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'The Last Word with Lawrence O'Donnell' for Wednesday, May 29th, 2013

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THE LAST WORD WITH LAWRENCE O`DONNELL
May 29, 2013

Guests: Ana Marie Cox, Nia-Malika Henderson, Julian Epstein, Ezra Klein; Jonathan Dienst

LAWRENCE O`DONNELL, HOST: The Tea Party is at a crossroads in the
House of Representatives because today their not-so fearless leader decided
to surrender.

(BEGIN VIDEOTAPE)

CHRIS JANSING, MSNBC ANCHOR: Tea Party champion and conservative
congresswoman, Michelle Bachmann.

UNIDENTIFIED MALE: Tea Party darling Michele Bachmann.

JANSING: Won`t run for re-election next year.

UNIDENTIFIED MALE: What?

ALEX WAGNER, MSNBC ANCHOR: Michele Bachmann is out.

UNIDENTIFIED MALE: She will not seek a fifth term in office.

MARTIN BASHIR, MSNBC ANCHOR: Catastrophic blow to the Tea Party.

UNIDENTIFIED MALE: Is the Tea Party sputtering?

BASHIR: And to comedy-loving individuals everywhere.

UNIDENTIFIED MALE: Yes. What am I going to write about now?

UNIDENTIFIED FEMALE: Bachmann`s career included plenty of national
highlights.

REP. MICHELE BACHMAN (R), MINNESOTA: The Tea Party is a dynamic force
for good. Are they pro-America or anti-America?

It literally kills women, kills children.

The president of the United States is threatened by my candidacy.

WAGNER: A woman with many theories.

BACHMANN: I haven`t had a gap.

UNIDENTIFIED MALE: She was in deep, deep trouble, and it`s only going
to get worse.

UNIDENTIFIED FEMALE: Bachmann was facing a very tough challenge.

UNIDENTIFIED MALE: Facing an FBI and FEC probe.

BACHMANN: Rest assured, this decision was not impacted in any way by
the recent inquiries.

UNIDENTIFIED MALE: I`m not quitting because of investigation. I`m
not quitting because I couldn`t win. We can read the exact opposite.

BACHMANN: Be assured.

WAGNER: Rest assured.

BACHMANN: Rest assured.

UNIDENTIFIED MALE: Well, I certainly feel reassured.

BASHIR: Never felt more assured in my life.

CHRIS MATTHEWS, MSNBC HOST: Michele Bachmann is quitting the
Congress.

BASHIR: The saddest moment in recent congressional history.

UNIDENTIFIED MALE: She will not seek a fifth term in office.

JANSING: Because for her, eight years is long enough.

BACHMANN: Oh, my goodness! Yes!

(END VIDEOTAPE)

O`DONNELL: The Tea Party suffered a major loss in the House of
Representatives today when the official leader of the Tea Party caucus made
this announcement.

(BEGIN VIDEO CLIP)

BACHMANN: I have decided next year I will not seek a fifth
congressional term to represent the wonderful people of the sixth district
of Minnesota.

(END VIDEO CLIP)

O`DONNELL: The announcement came while Michele Bachmann and her staff
are under investigation by the Office of Congressional Ethics and FBI for
alleged illegal campaign spending, and as "Des Moines Register" reports
today, a trial date is set for a lawsuit alleging that during her
presidential campaign, Michele Bachmann`s staff stole and misused an e-mail
distribution list maintained by an Iowa home school group.

Michele Bachmann went out of her way in her tape announcement today to
insist that that the investigation is closing in on her had nothing to do -
- nothing to do -- with her decision to quit Congress.

(BEGIN VIDEO CLIP)

BACHMANN: This decision was not impacted in any way by the recent
inquiries into the activities of my former presidential campaign or my
former presidential staff.

(END VIDEO CLIP)

O`DONNELL: No! Why would it be, of course not.

A recent poll of her district showed Michele Bachmann trailing her
Democratic opponent, Jim Graves, with Graves at 47 percent, Bachmann at 45
percent. A truly deadly polling result for an incumbent.

Graves came close to winning that seat in the last election, but in
her announcement, Michele Bachmann said that, too, had absolutely nothing
to do with her decision.

(BEGIN VIDEO CLIP)

BACHMANN: My decision was not in any way influenced by any concerns
about my being reelected to Congress, and I have every confidence that if I
ran, I would again defeat the individual who I defeated last year.

(END VIDEO CLIP)

O`DONNELL: Yes, of course you would. Michele Bachmann will join the
list of Tea Party members who are no longer members of Congress, that
includes Joe Walsh, Allen West, and Todd Akin who lost their elections, and
Jim DeMint who quit the Senate.

And we should not forget the list of Tea Party members that never
became members of Congress or Senate because they lost their general
elections to Democrats, Sharron Angle, Christine O`Donnell, Ken Buck,
Richard Mourdock.

