updated 5/23/2013 11:03:39 AM ET 2013-05-23T15:03:39

THE LAST WORD WITH LAWRENCE O`DONNELL
May 22, 2013

Guests: Eleanor Holmes Norton, Julian Epstein, Mary Fallin, Krystal Ball


LAWRENCE O`DONNELL, HOST: So, what if Congress held a hearing about a
political scandal and most of the political media actually couldn`t figure
out what the scandal really is? That happened in Washington today, once
again.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: You`re the head of the agency and you`re not
asking questions? Shame on you. Absolutely shame on you.

CHRIS JANSING, MSNBC ANCHOR: Congress gearing up for another week of
hearings on the IRS scandal.

ANDREA MITCHELL, MSNBC ANCHOR: Contentious hearing on the IRS
controversy.

JANSING: The House Committee on Oversight and Government Reform --

TAMRON HALL, MSNBC ANCHOR: No, in its fifth hour.

EZRA KLEIN, MSNBC POLICY ANALYST: So far, we`re not seeing this go
high up the chain.

UNIDENTIFIED FEMALE: The people I represent believe the federal
government is out to get them.

UNIDENTIFIED MALE: Not a single application was denied.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: My question is who is
going to jail over this scandal?

UNIDENTIFIED MALE: I don`t want to go to jail.

UNIDENTIFIED MALE: I don`t want you to go to jail.

KRYSTAL BALL, MSNBC HOST: There`s not a lot here other than
incompetence.

ALEX WAGNER, MSNBC ANCHOR: But there`s plenty of drama.

LOIS LERNER, IRS OFFICIAL: I am very proud of the work that I`ve done
in government.

MITCHELL: Lois Lerner, the head of the tax-exempt organization
division --

LERNER: Members of this committee have accused me of providing false
information.

MITCHELL: -- chose to plead the Fifth.

REP. TREY GOWDY (R), SOUTH CAROLINA: You don`t get to tell your side
of the story, and not be subjected to cross examination.

LERNER: I have not broken any laws.

GOWDY: That`s not the way it works.

LERNER: I have not violated any IRS rules and regulations.

GOWDY: She waived her right to Fifth Amendment privilege.

LERNER: I have not done anything wrong.

GOWDY: She waived her right to Fifth Amendment privilege by issuing
an opening statement.

WAGNER: South Carolina Republican Trey Gowdy --

GOWDY: That`s not the way it works.

WAGNER: -- does not understand the Fifth Amendment of the U.S.
Constitution.

UNIDENTIFIED FEMALE: Requiring organizations to be primarily engaged
--

UNIDENTIFIED MALE: This is an area that requires additional clarity.

UNIDENTIFIED FEMALE: -- is significantly different than requiring
them to be exclusively engaged.

REP. DARRELL ISSA (R), CALIFORNIA: This has happened before and it
has not always been conservative groups.

WAGNER: A rare call for bipartisanship.

ISSA: Let`s all be Republicrats and Democans.

WAGNER: Democans? Democans.

UNIDENTIFIED MALE: Or daclefans (ph).

WAGNER: There you go.

(END VIDEOTAPE)

O`DONNELL: Well, you heard it here, first -- the difference between
the words exclusively and primarily. And that difference is huge. People
who don`t understand the difference between those words, by which I mean
congressional Republicans and virtually all of the political media, believe
that the IRS has a huge scandal on its hands.

Here is the first time America heard about the difference between the
words exclusively and primarily in this context and how changing those
words was indeed an IRS scandal -- a scandal that happened in 1959.

(BEGIN VIDEO CLIP)

O`DONNELL: 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."

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 primary.

(END VIDEO CLIP)

O`DONNELL: That was last Monday. But as expected, it did nothing to
dim the political media`s lust for scandal. I continued to harp on the
point all week, and then, Friday, at the House Ways and Means Committee
hearing where the members of that committee are supposed to be sort of
experts in taxation came the first glimmer that someone in Congress was
actually listening.

(BEGIN VIDEO CLIP)

REP. LLOYD DOGGETT (D), TEXAS: As Mr. Lawrence O`Donnell, as the crew
group, the citizens for responsibility and ethics in Washington has pointed
out in a petition, you are to be denied this status if you are not
exclusively engaged in social welfare according to the statute.

(END VIDEO CLIP)

O`DONNELL: Then, came the Senate Finance Committee hearing yesterday
where the Senate`s real experts on taxation, the staff of the Senate
Finance Committee, made sure that the chairman asked the key question.

(BEGIN VIDEO CLIP)

SEN. MAX BAUCUS (D), MONTANA: How does the IRS justify regulations
that weaken the standard from exclusively to primarily?

