updated 5/17/2013 10:52:36 AM ET 2013-05-17T14:52:36

THE LAST WORD WITH LAWRENCE O`DONNELL
May 16, 2013

Guests: Jay Carney, Sam Stein, Joy Reid, Murray Mittleman

LAWRENCE O`DONNELL, HOST: It has been a rough week for my first
guest, White House Press Secretary Jay Carney.

(BEGIN VIDEOTAPE)

JON STEWART, COMEDIAN: Yesterday, Press Secretary Jay Carney.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: I`m here today to take
questions.

STEWART: Stood and let the wind and rain pummel him for our
entertainment purposes.

REPORTER: One more on the IRS. Is the president concerned --

REPORTER: You said the IRS`s credibility at stake here?

REPORTER: -- about the allegations.

CARNEY: Allegations of what, sorry?

REPORTER: Should those officials be punished?

CARNEY: I appreciate the effort to generalize the question.

REPORTER: On "The A.P." (INAUDIBLE) what stopped the president from
picking up a phone?

REPORTER: Does it involve multiple months?

REPORTER: What happened?

REPORTER: Is the president at all concerned?

CARNEY: Thank you for that question.

REPORTER: On Benghazi, are you willing to release the e-mails?

REPORTER: What role did the White House play?

CARNEY: I`ve answered this question several times. I`m happy to
answer it again, if you let me.

REPORTER: That still doesn`t antibiotics the question.

(INAUDIBLE)

REPORTER: Can you answer my question?

REPORTER: There`s one more thing --

CARNEY: Thank you for that question. I appreciate the question. I
appreciate the effort to generalize the question.

REPORTER: What about you? Have you dreaded this week`s briefings
more than any other?

CARNEY: It`s a personal question and a great question.

REPORTER: You appreciate it.

CARNEY: I --

(LAUGHTER)

CARNEY: Yes. In this case, I actually do. It may sound odd, but I
enjoy coming out here when it is challenging, because I think that this is
a portion of our democracy at work. And to be a part of that is a rare and
unique privilege.

(END VIDEOTAPE)

O`DONNELL: Joining me now, White House Press Secretary Jay Carney.

Thanks for doing this tonight, Jay.

CARNEY: My pleasure, Lawrence. Thanks for having me.

O`DONNELL: Jay, yesterday you had the acting director of the IRS
leave at the president`s request. Today, you had Mr. Grant also leave. He
had closer jurisdiction over nonprofits.

Did the president ask for that resignation also?

CARNEY: The president asked that senior leadership at the Treasury
Department take appropriate action. And, you know, we`ve seen Secretary
Lew in response to that ask for and accept the resignation of the acting
IRS commissioner. You`ve seen that the president will be putting in place
a new acting commissioner.

And we as the president said expect for further action to be taken as
the facts are established here about who is responsible for the clear
failures at the IRS, in this matter.

I mean, nobody has been more outraged by the actions that were
reported in this inspector general`s review. And no one has been more
decisive in taking action to deal with it.

We had to wait until we had the inspector general`s review. We
couldn`t act before we got it. We couldn`t act on news reports that
partially told us the story. We had to wait for the actual independent
inspector general`s review.

Once we had that, the president acted very quickly and made his view
on this very clear. We need to be able to ensure that the American people
can have faith that an institution and agency like the IRS is enforcing our
tax laws in a fair and neutral way across the country. And that`s what the
president is going about the business of doing, because when problems arise
on his watch, he will act decisively to fix them.

O`DONNELL: I`d like to clarify as a point on the calendar when the
president first knew there was any kind of problem of this sort at the IRS.

CARNEY: From news reports on Friday, which is when I found out.

O`DONNELL: So even though there was an I.G. report being done,
nothing that had happened in any of the investigative stuff going on prior
to Friday, none of that ever made its way to the president? No awareness
of that?

CARNEY: That`s correct. And what I have said here from the briefing
room, Lawrence, is that the White House counsel was notified as is routine
in Washington, as you know from your experience here, that there was an
I.G. review going on that was looking at conduct at the IRS, very top line
notification. And that was roughly three weeks ago. And that process was
coming to a conclusion, which is why the notification went out.

But we had no details. We had no specifics about what the allegations
would be, or what the conclusions would be. And therefore, we had to wait
for the report to come out.

O`DONNELL: And as we know, there is probably no more sensitive
interaction with the citizenry in the government than the IRS interaction
and yet the IRS commissioner, you knew this, was resigning last year. The
president had advanced knowledge of that.

Why has the White House done nothing, nominated no one, to replace the
IRS commissioner who left last year?

