'The Last Word with Lawrence O'Donnell' for Tuesday, October 1st 2013

THE LAST WORD WITH LAWRENCE O`DONNELL

October 1, 2013

Robert Costa, Wendell Potter, Carolyn Federoff>

ARI MELBER, GUEST HOST: Day one of government shutdown, and when it
comes to Republicans piecemeal plans, we are already a third of the way
through the alphabet.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Break down. Meltdown. Shutdown.

UNIDENTIFIED FEMALE: Dismay and disgust.

CHUCK TODD, MSNBC HOST: Hard to say a good morning here.

REP. NANCY PELOSI (D), CALIFORNIA: It isn`t a very good one.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: At midnight last night
--

TODD: Just before midnight Eastern Time.

OBAMA: -- Republicans in Congress chose to shut down the federal
government.

UNIDENTIFIED FEMALE: The blame game is in full effect.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: This is not about me.

OBAMA: Stop governing by crisis.

BOEHNER: It`s not about Republicans here in Congress.

UNIDENTIFIED MALE: House Republicans compromised.

SEN. HARRY REID (D-NV), MAJORITY LEADER: We had a good day for the
anarchists.

UNIDENTIFIED MALE: End compromise, end compromise.

CHRIS JANSING, MSNBC ANCHOR: D.C. dysfunction at its worst.

OBAMA: Stop governing by crisis.

REP. PETER KING (R), NEW YORK: It`s going to hurt the government.
It`s going to hurt the Congress.

TAMRON HALL, MSNBC ANCHOR: This is a foolish battle.

KING: It`s going to hurt the Republican Party.

UNIDENTIFIED MALE: What`s the Republican end game?

UNIDENTIFIED FEMALE: There is no end game.

BOEHNER: I didn`t come here to shut down the government.

REID: We have a good day for the anarchists.

JON STEWART, COMEDIAN: Sponsored by the word why.

BOEHNER: I talked to the president earlier tonight.

REID: We will not go to conference with a gun to our heads.

STEWART: Also brought to you by how?

UNIDENTIFIED MALE: Breakdown. Meltdown. Shutdown.

OBAMA: Republicans in Congress chose to shut down the federal
government.

HALL: Federal workers are paying the price.

OBAMA: All because they didn`t like one law.

TODD: This is 1995 all over again.

(END VIDEOTAPE)

MELBER: Hi, I`m Ari Melber, in for Lawrence O`Donnell.

John Boehner may be scrambling for a lifesaver, but President Obama
and Harry Reid are not throwing it to him. The president went to his bully
pulpit to explain to the nation that Republicans made this mess and it`s on
Republicans to clean it up.

(BEGIN VIDEO CLIP)

OBAMA: At midnight last night, for the first time in 17 years, the
Republicans in Congress chose to shut down the federal government. Let me
be more specific. One faction of one party, in one house of Congress, in
one branch of government, shut down major parts of the government, all
because they didn`t like one law.

(END VIDEO CLIP)

MELBER: And then the president hit the most important Republican
failure here. There are enough votes to fund the government, but John
Boehner is afraid to let democracy resolve this crisis.

(BEGIN VIDEO CLIP)

OBAMA: And many representatives, including an increasing number of
Republicans have made it clear that had they been allowed by Speaker
Boehner to take a simple up or down vote on keeping the government open
with no partisan strings attached, enough votes from both parties would
have kept the American people`s government open and operating.

(END VIDEO CLIP)

MELBER: Here is why that is true. There is a floor of 200 Democratic
votes to fund the government right now as Nancy Pelosi keeps reiterating.
So, it would take only 18 more to pass the funding bill. And several
Republicans say, there are actually dozens of their members who want to do
that.

But Boehner simply refuses to allow that bipartisan up or down vote.
And that might be how this all end. But House Republicans aren`t there
yet.

Here is Boehner on the floor today.

(BEGIN VIDEO CLIP)

BOEHNER: Our country has big problems. Today our government has big
problems. The only way these problems are going to be resolved if we sit
down, amicably and keep the American people in mind and come to an
agreement.