(END VIDEO CLIP)

O`DONNELL: Like many questions at these hearings, no one really
answered it, but senators kept pressing the point while Republicans and
political media remained blissfully oblivious to the language of the law.

(BEGIN VIDEO CLIP)

SEN. ROBERT MENENDEZ (D), NEW JERSEY: I didn`t see a vote for
primarily, I saw a vote for exclusively because we wanted to limit the
scope of who could avail themselves of the benefit of a 501(c)(4) under the
tax code.

SEN. SHERROD BROWN (D), OHIO: What does the term primarily for social
welfare mean? The IRS has not made it clear when the statute says
exclusively, and that`s really at the root of so many of these problems.

(END VIDEO CLIP)

O`DONNELL: Some of the thoughtful members of the House Committee on
Oversight and Government Reform showed in today`s hearing that they were
paying attention to the Congressman Lloyd Doggett last week and to the
Senate Finance Committee yesterday.

(BEGIN VIDEO CLIP)

REP. ELIJAH CUMMINGS (D), MARYLAND: The original statute passed by
Congress requires 501(c)(4) organizations engaged exclusively in social
welfare activities. But in 1959, Treasury Department issued a regulation
that requires these entities only to be primarily engaged in social welfare
activities. As a result, many groups now believe they can spend up to 49
percent of their funds on campaign-related activities.

DEL. ELEANOR HOLMES HORTON (D), DISTRICT OF COLUMBIA: The seed was
planted for something bad to happen when somehow the interpretation of a
law was changed from exclusively to primarily.

REP. MICHELLE LUJAN GRISHAM (D), NEW MEXICO: Requiring organizations
to be primarily engaged in social welfare activities is significantly
different than requiring them to be exclusively engaged in social welfare
activities. Wouldn`t you agree?

NEAL WOLIN, DEPUTY TREASURY SECRETARY: It is, Congresswoman.

GRISHAM: All right, Mr. Shulman. Would you agree?

DOUG SHULMA, FORMER IRS COMMISSIONER: Yes.

(END VIDEO CLIP)

O`DONNELL: There is the commissioner of the IRS during this so-called
scandal saying that there is a big difference between organizations being
exclusively engaged in social welfare and primarily engaged in social
welfare, that there`s a difference between the law and the IRS` official
interpretation of the law in their regulation.

How big a difference?

(BEGIN VIDEO CLIP)

BAUCUS: Clearly, a Mack truck is being driven through the 501(c)(4)
loophole.

(END VIDEO CLIP)

O`DONNELL: But don`t expect the political media to notice the Mack
truck. Don`t expect them to pay any attention to points like this when
someone walks into a congressional hearing and takes the Fifth Amendment
because nothing, nothing arouses the political media`s scandal lust like
someone taking the Fifth Amendment.

And so, of course, they didn`t even notice when Congresswoman Jackie
Speier got the oh, so careful and bureaucratically precise inspector
general to admit at the heart of his report is a crime -- a crime he chose
not to specifically identify in his report.

(BEGIN VIDEO CLIP)

REP. JACKIE SPEIER (D), CALIFORNIA: If regulation can`t trump
statute, then everything that`s been going on here relative to authorizing
501(c)(4)s, if not exclusively used for social service purposes is
violative of the law, correct?

UNIDENTIFIED MALE: I would say yes.

(END VIDEO CLIP)

O`DONNELL: Violative of the law, which is to say against the law.

The IRS in 1959 without authority from Congress changed Congress`
intent in 501(c)(4) organizations, and they suddenly had to be primarily
for social welfare, which meant from that day forward, IRS agents
somewhere, Washington or Cincinnati or somewhere were going to have to
evaluate how much politics a 501(c)(4) applicant was going to engage in.

But by either standard, the standard of the law written by Congress or
standard of the regulation as misinterpreted by the IRS, any organization
with the name of a political party in its title of any size from the
Democratic Party to the Tea Party to local Tea Parties to socialist workers
party to the green party -- every single such application should have been
rejected for 501(c)(4) status as a matter of law.

(BEGIN VIDEO CLIP)

J. RUSSELL GEORGE, TREASURY INSPECTOR GENERAL: Not a single
application for this status, this tax exempt status, was denied.

(END VIDEO CLIP)

O`DONNELL: And so, the real scandal here is not that the applications
were delayed but that they were ever approved.

But once the political media latched onto the paradigm of a scandal,
once they`ve collectively fixed its frame around what they think are the
relevant elements of the scandal, it is inescapable from that point
forward, that frame, and the media is incapable of processing any new
information that can show the political media just how wrong they have
been.

Joining me now, House Oversight Committee member, Democratic
Congresswoman Eleanor Holmes Norton, representing the District of Columbia,
and MSNBC`s Joy Reid.