CARNEY: Well, Lawrence, he finished his time of service, I believe,
in November. We have been in this process of a transition into a second
term with a lot of very senior level spots to fill, nominating a number of
high-level personnel for cabinet secretary positions and the like. And,
you know, we are working through that. The president is working through
that.

There was -- I mean, I think it`s important to note that that IRS
commissioner, because of the way that the agency works, and its positions
are filled, is -- was on a fixed term. He was appointed by and nominated
by President George W. Bush, and in the interim, there was an acting
commissioner who has now since resigned.

But, you know, it`s important, as I read the I.G. report, the review,
the activity that was improper, that was found by the I.G., occurred prior
to that, prior to the transition to an acting commissioner.

O`DONNELL: Knowing --

CARNEY: Having said that, you know, what you`ve seen the president do
is take the action he did, in directing Secretary Lew to move forward on
making some changes, and insisting that everyone who is found to be
responsible for the failures that we have seen in this be held accountable.
And that`s what he`ll insist happens.

O`DONNELL: Jay, has someone in the White House counsel`s office
actually read the law or given the president a copy of the statute that
created the 501(c)(4)s and that law says civil leagues and organizations
not organized for profit but operated exclusively for the promotion of
social welfare?

CARNEY: Well, the president himself, as you know, is a lawyer and
taught constitutional law. I`m not sure if he has read that word for word.
I`m sure that some of the very highly qualified lawyers who work in the
White House counsel`s office have.

And that goes to a broader issue about this specific section of our
tax code. I think experts should address that, not me. But if there need
to be, you know, improvements in how that is adjudicated and how that is
applied, that`s one thing. On the matter at hand here, as the president
has been very clear, the behavior articulated in the I.G. report is
unacceptable.

And regardless of the intent, and the I.G. report says that if he did
not find any indication that there was outside influence or a partisan
intent here. But regardless of the intent, it`s wrong and it needs to be
corrected and people need to be held accountable.

O`DONNELL: Well, Jay, as an expert on the tax code, I accept your
invitation to interpret it for you. Having written some of it myself, but
not this provision. I just read to you --

CARNEY: Oh, you`re not going to take the fall for that?

O`DONNELL: Not this one. This is 1959.

The law, most updated version of the law was 1954. And it said "civic
leagues or organizations not organized for profit but operated exclusively
for the promotion of social welfare", in 1959, President Eisenhower`s IRS,
changed the word "exclusively" to "primarily", without any congressional or
legal authority. They did it in what they call their guidelines for
enforcement, which as you know, every agency does with things that come
their way. They interpret the laws.

That was a change of law executed by the IRS. And as the president
should know about, at this point in this story, "The New York Times" --

CARNEY: Lawrence, I don`t doubt he knows about it and I don`t doubt
he is fully aware of the broader issues here, but I just want to be clear,
whatever discussions may be had in the future about that aspect of our tax
law and how it is enforced, that`s one thing.

The other thing is that the conduct that has been revealed by this
I.G. report is unacceptable. And it needs to be dealt with.

O`DONNELL: Jay, I want to get to the Benghazi e-mails. What was the
delay in releasing this 100 pages of e-mails, which having been examined by
everyone, it`s hard for us to comprehend why the White House was holding
back, especially --

CARNEY: Wait, wait, let`s be clear, Lawrence. We weren`t holding
them back. The very members of congress, Republicans, who tried to turn
this again into a scandal, when, in fact, there is nothing there, were the
ones -- many of them, who had seen these e-mails, because the White House
provided those e-mails to the members of the relevant committees, as well
as members and their staff in leadership many months ago in February.

This has been, you know, part of the pattern of politicizing this
issue that I think most Americans see through. And we saw, again, when
they came to releasing the e-mails, there is a long standing history here -
- and you are more familiar with this, even, than I am -- I`m sure, of
protecting the internal deliberations, the communications in a White House,
that`s a long-standing position that has been held by administrations of
both parties. And so, you do not release that kind of communication
lightly.

In this case, because in an extraordinary circumstance, related to the
confirmation process for John Brennan, CIA director, we made those e-mails
available in the way that we did. In camera, which means that members and
staff could look at then, spend as much time as they want, take notes,
sometimes verbatim, as it turns out, sometimes not.

And at the time, when those were reviewed in the context of John
Brennan`s confirmation process, Republicans found themselves satisfied,
that they felt they had the information they needed and the confirmation
went forward. And John Brennan is now in place at the CIA, where he will
be an excellent servant to the public, as he has been for so long.

Now, what happened a few months later, there was a decision by
Republicans, I assume, one has to assume, in Congress, to leak selectively
these e-mails that had been provided to them. And we saw what happened.