(END VIDEO CLIP)

MELBER: And the House Republicans plan D on this funding impasse was
a non-answer that no one really took seriously. They wanted to have a
ninth inning conference meeting to go back over demands to you -- guessed
it -- to undermine Obamacare.

Well, the Senate rejected that. This morning, as expected, we had
this debate continue.

Boehner went then to his plan E, a piecemeal approach to founding a
few parts of the government he likes -- support for veterans, national
parks, and this one is important to Beltway residents, funding for
operations of the District of Columbia. That failed as well.

Now, there are some signs of cracking. Scott Rigell, a Virginia
Republican, took to Twitter with a novel idea today. Quote, "We fought the
good fight," he wrote. "Time for a clean C.R."

And, look, politicians love the bumper sticker simplicity of tweet
negotiations. But he did one better and took the case to Rachel Maddow on
her show tonight and he also went to FOX News.

(BEGIN VIDEO CLIP)

REP. SCOTT REIGELL (R), VIRGINIA: The question is, does a shutdown
advance our goals? I hold the view that it doesn`t. And I have said so.

(END VIDEO CLIP)

MELBER: Now, he is not alone today. His Republican colleague from
Virginia, Frank Wolf, also backs what they`re calling a clean C.R., and he
denounced this shutdown today on the House floor.

(BEGIN VIDEO CLIP)

REP. FRANK WOLF (R), VIRGINIA: Mr. Speaker, I`m calling for the
government to reopen. I`m calling for leadership on both sides to resolve
the issues. The FBI is being impacted. The CIA is being impacted. The
National Terrorism Center, which is looking at leads that are coming in to
keep this nation safe, is being impacted. And NIH, cancer research,
Alzheimer`s research are being impacted. People and families are being
impact the.

This is bad for America. It`s bad for America. Enough is enough.
It`s time to be leaders. It`s time to govern. Open up the government.

(END VIDEO CLIP)

MELBER: And Republican Congressman Peter King is no longer alone in
whipping House Republicans against their fellow Tea Partiers.

(BEGIN VIDEO CLIP)

KING: There is no reason for the government to be shut down. This
was a fool`s errand that was started by Ted Cruz. We can`t just blame him.
We have to also blame his acolytes in the Republican conference, who -- 30,
40 of them who stood with him, who were willing to undo what John Boehner
wanted to do which was, to pass the C.R., move this along.

UNIDENTIFIED MALE: We have 180 to 200 members of the House Republican
Conference who have a serious sense of governance. And do believe we have
an affirmative obligation.

(END VIDEO CLIP)

MELBER: There`s one more breakthrough you need new know about, and
this one is really important. Republican House members aren`t just
speaking out against the shutdown itself or some of their extremist
colleagues. They are starting to openly admit how the monster was created.

(BEGIN VIDEO CLIP)

RIGELL: We are in a terrible situation here. In Congress, we have
these gerrymandered districts to where Congress really doesn`t look like
America. And so, we are at loggerheads. It`s really no surprise on the
type of districts that, you know, that we have created in all of the state
legislatures.

(END VIDEO CLIP)

MELBER: Joining me now, E.J. Dionne, columnist for "The Washington
Post" and a senior fellow at Brookings Institution. And Joy Reid, managing
editor for "The Grio" and an MSNBC contributor.

Joy, you heard it right there. You have a member of Congress saying
something we know that they don`t usually say. This Congress doesn`t look
like America because it`s become a place where the members are picking the
voters. And the voters don`t have much of a say in picking the members.

JOY REID, MSNBC CONTRIBUTOR: Yes, it`s like a revelation, I`m sure on
FOX News. Did you see where the other guy, before, that congressman was
from Virginia.

So, if you are in Virginia, one of this dwindling number of sort of
blue and purple state Republicans, you are panicking right now, because
your district looks a little bit more like America than let`s say districts
in Alabama, or Georgia, or Texas or Ted Cruz`s state. The problem for
those Republicans in Virginia in particular is you`ve got a governor`s race
coming up. That sequester was already hurting you. You`ve got a lot of
people who re military. A lot of government contractors.