Congresswoman Norton, I can`t tell you how much joy you brought to me
when I heard you making this distinction about the law says exclusively and
the IRS misinterpreted it to primarily. And if the IRS had never done that
misinterpretation, I sub to you, we wouldn`t be discussing this tonight, no
one ever would have been getting political organizations 501(c)(4)s.

NORTON: Lawrence, if they had -- if the IRS had simply taken the
plain meaning, what we call it in the law, the plain meaning, none of this
would have happened by changing the law. That`s what happened here,
changing the plain meaning of exclusively to primarily.

This was a disaster waiting to happen. It began in 1959, almost 50
years ago in the Eisenhower administration, a Republican commissioner
apparently under his -- on his watch, that got changed.

I must tell you, I am so curious how that happened. I don`t think
it`s legal. I don`t know who has standing to sue. That`s another
question.

But an administrative agency does have the power to interpret the law
and to take words that are vague and to give them meaning. An
administrative agency does not have the power to change the plain meaning
of the law and make a disaster happen and that`s what`s happened here.

O`DONNELL: And, Congresswoman, I can`t tell you how shocked I was
last week when I first started investigating this. It is no surprise to
you since I worked on congressional staff in the Senate that staffers and
new members, when one of these things comes up, the very first thing you do
is say let me see the law, let me see the statute. You go and read the
statute, which apparently is against the rules for the political media.

And when you read that statute, it is a shocking thing to read. I
remember reading it, I had never read it before this thing started. I
looked at it, saw exclusively. And I just thought how did it come to this?

NORTON: Indeed, before I got my staff to get that, I thought it said
primarily.

O`DONNELL: Yes, me, too.

NORTON: I was shocked to see the wording changed and I don`t see how
it has lasted almost 50 years.

O`DONNELL: Well, you know, we found a memo from JFK`s counsel at the
IRS affirming this change of primarily. He did it in a response letter to
someone.

But, Joy Reid, the reason I am harping on the political media here is
that they love scandal because scandal makes their jobs easier and the
funny thing about scandal is they don`t bother with facts any more. The
game becomes oh, well, what about Jay Carney`s tone? And, wait, they
didn`t tell us that yesterday, and now they`re telling us that today.

So it all becomes -- they all become and lists of scandal management
and they`re grading people on how well they`re managing their scandal.
They are grading the president and they`re grading Carney and they`re
everybody, and it just becomes this theater review, performance review.
They don`t care what`s at the basis of it all.

JOY REID, THE GRIO: No, absolutely. You know, Lawrence, this is not
church, when you started talking about this, I felt like jumping up and
saying hallelujah.

O`DONNELL: You can do that.

REID: I can do that, like hallelujah, because this is the point. It
felt like you were sort of channeling what was inside my mind, like please,
let`s talk about -- it used to be a bipartisan complaint that 501(c)(4)
section of the tax code was being abused. You used to have senators like
Tom Colburn saying why is the NFL a 501(c)(4)?

You used to have a specific target at the 501(c)(3). There`s a very
strict interpretation of c3, that the IRS takes as well, where the IRS
looks at the NAACP, or recently, you had a Republican congressperson
complained about the Humane Society, and complained to Lois Lerner who took
the Fifth in the hearing today, why aren`t you looking closer at the Humane
Society`s abuse of c3.

And it becomes so comical that 501(c)(3)s understand the IRS is
stricter about c3. So what do most c3s do when they want to get involved
in political activity? They form a c4, they form a 501(c)4, so you have
all these convoluted organizations that are both super PAC with a c4 or c3
with a c4.

They do it knowing the IRS is going to misinterpret the law, allow
them to do political activity through the c4. That`s why Karl Rove who has
never done a day of social welfare I could ever interpret or find has a c4.
He doesn`t even have to pretend.

So, I totally agree with you. The scandal is that the IRS over-
interprets c3, goes after charitable organizations if they have a hint of
disagreement with the president, NAACP, but they let anybody slide through
c4. And you`ve got now members of Congress declaring an inalienable right
to be a tax-exempt organization. Seriously?

O`DONNELL: Congresswoman Eleanor Holmes Norton, I want to go to the
politics of the IRS. I think it`s very clear that politicians, especially
members of the House and the Senate, whenever the IRS comes up and there`s
an opportunity to attack them for some negative thing they have actually
done or imagined to have done, politicians cannot refuse to attack them.
Their constituents expect the attack, Democrat and Republicans. There`s no
easier shot to take in politics than attacking the IRS.

NORTON: Of course not, because nobody wants to pay taxes. But I have
to tell you that the IRS has been the whipping boy for the 112th, 113th
Congress, last two congresses anyway. These are people who would just as
soon abolish the IRS. These are people who hate the IRS.

