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'The Last Word with Lawrence O'Donnell' for Wednesday, May 15th, 2013

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THE LAST WORD WITH LAWRENCE O`DONNELL
May 15, 2013

Guests: Nia-Malika Henderson, Melanie Sloan, Sen. Claire McCaskil>


LAWRENCE O`DONNELL, HOST: President Obama took action today to try to
contain scandal fever sweeping Washington. He released 100 e-mails about
Benghazi, and he got rid of the head of the IRS.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Americans are right to
be angry about it and I am angry about it.

UNIDENTIFIED FEMALE: Two erupting scandals.

ALEX WAGNER, MSNBC ANCHOR: The IRS has been used as a political tool
throughout history.

OBAMA: We`re going to hold the responsible parties accountable.

STEPHEN COLBERT, COMEDIAN: Every day this week.

JON STEWART, COMEDIAN: Veritable storm of scandals.

COLBERT: Brings a new scandal.

UNIDENTIFIED MALE: Stop calling it a huge scandal.

UNIDENTIFIED FEMALE: Everybody simmer down now!

UNIDENTIFIED MALE: Let the facts speak for themselves.

OBAMA: The good news is, it`s fixable.

UNIDENTIFIED FEMALE: I don`t understand what they`re accusing the
president of doing.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: My question isn`t
about who is going to resign.

OBAMA: The acting commissioner of the IRS.

BOEHNER: My question is who is going to jail over this scandal?

OBAMA: I look forward to taking questions at tomorrow`s press
conference.

UNIDENTIFIED FEMALE: I don`t even understand what they`re accusing
the president of doing.

WAGNER: "The A.P." scandal engulfing the administration.

UNIDENTIFIED FEMALE: Let`s be clear that it is perfectly legal.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: We can`t count on
administration to be forthcoming.

UNIDENTIFIED MALE: Mitch McConnell gets hysterical over nothing.

OBAMA: To treat that authority with the responsibility it deserves.

CHUCK TODD, MSNBC ANCHOR: House Republicans are getting their chance
to put the president and his cabinet on the hot seat.

OBAMA: In the way it doesn`t smack of politics or partisan agendas.

BILL O`REILLY, FOX NEWS: You can`t connect it to him without gross
speculation.

UNIDENTIFIED MALE: Stop calling it a huge scandal.

OBAMA: I will not tolerate this kind of behavior.

RUSH LIMBAUGH, RADIO HOST: You let a president like Richard Nixon do
something like this.

CONAN O`BRIEN, COMEDIAN: Some Republicans saying President Obama
should be impeached.

LIMBAUGH: And there are calls and demands immediately for
impeachment.

O`REILLY: That`s insane.

O`BRIEN: Two words, fellows: President Biden.

(LAUGHTER)

(END VIDEOTAPE)

O`DONNELL: With the political media dizzy from very bad bout of
scandal fever, the president decided today the only thing that can get that
fever to down, show the political media that he is taking charge of scandal
management in the White House, even though there are no real scandals
involving the White House in any way.

First, the president dealt with talking points scandal that is not a
scandal. The White House released today 100 pages of e-mails that revealed
discussion that went on between the CIA and State Department over exactly
how to describe the attack in Benghazi, Libya, that killed our ambassador
to Libya, Christopher Stevens.

It is important to remember it is scandalous, it really is scandalous,
that an American ambassador was killed. There was a scandalous failure in
the State Department to provide adequate security to that ambassador before
that ambassador was attacked. It is a scandal that the ambassador was left
in such a vulnerable position in Benghazi.

The Obama administration conducted its own investigation of that
scandal late last year, and as a result, four State Department officials
were relieved of duties: the assistant secretary of state for diplomatic
security, the deputy assistant responsible for embassy security, and
unnamed official within the bureau of Near East affairs, and deputy
assistant secretary who have responsibility for North Africa.

But Republicans in Washington and no one else anywhere in the world
thinks that these scandals of Benghazi is what one person who had no
involvement in it at all said about it on television one Sunday morning.

Only in Washington could that be a scandal. And the 100 pages of e-
mails released today show as "The Washington Post" puts it, quote, "the
internal debate didn`t include political interference from the White House,
according to e-mails which were provided to congressional intelligence
committees several months ago."

So, Republicans had these e-mails for several months. They have known
there`s nothing incriminating of the White House, and only after
Republicans began to recite certain section of e-mails and after ABC News
misquoted those e-mails, only then did the president decide it was time to
make the e-mails public.