So, in reaction to that, we took the step of simply releasing them.
There was a little bit of a process that had to be gone through to make
sure that proper declassification took place. But we released them,
because we knew, as we have said all along, that the truth was on our side
here. That the fundamental issue going back to the Sunday shows after the
attacks in Benghazi, that Republicans made a big deal about, was that
Ambassador Rice went out and said it was our best estimate, based on
intelligence reports, there had been a spontaneous protest that evolved
into these violent attacks on our facility.

That piece of information turned out to be wrong, and Republicans
excoriated her and the administration for that. What we have said all
along and what these e-mails proved is that that was the assessment of the
CIA. That was the assessment of the intelligence community. And it was an
assessment that was made with the caveat that our understanding of what
happened would change, and as more information became available, we would
provide it. And we did.

When that became not to be the case, when it became understood that
there had not been protests, or that that became the assessment of the
intelligence community, we made it clear that the head of the NCTC, Matt
Olsen, testified before Congress to that fact, not long after Susan Rice
appeared on those Sunday shows.

So, this is -- what this demonstrates is that what we have been saying
all along is a fact, Republicans have politicized this when the real
tragedy was what happened in Benghazi and the loss of four Americans, and
the need to find out who is responsible and bring them to justice. And the
need to take action to assure that never happens again. And that`s what
the president and Secretary Clinton did in setting up the Accountability
Review Board, and in implementing all of the recommendations from that
review, which was very unsparing, as you will recall.

O`DONNELL: Jay, Thursday -- sorry, yesterday you decided to actually
release the e-mails publicly, which is a very big new step. And I`m
wondering, what was the final straw there that forced that? Was it ABC
News with Jon Karl, completely misquoting one of the e-mails presenting it
as fact as a quote when, in fact, not one sentence he presented was
actually in the e-mail?

CARNEY: Well, without specifying reporters, it was definitely the
case that the leaks provided by Republicans, presumably, on Capitol Hill to
reporters were selective and in some cases elaborated on or fabricated.
And because of that, we decided that we had to take the action we it,
because we knew that -- we knew what the facts were and we felt this was an
important step to take.

The reason that I -- we had not done this in the past, that we had
provided them to Congress, which was already an extraordinary step, is
because these are communications that tend to be protected for all of the
reasons that are important in a deliberative process within the White
House.

But we took that step, because we knew that they would demonstrate
what we have been saying all along. That Ambassador Rice was speaking
based on talking points, provided by the CIA. And that the fundamental
error in those talking points was corrected by us when we became -- when it
became clear that new information shed new light on what happened, and this
was not a case as Republicans charged again and again, that Ambassador Rice
had, at the direction of the White House or anyone else, said what she said
about our understanding that there had been protests. That was the
intelligence that she was provided.

O`DONNELL: Jay, quickly, before you go, on "The A.P." story where the
Justice Department has been investigating, "The Associated Press", I have
the feeling if you were back in our old job at "Time" magazine, you may be
one of the complaining chorus in the White House press corps about that
being overbroad, reaching for too much, and that this is exactly what the
press has to fear in this kind of situation with the government.

CARNEY: Well, I addressed this, Lawrence, as you know. I was asked
about this from the podium. And I can tell you two things. As a citizen,
I believe it`s important that we do not tolerate leaks of sensitive,
classified information that can endanger our national security and endanger
the lives of Americans in uniform and working abroad in pursuit of our
national interests. I think that`s very important.

I am also firmly of the belief that we need to protect the First
Amendment, provide the freedoms that are contained within it to the press
and to individuals, to speech. And the president believes that very
strongly too. And that is why as a senator and again as president, he has
pushed a media shield law that when it was negotiated in the fall of 2009,
had the support of everyone from the "Washington Post" editorial board to
federal prosecutors. And we need to get about the business of turning that
into law and the president will happily sign it.

O`DONNELL: White House Press Secretary Jay Carney, thank you very
much for your time tonight. Really appreciate it.

CARNEY: Lawrence, thanks for having me.

O`DONNELL: Alex Wagner and Sam Stein have been standing by, taking
notes, ready to go, in reaction to what they just heard.

And in the rewrite tonight, the stupidest thing the speaker of the
House has ever said, and why the rest of Congress, Democrat and Republican,
aren`t much smarter than the speaker when it comes to understanding what
happened at the IRS.

And later, as medical marijuana continues to march toward legalization
across the country, a new study shows, there could be more health benefits
to marijuana than just a pleasant pain killer.

(COMMERCIAL BREAK)

O`DONNELL: Twenty-three percent of voters think Benghazi is the
biggest political scandal in American history. And of the people who think
it is the biggest political scandal in American history, 39 percent of them
do not know where Benghazi is. No idea.