O`DONNELL: Well, Congresswoman, some of them said today, that they
want to abolish the IRS, that`s part of their approach to this
investigation.

NORTON: And they have cut the IRS hugely at a time when we`re looking
for money, when trying to cut the deficit, you cut it from the people that
collect the money. Does that make any sense?

O`DONNELL: Yes. They`re the profit center over the federal
government.

NORTON: Precisely.

O`DONNELL: Joy, the other big piece that`s lost, you don`t even have
to apply for 501(c)4 status, you can apply or you can just claim it.

REID: Yes.

O`DONNELL: You can`t just claim your passport. You have to apply for
one.

REID: Right.

O`DONNELL: So, there`s this big scandal that the Republicans are
saying happened here for something you don`t even have to apply for. You
can actually operate as a 501(c)(4) if you`re never approved by the IRS.

REID: Yes, there are organizations now, I think Tea Party Patriots,
big Tea Party groups, if you scroll to the bottom of their web page, it
says their tax status is pending.

So, they`re functionally operating at c4s without having that stamp of
approval. You can go and ask the IRS to do it, but you don`t necessarily
have to.

But I think what`s even funnier, and you worked in politics, I worked
for a time in politics, any political consultant with two brain cells can
come up with this idea to make a c4, I can raise gargantuan sums from
corporations. It can all behind God`s back, because they don`t have to
disclose, I can pay myself a salary, nothing illegal about any of it.

The scandal to me here is that the IRS has been so lax in enforcing
the law, as you pointed out, as Congresswoman Eleanor Holmes Norton pointed
out, enforce the rules, enforce the laws as written in the statute, and
then we wouldn`t have Crossroads GPS and all of these organizations which
shouldn`t be tax-exempt. We are subsidizing them through the tax code.

O`DONNELL: Crazy.

Congresswoman -- go ahead, Congresswoman.

NORTON: I just want to say one thing. Imagine the hapless IRS people
trying to figure out what to do, and now watch what`s going to happen,
they`re going to be afraid to let --

O`DONNELL: Well, that`s exactly it. I mean, I think using the words
they used were perfectly reasonable indicators that these applications need
to be studied and oh, by the way, probably do not deserve 501(c)(4) status.
There are plenty of other words, I would suggest using anything with
Democratic Party or progressive party, use them all, every one of them.

REID: Absolutely.

O`DONNELL: Congresswoman Eleanor Holmes Norton, thank you for joining
us tonight after that marathon hearing today.

And, Joy Reid, thank you as always.

REID: Thank you.

NORTON: Always a pleasure.

O`DONNELL: Coming up, taking the Fifth, Washington-style. We will
show you the dramatic video, incredibly dramatic video of a woman invoking
her constitutional rights, much to the horror of some members of Congress
who can`t seem to remember that they actually took an oath to protect those
rights.

Also coming up, the latest from Oklahoma. I`ll be joined by the
Oklahoma Governor Mary Fallin.

(COMMERCIAL BREAK)

O`DONNELL: Some stunning developments in the Boston marathon bombing
investigation. A man being questioned about ties to the bombing suspects
was killed by law enforcement in Florida yesterday. NBC`s Pete Williams
reports an FBI agent shot and killed 27-year-old Ibragim Todashev when he
attacked an officer with a knife. Authorities tell NBC News that Todashev
had confessed to his involvement in unsolved triple homicide in a Boston
suburb on September 11th, 2011, and he was about to sign that written
confession when he became violent.

Todashev was not suspected in the Boston marathon bombings himself but
was being questioned because of his involvement with Tamerlan Tsarnaev.
Investigators have been trying to determine if the two Tsarnaev brothers
were involved in that triple murder case.

Authorities say Todashev had some connections with radical Chechen
rebels, but it`s not clear if he had any role in radicalizing the Tsarnaev
brothers.

Up next, more on a witness who pleaded the Fifth Amendment at today`s
congressional hearings on the IRS.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

LERNER: My professional career has been devoted to fulfilling
responsibilities of the agencies for which I worked and I am very proud of
the work that I have done in government.

Members of this committee have accused me of providing false
information when I responded to questions about the IRS processing of
applications for tax exemption.

I have not done anything wrong. I have not broken any laws. I have
violated any IRS rules and regulations, and I have not provided false
information to this or any other congressional committee.

(END VIDEO CLIP)

O`DONNELL: That was Lois Lerner, head of the tax-exempt organizations
office for the Internal Revenue Service, speaking at the start of today`s
hearing.

Then she said this.

(BEGIN VIDEO CLIP)

LERNER: I have been advised by my counsel to assert my constitutional
right not to testify or answer questions related to the subject matter of
this hearing. One of the basic functions of the Fifth Amendment is to
protect innocent individuals. And that is the protection I am invoking
today. Thank you.