Michele Bachmann was the first candidate to drop out of the Republican
presidential primaries after she lost the Iowa caucus. Let`s take a look
at why getting reelected in her congressional district was becoming
increasingly difficult, including in the last election which she won by one
point.

(BEGIN VIDEO CLIPS)

BACHMANN: The Lord says be submissive. Wives, you are to be
submissive to your husbands. So, we moved to Virginia Beach, Virginia.

We also know that the Founders that wrote those documents worked
tirelessly until slavery was no more.

I find it interesting that it was back in the 1970s that the swine flu
broke out then under another Democrat president, Jimmy Carter, and I`m not
blaming this on President Obama. I just think it`s an interesting
coincidence.

It`s a brand new billion dollar high-speed train that is going to go
from Disneyland out to Las Vegas. Harry Reid was also the senator from
Nevada, was behind this measure. And it makes us wonder, is he more
interested in making sure kids start to gamble at younger ages?

The president of the United States will be taking a trip over to India
that is expected to cost the taxpayers $200 million a day.

Michael Steele, you`ll be the man. You`ll be the man.

Here in New Hampshire, what you have done is nothing short of
remarkable and the shot that was heard around the world at Lexington and
Concord.

I don`t know where they`re going to go to get this money, because we
are running out of rich people in is country.

I want to thank the Tea Party Express and Tea Party HD for inviting me
to speak this evening.

(END VIDEO CLIPS)

O`DONNELL: We have a full panel to deal with this news, including Ana
Marie Cox, in Minnesota, which I believe is costing us $200 million an hour
to have that satellite open up.

KRYSTAL BALL, "THE CYCLE": It`s worth it.

O`DONNELL: But we have to begin with Steve Schmidt, because he cannot
wipe that gloating smile off his face as he represents that diminishing
section of the Republican Party, the group that wants to win elections.

This is a big win for Republicans who want to win elections, isn`t it,
Steve?

STEVE SCHMIDT, MSNBC POLITICAL ANALYST: Look, you saw in the
statements which could have played for the entirety of the show through the
night, all day tomorrow, and into tomorrow night.

(CROSSTALK)

SCHMIDT: It is.

Look, the House of Representatives is the people`s house. There`s no
small number of nuts out there. They were well-represented by her, but
sometimes a nut is just a nut. You look at her record and the
irresponsible pronouncements on issues like vaccines, the serious issues,
the ethical issues, the investigations, and this litany of just bizarre,
off the wall ignorant statements.

My view is she was a blight on the Republican Party. She`s an
embarrassment to the party. We have one more extreme person who is now
going to be out of the equation. I think that`s healthy for the Republican
Party.

O`DONNELL: And, Steve, as a Republican operative calling plays in the
field, did you have the sense there was a rub-off effect from Michele
Bachmann specifically that was hurting Republicans outside of just her
congressional district?

SCHMIDT: I don`t think that you can attribute the party`s problems to
just Michele Bachmann, but she`s part of the mosaic --

O`DONNELL: Yes.

SCHMIDT: -- that was on a presidential primary stage that on any
given night resembled a reality show, something that you would see on one
of the cable channels, not someone that you expect to see on news channels
doing a presidential debate.

O`DONNELL: Krystal Ball, the Bachmann wing of the party kept Harry
Reid as the majority leader of the Senate. He probably would not have won
re-election if he didn`t get a Bachmann types running against him in
Nevada, Democrats probably would have lost control of the Senate.

So, they have a lot to answer for.

BALL: That`s right. I mean, on this seat, she looks like she was
possibly, probably going down to defeat in November, which is obviously not
why she`s backing out of the race, obviously.

O`DONNELL: I have to say, an announcement for leaving, never seen a
longer list of why I am not leaving.

BALL: Why I am not leaving.

O`DONNELL: This isn`t why I am leaving and this isn`t why I am
leaving.

BALL: It reminds you when you see a restaurant that says good food
here, you definitely keep driving.

But, I think, anyway, I think the thing with Michele Bachmann that`s
more egregious than her wildly irresponsible relationship with reality is
the fact that she had absolutely no interest in governing. She was not in
Congress to govern. She was there to be a celebrity, she was there to be
incendiary. She was there to throw bombs.

But literally in her time in Congress, the only bill she sponsored
that ended up coming to pass was her recognizing Minnesota`s 150th
birthday. So, I think that`s the other piece of this that`s a real win, is
for Americans who are interested in actual governance, her leaving is a
step in the right direction.

O`DONNELL: Ana Marie Cox, we have to go to you for the mood in
Minnesota. Are Tea Party tears running in the streets of Minnesota
tonight?

ANA MARIE COX, THE GUARDIAN: You know, there aren`t a lot of Tea
Partiers in Minnesota. I think one of the reasons, I mean, obviously, her
last race she was in trouble, in a district that`s actually plus seven
Republicans, she came close to losing. There are a lot of people were
crossing party lines.

That district is usually reliably moderate Republican, sometimes a
Democrat. So, she was in real trouble. I mean, I am a transplant here,
but I have come to love Minnesota.