Benghazi talking points scandal should evaporate now, it should just
disappear. And there is a slight chance it just might because all of
Washington, all of Washington, now believes, Democrats and Republicans,
that they have a real scandal in what the Internal Revenue Service did.
And today the president tried to show that he was taking charge of that
one, too.

(BEGIN VIDEO CLIP)

OBAMA: I just finished speaking with Secretary Lew, senior officials
at the Treasury Department to discuss the investigation into IRS personnel
who improperly screened conservative groups applying for tax exempt status.

It is inexcusable and Americans have a right to be angry about it and
I am angry about it. I will not tolerate this kind of behavior in any
agency, but especially in the IRS.

So, here`s what we`re going to do. First, we`re going to hold the
responsible parties accountable. Today, Secretary Lew took the first step
by requesting and accepting the resignation of the acting commissioner of
the IRS, because given the controversy surrounding this audit, it`s
important to institute new leadership that can help restore confidence
going forward.

Second, we`re going to put in place new safeguards to make sure this
kind of behavior cannot happen again. Third, we will work with Congress as
it performs its oversight role. And our administration has to make sure
that we are working hand in hand with Congress to get this thing fixed.

Congress, Democrats and Republicans, owe it to the American people to
treat that authority with the responsibility it deserves in a way that
doesn`t smack of politics or partisan agendas because I think one thing
that you`ve seen is, across the board, everybody believes what happened in
-- as reported in the I.G. report is an outrage.

(END VIDEO CLIP)

O`DONNELL: Yes, everybody. Everybody but me. I do not believe what
the IRS was reported to have been doing is an outrage. I believe the IRS
agents in this case did nothing wrong.

Let me say it again. You won`t hear it anywhere else. The IRS agents
did nothing wrong. They were simply trying to enforce the law as the IRS
has understood it since 1959.

I have been telling you all week that the IRS is wrong about their
interpretation of the law, an interpretation that they introduced in 1959,
but it is not the fault of anyone working in the IRS today. It is now very
clear that what I`ve been saying about this is getting through to the White
House and we`ll have more about that later when I will show you more of
exactly how the IRS took a wrong turn under President Eisenhower and has
been on the wrong road on this one ever since.

Krystal Ball, my concern is the concern of all of Washington in this
segment, how is the president doing in his management of what I think are
the faux scandals?

KRYSTAL BALL, THE CYCLE: Yes, I think you`re doing an excellent job
of separating the perception and what the media wants to write and the
reality of these non-scandals.

Look, I think the president has done actually a very good job. He
went out today, he finally, I don`t know why he didn`t release the Benghazi
e-mails earlier, I guess he thought even for Republicans six months of
harping on talking points would be too much, but nothing is too much for
them.

O`DONNELL: Well, you know, part of it is he thought he did release
them earlier.

BALL: Right.

O`DONNELL: He released them several months ago to the people that
were so desperately interested in them. They had them, they read them,
nothing came of it.

BALL: And this has been his consistent flaw to the extent he`s had
one in his presidency, trusting too much that they`re operating in good
faith, that they`re interested in the facts, that they will, you know, if
they see the evidence there, that there was no on page 59, the White House
saying this will surely lead to, you know, the president being reelected in
2012, that they will move on to something else. But, clearly, that`s not
the case.

So, finally, he was forced to say here is what it is. And with the
IRS, I think he had to relieve somebody of their duty for people to feel
like he was taking charge and taking action, even though I agree with you
the real problem with 501(c)(4)s is not that these groups were targeted,
it`s that all groups aren`t being targeted and there isn`t more scrutiny
over political activities for 501(c)(4)s.

O`DONNELL: Richard, the thing -- there`s a very simple thing in
politics. When the IRS comes up as an elected official in America, it is
your obligation to attack them.

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Right.

O`DONNELL: There`s not an elected official who will find himself
defending the IRS publicly, pretty much at any time.

WOLFFE: Yes, you know, I recall in the late `90s actually when there
was nothing much else to talk about, the Senate was really obsessed with
the IRS and ATM fees. Two most loathed things in America when it comes to
finance.

Yes, you`re right, everyone hates them. No political capital as Bush
would have put it.

There`s a perception that has come out, not so much from the
president`s performance but by everyone else, this has been a fumble
operation. People haven`t projecting either knowledge of what went on or
control.

His appearance, though, as you saw today, much more forceful, but, you
know, when you get into a White House briefing and the attitude is, well,
we don`t know or that`s someone else`s problem, that`s not good enough.

BALL: But I will say with the DOJ, "A.P." scandal in particular, it
would be a scandal if the president was involved in the subpoenaing of
those telephone records if he knew more about the investigation, that would
be the scandal.