(END VIDEO CLIP)

O`DONNELL: Joining me now is Julian Epstein, former counsel to the
House Judiciary Committee. He is also the former staff director of the
House Oversight Committee. He`s now a Democratic strategist.

Julian, you saw a little fight break out over this Fifth Amendment
issue in the hearing. I want to play video of what Trey Gowdy said.

(BEGIN VIDEO CLIP)

GOWDY: She just testified, she just waived her Fifth Amendment right
to privilege. You don`t get to tell your side of the story, then not be
subjected to cross examination. That`s not the way it works. She waived
her right Fifth Amendment privilege by issuing an opening statement. She
ought to stand here and answer our questions.

(APPLAUSE)

(END VIDEO CLIP)

O`DONNELL: Julian, your response?

JULIAN EPSTEIN, DEMOCRATIC STRATEGIST: Well, I think the first thing
you have to understand is a lot of media today were saying that the
invocation of Lois Lerner of the Fifth Amendment means the so-called
scandal is widening or deepening, and that`s just entirely wrong.

The fundamental story here which is that the inspector general found
that neither the White House, not the Department of Treasury, nor anybody
in the president`s political operation had any involvement in, had any
knowledge of or any way directed the IRS activity. There`s absolutely no
evidence of any of that, and nobody has contradicted that, including the
former head of the IRS appointed by President Bush.

This was a low level operation that was conducted by civil servants
and that was inappropriately supervised by civil servants. Lois Lerner is
invoking --

O`DONNELL: Did you see her waive her Fifth Amendment right the way
Trey Gowdy thinks she did?

EPSTEIN: Yes. So let me come to that.

So, that`s a very amateur mistake that Trey Gowdy is making,
Congressman Gowdy is making. First of all, congressional hearing is not
like a courtroom. In a courtroom, you have the option of not taking the
stand. That`s not true when subpoenaed by chairman of a committee. You
actually have to appear.

Secondly, the general protestation (ph), when somebody appears and
says I am innocent of the charges, I conducted myself honorably, that in no
way waives your Fifth Amendment. What waives the Fifth Amendment is if you
begin to selectively answer questions and not others.

General protestations, and this is pretty well-established, are in no
way a waiver of the Fifth Amendment.

So, Congressman Gowdy`s statement she had waived it I think with all
due respect to him is a little amateur hourish.

But, you know, secondly, Lawrence, I think -- and you hit on this at
the beginning of the show, which is that this is what the investigation has
now come to, it kind of makes the case we have been trying to make on this,
this is much ado about nothing.

For the committee to pursue this question about whether or not she
waived her right, waived her Fifth Amendment right, would be a monumentally
stupid move even for the most partisan of Republicans.

You know, I made the comment before that Chairman Issa is much more
Inspector Clouseau than he is Sam Irwin. If they want to take this fight,
this would take months and months to prosecute, you would have to get a
citation of contempt to the committee, you would have to go to the floor,
you would have to get -- if you could get a contempt citation passed on the
floor, you would have to have it enforced, that could take months, maybe
even years.

So, for the committee to get bogged in this process seems to me to be
a very foolish move, even if you`re the most partisan Republican in this
case. But I do think it is very important for viewers to understand why
she`s invoking the Fifth Amendment. And again, as I said, it doesn`t imply
any widening of the so-called scandal.

Lois Lerner in 2011, in June of 2011, learned that there was a
problem. She tried to correct it. She corrected it ineffectively. In
2012, she began to brief the committee from February up through April of
2012.

Chairman Issa accused her in a letter the other day of committing
false statements. He accused her of a crime.

So when you`re accusing someone of a crime, any attorney is going to
tell the witness to invoke the Fifth Amendment, but it has absolutely no in
vocation of the central story, nobody outside these subordinates in the IRS
had knowledge, activity or involvement and this misgivings and malfeasance
that occurred inside the department, inside the agency.

O`DONNELL: And also the point, Julian, that there was once a time
when Congress understood that the most effective investigation is criminal
investigation by the FBI. That`s actually already going on, and the only
thing Congress could do by eliciting her testimony is compromise that
investigation. But we will have more on that as we cover this. Julian
Epstein, thank you very much for joining us tonight.

EPSTEIN: Thank you, Lawrence.

O`DONNELL: Coming up, the latest from Oklahoma. Governor Mary Fallin
will join me.

And in London today, a gruesome murder of a British soldier in broad
daylight is being called a terrorist attacked. Passersby caught moments of
the assault on video that you have to see. That`s coming up.