One of the things I love is common sense and lack of irony. And, you
know, I have to say here, the people that I talked to, not a random
sampling by any means, but they have no sense of oh, we are going to miss
her because we like to make fun of her. They`re really just glad that
she`s leaving. I mean, they`re just straight up glad that she`s leaving.

O`DONNELL: Steve, her popularity declining in a state over the same
period of time where Al Franken`s popularity has been rising. And the way
he approached his work in the Senate was to show Minnesota one thing, I`m
going to work really hard, and I`m going to work really hard at this job of
governing. I`m not going to be out there trying to be funny, or make --
get attention, the way Bachmann -- if you tried to choose the exact
opposite performance for being in office, that`s what Bachmann show.

SCHMIDT: Absolutely. Look, Al Franken may have been a comic in his
former life, but he is a deadly serious U.S. senator. I disagree with him
on all manner of issues, but he takes his job seriously. This was a
carnival act from beginning to end and she`s an extreme voice.

And you look at the issues that she has held forth on, you have that
mix of ignorant extremism, the ethical challenges. This is a good riddance
moment if you`re a Republican out there today. And, you know, the fact of
the matter is we have given up five U.S. Senate seats over the last two
election cycles, Republican senator in Missouri, in Nevada, in Delaware, in
Colorado, and we don`t because of these extreme candidates.

And nobody with a better representative archetype of them than Michele
Bachmann.

O`DONNELL: And, Krystal Ball, here is another reason, why -- this is
not a reason, I mean. This is a reason that isn`t a reason, why she is not
running, that is that she used to work at the IRS. That`s also one little
bio facts that has nothing to do with why she is not going to run again.

BALL: Of course, it has nothing to do with it. I think that speaks
to some of the more hypocritical elements of her platform as well, you
know, taking subsidies while rallying against the government.

O`DONNELL: Yes.

BALL: So, there`s that element to her as well. To Steve`s point,
there`s nothing below the sort of surface act. She is a flamethrower. She
is a bomb thrower. She wants attention.

She used that for awhile effectively to raise money but that has a
shelf life, and seeing that shelf life play out to me is very encouraging.

O`DONNELL: Ana Marie, were her constituents catching up with some of
these inconsistencies like the family taking agriculture subsidies while
she would rail against, you know, Obama socialism.

COX: Well, I think if they were catching up with these particular
pieces of hypocrisy. I think what they were saying is that she was
actually a really ineffective member of Congress for them. I mean, she did
bring back some subsidies. But I was looking at her record of attendance
in Congress, she only -- she was third to last in terms of attendance. One
of the Congress people below her was Gabby Giffords.

So, she`s not -- she wasn`t doing a lot for them. And I want to add
that yes, this was a carnival. This was also just all about her. She
raised all that money.

She barely gave any of it to other Republican candidates. It wasn`t a
three-ring circus. It was a one ring circus with Michele at the middle.
And, I think, again, I think people just kind of tired of her.

I think they will be happy to elect a moderate Republican, you know,
come next election cycle. Yes. So, it`s actually a bad move for the
Democrats in that particular district. They had a fair shot at it.

BALL: It is better in that particular district for Michele Bachmann
to stay there, we probably would have beaten her. I have to say bigger
picture here, this is a good thing --

(CROSSTALK)

O`DONNELL: You got to think of the good of the country more than
district. Very well.

Ana Marie Cox, Krystal Ball, and the very pleased Steve Schmidt,
triumphant Steve Schmidt -- thank you very much all for joining me tonight.

Coming up, why no one at the party protest against the IRS today is
demanding that the IRS enforce that 501(c)(4) law.

And New York City Mayor Michael Bloomberg and gun safety group got
ricin tainted letters today which attacked the mayor for his gun safety
campaign.

And in the rewrite, Rudy Giuliani has decided to stand in judgment of
Anthony Weiner. We will examine Rudy Giuliani`s glass house in the
rewrite.

(COMMERCIAL BREAK)

O`DONNELL: Rudy Giuliani is a serial polygamist. He`s been married
three times. But he now wants to stand in moral judgment of Anthony Weiner
who`s been married exactly once. Rudy Giuliani, who appointed the only New
York City police commissioner in history who went to jail, wants to present
himself in the matter of Anthony Weiner as an excellent judge of character.

Rudy Giuliani and Anthony Weiner are in a rewrite tonight -- a rewrite
that is full of sex and crime, but neither one of them was actually
specifically involved in. That`s in tonight`s rewrite.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. STEVE CHABOT (R), OHIO: One of the things we have to be careful
of is that we don`t give them that opportunity or excuse by overreaching,
going too far, going where there`s not evidence. We need to stay focused
on the evidence, the facts.

(END VIDEO CLIP)

O`DONNELL: That was Republican Congressman Steve Chabot caution to
Tea Partiers on the IRS story. He was one of three Republican lawmakers
who spoke at a southwest Cincinnati town hall on the IRS just a short time
ago. But the other speakers didn`t exactly heed that warning, including his
fellow Republican Tea Partier Brad Wenstrup.

