part of that whole idea
they believed for awhile.

O`DONNELL: This Issa thing today, I mean, absolutely insane. He`s
drawing a distinction between act of terror and terrorism. We have to hear
him saying it. We`ve got him saying this thing.

(BEGIN VIDEO CLIP)

REP. DARRELL ISSA (R), CALIFORNIA: The words that are being used
carefully like you said, act of terror. An act of terror is different than
a terrorist attack. The truth is, this was a terrorist attack.

(END VIDEO CLIP)

O`DONNELL: Act of terror is different from a terrorist attack. In
the opening of the show, heard George W. Bush using "act of terror".

I mean, saying something like that is the most open way Darrell Issa
can say I`m absolutely desperate. I don`t think I have anything.

HENDERSON: Right, I don`t have much, so I`m playing this sort of
semantic games around diction, what`s an act of terror versus what is
terrorism.

Again, I think you found from Americans, they`re not really keyed into
this. I think there was a Pew Poll out couple of days ago that showed 56
percent of people weren`t even paying attention to these hearings. But you
have with Republicans a really drive.

And this is about the base, right? I mean, they have wanted to malign
this president for awhile and I think you`ll see this play out for awhile
with 2014. But the president, I mean, from the very beginning, I think he
won that debate moment, when you had Romney go at him, and then very
emotional when he was talking about Susan Rice with that press conference.
And again, a real flash of anger here and outrage that these conversations
are still going on, and impugning his character.

O`DONNELL: Nia Malika-Henderson, thank you very much for joining us.

HENDERSON: Thank you.

O`DONNELL: Coming up, Senator Al Franken is going to be my next
guest.

(COMMERCIAL BREAK)

O`DONNELL: Minnesota State Senate today passed a bill that will make
Minnesota the 12th state to make marriage equality legal. The Democratic-
controlled state Senate voted 37-30, with only one Republican voting yes.
The Minnesota House passed that bill last Thursday with bipartisan support.

Just two years ago, Republicans controlled both chambers in Minnesota
and put a constitutional amendment banning marriage equality on the ballot.

Republicans rejected that -- I`m sorry, voters rejected that.
Republicans lost that vote, and control of the Minnesota House and Senate
at the same time. Democratic Governor Mark Dayton will sign that bill
tomorrow night on the Capitol steps. He will then join me here tomorrow
night on THE LAST WORD.

Coming up next, Minnesota Senator Al Franken joins me.

(COMMERCIAL BREAK)

O`DONNELL: In the Spotlight tonight, Democratic Senator Al Franken.
That`s the shortest introduction I have done in the history of this
program. It`s kind of the man who needs no introduction sort of
introduction.

SEN. AL FRANKEN (D), MINNESOTA: I`m honored.

O`DONNELL: So you are here because I know you are pushing this
transparency issue that you fought for in the Banking Reform Bill. You
only got 64 votes in the Senate.

FRANKEN: Right.

O`DONNELL: So, of course, it didn`t become law.

FRANKEN: Well, it kind of became law. Let`s start with what we`re
talking about here. We`re talking about how our financial system is kind
of rigged. And talking about, you know, those Moody`s and Standard and
Poors.

O`DONNELL: The ratings agencies, the ones who tell you this is a good
investment.

FRANKEN: Right. They gave AAA ratings to financial products that
were junk.

O`DONNELL: Like all the bad mortgages that were out there.

FRANKEN: Like these subprime mortgage backed securities. And what
happened -- what it was, there`s an inherent conflict of interest here.
And a bank would issue a financial product and it would shop around for a
rating agency to give it a AAA. The rating agencies, the three main ones,
the big three, Moody`s, Fitch and S&P, knew that if they didn`t give a AAA
to this instrument, they wouldn`t get the next gig and they wouldn`t get
the big bucks for giving that AAA rating.

And it was a total conflict of interest. It would be like --

O`DONNELL: And it was very much part of the collapse. Because these
ratings, they were saying, all of this stuff is good, and then it all
collapsed.

FRANKEN: This is why it collapsed: at a certain point, they ran out
of subprime mortgage backed securities, so they had nothing else to
securitize. So they decided to do bets on them, essentially. Then they
did bets on the bets and bets on the bets.

O`DONNELL: And those bets had to be rated.