(COMMERCIAL BREAK)

O`DONNELL: Today in Oklahoma, we got the news that Monday`s powerful
tornado may have caused more than two billion dollars in damage. The
estimate comes from the Oklahoma Insurance Department after an aerial view
of the destruction, a trail of debris that stretched 17 miles.

But, of course, the worst loss was the loss of 24 lives, including 10
children.

Up next, Oklahoma Governor Mary Fallin joins me.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: On Sunday, May 26th, the
president will travel to the Oklahoma City area to see firsthand the
response to the devastating tornadoes and sever weather that have impacted
the area on Sunday night and Monday. He will visit with affected families
as well as thank first responders.

(END VIDEO CLIP)

O`DONNELL: Authorities have now accounted for the last six people,
all adults, thought to be missing after Monday`s massive tornado in Moore,
Oklahoma. Five of those people were found to be safe; one of them was
discovered to be among the dead already accounted for by the State Medical
Examiner`s Office. In all, 24 people were killed, including 10 children;
353 people were injured.

Today, Homeland Security Secretary Janet Napolitano toured the damage
in Moore, Oklahoma, and met with Governor Mary Fallin and other state and
local officials.

(BEGIN VIDEO CLIP)

JANET NAPOLITANO, HOMELAND SECURITY SECRETARY: I am pleased to hear
that the charity you`re forming is called Oklahoma Strong. I think one of
the things that has impressed me so much has been the strength and
resilience of the Oklahomans who have been effected by this disaster and
who are taking charge and moving forward with the recovery of their
communities.

It is very impressive and it`s a model for the rest of the country.
On behalf of President Obama and on behalf of FEMA, we will be here to stay
until this recovery is complete. So you have our commitment on that.

(END VIDEO CLIP)

O`DONNELL: Joining me now is Oklahoma Governor Mary Fallin. Thanks
for joining us tonight, governor.

GOV. MARY FALLIN (R), OKLAHOMA: You`re welcome.

O`DONNELL: Governor, have you had a chance since we spoke last night
to speak to any of the people that suffered losses in their family, among
those who have lost lives?

FALLIN: I have not spoken to those who have lost relatives, who have
lost loved ones, because I want to let them have their time to mourn and
grieve and to do what they need to do to help their families right now.
But I have been to the shelter. I`ve certainly been out in the
neighborhoods, talking to the citizens. I went to the shelter just a
little while ago and talked to some of the people that had been in the
tornado itself, were staying at the shelter.

I also talked to one of the teachers that was a big hero at Briarwood
School, that had students and she were trapped under a lot of debris. And
the fireman pulled her out. It was quite a remarkable story. A lot of
good stories going out today of people that are true heroes, people that
survived some pretty traumatic incidents.

O`DONNELL: And a lot of amazing minor miracles within what happened
and how people survived, some by luck, some by sheer determination. And
I`m sure going forward, it is going to be the determination that you`re
going to need as a community now, isn`t it?

FALLIN: Absolutely, you`re right. It`s amazing that we didn`t have
larger loss of life. Of course, one life is way too many. But considering
the debris, which you saw, and how wide the destruction was, it is
remarkable that more people weren`t lost in this terrible tragedy. And
there are some just absolutely wonderful stories of people that survived.
And there are some good stories right now of survivors that are out in the
shelters helping other survivors.

They`re out delivering food. They`re out helping people. I saw one
little five-year-old boy that had a yellow jacket that said security. I
was talking to him. He said he was helping out the people that needed some
help.

O`DONNELL: You had Secretary Napolitano there today. The president
is coming on Sunday. What are you hoping for from the president`s visit?

FALLIN: We hope it brings encouragement and hope to our citizens. It
is an important event that has happened in our community, that has caused a
lot of grief. And having someone come and know that they recognize the
community is suffering will certainly make an impact on people who are
suffering so much. And of course, the first responders, those that have
been working so hard around the clock, clearing up the debris, providing
security with the National Guard, the law enforcement, all of the people
have been helping here, it will send a signal that the president recognizes
that there are a lot of people that have done a lot of good in a situation
that has not been real good.

O`DONNELL: And governor, the people you`re talking about working 24
hours a day, some of them, I keep asking people, as I did you last night,
when is the last time you slept. Some people, when I was in Oklahoma, were
telling me well, you know, it has been two nights. It has just been an
amazing physical effort. And you see these trucks parked around different
hotels in town where these workers are temporarily being housed, because
they`re obviously not all local. And it has been just an amazing effort to
watch.

FALLIN: Well, it has been. I was at the Briar Creek School today,
and I was talking to firefighters that were there working at the school,
sorting through the debris and trying to keep things safe. And they had
several different tents that were set up. As I was talking to the
firefighters, they were telling me that they had food in one tent, they had
showers in another tent, and they slept in another tent. I said, you mean
you guys are staying here 24 hours? The gentleman said yes, we are running
12 hours shifts, so we just stay here on site, and we sleep, we eat, we
take a shower right here, and we`re going to stay until the job is done.