Up next, Alex Wagner and Sam Stein will join me.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CARNEY: The president himself, as you know, is a lawyer, and taught
constitutional law. I`m not sure if he`s read that word for word. I`m
sure that some of the very highly qualified lawyers who work in the White
House counsel`s office have.

And that goes to this specific section of our tax code. I think
experts should address that, not me. But if there need to be improvements
in how that is adjudicated and how that is applied, that`s one thing.

On the matter at hand here as the president has been very clear, the
behavior articulated in the I.G. report is unacceptable. And regardless of
the intent --

(END VIDEO CLIP)

O`DONNELL: Alex Wagner, I think it`s clear now that the president is
aware that there is something funny, because in the last couple days, he
has said we have to look at the law, we have to look at the law, and make
sure it`s being interpreted correctly, which is his way of signaling, there
is a solution in this law.

But the politics of this are very, very simple. If the IRS has
bothered anyone, your job as a politician is to attack the IRS. That`s why
there is not one elected official in Washington standing up going, excuse
me, actually, some of what they do, they do pretty well. Like this is not
--

ALEX WAGNER, MSNBC ANCHOR: That`s why the tax man cometh is a bad
thing, and not a heralding proclamation.

O`DONNELL: Right.

WAGNER: I mean, I think, actually, Lawrence, this is an uncomfortable
subject, because it`s really ultimately about money and politics, right? I
mean, this is about the influence of 501(c)(4)s in the political arena and
also super PACs. But 501(c)(4)s have been around a long time and we talk
about Citizens United and super PACs influencing the political arenas and
races.

But 501(c)(4)s, as you have pointed out, are influential and should
not be tax exempt. This is an uncomfortable place for the administration,
given where the president is right now in terms of super PACs, fund-raising
and money and politics and sort of where he was as a candidate.

And so, to some degree, it is an awkward dance they are forced to do
on the subject.

O`DONNELL: Sam?

SAM STEIN, THE HUFFINGTON POST: Well, yes, exactly. And one of the
underlying aspects of this I.G. report, it was not as much of a problem of
filtering out these groups but they also concluded that the IRS was giving
501(c)(4) status who were clearly not in the social welfare business and
didn`t deserve that tax exempt status. And that`s a huge problem because
you have tons of anonymous donors giving huge checks and they`re not doing
social welfare. They`re not abiding by the law.

So that is a secondary problem that has similar important
ramifications as being totally lost in this conversation. I think that,
you know, a smart politician will pivot off of this, try to find some sort
of sensible campaign finance reform that deals with the law itself, and
just go at it. And say this is what we need to do. We need to figure out
how to control these outside groups, how to control the influence of money
and politics, in a sensible way, without these filters, without the
political strings attached.

O`DONNELL: There`s two hearings coming up from the tax committees.
The House does it tomorrow, Ways and Means. Finance, next week. There is
no question in my mind that someone in the Ways and Means Committee
tomorrow is going to point out the statute, and the press will probably
ignore it.

And then -- but Tuesday, I think in the Senate Finance Committee,
second round of this, I think next week is when the press is going to start
to get, oh, yes, you know, there is something there.

I mean, E.J. Dionne has a great column today where he talks about the
change -- where the IRS changed from exclusively to primarily, all on their
own. And then in a private joke to me today, E.J. made the point of
imagine that your marital vow was changed in 1959 from exclusively to
primarily. Would anyone think that any difference had just happened?

WAGNER: No, it`s a massive change. It`s a massive change, and to
look at the groups that are tax exempt because they`re social welfare
organizations, I mean, it`s almost a joke when you look at the ads that
they ran in the 2012 election cycle or oh the 2008 election cycle.

It brings the issue of our tax code and how unjust it is and how much
we need reform. And if there is anything good that comes out of this,
maybe as a renewed conversation about campaign finance reform and renewed
efforts to reform the tax code and make it more equitable and make it more
realistic in terms of how the tax code is being manipulated for political
expedience.

O`DONNELL: Sam, the Benghazi e-mail dump, which seems in many ways to
have solved a lot of problems for the White House.

I mean, the stack is out there. We all have them. I`ve got my 100
pages. And we`re looking for the incriminating thing, you know, that
proves the Republican case. And it ain`t there.

STEIN: Speaking of marriage vows, my wife works for the White House
on congressional -- including on Benghazi. So, that`s full disclosure.