FRANKEN: Yes, they had to be rated AAA. It was great for everybody.
They made a lot of money. But Americans lost trillions of dollars. They
lost their homes. They lost their businesses. They lost their pension
savings. They lost their jobs. Minnesotans lost their jobs because the
credit rating agencies didn`t do the only job that they were supposed to
have, the only job they had, which is to give accurate, objective ratings
to financial products.

O`DONNELL: Is this the biggest challenge you have in discussing this,
is you`re discussing a Wall Street issue and people at home go, what does
this have to do with me?

FRANKEN: Well, it created the Great Recession. So there you go. I
mean, people who, again, lost their homes, their jobs, their businesses,
people lost their jobs and they lost their self worth and sometimes their
families. I mean, this -- and it all goes back to this conflict of
interest. It would be like a figure skater bribing the judges, and they`re
all giving 10s.

O`DONNELL: Right.

(CROSS TALK)

O`DONNELL: When you do a big banking reform bill, you try to get it
in there as an amendment.

FRANKEN: Yes. I introduced an amendment with Roger Wicker, a
conservative Republican from Mississippi. It gets 64 votes. It gets 11
Republican votes. We go to conference and it gets downgraded, if you will,
to a study, which --

O`DONNELL: Because the House did not pass a provision like that. So
the Senate had it in their bill, the House didn`t have it.

FRANKEN: I had enough champions in the conference to say that the SEC
will do a study, and if the conflict of interest still exists after this,
they have to do something. And that study came out a few months ago.
We`re having a roundtable tomorrow. This is why I`m on your show tonight,
because I`ve been following that. I`ve been pushing this for over two
years.

O`DONNELL: What are the stakes tomorrow?

FRANKEN: Well, this still exists. This conflict of interest still
exists.

O`DONNELL: As the study shows.

FRANKEN: As the study shows. And now it is time for the SEC to act.
And what we did in our amendment is we set up an independent board
underneath the SEC that SEC appoints one time, and then they`re self
regulating after that. It`s comprised of people who do investments like
for pensions and university endowments, and maybe some -- and some people
from the credit rating agencies and some people from the banking industry
and some academics.

And they -- they choose, when a bank puts out a structured financial
product, that board chooses the rating agency that does the initial rating
on the instrument, based on the credit rating agency`s expertise, their
capacity to do this job, and, over some time, their track record. So it
will reward accuracy. It -- the conflict of interest is gone, and so it
will be paid for performance, not pay to play.

And it is time for the SEC -- we`re having a roundtable tomorrow. I`m
speaking first. It is time for the SEC to get rid of the fix. Look, I was
in Wilmer, Minnesota, this past weekend. I had been with eight or nine
leaders in that community. It`s in central Minnesota. They were mainly
Republicans. They were, you know, the guy who owned a contracting
business, a couple ag businesses, community bankers. They just said look,
Wall Street is fixed.

O`DONNELL: Yeah.

FRANKEN: It`s -- and Main Street, they just don`t think about Main
Street. And that is true. And that`s what happened here. And I want to
end that. I want to protect Minnesota`s jobs.

O`DONNELL: Is it within the SEC`s jurisdiction to decide to do this?

FRANKEN: Yes, yes. This is -- the law says that if the conflict of
interest is shown to still exist when this study is produced, and it is,
that they shall address this;, they shall fix this. They don`t have to
adopt my model, but I haven`t seen anything better.

O`DONNELL: This reminds me of all the legislative fights that come
down to the word may or shall. When you get the word shall in there, you
know something`s going to happen.

FRANKEN: I fought to get "shall" in there during that conference.
And it was very important. And they shall do this. And we`re going to see
if the SEC is -- if the fix is in. I mean, you know, the SEC has a job to
do, and they should do their job, which is to regulate these people.

O`DONNELL: Three more letters before you go, the IRS, the lay of this
new IRS so-called scandal. What`s your reaction to what we know so far?

FRANKEN: Well, look, looking into these 501-c4s is a legitimate
inquiry, but it should be even handed. so let`s do the investigation.
Let`s see what happened here. And if the IRS is being biased and partisan,
that`s wrong.

O`DONNELL: And the other thing that the president addressed today,
the Benghazi investigations that have gone on; where do you think this
story is now in Congress? And where do you think it should go? I mean,
did anything happen in the House hearing last week that made you think
there are more questions to ask here?