And I don`t -- I think it`s a completely unreasonable bar to expect
that he would know what some low level bureaucrats in Cincinnati were
doing. How can he possibly know what the millions of government employees
in the country are up to at all times.

O`DONNELL: Well, there`s a clear bar between the White House and IRS,
there has been since the Nixon administration, when there was no bar and
they just went absolutely crazy.

WOLFFE: Yes, that`s the one problem with the whole Nixonian meme
going on here. There isn`t actually a Nixon in the mid of it, steering the
agencies to do his political bidding.

BALL: Right.

WOLFFE: Nobody, not even the craziest talk on the right has been able
to say the president ordered this to happen because there`s no way for that
to happen.

O`DONNELL: Talk about crazy talk, speaker of the House of
Representatives, third in line for the presidency as they like to point out
saying, "Not who`s going to be fired, who`s going to go to jail." Talk
about prejudging a situation.

There isn`t a whiff of criminal conduct anywhere here.

BALL: Not all, you have Mitch McConnell, not directly saying the
president did this in the IRS, they`re saying this was intentional by the
administration, by an executive branch agency to chill the speech of
political opponents. They`re trying to make that connection.

(CROSSTALK)

O`DONNELL: -- application was approved, number one.

BALL: Exactly right.

O`DONNELL: Number two, you can do everything a 501(c)(4) allows you
to do without being a 501(c)(4).

A lot of them conducted their business without getting approved, even
went out of business before the applications were ruled on and it didn`t
make the slightest bit of difference.

WOLFFE: And (INAUDIBLE) Democratic organizations who underwent the
same scrutiny and the same delays who are about to come forward. That is
the next beat of the story.

BALL: Yes.

O`DONNELL: Can`t wait for that one.

BALL: Just very quickly, I think the Republicans are making the
mistake they have been making a long time, which is thinking that the
American public hates the president as much as they do.

O`DONNELL: Exactly.

Krystal Ball and Richard Wolffe, thank you both very much.

BALL: Thanks, Lawrence.

O`DONNELL: Coming up, more on the real scandal at the IRS, and how I
think the president is aware now what the real scandal is.

And Attorney General Holder`s confrontation with Congressman Darrell
Issa today.

And what do you do if you`re a senator that voted against what 90
percent of the people want? Well, one approach would be to lie and say you
voted for it. And that is why Senator Kelly Ayotte is in the "rewrite"
tonight.

(COMMERCIAL BREAK)

O`DONNELL: Everyone is wrong, everyone is wrong about the IRS
scandal. I have been fighting this lonely battle here this week. But,
now, finally, finally I have company. Some people finally are
understanding what I`ve been saying.

I got through two, President Obama and chairman of the finance
committee. You`ll here that, coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ERIC HOLDER, ATTORNEY GENERAL: I`m sure there must have been a good
reason why only the to and from parts were --

REP. DARRELL ISSA (R), CALIFORNIA: Yes, you didn`t want us to see the
details. Mr. Attorney General --

(CROSSTALK)

HOLDER: No, no. I am not going to stop talking thousand. You
characterized something as something --

UNIDENTIFIED MALE: Mr. Chairman, would you inform the witness as to
the rules of the committee?

HOLDER: And it`s too consistent with the way in which you conduct
yourself as a member of Congress, it`s unacceptable and it`s shameful.

(END VIDEO CLIP)

O`DONNELL: Eric Holder, mad as hell and he`s not going to take it any
more. That was the attorney general today talking to one of the
Republicans who sees scandal in everything the Obama administration says or
does.

Even Bill O`Reilly thinks Republicans are overdoing it.

(BEGIN VIDEO CLIP)

O`REILLY: The reason President Obama can get away with saying all his
troubles are caused by political attacks is that some on the right go way
beyond established facts, and in fact they`re giving him cover. The heavy
odds are that the president did not directly order the IRS to pound
conservative groups. Down the road, the IRS and "A.P." stories might
become nightmares for President Obama, but again, that has not yet been
established.

(END VIDEO CLIP)

O`DONNELL: Ari Melber, Bill O`Reilly -- almost the voice of reason
there. I mean --

ARI MELBER, THE CYCLE: Jon Stewart famously said that, you know, Bill
O`Reilly was the reasonable person at FOX. He`s sort of being like the
thin kid at fat camp.

O`DONNELL: Yes.

MELBER: But we do see that here, Charles Krauthammer, who is as right
as you get, has also said the Republicans are overplaying their hand. They
have compared every mini-wannabe scandal to Watergate, Solyndra, to the
leaks, to, of course, Benghazi, and now, these relatively low level
operational questions, which I`ve discussed with you should be
investigated, I.G.s should be involved, but these are not Obama level
issues.