(BEGIN VIDEO CLIPS)

REP. BRAD WENSTRUP (R), OHIO: These agencies like IRS are following
Barack Obama`s lead. We have seen him target people, target groups.

GEORGE BRUNEMANN, TEA PARTY ORGANIZER: You didn`t get the impression
you might be the next one targeted by the IRS. We have this thing called
national health care, Obamacare, you may have heard of it. It is coming
down the pike and it`s being controlled by the IRS.

WENSTRUP: Are you going to be denied care because of some of your
political beliefs, for your religious beliefs?

UNIDENTIFIED MALE: Five years or ten years when my knees are so bad I
need them replaced, am I going to get a letter from the IRS saying where
have you been in the past with that knee, where do you intend to go in the
future with that knee? Do you ever intend to use that knee to kneel in a
church?

WENSTRUP: What Barack Obama and the IRS are doing to us with this
plan is exactly the kind of tyranny that I think our Founding Fathers were
fighting against, actually, I think it`s worse.

JENNY BETH MARTIN, TEA PARTY PATRIOTS: We`re asking you if you think
there are amendments to the Constitution that we need to be looking at to
correct this corrosive abuse of power.

UNIDENTIFIED MALE: There`s only one way to fix that. Abolish the
IRS, isn`t it? That`s only way to fix it.

(END VIDEO CLIPS)

O`DONNELL: Joining me now, Nia-Malika Henderson, political reporter
for "The Washington Post" and Julian Epstein, a Democratic strategist and
former counsel to the House Judiciary Committee.

Nia, that final line about abolish the IRS is something that
Republicans have been, some Republicans anyway, have been dreaming about
for a long time. And it seems to me that`s where they really want to drive
all this rhetoric.

NIA-MALIKA HENDERSON, THE WASHINGTON POST: Yes, that`s right. I
mean, in fairness, a lot of Americans hate the IRS, hate tax season. They
might want to see it wiped off the face of the earth, as well, but this is
sort of a perfect storm for the Tea Party. In 2010, they had Obamacare,
and they successfully ran against this president, Obamacare. And now, they
have Obamacare plus the IRS.

The IRS is going to come and deny you health care because of your
beliefs. This is what they`re going to run on. We saw these early ads
already out of Mitch McConnell, these Tea Party town halls we have seen.
So, we know how they`re going to run.

I think the question is what does the president do in the meantime to
sort of straighten this out, straighten out the IRS, what sort of messaging
will they have. In looking at some of their talking points so far in
campaign appearances at donation events, they don`t really talk about it.
They talk essentially about forwarding their agenda.

They also say, listen, we need a Congress that will do what we want
them to do. They talk about needing six more votes to get gun control
passed. So they`re going to have a tough time in the Tea Party states,
particularly Tea Party counties and certainly Southern states as well.

O`DONNELL: Julian, the one solution that will never be proposed at
one of those meetings to the whole 501(c)(4) controversy is to simply
enforce the law word for word, something that Republicans always used to
say they really cared about, you know, we remember when they went out to
begin the House session by reading the Constitution as if they were devoted
to every word of that.

Of course, if they did enforce 501(c)(4) law as written, it says you
have to be exclusively engaged in social welfare. And so, every single Tea
Party group and every single group involved in the controversy would have
been rejected for that status. So, they`re never going to take up the
chance of enforce that law, are they?

JULIAN EPSTEIN, DEMOCRATIC STRATEGIST: I think that`s where this
controversy goes, and I think you have been making this point from day one.
The -- there`s a lawsuit being brought as you know now, and I think, at the
end of the day, there`s going to be two questions that are going to be
asked. One is what are the questions to the Tea Party members
inappropriate? And I think that the likely answer to that is they were not
inappropriate. I think in any court of law and I think committee
investigating is going to have to come to that conclusion because the
questions that were asked were well-established in law.

The second question was singling out of the Tea Party and other
members for greater screening. And in the lawsuit and elsewhere, we might
come to the conclusion at the end of the day that the screening was
inappropriate, but then the question is going to be, what is the remedy?

And the remedy at the end of the day is all these groups on the left
or right should have had tougher screening under the standard, a question
whether any of these groups really qualify, and at the end of the day, I
think people are going to have to answer your question, including the court
where the suit is filed, is what is the proper standard?

And the proper standard -- you make a good case, Lawrence. I mean,
the person who makes this argument, more so than anyone is Anthony Scalia,
strict constructionist argument, who says we should go by exactly what the
statute says.

And if you read the statute and read the exclusivity provision, in
other words, none of these groups can be involved in any political activity
whatsoever, they must all be involved exclusively in social welfare
activity, if you read that statute, and if you are a strict
constructionist, then you should come to the conclusion that none of these
groups should have had 501(c)4 status. Most of them should not because
most of them seem at least, by the reporting that we`re aware of, seemed to
be involved in some kind of political activity.