FRANKEN: Well, I guess they`re going to be focusing on the talking
points in the House. Important thing to me is that four Americans died,
and that we have to learn from it, so that our diplomats who are doing the
work that they`re doing overseas, who are in dangerous areas, are as safe
as they can possibly be. I think you are right that the -- that hearing in
the House showed that they could not rescue those people. They could not.
There was no assets in close enough proximity to do that.

O`DONNELL: And lost in this is the fact that the Pickering Report
found, awhile ago, that the State Department was at fault for not
anticipating the need for more security in that area.

FRANKEN: There is fault to go around. There is not voting enough
money, funds to do security, but -- and the Pickering Commission I think
issued like 29 recommendations. And the State Department says they`re
going to adopt them all. This is -- what`s important to me is that our
diplomats overseas, who are doing tremendous work, are safe.

O`DONNELL: Senator Al Franken, thank you very much. Your first prime
time cable news interview. We`re here, you know, almost every night. You
can just drop by.

FRANKEN: This is the exception that proves the rule. And it is
Lawrence, right?

O`DONNELL: That`s correct, sir. I don`t expect to see you again for
a long time. Thank you very much, Senator Franken.

Supreme Court Justice Ruth Bader Ginsburg wishes she could rewrite Roe
versus Wade. We`ll analyze that in the rewrite and consider what it could
mean about how she might vote on the marriage equality cases that are
before the Supreme Court right now.

(COMMERCIAL BREAK)

O`DONNELL: Supreme Court Justice Ruth Bader Ginsburg, of all people,
would like to rewrite Roe versus Wade. She has said as much a few times in
the past, but said it again very clearly on Saturday at a discussion on the
40th anniversary of Roe versus Wade at the University of Chicago Law
School. She said that Roe versus Wade had, quote, "given opponents of
access to abortion a target to aim at relentlessly. My criticism of Roe is
that it seemed to have stopped the momentum that was on the side of
change."

Justice Ginsburg has said in the past that Roe versus Wade, quote,
"moved too far too fast."

Ginsburg herself was a lawyer 40 years ago fighting for abortion
rights. But she thinks Roe was the wrong case for such a historic
decision. She wishes the court had simply affirmed the right to abortion
that was at issue in that case, and that the Roe ruling limited itself to
overturning the Texas law that allowed abortion only to save the life of
the mother. That was the law that was at stake in that case.

Ginsburg believes if the court had handled the abortion issue case by
case, with a series of gradual, progressive opinions, that would have
allowed space for state legislatures to step up and provide abortion rights
through a democratic process instead of a judicial process. Justice
Ginsburg`s criticism of Roe includes the principles used to decide the
case.

She said Roe is, quote, "about a doctor`s freedom to practice his
profession as he thinks best. It wasn`t woman centered. It was physician
centered."

But Roe also seemed to be centered on practicality. It seemed that
the Supreme Court simply felt that the country needed a national policy on
abortion, that it would not be fair to allow the rights of some women and
physicians in some states to be limited compared to the rights of women and
physicians in other states.

Now that the dust has settled on Roe versus Wade and most Americans
live in states where Roe versus Wade remains unchallenged, Justice Ginsburg
said this weekend that it wouldn`t, quote, "matter that much if Roe versus
Wade were overturned."

"Take the worst case scenario," she said. "Suppose the decision were
overruled. You would have a number of states that will never go back to
the way it was."

Let`s take a look at what would happen if Roe versus Wade were
overruled. By my political calculus, 33 states would continue to provide
reproductive rights under Roe versus Wade. That`s 72 percent of the
population that would still be covered by the current legal regime. Today
anti-abortion politicians are thriving in 17 states that are identified on
the map in yellow. Surely some of those states would try to ban abortion
if Roe versus Wade were overturned, but probably very, very few of them
actually would because anti-abortion politics is allowed to run wild in
those states because it is a purely theoretical position.

But if a state did outlaw abortion, the question would then be how far
would a woman have to drive to exercise her freedom to choose? It is
virtually impossible to get an abortion in the Dakotas right now. There`s
usually not more than one physician providing abortion services in North
and South Dakota at any one time. Long drives across state boarders to
obtain abortion service is already the norm in the Dakotas.