And when you immediately say they are, you give away the game, in the
same sense that Attorney General Holder is the first one held in contempt
by the House, but it was a year ago when they did it over fast and furious,
over e-mails, about responding to congressional requests. They have
nothing left to go after Holder, they already did the worse they could do.

O`DONNELL: Let`s listen to what Charles Krauthammer has to say about
this.

(BEGIN VIDEO CLIP)

CHARLES KRAUTHAMMER, FOX NEWS: One advice I give to Republicans is
stop calling it a huge scandal. Stop saying it is a Watergate. Stop
saying it`s Iran Contra. Let the facts speak for themselves.

Have a select committee, facts speak for themselves, pile them on, but
don`t exaggerate, don`t run ads about Hillary. It feeds the narrative for
the other side that it is only a political event. It is not.

(END VIDEO CLIP)

O`DONNELL: Nia-Malika Henderson, what are the chances that
congressional Republicans were taking notes when Charles Krauthammer was
saying that and they will actually be guided by that in the future?

NIA-MALIKA HENDERSON, THE WASHINGTON POST: Absolutely no chance at
all. I mean, you`ve got Darrell Issa, who is like a kid in a candy store
at this point, he really feels like this is his moment. He feels like he`s
got some lines of inquiry here with these three scandals that we`ve seen.

You saw the president come out today and deal strongly with Benghazi
and the IRS scandal. It was a real drop the mike moment I thought at the
press conference for this president.

But on the other hand, you have Republicans who are already asking
more questions about this administration, what they knew, and who the IRS
low level aides got direction from. Portman, for instance, was out on the
radio saying I think you have a situation where you have some Republicans,
who might be worried about their immigration stands, their stance on same-
sex marriage in the case of Portman -- these scandals give them opportunity
to court and curry favor with a really far right wing of the base.

That`s why you see Boehner grabbing the Benghazi scandal and running
with it. And I think you`ll see more of that in the House.

O`DONNELL: Ari, this is such an important point Nia just brought up,
which is multidimensional nature of the politics of scandal. It`s not just
I want to taint the other guy with something, but it`s frequently I want to
you not pay attention to what I`m not doing, like anything on the budget,
and I need you to think I`m really a hardcore guy on this because I plan to
vote in a way that you aren`t going to like very much a few months from
now.

MELBER: Right. It`s certainly the case on the IRS where a key
constituency, the Republican Party, that`s always saying they`re not good
enough, is now in the news -- whether it was low level targeting or not --
they`re in the news, feel attacked. This is a way the Republicans can with
relatively low cost, I`m sorry to say, can go and make the bones there.

The comparison to Watergate you have been talking about several nights
which are overblown, the most interesting thing is Watergate was an example
of nonpartisan oversight. The Judiciary Committee had six Republicans that
voted on articles of impeachment for Nixon which forced his hand to resign,
because they weren`t putting party first.

Now, we`re seeing the opposite really of Watergate, is the oversight
process run as opposition research out of RNC. And that is why Bill
O`Reilly is nervous, because the public steps back and says, "I don`t trust
it."

O`DONNELL: Nia-Malika, there`s commentary from Rush Limbaugh and
others on this matter. But it seems to me given there are some things
brewing in Congress that the Republicans may actually act on that will
displease the Tea Party, the ability to be seen to be fighting for the Tea
Party, against of all things the Internal Revenue Service, is just a gift
that the Republicans cannot resist.

HENDERSON: That`s right. It is a gift and, you know, in many ways
you look at what the rhetoric of the Tea Party has been all along, which is
that they`re out to get us. This IRS scandal really plays very well into
that.

So you have folks looking at this 2014 re-election, they feel like
they have the narrative they want going into 2014, which is that this is an
administration that thinks it is, you know, king Obama in some ways and all
about government overreach, and you feel like that`s what they`re going
into 2014 arguing, what sort of legislation, what kind of governing
philosophy they will run on. It looks like not much of anything, and that
their plan so far is to be the obstructionists for Obama`s agenda.

I think the problem again for Obama is the same and that is he`s got
to go through John Boehner for any of his legislative agenda, whether with
the budget, the grand bargain, immigration. I don`t think that equation
has changed.

O`DONNELL: And, Ari, in terms of 2014 campaign, there`s no evidence
in our record of these kinds of campaigns that there`s anything in this
that can help Republicans, because President Obama is not running, they`re
running against individual members of the House and senators, there`s no
way on earth you can assign the IRS thing or "The A.P." thing or Benghazi
or anything else you want to any Democratic member of the House or Senate.