I agree with you. It`s -- I also agree with Jay. There was a reason
to hold these back for protecting the ability of people to have
conversations internally. But now that we see them, the only thing that
strikes me as problematic for the White House is that at one point in time,
Jay Carney got up on the podium and said, there`s only been insignificant
stylistic changes in these talking points. That clearly wasn`t the case.

But beyond that, it seems like everything that we were told, this
grand cover-up, huge political motivations, just wasn`t there.

And in the end, I have to say this. We are having an extensive
conversation about talking points, the bureaucratic process --

O`DONNELL: Yes, its` crazy.

STEIN: And it is crazy.

There are bigger problems, specific to this Benghazi case. How do we
protect our diplomatic corps while still allowing them to complete their
mission? Why are intelligence failures happening in outposts like this?

Those are the big questions that are being totally lost in a
conversation about talking points.

WAGNER: And just a few hours ago, the White House serviced an
announcement the president was urging Congress to fund embassy security and
that`s great and good that`s happening. But this thing happened eight
months ago and that same release could have gone out on September 12th.

STEIN: But the irony is that Chris Stevens didn`t want that embassy
security. He wanted to be to run bus that`s what the diplomatic corps
needs to do. They can`t be behind the fortress. They have to talk to
people, have people feel they`re not there on a military mission.

So there is a balancing act. And when we put our diplomats in very
remote outposts where we don`t have good intelligence, we`re taking an
inherent risk.

And I`m not saying Benghazi was bound to happen or justified or
anything like it, I`m just saying we have to have a bigger, more
substantive conversation. Then, on how the State Department versus the CIA
develop their talking points.

WAGNER: Yes, a turf war, which is effectively -- I mean, I think part
of the frustration is the White House is only now bringing the spotlight
back to the fundamental issue of what does security mean, why were there
intelligence failures and not this tit-for-tat about a turf war between the
CIA and the State Department.

O`DONNELL: Sam, Jay Carney was working at "Time" magazine when they
were subject to subpoenas by the a special prosecutor investigating the
leaks about Valerie Plame, and our public understanding of those subpoenas
is that they were very targeted to specific reporters who they knew had
conversations, not 100 reporters at "Time" magazine.

STEIN: Yes, absolutely. And this is, you know, today, the president
spoke about the need to find a balance between national security interests
and the First Amendment.

And my only question to Jay would be, your administration has had
twice as many leak investigations as every other administration combined.
In this case, you went very broad in the subpoenaing of "A.P." reporters.
How can you say you`re hitting that balance if you`re on the very far end
of it?

O`DONNELL: Alex, the -- will "The A.P." story stay alive, given that
the White House has come out with this? Hey, we support a shield law. I
mean, isn`t that basically calling Congress`s hand on this? Because
they`re not going to pass --

WAGNER: Well, I mean -- Sam and I were talking about this before.
It`s very convenient for the White House to renew their support for the
media shield law at this point in time.

O`DONNELL: No conversation in the past.

WAGNER: I also think, I mean, there were two things that happened
today that were of interest. A., the media shield law, the other one is
the fact that the White House leaked information to "The A.P." about a new
appointment. Sort of like a sprinkling of the --

(CROSSTALK)

WAGNER: But it`s going to take -- the president has not had a sit-
down interview with the "New York Times" and "Washington Post" or "The Wall
Street Journal" in three or four years. This man needs to sit down with a
paper of record and have --

STEIN: Throw in "The Huffington Post" in there --

WAGNER: Yes, "The Huffington Post."

O`DONNELL: He`ll do it. Alex Wagner and Sam Stein, thank you both.

STEIN: Thanks, Lawrence.

O`DONNELL: Coming up, the single stupidest thing that John Boehner
has ever said. I know you`re probably going to think it`s something else.
But I think it`s something he said this week, and it`s in the "Rewrite."

(COMMERCIAL BREAK)

O`DONNELL: In the Spotlight tonight, the politics of scandal. The
editors of the conservative "National Review" published an editorial
entitled "Scandal is Not an Agenda." "Republicans must guard against the
temptation to count on scandal to deliver election victories in 2014 and
2016. Republicans should not jump to conclusions either about how high up
the White House chain of command these scandals are likely to creep. The
facts alone will determine that. And perhaps most of all, conservatives
and Republicans should not talk loosely about impeachment."

Joy Reid, the thing about Michele Bachmann is she doesn`t read that
stuff.

JOY REID, MSNBC POLITICAL ANALYST: No.

O`DONNELL: So she has been talking about impeachment. And you can
see what they`re worried about. They know America doesn`t feel that way
about this president. You`ll do nothing but alienate yourselves as a party
from the American voter if you keep talking this way.