If Roe versus Wade were overturned, no doubt charitable organizations
would spring up all over the country trying to help women travel from the
anti-abortion pockets of the country to the places where the majority of
Americans would make sure that reproductive rights were freely available to
all women. Today in this country reproductive freedom is not nearly as
available as the seven justices who joined the majority opinion in Roe
versus Wade expected it would be. But now abortion isn`t really available
everywhere in this country.

And so the justices who thought they were writing the law of the land
were actually writing the law of most of the land. And they were
unwittingly writing essential organizing principles of the two major
political parties. Although more Republicans favored abortion rights back
in 1973 when Roe versus Wade was written, opposition to abortion has become
a defining principle of the Republican party, just as support of Roe versus
Wade has become a defining principle of the Democratic party.

What everyone wants to know now about Justice Ginsburg`s rewriting of
Roe versus Wade is what her comments about that decision indicate about how
she and the Supreme Court justices will rule in the same-sex marriage cases
the court is considering right now. And for some answers about that, I`ll
be joined next by Linda Greenhouse of Yale Law School, formerly the "New
York Times`" Supreme Court correspondent.

(COMMERCIAL BREAK)

O`DONNELL: We`re back. And I am joined now by Linda Greenhouse of
Yale Law School, and a former Supreme Court reporter for "the New York
Times." Linda, I wanted to get your reaction, first of all, to what
Justice Ginsburg said this weekend and my summary of it, as I just did in
the previous segment.

LINDA GREENHOUSE, YALE LAW SCHOOL: Well, Lawrence, as you suggested,
it is a very complicated historical question. And I think Justice
Ginsburg, who has said for many years what she said this weekend in
Chicago, I think has compressed a bunch of facts that my Yale colleague
Reba Siegler (ph) and I have spent a long time sort of unpacking. We wrote
a book about what actually was going on in the country at the time of Roe.
As you suggested, more Republicans than Democrats, although a majority of
all segments of the population supported abortion reform in 1973, and what
happened after.

So it actually was not the case that abortion reform was rolling
smoothly across the country at the time that the court intervened. In
fact, it had come to a screeching halt because of Catholic opposition, even
in New York State, bluest of the blue states, that had reformed its
abortion law. But Catholic opposition led the legislature to repeal the
reform. And only Governor Rockefeller`s veto kept that reform alive.

So it wasn`t true. It`s really almost the mirror image of what`s
happening today with same-sex marriage, where in the absence of a court
ruling, Minnesota today became the 12th state to legalize same-sex
marriage.. It is really very fascinating. So it is really hard to import
what happened 40 years ago and subsequently to the fascinating social
revolution that we`re witnessing today.

O`DONNELL: But when we look at Justice Ginsburg -- and just to make
sure everyone in the audience understands this, she`s a very strong
supporter of the results of Roe versus Wade. And as a lawyer herself, she
was fighting for exactly that. She`s just arguing in a legalistic way, and
with some politics in it, that it was -- that she doesn`t believe Roe
versus Wade was the best case to get us to the point of abortion rights in
all 50 states.

But when she says she wishes there was a more limited ruling in Roe
versus Wade, does that indicate to us -- and the fact that she`s saying it
now and saying it kind of loudly now -- even though she has said it in the
past, she knows we`re all going to immediately say, what does this tell us
about how she`s going to rule on the marriage equality cases. And doesn`t
this indicate she`s going to rule in the narrowest way possible?

GREENHOUSE: Well, I think everybody would be very surprised if the
court gave us a wide, nationwide ruling in the California Proposition 8
case, as opposed to the Defense of Marriage case, the DOMA case. You know,
what she will do herself, I think she`s a very wise woman. And I think
she`s well aware that abortion 40 years ago, marriage equality in 2013 are
really two different issues. And I think -- I don`t think she`s
exercising, in other words, a strategy or signaling to people here is what
I think about Roe against Wade and here is what I am going to think about
the Proposition 8 case in California.

But I think it would be surprising if the court, as a whole, ruled
very broadly in the Prop 8 case because it doesn`t really have to. There`s
an off ramp to the case that would allow the lower court judgment in favor
of same-sex marriage to stand without having to reach a nationwide ruling.
I think a lot of people expect that`s what`s going to happen.

O`DONNELL: Linda Greenhouse, thank you very much for joining us
tonight.

GREENHOUSE: Thanks for having me.

O`DONNELL: Chris Hayes is up next.

END

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