MELBER: No. I think this could be a mobilization strategy for
hardcore Tea Party Republican base. The problem is those folks are already
behind the House congressional candidates. I think that`s their problem.

O`DONNELL: Yes. Nia-Malika Henderson, and Ari Melber, thank you both
very much for joining me tonight.

MELBER: Thanks.

HENDERSON: Thank you.

O`DONNELL: Coming up, the IRS scandal, the real scandal, the one
that`s been going on for decades, it has been going on longer than the IRS
workers who were caught up in this one have been alive. We`re going to get
to that, coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: Everybody believes what happened as reported in the I.G.
report is an outrage.

(END VIDEO CLIP)

O`DONNELL: As faithful viewers of the program know, not everybody
does believe that. I don`t.

What happened was the Internal Revenue Service agents were trying to
do their jobs, jobs made impossible by an incorrect interpretation of the
law that the IRS made in 1959. That`s when the IRS got this wrong.

It was then that the IRS, as I have been telling you since the story
started, changed the language of the law without any authority to do so.
Here is how the tax law was written in its latest update in 1954 on
501(c)(4) social welfare organizations -- 501(c)4 designation was to apply
only to, quote, "civic leagues or organizations, not organized for profit,
but operated exclusively, exclusively for the promotion of social welfare."
Exclusively!

But a 1959 interpretation guideline written by the IRS says that to be
operated exclusively to promote social welfare, an organization must
operate primarily to further the common good and general welfare, and
there`s not an English teacher in the world who couldn`t tell you how wrong
that sentence is.

With absolutely no legal authority to do so, the IRS changed the word
"exclusively" to mean "primarily". And then the IRS never defined what
they meant by primarily, never.

Now, I have been a very lonely voice in the woods on this matter,
until today. Last night, I said on this program the government has been
wrong about 501(c)(4)s for so long it was entirely possible no one in the
government knew how wrong everyone in the government is about this.

Someone from the staff of the Senate Finance Committee where I used to
work must have heard that and altered the chairman of the Senate Finance
Committee`s take on it today to say this.

(BEGIN VIDEO CLIP)

SEN. MAX BAUCUS (D), SENATE FINANCE COMMITTEE CHAIRMAN: There`s
another important question that needs to be asked. Is there a fault in the
tax code that may have contributed to the IRS taking such unacceptable
steps? Do we need a better definition of an organization to qualify for
tax exemptions? Do we need to revisit -- do we need to revisit the role
tax exempt organizations play in our political system?

What part of the tax code has to be changed for us to guarantee this
overreach never happens again?

(END VIDEO CLIP)

O`DONNELL: All good questions. And as a dutiful former chief of
staff of the Senate Finance Committee, who used to sit right on the Senate
floor beside the chairman there, I am once again ready to supply a Finance
Committee chairman with the answer. This time I won`t be whispering it in
his ear.

The answer is no part of the tax code has to change to ensure that
this never happens again. We simply need to enforce the tax code, which
says 501(c)4 organizations are civic leagues or organizations not organized
for profit, but operated exclusively for the promotion of social welfare.
That word exclusively would mean that no political organizations would ever
be able to get 501(c)4 status, no Tea Party organizations, no Democratic
party organizations, no Republican party organizations, no Libertarian
organizations, no organizations of any kind.

No political organization should ever, ever have gotten 501(c)4
status. And that is exactly what the law already says. It seems that
overnight someone at the White House has tipped off the president about the
problem of the law versus the IRS interpretation of the law. And I don`t
know where anyone in the White House would have learned that other than
this program, since no one in Washington has said a word indicating that
they know anything about it.

So let`s listen carefully to this part of what the president had to
say today.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We`re going to have to
make sure that the laws are clear so that we can have confidence that they
are enforced in a fair and impartial way, and that there is not too much
ambiguity surrounding these laws.

(END VIDEO CLIP)

O`DONNELL: The rogue at the IRS who created the ambiguity was the
chief counsel of the IRS in 1962, who was, of course, appointed by
President Kennedy. Crane C. Houser knew that there was a difference
between the law as written and the IRS interpretation of that law. And he
acknowledged a policy decision as to whether the language of the statute or
the language of the regulation`s controls should be reached.

But he not only refused to reach it, he chose to deny 501(c)4 status
only to organizations that are primarily engaged in political activity.
And thus the deed was done, and IRS agents were left to try to figure out
just how political organizations could be and still get tax exempt status
under 501(c)4.