And this shutdown is actually hurting you where you live, so that
dwindling number of purple district Republicans -- and there aren`t many of
them left -- they actually could feel very real electoral effects from
this. They`re not from the right. So they, yes, are raising the alarm.

MELBER: Well, and you`re hitting the point that is different today
than it was yesterday, which is, this thing has gone main line.

REID: Right.

MELBER: This its not a political story anymore. It`s an American
story.

E.J., take a listen to what, Steny Hoyer said when he was discussing
exactly how we got here and how balanced the offer was on the table.

(BEGIN VIDEO CLIP)

REP. STENY HOYER (D), MARYLAND: What compromise are we talking about?
We are taking your number. Your number. And you will not take yes for an
answer. How sad. What a shameful day this is in the history of the House
of Representatives.

(END VIDEO CLIP)

MELBER: E.J., what he is talking about there is the fact that the
proposal on the table, the so-called clean C.R., basically funding the
government, still would continue those Republican desired sequester cuts.

E.J. DIONNE, THE WASHINGTON POST: Well, no that`s exactly right. I
mean all this talk of let`s have negotiations and compromise -- democrats
have given up, depending on how you count it -- about $70 billion worth of
programs that they would like to fund. A lot of liberals are not happy
with how much money they have agreed to lop off. That was just given to
the Republicans.

The Republicans could have come out of this claiming a big victory in
saying we`re keeping government spending at the sequester levels which
really are too low.

And the fact is from now on there is nothing left to compromise on,
because, it is not a concession for a member of Congress to agree to open
the government. That`s what politicians are supposed to do. It`s not a
concession to say, oh, I guess we`ll vote for the government to pay its
bills. And that`s why you are seeing no action.

And I think, it would be a terrible mistake to make any concessions
now on the basis of a shutdown or threat on the debt ceiling. I think this
is the time to say no more hostage taking politics. That`s why -- you are
hearing virtual silence from Democrats.

MELBER: Right. And, Joy, the numbers back that up -- $70 billion
difference if we were looking at the actual budgetary proposals of the
president. He already walked away from that and said, fine, I`ll be
responsible and try to meet you more than halfway.

REID: Right.

MELBER: So, that is why it doesn`t make a lot of sense to talk about
whether there is phone calls, right? What`s there to talk about?

REID: Right. There its nothing left to give because the budget as
the C.R. would have it is almost down to the Paul Ryan levels of funding.
So right, Democrats have already given Republicans a lot when it comes to
the actual number.

And Republicans are now asking for things that are extraneous to the
budget. They`re still insisting we want to defund or delay the Affordable
Care Act, which has nothing to do with this.

And, look, the other side I think that`s even more important that we
are now talking smaller and smaller length of time between the hostage
negotiations. We are not talking a one-year budget. We`re not even
talking about a continuing resolution, that six months or eight months.
We`re talking about two months.

So, does that mean every two months? Every six weeks? How short is
this going to become?

And then Republicans tried a strategy to go even micro. Let`s do one
program at a time. We will give you just the national parks in exchange
for a hostage.

OK, they`re now sending hostages out. But out of 14-story window, and
that is their version of negotiation.

MELBER: Oh, I thought that was amazing when they said, well, we could
do one week. This is sort of like the cash until payday loan program for
the federal government.

REID: Exactly, exactly.

MELBER: Probably not a good idea.

I want to play for both of you what Congressman Tom Cotton said. He
is from Arkansas. He has a very different view of this as a Republican who
feels they need to get more.

Let`s take a listen.

(BEGIN VIDEO CLIP)

REP. TOM COTTON (R), ARKANSAS: The House Republicans have acted
reasonably and responsibly to act on two separate principles -- the
government should be funded and the American people should get relief from
Obamacare. We have repeatedly made reasonable and responsible compromises.
We couldn`t repeal Obamacare. So we offered to defund it. We offered to
delay it for merely one year.

(END VIDEO CLIP)

MELBER: E.J., he may believe that is the reasonable offer. Can he
get a lot other people around the country to believe that?