There may be an argument at the end of the day that there should have
been greater scrutiny on the left, but that`s fine. I would probably agree
with that. Maybe there should be greater scrutiny of all groups. So, at
the end of the day, we do have the statutory standard that you have spoken
about, which is that if you were only involved -- exclusively involved in
social welfare activity, then you qualify for this, otherwise you don`t.
Most of these groups probably didn`t qualify.

O`DONNELL: Well, there`s also the fact that none of the Tea Party
groups got rejected for this status, and on the left, there were groups
that didn`t get the 501(c)(4) status. I want to listen to something
someone else said about why John Boehner actually doesn`t want to have a
special counsel investigating this.

EPSTEIN: Right.

(BEGIN VIDEO CLIOP)

BRUNEMANN: I did have the opportunity to talk again with Speaker John
Boehner. I think a lot of people have different opinions of Speaker
Boehner. He`s a decent poker player, and he`s really playing his cards
good here. So, the groups that are screaming for a special prosecutor, we
don`t want to do that because that special prosecutor is appointed by Eric
Holder.

(END VIDEO CLIP)

O`DONNELL: So, Nia, I guess that`s it for the special prosecutor.

HENDERSON: Yes, you know, there you have it. I mean, what you see in
that clip though is some ways, the Tea Party have their views about John
Boehner, and they`re not always great. But, you know, I think one of the
points about this is that Democrats have to figure out how they`re going to
-- what is their narrative going to be essentially.

Julian, you made an excellent point and you did, too, Lawrence, in
stating it was liberal groups that were rejected, no Tea Party groups got
rejected. Those details I think will be lost in the fog of campaigning
that is already going on, but I think Democrats have to figure out what
their narrative is going to be.

O`DONNELL: Julian Epstein -- sorry, Julian, we`ve got to go. We`ll
be back on it, I`m sure.

Julian Epstein and Nia-Malika Henderson, thank you both for tonight.
Sorry, we ran out of time.

HENDERSON: Thank you.

O`DONNELL: Coming up, ricin-tainted letters were sent to New York
City Mayor Michael Bloomberg and his gun safety group. We will have the
latest on that breaking story.

And Rudy Giuliani, that paragon of virtue Rudy Giuliani wants to stand
in judgment of Anthony Weiner, which is a very, very big mistake for
someone living in the glass house that Rudy Giuliani lives in. That will
be in the rewrite.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WAYNE LAPIERRE, EXECUTIVE VICE PRESIDENT, NATIONAL RIFLE ASSOCIATION:
Michael Bloomberg and the media. It is really important that they hear
from every NRA member, every gun owner.

Michael Bloomberg or some other official dropped out on national
television to scold and shame us.

Stand up to this guy that says ridiculous things like the NRA wants
firearms with nukes on them.

Let me ask president Obama, Michael Bloomberg, they don`t know what
they are talking about. You just heard mayor Bloomberg, this is a country
by the people, of the people, and for the people.

(END VIDEO CLIP)

LAWRENCE O`DONNELL, MSNBC ANCHOR: Wayne Lapierre of the NRA have made
New York mayor, Michael Bloomberg, their number one enemy for gun control
advocacy. And now, the mayor and the organization he founded, mayors
against illegal guns, are the apparent target of an attack with deadly
poison ricin.

Letters addressed to mayor Bloomberg and the gun control group
containing ricin were delivered to offices in New York and Washington.
Now, sources tell MSNBC investigative reporter Jonathan Dienst that the
letter accused the mayor of trying to take our guns away. Michael
Bloomberg said this a short time ago.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE REPORTER: Mayor, is this because of your
outspokenness about guns and your thoughts about that?

MICHAEL BLOOMBERG, NEW YORK CITY MAYOR: Well, there was a letter that
threatened us. The letter was obviously referred to our anti-gun efforts,
but there`s 12,000 people that are killed this year with guns, and 19,000
are going to commit suicide with guns, and we are not going to walk away
from those efforts. And I know I speak for all of the close to a thousand
mayors in mayors coalition against guns, this is the spiritual in a country
that we just have to make sure that we get under control and eliminate.

UNIDENTIFIED FEMALE REPORTER: Mayor, do you feel threatened?

BLOOMBERG: No, I don`t feel threatened.

(END VIDEO CLIP)

O`DONNELL: Jonathan Dienst joins me now.

Jonathan, you cover any stories in New York that involve any traces of
terrorism in any way. What`s the latest we know about this?

JONATHAN DIENST, MSNBC INVESTIGATIVE REPORTER: Well, what makes this
case concerning is that the lab tests came back, not only field tests but
actual lab tests for the New York letter came back positive for ricin.
Unclear about of the potency of it, but the police department says two of
its officers suffered some minor illness, some minor effects over the
weekend. But, again, this letter was intercepted at an offsite office
location where the city hall mail is screened first before it gets on time
the city hall and the mayor. So, those civilian personnel were at risk at
any time. It was detected today.