Today, Citizens for Responsibility and Ethics in Washington have done
in writing, in an official pleading to the Internal Revenue Service, what I
have been trying to do on this program. In a 17 page filing that contains
a masterful history of how wrong the IRS has been for so long about this
matter, they are asking the IRS to simply enforce the law as written by
Congress, and to drop the IRS false interpretation of that law.

The pleading says, "it is critical that the IRS act now by
promulgating new regulations that comport with the statutory requirement of
501(c)4 organizations to be operated exclusively for social welfare
purposes."

Joining me now, Melanie Sloan, executive director for Citizens for
Responsibility and Ethics in Washington. Thank you, Melanie Sloan! I am
not alone any more on this issue. I love this document, your 17 page
document, I have been reading and underlining all day.

I`ve got to say, I`ve never seen anything like this in law. You know
in the legislative process, people fight for days, sometimes weeks, months,
over single words like exclusively. And someone got that word exclusively
into the law. And then at the IRS, they just changed it to primarily, and
they changed everything, didn`t they?

MELANIE SLOAN, PEOPLE FOR RESPONSIBILITY AND ETHICS IN WASHINGTON:
They did. And it happened, as you said earlier, decade ago, starting in
1959. And the IRS has been well aware that this has been a problem for
decades. In the `60s, this was raised. In the `70s, it was raised. There
has always been this problem between the statutory language, which is what
Congress passed, which says exclusively, and the regulation enacted by the
IRS which says primarily.

And then the IRS made matters all the worse by never defining
primarily and what a primary purpose is, not that, by the way,
organizations haven`t walked well over whatever the primary purpose line
could possibly be anyway. Many people view it as about 50 percent. But
groups like the American Action Network have spent well over 60 percent of
their budgets on political activities, clearly in violation of even the
primary purpose test.

So this has been a very long problem. And in fact, a crew and a
plaintiff, former Congressional candidate David Gill, sued the IRS over
this failure to have a regulation that complies with the law as early as
February. But it has been very hard to get any traction on this issue, to
get people to talk about the issue of 501(c)4s until this scandal broke.

O`DONNELL: Well, Melanie, the great news is we just heard the guy who
can fix this, the chairman of the Finance Committee, on the Senate floor,
who seems to get the point. And President Obama very clearly gets it. He
kind of put it at the end of his statement today, in a thing that all of
the media will not understand. But he gets it, that there is a problem
with the way the law is being administered. There`s no problem in the way
the law is written. The law is written beautifully.

SLOAN: That`s right. And the IG in the IG report, he, too,
recognized that this was an issue, that IRS employees are really
floundering. They don`t know how to enforce the law. They don`t know what
the law is. There`s never been any clarity for them. That`s why we`re in
this state.

What really needs to happen is the IRS needs to go back and get rid of
this regulation. And the IRS has been asked several times over the past
couple of years to deal with this problem. And whenever asked, they say
well, they`re aware of the problem. But aware of the problem isn`t doing
something about the problem.

O`DONNELL: Melanie Sloan of Citizens for Responsibility and Ethics in
Washington, a group that operates honorably as a 501(c)3, thank you very
much for joining us tonight.

SLOAN: Thank you.

O`DONNELL: Coming up, how one Republican senator who voted against
expanded background checks is now trying to say -- she`s actually saying it
-- that she voted for them. That, of course, is one way to get into
tonight`s Rewrite.

And Senator Claire McCaskill will join me to talk about her reaction
to the latest sexual assault case in the military and legislation she`s now
introducing to stop it.

(COMMERCIAL BREAK)

O`DONNELL: In tonight`s episode of the Politics of Religion, a
candidate for mayor of North Miami, Florida, grabbed attention with an
unusual endorsement on her fliers. Anna Pierre says she was endorsed by
Jesus Christ. She said the revelation came to her in a dream.

(BEGIN VIDEO CLIP)

ANNA PIERRE, CANDIDATE FOR MAYOR OF NORTH MIAMI, FLORIDA: Yes, Jesus
endorsed me.

UNIDENTIFIED MALE: Does he like you more than the other people
running for mayor?

PIERRE: Well, this is funny. Listen, if he likes me more, I don`t
know about if he likes me more. But what I can tell you, I know he loves
me very much.

(END VIDEO CLIP)

O`DONNELL: Anna Pierre, who is now a registered nurse, actually came
in last out of seven candidates, which prompted her to say "North Miami
chose Lucifer over Jesus. Thank you for your trust and support."

Wow. Anna Pierre is going to be very hard to top in tonight`s
Rewrite, which, of course, is coming up next.