That`s true commitment to service on the part of the firefighters.
And there are lots of stories like that, as you saw when you were here.

O`DONNELL: Well, I know you have been going nonstop, too, governor.
Governor Mary Fallin, thank you very, very much for joining us tonight.

FALLIN: Well, it was a pleasure to see you. We appreciate you
helping get the story out about what this community is going through and
the support that we have been receiving. Thank you.

O`DONNELL: Thanks, governor.

Coming up, a British soldier is murdered on a London street in the
middle of the day by two self-proclaimed terrorists. And witnesses caught
much of it on tape. The shocking tape is next.

(COMMERCIAL BREAK)

O`DONNELL: Security is being tightened at British consulates and
embassies tonight after a British soldier was murdered today in a
shockingly gruesome scene on a busy London street. One of the murderers
said on video after the murder that it was an act of terrorism. Before
police shot the two suspects at the scene, one of them, covered in blood
and carrying a blood drenched knife, spoke to a witness who recorded what
the murderer had to say.

NBC`s Michelle Kosinski has our report from London tonight.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Move back, move back.

MICHELLE KOSINSKI, NBC NEWS CORRESPONDENT (voice-over): In the middle
of the day in a busy working class neighborhood, right next to an army
barracks, near an elementary school, a scene of such raw violence, few
could believe it.

UNIDENTIFIED MALE: Look at the guy, he is dead now.

KOSINSKI: People here say a young man, who NBC News has confirmed was
an active British soldier, wearing a charity Help for Heroes t-shirt, was
walking along the sidewalk when two men in a car apparently drove into him,
then got out and started stabbing him with multiple large knives.

UNIDENTIFIED MALE: They were hacking at the poor guy, chopping him,
cutting him.

KOSINSKI: Some eye witnesses say the victim was decapitated in the
attack, and that the two suspects then approached people in the horrified
crowd.

UNIDENTIFIED MALE: They were telling people to video record them
doing it.

KOSINSKI: One made a long political statement, weapons still in his
blood covered hands.

UNIDENTIFIED MALE: So what if you want to live by the Sharia in
Muslim lands. Why does that mean you must follow us and chase us and call
us extremists and kill us? Rather, you are extreme. You are the ones.
When you drop a bomb, do you think it takes one person or rather your bomb
wiped out a whole family? This is the reality.

By Allah, if I saw your mother today, I would help her up the stairs.
This is my nature. But we are (inaudible) many, many -- we must fight them
as they fight us. An eye for an eye, a tooth for a tooth. I apologize
that women had to witness this today, but in our land, our women have to
see the same. You people will never be safe. Remove your governments.
They don`t care about you.

KOSINSKI: When police arrived, witnesses say the men charged at
officers who opened fire. Both were hit, now in hospitals.

RAFFAELLO PANTUCCI, RUSI: Small groups deciding to carry out these
sorts of attacks is part of a broader trend we have seen recently. I think
the brutality that we are seeing in this one does seems to be a new element
that we have not seen before.

KOSINSKI: Prime Minister David Cameron is rushing home from France
for an emergency meeting on what exactly this was, whether others could be
involved, or other attacks planned.

DAVID CAMERON, BRITISH PRIME MINISTER: There are strong indications
that it is a terrorist incident.

(END VIDEOTAPE)

KOSINSKI: Tonight, the two suspects are formally under arrest. And
the government here is increasing security at army barracks across London.
One of the men did indicate they targeted the victim because he was a
soldier.

Michelle Kosinski, NBC News, London.

O`DONNELL: Horrifying. Krystal ball joins me next.

(COMMERCIAL BREAK)

O`DONNELL: In today`s Senate debate on the farm bill, Louisiana
Republican David Vitter offered and Senate Democrats accepted an amendment
that would bar anyone that`s been convicted of certain violent crimes from
ever getting Food Stamps. So what that means is a 19-year-old who commits
a crime does his time, and 20, 25 years later, after working and paying
taxes for years, finds himself laid off in a recession and needs food
stamps to help feed his family, his children will pay for his crime by
going hungry.

The farm bill, which is actually a massive agriculture socialism
program that subsidizes farmers no matter their criminal record are, is
still being considered on the Senate floor. And David Vitter`s vicious
amendment can still be struck from the bill, if somehow human decency
prevails in the United States Senate.

Up next, Anthony Weiner`s political come back.