REID: Yes. But those are sort of the cooler heads in the Republican
party. At the base level, at the Bachmann level, they`re just concerned
about the base. They only listen to the base. They`re in that hermetic
seal. For them, the only thing that really unites conservatives and
Republicans at this point is hatred of Barack Obama. So they`re going to
play it for all it`s worth.

And now that they`ve got the lame stream media also reporting on these
stories, they are so excited. They`re in hog heaven. They think this the
end of Barack Obama. And they`re going to ride it for all it`s worth.

O`DONNELL: The parallels are being drawn to, look, you went after
President Clinton with an impeachment proceeding, and that actually helped
the Democrats. No one would have predicted that ahead of time, but now you
have that model to look at.

REID: Yeah. Those are facts, Lawrence. See, those don`t matter.
Those are not important. The Republicans --

O`DONNELL: I`m sorry. There`s data on it, polling data and electoral
results.

REID: That all has a liberal bias. Exactly, that all has a liberal
bias. They`re not talking about facts. This is about gut instinct and
feeling and emotion. And the only thing that conservatives and Republicans
are sure of is that they hate Barack Obama, that their base hates Barack
Obama, and that up to now, the media has refused to see the monster that is
Barack Obama.

But now that they think the media does see him for the ogre that he
is, there is no way they can get themselves out of this box. I really do
think that Republicans, because they don`t agree on an electoral agenda,
because they can`t get legislation through, and even if it gets through the
House, they can`t get it through the Senate -- this is going to substitute
for governing. This is the way it`s going to be, I think, going forward,
at least through 2014.

O`DONNELL: Now there are also some organizations out there writing
letters to Boehner saying don`t you dare get involved in any governing
here. Do nothing but talk about the scandals, because that`s what we want.
And if you try to do any governing on anything, we will be out there
screaming about it.

REID: Yeah, absolutely. The Heritage Action -- it`s called Heritage
Action for America. It`s the lobbying arm of the Heritage Foundation,
which we know just got discredited because they had this guy talking about
race and IQ that co-authored the immigration report. Well, their lobbying
arm just sent a letter to Boehner and Cantor -- I can`t believe they wrote
this down, and said, you know what, just ride the scandals. Don`t govern.
Don`t put any legislation on the floor that will point out our differences.

They have made the farm bill sort of an example. They are saying
listen, rather than argue about whether we should cut Food Stamps or give
subsidies to our rural states, rural red states, in a lot of cases, don`t
do that. Don`t govern. Just scandal monger.

So there is a -- listen, they scored these guys. If they don`t listen
to the Heritage Action, they score that.

O`DONNELL: Right. And the "National Review" doesn`t. They just
write their editorials and you either go along with them or they don`t.
It`s kind of the perfect demonstration, the cross current that they`re in.
I mean, my sense of Boehner and Cantor at this point is that they probably
think that the "National Review" is right.

REID: Right.

O`DONNELL: But they are stuck with these people that are pushing
them.

REID: They are paralyzed by their own base. And John Boehner has had
a struggle trying to get right with the base and get them to be on his
side. Now this is a way for him to demonstrate that he`s on their side.
He`s quote, unquote, obsessed with Benghazi. He`s one of them. He`s a Tea
Party aficionado too. I think that right now they can`t get out of this
closed circle. They think the brainiacs got it wrong by giving them Mitt
Romney and McCain.

O`DONNELL: You know how else Boehner tries to appeal to the base? He
said the stupidest thing ever this week, the stupidest thing. And that has
him in the Rewrite, which is coming up.

REID: Can`t wait to hear it.

(COMMERCIAL BREAK)

O`DONNELL: A new poll finds 76 percent of New Hampshire voters favor
background checks for all gun sales, and just 17 percent oppose them.
Among the 76 percent who favor background checks, just 29 percent have a
favorable view of New Hampshire`s Republican senator, Kelly Ayotte, and 35
percent have an unfavorable view. Kelly Ayotte, of course, voted against
the background checks bill.

As reported on this program, Senator Ayotte is now allowing the NRA to
lie to New Hampshire voters on her behalf in ads telling voters that she
actually voted for background checks when, in fact, she voted against the
form of background checks that New Hampshire wanted, and voted for a bill
that would actually make the current background check system even weaker.

It`s a very different story in New Hampshire for the Democratic
senator, Jeanne Shaheen, who voted for the background check bill. In that
same poll, it finds that Senator Shaheen is leading her possible opponents
by double digits. Those opponents include former senator -- Massachusetts
Senator Scott Brown, who she beat 44 percent to 29.5 percent. And just
like Mitt Romney, Scott Brown owns a summer house in New Hampshire. And
reports say that he is considering another run for the Senate. But that
poll makes it look like he`s going to have to go shopping for another state
to run in.