(COMMERCIAL BREAK)

O`DONNELL: So what do you do when you`re the junior senator from New
Hampshire and you voted against something that 90 percent of America is in
favor of.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I received your four page letter regarding guns
and background checks. I really don`t understand. It doesn`t make sense
to me. What is wrong with universal background checks?

(APPLAUSE)

(END VIDEO CLIP)

O`DONNELL: That`s what happened to New Hampshire Republican Senator
Kelly Ayotte after she voted against expanded background checks for gun
purchases. Senator Ayotte kept running into the 75 percent of New
Hampshire voters who supported the billed that she voted against. She kept
running into the 56 percent of New Hampshire Republicans who supported the
bill that she voted against.

And her poll numbers in New Hampshire changed dramatically. After the
vote, the number of voters who disapproved on the job she was doing jumped
to 46 percent. That`s 11 points higher than it was back in October.

Senator Ayotte kept trying to explain why she voted against what the
people of New Hampshire wanted. But New Hampshire just wasn`t buying it.

Then came this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Ayotte campaigning.

SEN. KELLY AYOTTE (R), NEW HAMPSHIRE: Washington needs a good dose of
New Hampshire common sense.

UNIDENTIFIED MALE: Well, 89 percent of New Hampshire support
comprehensive background checks. But Ayotte votes no. A conservative pro-
gun Democrat and a Republican come out with a tough on crime background
check bill that keeps guns away from criminals while protecting the Second
Amendment, but Ayotte votes no.

No to police, no to fighting crime, no to background checks for
criminals. That`s not --

AYOTTE: New Hampshire common sense.

O`DONNELL: That`s gone Washington.

(END VIDEO CLIP)

O`DONNELL: That ad was sponsored by Mayors Against Illegal Guns,
which is supported largely by the wealth of New York City`s billionaire
Mayor Michael Bloomberg. Kelly Ayotte knew she had to fight back. For
Kelly Ayotte, that meant having the NRA do her fighting for her. The
National Rifle Association paid for this ad.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Seen this TV ad paid for by New York City Mayor
Michael Bloomberg? Don`t believe it. Kelly Ayotte voted for a bipartisan
plan to make background checks more effective. Here is her vote. Ayotte
voted for a bipartisan plan to reform our broken mental health system.
Ayotte voted for more resources to prosecute criminals who use guns. Kelly
Ayotte stands with prosecutors and police for New Hampshire values.

(END VIDEO CLIP)

O`DONNELL: Yeah. The National Rifle Association`s defense of Kelly
Ayotte`s vote against background checks was to say she actually voted for
background checks, something that the NRA opposed. And here is how that
particular slight of hand works. It is a standard Washington trick. After
Kelly Ayotte stood on the Senate floor as part of a minority that was able
to block the will of the majority of the Senate to legislate expanded
background checks, she stood on the Senate floor and voted for a fake
background check bill, so that later she could claim, if she needed to,
that she voted for some kind of background checks.

The bill that Senator Ayotte voted for was, in effect, written by the
NRA and actually would have weakened the current law on background checks
and would have made it easier for people with dangerous mental illness to
get guns. So Kelly Ayotte voted for the NRA`s rewrite of the bipartisan
background check bill, written by Senators Joe Manchin and Pat Toomey, the
one that everyone was really paying attention to. And now the NRA and its
TV ad is rewriting Senator Ayotte`s vote to sound like she voted for the
Manchin/Toomey Bill, the thing that New Hampshire wanted her to vote for.

Senator Ayotte is also getting help lying to New Hampshire from
Senator Marco Rubio, who is exploring just how much you can lie to New
Hampshire in an ad that his super PAC is running for Kelly Ayotte. Rubio
is, of course, hoping you can lie a lot to New Hampshire, since he will be
running for president in the New Hampshire primary next time around. Here
is Marco Rubio`s lie to New Hampshire about Kelly Ayotte.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Safety, security, family. No one understands
these things like a mom. And no one works harder for them than this one.
A former prosecutor, Kelly Ayotte knows how to reduce gun violence. Ayotte
voted to fix background checks, strengthen mental health screenings, and
more resources to prosecute criminals using guns.

Washington might not like it, but you can count on it.

(END VIDEO CLIP)

O`DONNELL: What the -- what do you mean Washington may not like it?
Washington would have loved it if Kelly Ayotte actually vote to expand
background checks. America would have loved it. She would have joined the
majority of the United States Senate who have voted to do that. She is not
bucking Washington by voting against expanded background checks. She was
bucking America. She was bucking New Hampshire.