O`DONNELL: Do they, by the way, have protective gear in that kind of
facility in anticipation of exactly this?

DIENST: That`s exactly right. It is explained to us, as mailroom
operator found something suspicious about the letter, put it in a contained
box, reached in with gloves that were there, opened it, discovered this
whitish, orangish substance, and alerted police and they responded. This
was Friday. And again, lab tests coming back officially today for that
letter.

The second case involves the mayor, one of the leaders of the mayor`s
group in Washington and it was sent to his private office. He works at a
consulting firm and he received that there, walked outside with his mail,
sat on a park bench, opened the letter. And again, that whitish, orangish
substance came out. That was Monday. Washington police arrived, FBI are
still waiting final test results. But, preliminary tests showed that one
positive as well.

O`DONNELL: And was he harmed in any way?

DIENST: He was not having symptoms, he is not talking publicly, but
his office and mayor`s office are confirming he did receive this letter,
Mark Lays (ph), and that he did not suffer any illnesses or ailments as a
result.

O`DONNELL: And what do we know about the content of the letter. Was
it all about guns?

DIENST: We know the letter was mailed on, the 12 letters were mailed
May 20th from Shreveport, Louisiana. And in the letter, we don`t have
direct quotes, but it is explained to us, says no one is going to take our
gun rights away. And this is including threats against mayor Bloomberg.
So, that`s the content of this. It does not appear to be linked to
previous letters sent to the White House and Congress a few weeks back.
But again, it is concerning that people are sending these types of letters.

We have not seen confirmed instances since the anthrax attack in 2001.
This now appears to be -- we have seen lots of hoaxes and white powder jobs
across the city over the years, but this now appears to be another
confirmed case, not seen since 2001.

O`DONNELL: Jonathan Dienst, thank you very much for getting us the
latest on that tonight.

DIENST: Thank you.

O`DONNELL: Coming up, Ezra Klein is here and going to reveal
something that Republicans really don`t want you to know, something they`re
hoping their scandal fog will prevent America from seeing, but Ezra is not
letting them get away with that little trick. It is coming up.

(COMMERCIAL BREAK)

O`DONNELL: What do you think this headline is about, hide your kids?
Scary stuff, right? It is "the New York Post," so not really so scary. It
is next in the "rewrite."

(COMMERCIAL BREAK)

O`DONNELL: This is what "the New York Post" does on a slow news day.
Hide your kids.

Sounds like there`s a dangerous serial predator roaming the streets of
New York, right? Well it is actually a story about the smallest possible
development in the New York city mayor`s race. It is a development that no
newspaper in history has ever reported on before.

One of the ten candidates for mayor is trying to find interns to work
on the campaign. Campaigns needing volunteers and working for volunteers
has never before in political campaign coverage been considered news until
the candidate seeking interns was the man "the New York Post` calls the
sexting king, Anthony Weiner right down there. And that was enough for
"the New York Post" to rewrite a nothing story into a front page story.

And in another Weiner item in the New York post today, former mayor
and self proclaimed hero of 9/11 Rudy Giuliani said this about Anthony
Weiner.

I wasn`t stunned when he got in trouble. I know him for years and
always knew something was wrong with him.

You see, Giuliani was a cop. OK, not a cop exactly. He was a U.S.
attorney, federal prosecutor. He worked with cops, FBI agents mostly. And
so, he wants you to think he has that cop mythical power to look at someone
and know something is wrong with him.

Giuliani didn`t have that power when he first looked deeply into the
eyes of Bernie Kerik who entered Giuliani`s world as chauffeur. It was
pretty much love at first sight for Giuliani and Kerik. The mayor judged
the chauffeur to be something greater than his resume which included being
a high school dropout.

Giuliani using his great skill as judge of character, promoted Bernie
Kerik over many more seemingly qualified candidates to the city`s
corrections commission. Kerik took full advantage of that job which also
meant taking full advantage of city correction officer, Janet Pinero with
whom he had an affair for several years, which ones discovered provoked
some lawsuits from other employees of the corrections department,
complaining that Kerik gave his mistress advantages in the workplace much
to their disadvantage.

Giuliani proved himself to be the worst judge of character in the long
history of New York city mayors that have appointed New York city police
commissioners when he appointed his soul mate, Bernie Kerik to that job.

New York city police commissioner is the most important police job in
America, running by far the biggest police department in the country, and
to the shock of anyone who knows anything about police work, Rudy Giuliani
gave that job to the supremely unqualified Bernie Kerik.

(BEGIN VIDEO CLIP)

RUDY GIULIANI, FORMER MAYOR, NEW YORK CITY: My choice ultimately was
Bernie Kerik. Bernie has been an exceptional commissioner of the
department of corrections. He understands the job of being a police
officer. Most importantly, he understands the job of being a leader and he
brings a quality of leadership that I believe can give us the opportunity
to build on a record that is a very difficult one to match.