DIONNE: Well, he can get a lot of Republicans to belief that. That
is it. Not even all Republicans if you look at the polls.

I mean, what`s really struck me is that the Tea Party folks talk all
the time about their love of the Constitution. But what they`re really
showing here is they don`t believe in the constitutional process. They
believe in using power and force, because what the Constitution tells us if
you are going to repeal a bill, you need a vote. You need to win an
election on the issue in question. Then you get the votes in Congress and
you pass whatever you want to pass including the repeal of Obamacare.

They cannot pass that through the Senate. They cannot get it by
President Obama. It is not normal to stay, well, we can get what we want,
so we`re just going to shut down the whole thing.

That`s what the problem is here. And, you know, just ironic that all
of this is happening on the first day when a whole lot of Americans seem to
be eager to sign up for Obamacare. And I think to get past this first day
without any harm being done to Obamacare is a big deal.

MELBER: Well, E.J., it`s an important point. And you are hitting on
the structural tension.

The Tea Party thinks it has a veto over what the president does.

REID: Right.

MELBER: The Constitution wasn`t written that way. So far, looks like
the public is frustrated with that approach.

Joy Reid and E.J. Dionne, thank you for joining me tonight.

REID: Thank you.

DIONNE: Good to be with you.

MELBER: Coming up -- thank you.

Obamacare, day one. Despite Republicans` best efforts, it turns out
millions are flocking to the state exchange sites as the Affordable Care
Act makes its debut.

And THE LAST WORD puts an APB out on the man who started Congress on
this road to a shutdown. Where is Ted Cruz hiding? We`ll tell you.

And later, the government doesn`t have to be this dysfunctional.
Lawrence O`Donnell and Chris Matthews will explain why. That`s all coming
up.

(COMMERCIAL BREAK)

MELBER: Today, "The New York Daily News" had this cover to describe
the shutdown. That is, of course, the take on the D.C. political drama
"House of Cards" starring Kevin Spacey. And it`s not the first time "The
Daily News" called out the irresponsible side of a shutdown fight. This
was the cover in 1995 when Speaker Newt Gingrich forced another government
shutdown.

It didn`t work out very well for Newt in the long run. Today, a
Republican who drove his party over the cliff is keeping a lower profile
especially given his hobbies of talking and -- well, talking. Where
exactly did Ted Cruz go? That`s up next.

(COMMERCIAL BREAK)

MELBER: With a 21-hour non-filibuster and appearances on every news
show that would take him, it seemed like Senator Ted Cruz was everywhere
before the shutdown. He was the one ready with the match and gasoline to
burn down the house.

Well, now the fire is rising, the government is closed, people are mad
at the Republicans and Congress and Ted Cruz has gone MIA when it comes to
governing. We last saw him on CNBC yesterday at 7:00 p.m. And then poof,
during all of the floor speeches in the final hours last night in the
Senate and in the news conferences in interviews as the shutdown was
beginning and even today, as the Senate traded barbs, there was no Ted
Cruz.

In fact, the closest we came to seeing him was, you could say, BFF,
Utah Senator Mike Lee on FOX last night. Lee popped up for a floor speech
this morning as well.

But meanwhile, Cruz, or one of his potentially furloughed staff
members, has been tweeting from his account. And Cruz did find time to
hang with Laura Ingraham where he blasted Harry Reid again.

(BEGIN AUDIO CLIP)

SEN. TED CRUZ (R), TEXAS: It is abundantly clear that Harry Reid
wants the shutdown. And now, he`s gotten the shutdown he wants. I mean,
the fact when the House voted at 12:30 in the morning Sunday, Reid didn`t
bother to call the Senate back. He left everyone on vacation, all day
Sunday, said, let`s come back Monday afternoon.

(END AUDIO CLIP)

MELBER: See, he doesn`t like how they`re not at work, in the Senate.

And it was all day, no Cruz, but then, suddenly, Cruz was back, on
O`Reilly.