(COMMERCIAL BREAK)

O`DONNELL: The week after former South Carolina Governor Mark Sanford
was sworn in as a member of Congress, former member of Congress Anthony
Weiner decided it is time for his second act in politics, too. I don`t
have to remind you why Anthony Weiner resigned from Congress, do I? If so,
I can use it as an excuse to show some of the pictures he Tweeted in what
turned out to be the first Congressional sex scandal in history in which
the congressman in question was not accused of actually touching anything
other than his camera phone.

And with 4.8 million dollars in campaign funds, Anthony Weiner is in
second place in a new Quinnipiac poll on the mayor`s race; 25 percent of
registered Democrats say they would vote for City Council Speaker Christine
Quinn; 15 percent say they would vote for Anthony Weiner. And Bill
Thompson and Bill Deblasio are tied for third place at 10 percent each.

Mr. Weiner announced his candidacy on Youtube. The digital candidate,
you know, that`s what you get. He was accompanied by his campaign`s most
important asset, Mrs. Weiner.

(BEGIN VIDEO CLIP)

ANTHONY WEINER, FORMER MEMBER OF CONGRESS: Every day starts right
here. And it is the best part of my day.

Look, I made some big mistakes. And I know I let a lot of people
down. But I have also learned some tough lessons. I am running for mayor
because I have been fighting for the middle class and those struggling to
make it my entire life. And I hope I get a second chance to work for you.

New York City should be the middle class capital of the world. I have
some ideas on how to do it, 64 of them right on my website. Take a look.
Tell me what you think.

UNIDENTIFIED FEMALE: We love this city. And no one will work harder
to make it better than Anthony.

WEINER: I will fight for you every single day. Thank you for
watching.

(END VIDEO CLIP)

O`DONNELL: Well, Krystal Ball, he has 64 ideas. Here we go.

KRYSTAL BALL, MSNBC ANCHOR: Here we go. I love the ad. I have a
family. Did I mention I have a family and a wife and a family. I mean,
he`s striking the right tone. And at 15 percent out of the gates, with
very high name recognition, a lot of money in the bank, I think he has a
good shot at making it to a runoff. If no Democratic candidate in the
primary gets over 40 percent, which no one is at right now, they go to a
runoff.

Then I think sort of all bets are off. So Christine Quinn also, who
is the frontrunner, her poll numbers have been declining. So Anthony
Weiner, at this point he just has to sort of hold steady to be able to make
it into that runoff.

O`DONNELL: And he is the only candidate in the race whose negatives
are known.

BALL: Right.

O`DONNELL: You`re not going to be able to come up with a negative ad
on Anthony Weiner that tells anybody anything that they don`t know. But
the other ones have lower visibility, so people are starting to discover
some things about Quinn and about others. And they think oh, maybe I don`t
like that.

BALL: I think that`s exactly right. His challenge is to me not so
much the photos themselves. There`s more of a trust issue in two
directions. One is, is he about anything other than himself? Is he really
just interested in this office for his own ambition and to rehab his image?
I think that`s an obstacle.

O`DONNELL: What would ever give you that idea?

BALL: I know, it`s crazy that anyone would think that. But I think
that`s one obstacle that he has to overcome. And the other issue that is
surrounding the photos is, again, always not the scandal but the cover up.
He lied to New Yorkers. He said I did not do this. And I think that is
fair game for his opponents.

O`DONNELL: Bill Clinton lied and these voters were OK with that. He
is lying in a territory that American voters have said, in Clinton`s case
anyway, we get it. Let`s just talk about taxes and real things about
government.

BALL: That`s true, although I will say Clinton is more charming and
more skilled politician than Anthony Weiner, who is also a decent
politician. Bill Clinton also has more friends. One of the reasons why
Anthony Weiner had to resign from Congress is not because of the scandal
himself, but because his own party basically said you need to go. His high
profile friends are not stepping up for him here. He is not likely to get
any big endorsements within the city.

A challenge to overcome. But he can run as sort of the outsider, I
don`t need help from these big guys. I`m not married to any special
interest, I am going to represent you, the middle class voter. And that
obviously is his message.

O`DONNELL: OK. So if it comes down to basically one on one, Anthony
Weiner against Quinn, he can`t run any negative ads against her, can he?

BALL: I think it would be very tough. I do think she`s a very tough
opponent for him to go against. And one of the skills that he has been
great at in the past is his combative style, his ability to get into
combat. And he has to totally put that aside and run a relentlessly
positive, message focused, I`ve got my 64 ideas and here they are and I am
your champion campaigner.

O`DONNELL: Well, this is going to be one that we will be watching.
We are going to be covering a mayor`s race right here on national TV.
Krystal Ball, thank you very much for joining us tonight.

BALL: Thanks, Lawrence.

O`DONNELL: Chris Hayes is up next.

END

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