(END VIDEO CLIP)

O`DONNELL: Fine judge of character, Rudy Giuliani.

And then Bernie Kerik became the first New York police commissioner to
go to jail. But before Bernie Kerik`s crimes caught up with him, he was
actually on his way up from New York city police commissioner. It was when
the FBI was doing the background check on Bernie Kerik to meet George W.
Bush`s secretary of homeland security that the lies of Bernie Kerik started
to surface. Bernie Kerik was on his way to George W. Bush`s cabinet when a
bunch of things emerged almost at once.

We discovered Bernie Kerik was a tax evader, having hidden income from
a book he wrote about what a hero he was on the aftermath of 9/11. We
discovered he used a mob connected company to do hundreds of thousands of
dollars of free work on an apartment, a company that had been banned from
doing business with the city of New York.

We discovered a public landlord had donated an apartment close to
ground zero for the use of the exhausted firefighters, police officers and
other city workers who were toiling in the rubble nearby. And the Bernie
Kerik character decided to use the bet in that apartment, not so much for
rest, as for exercise with two women with whom he was then conducting
affairs, One was the continued affair with the corrections officer and the
other was with the woman who was the editor and publisher of his book, the
book whose royalties he lied to the IRS about.

The editor told this story about the time she tried to break up with
Bernie Kerik in fall of 2002 on the day of the New York marathon. He
started crying. I love you, you can`t leave me. He was crying in front of
everyone. He convinced me to cancel my plans for the evening. Then he
says, he is sick to his stomach that he couldn`t take the stress and had to
go home and sleep. He gets in his car, and two minutes later, calls me
again all weepy. He hangs up the phone, but it doesn`t disconnect, I can
hear him tell the guys on the detail how he fooled me and how he was taking
his wife out to dinner.

Well, he must have been good at fooling people because he fooled that
great judge of character, Rudy Giuliani, the guy that says he always knew
that something was wrong with Anthony Weiner, but never knew there was
anything wrong with Bernie Kerik.

Here is something else the great judge of character didn`t know about
his bosom buddy, Bernie Kerik. The editor he had the affair with, said
quote "while police commissioner he spent his days running around the city
having sex with women, not just me and Jeannette Pinero, there were others.
Hid details was driving these women all over the place. He had deals with
hotels around the city. He and I would go in separate doors. He never
paid for anything.

There is one of Bernie Kerik`s lovers telling you that when he was
Rudy Giuliani`s police commissioner, he spent his days running around the
city having sex with women. And now Rudy Giuliani wants to stand in
judgment of Anthony Weiner`s tweets.

Rudy Giuliani, who had three wives to Anthony Weiner`s one. Rudy
Giuliani who himself was caught having at least one affair while mayor,
wants to judge on moralistic grounds Anthony Weiner, who unlike Rudy
Giuliani and Bernie Kerik was never caught having an affair with anyone.
He was caught tweeting. Anthony Weiner wasn`t caught stealing like Bernie
Kerik who Rudy Giuliani judged to be an honorable man.

In 2006, in state Supreme Court in the Bronx, Bernie Kerik pleaded
guilty to criminal charges involving the rebuilding of that apartment that
was done by a mob connected company. And in 2010, Bernie Kerik pled guilty
in federal court to eight felony charges, including tax fraud.

When the federal judge sentenced him to four years in prison, the
judge said I think the damage caused by Mr. Kerik is in some ways
immeasurable. The one thing Bernie Kerik has done well in life is be a
federal prisoner, so well he got out of prison yesterday, a little early
because of good behavior. And no, Rudy Giuliani, the great judge of
character wasn`t there to welcome his buddy Bernie home.

(COMMERCIAL BREAK)

O`DONNELL: The fog of scandal talk in Washington is blocking much of
America from seeing the most important thing that Washington is not talking
about but Ezra Klein is going to talk about it next.

(COMMERCIAL BREAK)

O`DONNELL: What is not coming through loud and clear in all of the
attention being directed to Benghazi aftermath and the IRS fake scandal,
and the justice department, is that the economy is improving.

New Standard and Poor`s data finds housing prices at the highest
levels in seven years, according to a new conference board report, consumer
confidence is at its highest level in five years. Another piece of good
news came about two weeks ago in the middle of what was arguably one of the
administration`s worst weeks of the year.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Finally, and I smile for
this, I think you all noticed in the CBO, I hope you did. CBO report
yesterday, so-called baseline re-estimate, and improvement in CBO report
shows the president`s policies of cutting the deficit by more than $2.5
trillion in a balanced way are contributing the most rapid deficit
reduction since world war II. The most rapid deficit reduction since world
war II.

(END VIDEO CLIP)

O`DONNELL: So how did Republican deficit hawks react to the news?

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: My question isn`t
about whose going to resign, my question is who`s going to jail over this
scandal?