(BEGIN VIDEO CLIP)

BILL O`REILLY, FOX NEWS: Now to the top story, reaction. Joining us
from Washington, Senator Ted Cruz, Republican from Texas.

(END VIDEO CLIP)

MELBER: Well, when the Senate calls, it`s no Cruz. When O`Reilly
calls, Cruz answers.

Joining me now to unpack it, Robert Costa, Washington editor for "The
National Review", and CNBC contributor. You have been all over these
stories. You are well-sourced with the Tea Party. I don`t know if that
makes time for you in Washington fun and exciting, or just repetitive.

But explain to us what this new Ted Cruz strategy is.

ROBERT COSTA, THE NATIONAL REVIEW: Des Moines, Iowa, in August, when
this idea of defunding the government over Obamacare really was just a
kernel in the conservative imagination. It has gone I think beyond Senator
Cruz`s wildest dreams. It has now led to a government shutdown. He has
gotten, achieved so much from this fight.

So I think what we are seeing now is him receding from the limelight a
little bit, trying to let Boehner, Harry Reid, fight it out over the
defunding of the shutdown. But he is going to take a lower profile over
the next few weeks.

MELBER: And let`s look at the claims he is making. We`ve discussed
on MSNBC, Lawrence O`Donnell has discussed repeatedly the dishonesty in a
lot of his campaigning. Take a listen to his discussion of what he views
as compromises offered by Republicans on O`Reilly.

(BEGIN VIDEO CLIP)

CRUZ: Let me point out, Bill, four times already, the House of
Representatives offered compromise. It`s compromised over and over and
over, sent over bills to the Senate that fund the whole federal government,
but also mitigate the harms of Obamacare. And four times, Harry Reid has
said, no compromise, no negotiation, absolutely nothing.

In fact, it is being reported Harry Reid urged the president, don`t
even talk to congressional leaders. You can talk to Iran, but don`t talk
to congressional leaders.

(END VIDEO CLIP)

MELBER: Now, Robert, that`s pretty stale. Do you think that gets him
where he needs to be at this point?

COSTA: It gets him where he need to be within the Republican base.
What Senator Cruz has done in less than a year in office is almost dominate
the conservative discourse. He`s been able to raise expectations within
divided government on the right that make defunding or negotiating out a
compromise with Harry Reid seem like a realistic goal.

But when you talk to leadership sources, they say what Senator Cruz is
raising unrealistic expectations and he`s making it hard for any kind of
real deal to emerge.

MELBER: Yes. I mean, I think you just said it on the head. If the
final strategy is to the get the president to sign the cancellation of
Obamacare, right? I don`t think there is a real Republican strategist
around who believes that, that`s why we`ve been playing footage of everyone
from John Boehner to Karl Rove saying so.

And I would disagree a little bit I think with where you`re going. He
has that impact, but I`m not sure the strategy exists. Take a listen to
what he tried to explain was the end game to Chris Wallace just a week or
so ago.

(BEGIN VIDEO CLIP)

CHRIS WALLACE, FOX NEWS: Here is the question everyone on both sides
is asking in Washington which is, what`s your end game? Let`s say that you
block consideration of any bill in the Senate, or let`s say you lose, and
the bill goes into the Senate, and they take out Obamacare, and they send
it back to the House. What`s your end game? Because the government is
going to shut down a week from Monday.

CRUZ: Well, I don`t want the government to shut down. The American
people don`t want the government to shut down. I don`t think Harry Reid
and President Obama should shut down the government.

(END VIDEO CLIP)

MELBER: So, there`s linguistic jujitsu there. But people know
Congress shut it down. Even false equivalency narrative refers to Congress
not the president shutting it down. What do you make of this?

COSTA: What I make of this is Senator Cruz started this defunding
effort. I don`t think he ever expected the House leadership especially, to
take it up as their strategy to follow Senator Cruz`s advice in essence and
make it House policy. So, I don`t think Senator Cruz had a true end game
here from a legislative perspective. He wanted to mount a fight against
the Republican establishment. That was always his goal.

And now when he sees it unfolding before his eyes as something that`s
actually happening. He is not there as a legislative player to figure out
how to make it actually work and solve the solution.