The Rewrite is next.

(COMMERCIAL BREAK)

O`DONNELL: Did you know that the Koch Brothers own the company that
makes Dixie Cups? I didn`t. Until I just read it on my teleprompter. And
so suppose you want to boycott whatever the Koch Brothers are selling.
Well, now there is an app for that, of course. Buy-Cot scans a barcode on
whatever you`re buying, determines that product`s parent company and then
cross-checks that company with the causes and campaigns the company
supports.

The creator of Buy-Cot told "Forbes" he is having difficulty keeping
up with the demand for the app, an average of about 10 downloads a second.
Make that 11 downloads this second.

Coming up, the next thing we`re going to do is good news about
marijuana, as if marijuana needed good news to sell more marijuana. It
turns out pot just might be a great diet drug.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: My question isn`t about who is
going to resign. My question is who is going to jail over this scandal.

(END VIDEO CLIP)

O`DONNELL: That may be the single stupidest thing ever said by a
Speaker of the House. There is the Speaker of the House of Representatives
in one sentence acting as police, prosecutor, judge and jury, convicting of
a crime, and sending to jail someone, anyone, working in the Internal
Revenue Service. And so of course he was instantly humiliated by all of
the reporters in the room who buried him in angry questions about how could
he possibly presume a crime had been committed, and how could he possibly
presume the crime would carry a jail sentence. And, oh, by the way, what
is the crime that he imagined had occurred?

Of course, all of that would have happened if the Washington press
corps had the slightest sense of balance in how it pursues the scent of
scandal. But they don`t. And so, of course, that didn`t happen. And when
the Speaker walked out of the room, he wasn`t chased down the hall by
reporters, peppering him with more questions about his breathtakingly
stupid and crazy comment, a comment that makes him finally and definitively
unworthy of his office.

Now, I have not been one of those critics of John Boehner who says
that he is bad at his job of running a Republican House of Representatives.
In fact, the night of the 2010 elections, when it was obvious that he was
going to be the next Speaker of the House, I predicted, somewhat
sympathetically, that he was going to have a lot of trouble with the Tea
Party members of his party who would not comprehend why they would ever
have to do such things, as, for example, raise the debt ceiling.

I don`t think it is possible for John Boehner to actually have done a
better job of managing his out of control and crazy party in the House of
Representatives than he has done. But for a Speaker of the House to be so
unschooled in the ways of American criminal law, American jurisprudence, to
be so reckless with language and ideas, to be saying that someone should go
to jail without even knowing who he is talking about, without even knowing
what the case against the person is, without even knowing that person`s
defense, means in the controversy involving the IRS, the Republican Speaker
of the House has become Washington`s new Joe McCarthy, the raving alcoholic
senator of the 1950s who threw blind accusations everywhere.

Now as I`ve been pointing out all week, rank ignorance of the law is
the driving force of what Washington perceives to be the scandal at the
IRS. I`ve been telling you since Monday that Washington is so desperately
ignorant of the law on 501(c)(4) tax exempt organizations that no one in
Washington actually understands what the real scandal at the IRS is. We
showed you last night that after two days of my harping on this, the
chairman of the Senate Finance Committee finally started to echo my words
on the Senate floor, as did the president yesterday and today.

But here is how much ignorance pervades the discussion of the IRS
controversy.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), MINORITY LEADER: We must pass a law that makes
it much clearer that the so-called social welfare organizations must make
their priority promoting social welfare, rather than engaging in politics.
From my standpoint, I think that they should not have any political
purpose. And I would hope that we could change the law on that.

(END VIDEO CLIP)

O`DONNELL: Ignorance in Congress never surprises me. But that
completely false statement that you just heard is worthy of some surprise
at this stage of this game. As viewers of this program have known since
Monday, the law that Nancy Pelosi is talking about says that 501(c)(4)s
must be, quote, "operated exclusively for the promotion of social welfare."
Exclusively. That is what the law says. Already that law solves the
problem if that law is simply enforced, which it has not been since 1959,
when the IRS changed the meaning of the word "exclusively" on its own, and
without the legal authority of Congress, and said, in defiance of both the
law and the English language, that "exclusively" means "primarily."

Now, I don`t expect Nancy Pelosi to be watching this program, but
someone on her large staff should have picked up what I`ve been saying
about this by now and whispered something in her ear about it. And if none
of them heard what I had to say about it, how it they miss these words from
the lead editorial in this morning`s "New York Times?" "Given the
confusion and the years of abuse, it`s time for the IRS to return to the
original language of the statute and require these groups to operate
exclusively for the promotion of social welfare, and not engage in
politics."