And as we have already seen in the town hall meetings and in the
polls, New Hampshire doesn`t like it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Ayotte stands for our values, not theirs.

(END VIDEO CLIP)

O`DONNELL: Meaning Kelly Ayotte stands for the NRA`s values, not New
Hampshire`s.

(COMMERCIAL BREAK)

O`DONNELL: As reported here last night, the Pentagon is dealing with
another sexual assault allegation involving an officer who`s supposed to be
a leader in sexual assault prevention. Last week, it was the Air Force.
This week, it is the Army. A coordinator for the Army`s Sexual Assault
Prevention Program at Fort Hood, Texas, is being investigated for possibly
forcing one of his subordinates into prostitution and sexually assaulting
two others. In a statement released last night, Armed Services Committee
member Senator Claire McCaskill asked "are folks filling these jobs who
aren`t succeeding elsewhere? Or are these jobs being given to our best
leaders?"

Today Senator McCaskill and New Hampshire Senator Jeanne Shaheen wrote
a letter to Secretary of Defense Chuck Hagel urging him to make all sexual
assault prevention jobs what they call a nominative position, meaning that
they would require a rigorous application screening and interview process,
enabling direct leadership involvement from the commander, who would now
hand pick that person.

Joining me now, the senior senator from Missouri and a member of the
Senate Armed Services Committee, Senator Claire McCaskill. Senator
McCaskill, I cannot believe that we are back here on this subject in this
way once again.

SEN. CLAIRE MCCASKILL (D), MISSOURI: Yeah. I think what we`re seeing
here is how far behind the military is in terms of changing their culture
and recognizing this is a serious crime, and that we need to prioritize
going after the criminals, and we need to focus like a laser on that.
Clearly the people they`ve put in these jobs are not the right people for
these jobs. That`s why we draw up legislation today to codify a
requirement that they retrain, rescrub, reprioritize this particular line
of work in the military, and put strong leadership there, instead of
obviously folks that are being put there to end their careers or tread
water.

O`DONNELL: Senator, the military is all about career advancement.
It`s all about moving up the ranks.

MCCASKILL: Right.

O`DONNELL: So how do you make this job something that people should
actually seek in order to move up in rank, if they do it well?

MCCASKILL: Well, that`s exactly at the heart of this, is how do we
change the culture that the folks that go to the jobs are not seen as the
ones that have an upper trajectory. Because you`re exactly right,
Lawrence. In the military, it is all about are you moving up. This is not
seen as a move up. This is seen as a lateral move or a place where people
go to end their careers.

We`ve got to change that. What we`re trying to do with everything
we`re doing around this subject is get the military`s attention that the
only way -- they`re not going to train their way out of this. They`re not
going to tell people to have the buddy system or don`t say yes if you`ve
been drinking. We`ve got to make sure we`ve got professional prosecutors,
victim advocates, a justice system that`s professionalized. And we need to
taking this buddy culture out of it completely, which means changing how
these jobs are viewed internally in the military.

O`DONNELL: Senator, on this issue of career advancement, we have seen
the case of Air Force Lieutenant General Susan Helms, who has been
nominated by President Obama to become the vice commander of the Air
Force`s Space Command. And she was nominated by the president to do that
after she, in a very controversial move, overturned a finding in one of
these kinds of cases, did exactly what you`ve been complaining about in the
military, very striking here that it was done by a woman officer. What is
your response to a situation like that?

MCCASKILL: Well, this case, frankly, did not get out in the public
domain until I discovered it through conversations with a lot of different
prosecutors in the military. Then I said to my staff, let`s check and make
sure she is not going through on a promotion. Sure enough, we found her
name.

So we`ve held her nomination for now. I had an opportunity to visit
with her. We are looking at the specifics of the case. It is a tough
situation. She`s had an outstanding career. But she did decide to
overturn the decision of a jury she handpicked over whether or not there
was sufficient evidence and who was telling the truth.

And frankly, that`s what we`ve got to stop. We have got to stop the
ability of these generals to second guess the people who are in the
courtroom deciding the credibility of the witnesses, because that`s what
these cases turn on, Lawrence. I`ve done many of them in the courtroom.
So often, these cases are who`s telling the truth. And you`ve got to rely
on the jury in those instances, and not supersede their judgment by a
general after the fact, who has no really working knowledge of the case.

O`DONNELL: Senator Claire McCaskill, thank you for fighting this
fight on behalf of our military service personnel. Thank you for joining
us tonight.

MCCASKILL: Thanks, Lawrence.

O`DONNELL: You have to wonder where this fight would be without those
women senators.

Chris Hayes is up next.

END

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