MELBER: All right. Robert Costa of "The National Review", thanks for
sharing your reporting with us tonight.

Now, coming up, President Obama vows to stop Republicans and their
ideological crusade as Obamacare makes its debut today.

And remember when everyone in Washington could be friends after 5:00
p.m., really, Congress used to work together. Lawrence O`Donnell and Chris
Matthews will explain what Republicans should have learned from the old
days of Ronald Reagan.

(COMMERCIAL BREAK)

MELBER: In the spotlight tonight, the centerpiece of Affordable Care
Act launched to day. That`s despite the GOP efforts to sabotage it.

Here is how President Obama described public embrace of new insurance
marketplaces today.

(BEGIN VIDEO CLIP)

OBAMA: Republicans have made a whole bunch of predictions about the
law that haven`t come true. There are no death panels. Costs haven`t
skyrocketed. They`re growing at the slowest rate in 50 years. Like every
law, every new product rollout, there are going to be some glitches in the
signup process along the way that we will fix.

There have been times this morning when the site has been running more
slowly than it normally will. The reason is because more than one million
people visited healthcare.gov before 7:00 in the morning.

MELBER: The president also rebutted critics that say any glitches on
day one meant the program was doomed to fail.

(BEGIN VIDEO CLIP)

OBAMA: Consider that just a couple of weeks ago, Apple rolled out a
new mobile operating system. And within days, they found a glitch. So,
they fixed it. I don`t remember anybody suggesting Apple should stop
selling iPhones or iPads or threatening to shut down the company if they
didn`t.

(END VIDEO CLIP)

MELBER: Joining me now is MSNBC policy analyst and "The Washington
Post" "Wonk Blog" author, Ezra Klein, and Wendell Potter, a former health
insurance executive who`s testified before Congress on reforming the health
care system.

Welcome to you both.

And, Wendell, how do we know if this it is working?

WENDELL POTTER, FORMER HEALTH INSURANCE EXECUTIVE: We know it is
working we have so much interest in the exchanges so far, which doesn`t
surprise me. I traveled and talked to many, many people who were uninsured
waiting for this day. So I would have been surprised if we didn`t have
this volume of interest in the exchanges.

MELBER: Ezra, build on that. Were you surprised to see the over a
million people on the federal site, over 2 million in New York, many other
states, seeing a tremendous interest as we are hearing so much about
government being broken?

EZRA KLEIN, THE WASHINGTON POST: This completely overwhelmed the
expectations of people on the online marketplaces. We were talking in the
"Wonk Blog", my colleague (INAUDIBLE) who`s an incredible health care
reporter, the head of the California exchange, Peter Lee, who`s joking a
bit. But he said two people would sign up on the first day.

I mean, person after person, who is running these things said, look,
don`t get October 1st stuck in your head. It`s not going to be that big of
a deal. That`s going to be the beginning of a process to get people to the
Web site. Not the end of it. Not the day we judge it on.

So, the absolute flood and rush of traffic shocked them and frankly
shocked the servers. We`ll see if the glitches are just as the president
said, too many people, coming and the service buckling, or deeper IT
architecture problem.

The one thing I would say, though, and I do think it`s important, that
we in the media don`t this thing we`re like, it`s day one and it`s almost
midnight. So, how is the law doing?

This is going to be a law that is judged for a period of time. You`re
going to go to year one, and you`re going to year two, and year three.
Year one is expected I think to cover 14 million people. You don`t get up
to 25 million until a couple years from now.

So, I do think there is going to be the Washington political effort to
rush to judgment on it. It should be resisted a bit. This thing is going
to be a long effort of perfection in order to make something really
worthwhile.

MELBER: Yes, I think that it`s a useful note of caution as we try to
interpret it. I mean, one theory is that all the controversy, while
damaging in some ways, may have also been promotion for something that --
you know, no bad press is, bad press if you get the name out there.

We have heard a lot about, Wendell, about how Obamacare is not as
popular as the products themselves, which is fine if the sum result is
people going and looking around and getting educated.