It took the "New York Times" four days to get on my bandwagon, but
there is, sadly, now no greater marker of the decline of the influence of
the mainstream media that no one on Nancy Pelosi`s staff had brought that
passage to her attention today before she got it all wrong.

There is, as far as I can tell, exactly one member of Congress who has
understood this problem before this week. And that is Senator Carl Levin.
He has peppered the IRS with questions over the years about 501(c)(4)s.
Last summer, in a letter to the IRS, he asked, "how can the IRS interpret
the explicit language which provides that 501(c)(4) entities must operate
exclusively for the promotion of social welfare to allow any tax exempt
partisan political activity by 501(c)(4) organizations?"

And the IRS`s answer was, quote, "long-standing Treasury regulations
have interpreted exclusively, as used in section 501(c)(4), to mean
primarily."

In other words, the Congress wrote a very clear law with a very clear
word, "exclusively." And the IRS, in its enforcement guidelines for its
agents, changed the word "exclusively" to "primarily." And by doing that,
they made IRS agents judges of political activity, investigators of
political activity. IRS agents were then forced -- they were forced to
evaluate just how political a given 501(c)(4) organization might be.

And it is very clear that if the words "Tea Party" or the name of any
political party at all appears in the title of your 501(c)(4), you
absolutely do not qualify for 501(c)(4) status under the law, and you
should be challenged.

But you might, under the scandalous way the IRS began interpreting
that law in 1959, actually qualify for that status. And that is the IRS
scandal that only Senator Carl Levin seems to completely understand in
Washington, that the IRS changed the meaning of a very important word in
1959, and we now have the inevitable outcome that the IRS agents are forced
to use their judgments, based on their investigative capacities, to
determine which political organizations deserve 501(c)(4) status.

Now I am hoping that tomorrow at the House Ways and Means Committee
hearing, at least one question about the actual law defining 501(c)(4)s
will be asked. And my bet is that the leader of the Democratic minority on
that committee will actually ask that question, because Congressman Sander
Levin is Senator Carl Levin`s big brother.

(COMMERCIAL BREAK)

O`DONNELL: A majority of Americans, 52 percent, favor legalizing the
use of marijuana. There has been an across-the-board increase in support
in legalizing marijuana over the past three years. Republican support
increased by 13 points from 24 to 37. Democratic support increased by 11
points from 48 to 59. Medical marijuana is currently allowed in 18 states
and the District of Columbia. And now comes a study suggesting that
marijuana could have beneficial health effects beyond pain relief.

Joining me now, one of the authors of that study, Dr. Murray Mittleman
of Beth Israel Deaconess Medical Center in Boston.

Doctor, what are your key findings in this study?

DR. MURRAY MITTLEMAN, BETH ISRAEL DEACONESS MEDICAL CENTER: Well, in
this study, we have data available from the National Health and Nutrition
Survey, which is a study that`s done by the CDC on an ongoing basis. And
in a survey of about 4,500 adults, they were asked about their marijuana
use. And just under 600 were current users of marijuana.

We looked at their ability to handle carbohydrates, the ability of the
body to handle sugar, and how well the body metabolizes it. And what we
found is that among current users -- these are people who used marijuana in
the last 30 days -- there was an improvement in their metabolism, so that
their fasting insulin level was lower. They had less insulin resistance
than non-users. Their good cholesterol was a little bit higher, about
three points higher. And their waist circumference was skinnier, a little
bit, on average, about -- just about an inch narrower than the non-users.

And this was after adjusting for other differences between the users
and the non-users.

O`DONNELL: All right, doctor, there is your headline right there.
Marijuana, the new diet drug. If you`ve got something that makes waists
narrower, that is -- that`s a whole new direction for marijuana.

MITTLEMAN: Yes. There are -- several prior studies, actually, have
indicated that marijuana users tend to be leaner, despite the fact that
they do tend to consume more calories.

O`DONNELL: And more brownies, as I understand it.

MITTLEMAN: Yes, that could be the form. Although in this study, I
think they were asked specifically about smoke marijuana. But it`s -- you
know, it`s an interesting question about whether the form in which it`s
taken in makes a difference. One of the caveats, I would say, about our
findings is that it was based on self report. And really at this stage, we
need much more solid research, including experimental studies, to really
provide doctors with the evidence base to make recommendations, now that we
have medical marijuana approved in 19 regions of the country.

O`DONNELL: Dr. Murray Mittleman of the Harvard Public School of
Public Health gets tonight`s LAST WORD. Thank you, doctor.

MITTLEMAN: Thank you.

O`DONNELL: Chris Hayes is up next.

END

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