(END VIDEO CLIP)

O`DONNELL: Joining me now, MSNBC`s Ezra Klein.

Ezra, today, Jay Carney was trying to get reporters to focus their
attention on the baseline re-estimate. It was d-day. The president of the
United States made his first statement about what was going on at the IRS,
and now he was going to get rid of the guy running it, and put in an acting
head and all of that stuff. And so, it seems to have slipped national
attention that there are good things happening out there.

EZRA KLEIN, COLUMNIST, THE WASHINGTON POST: I am shocked to learn the
re-estimate or not. (INAUDIBLE).

O`DONNELL: Wait a minute, Ezra, it is a shocking baseline estimate as
you and I know. It is wicked exciting. It is the secretes slope since
world war II. I can`t believe it.

KLEIN: I can`t believe you`re underselling it, $600 billion. They
cut $600 billion off the deficit estimates. Although, let me take a
revisionist take on this, all the other economic news he mentioned is
really good news. And in particular, the housing news, the auto news, when
you begin to see housing and auto turn around, that`s when you begin to see
recovery, because those actually do drives jobs and they will accommodate.

But when I hear amid 7.5 percent unemployment we are seeing the
quickest deficit reduction since world war II, that to me is actually bad
news. That to me is evidence that we are doing much too rapid austerity.
And I was going back today and looking at the first four months of job
creation of this year versus last year.

Now, you would expect 2013 to be better than 2012. We have done
mortgage leveraging, gotten further out of debt, there has been more
calming in Europe. We actually had slightly, ever so slightly slower job
growth. It has been, OK, near 200,000, but it was 225 in the first four
months of 2012. So, I think there is a good evidence. We are not seeing a
huge effect couple of times cuts and sequestration, but I think those good
evidence that if we had better pulse, (INAUDIBLE) deficit reduction, that
we could be doing a little bit better. We could be seeing a somewhat
faster recovery, and we should be.

O`DONNELL: Well, I completely agree with that. And the problem now
that we are going to confront is because we had this drastic deficit
reduction and disaster hasn`t hit the economy, the Washington I then going
to start thinking, well, you can cut the deficit and it will hurt. What we
will never know is where will our economic health signs be today. If we
hadn`t done that, how much healthier would we be, how much lower would
unemployment be?

KLEIN: Right. This is the key issue in Washington. You can never
get anybody to seriously consider the kind of factually, you can never get
people to say, what would unemployment be without the stimulus? And you
can`t even get people to say what would the year 2011 have been like
without the deficit and crisis.

Look. We are doing things in a very dumb way. Let`s say you are just
the biggest deficit hawk on earth. Let`s say that the only thing you
actually care about is the deficit. You shouldn`t be happy now either. I
mean, it is coming down, that should make you a little bit happy. But it
is not coming down as quick as it would be coming down if we passed the
president`s budget, the Ryan budget, the democratic budget. And more to
the point, it is coming down in exactly the wrong way.

You look at the baseline re-estimation. I imagine every time I say
it, ratings just spike up. But you look at that baseline re-estimation,
and what you see there is what they think is going to happen over the next
decade, is we are going to see deficits fall very, very rapidly in the next
two to three years, then they begin to rise slowly the rest of the period.

Under all the other budgets and compromises that have been actually
put forward in Washington, instead of having a very rapid move to austerity
when the economy is weak and then a rising deficit when the economy should
be getting stronger, which is exactly what you don`t want, you would have a
slower move to austerity, more support for the economy the next couple
years and a lower deficit at the end of the next ten years which is exactly
what you want to see.

So, even if you are a true deficit hawk, we could be doing a lot
better than we are doing right now on the deficit caps. We are just doing
it in exactly the opposite way we should be.

O`DONNELL: And there`s nothing better for the deficit than a growing
economy where you have as a result growing tax revenues, you have less
reliance on support programs like un-insurance -- unemployment insurance
and that sort of thing. And there`s just with all this scandal fall, there
is no attention in Congress any way, absolutely no attention towards what
we might want to do to help grow the economy.

KLEIN: Yes. I think this is a generally key point. The one
exception here, and we will see if it continues on, is immigration reform.
It is not a quick move on the economy right, it is not going to affect
growth in 2014, or 2015, or 2016, at least it is not likely to. But over
the long term, getting a more sensible immigration, that system in place,
is a big deal for growth, being able to have the best people from all over
the world come to this country, being able to help folks even wanted that
skilled to come in to this country, these things is economy`s who would
really do help with growth. So, that would be a big deal.

But beyond, that in terms of infrastructure, in terms of things to
create jobs in the short term and also in terms of things like research and
development and education and basic science, which we are cutting
sequestration, we are doing it wrong.

O`DONNELL: Ezra, I am sure we have just completely redirected
Washington`s attention to economic indicators and exactly what they should
be paying attention to.

Ezra Klein, thank you for joining us tonight.

KLEIN: Thank you.

O`DONNELL: Chris Hayes is up next.

END

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