Wendell, what do you think this means in places where you have high
uninsured and less participation. We have 48 million uninsured people in
the country. And you have states particularly in the south and west, red
states especially, where there is less local buy in at this point in time.

POTTER: I think even in those states, thought, you are going to see a
lot of interest. A lot of insurance companies in the states that are red
states are going to be really heavily promoting this because they want this
new business. And there are many uninsured people in the states as well
too. And there are a lot of health care advocacy, advocates working for a
long time to make sure that people are aware.

So, I think you are to see people signing up in every state. The
uninsured are not just in one state or another. They are all across this
country. There are 48 million of us who are uninsured.

And Ezra is right. We actually have six months that an open
enrollment period before the window closes for 2014. Before you will be
assessed a penalty for not having coverage. So, there is quite a bit.
There will be quite a bit of time for people to kick the tires before they
actually sign up for coverage.

MELBER: Yes, I really think it is the ultimate antidote to everything
that is happening with the shut down because it is a place where people can
go, interact with and experience, government options and private sector
options. And that is, it is just so different than a lot of the negativity
we are hearing. Take a listen, though, to turn to negativity, Ezra. Take
a listen to something that Senator McCain was saying.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: It is unnecessary. And I am afraid
that the American people as they have in the past will blame Congress, the
Republicans. And what`s particularly disappointing is Obamacare is that
going to have a lot of problems in its rollout. The president`s polling
numbers are falling in every category, and yet, the story is to the
American people that Republicans are fighting Republicans. That`s not
helpful.

(END VIDEO CLIP)

MELBER: So John McCain doesn`t like that narrative. It is part of
the story. The other story is Republicans are fighting Obamacare even as
it rolls out, Ezra.

EZRA KLEIN, COLUMNIST, THE WASHINGTON POST: Yes, this is a
fascinating thing. Republicans will get on the floor of the Senate or
House talk about how unpopular Obamacare institutionally falling and that
sort of low 40s. Their poll is at 17 percent. They are much more
unpopular than Obamacare. If we are going to, if anything that doesn`t
poll gets repealed, they are in some trouble to.

But today was just a breathtaking juxtaposition. You had Washington
shutting down because Republicans don`t like Obamacare. And then, you had
Obamacare shutting down because so many people want to look and see if they
can get insurance through Obamacare. And that contrast between how badly
Washington is working and how much Republicans are doing to keep this bill
or anything like it. This law or anything like it from actually working.
And then the evident, clear need, people have, to come and actually get
insurance they can afford that won`t reject them for preexisting
conditions. They won`t cross them off the list. The price them out too
high because they have a sickness once or because they are older.

It`s really something. I mean, it would be one thing if Republicans
are coming saying, we have a better way to do this. But, they are not.
They say we are going to rip this out and do basically nothing.

MELBER: Yes. And that their funding mechanism idea is well, let`s do
piecemeal work, not deal with systemic reform, not deal with the programs a
lot of people are apparently looking into today. We have been reporting.

So Ezra Klein from "Washington Post," and "Wendell Potter" author of
the book "deadly spin," thank you both for joining me.

Now, coming up, Congress still gets paid, but she doesn`t. We are
talking to a public servant that was sent home today about the impact of
the shutdown on real Americans.

And Congress doesn`t have to be so broken. Lawrence O`Donnell and
Chris Matthews will explain why.

(COMMERCIAL BREAK)

MELBER: Up next, Lawrence O`Donnell and Chris Matthews explain why
Congress doesn`t have to be so dysfunctional. So if Lawrence is here, why
am I here? Well, you will just have to find out next.

(COMMERCIAL BREAK)

MELBER: Back in August of 1982, President Ronald Reagan needed to
counter the deficit and raise taxes. His party wasn`t happy about it. But
President Reagan had an edge that might seem unthinkable today, a
reasonable opposition party in Congress. Then the House Democrats were led
by Thomas P. Tip O`Neill, a Massachusetts Democrat who went to the floor to
whip Republicans and question their loyalty to their own president.

(BEGIN VIDEO CLIP)

THOMAS TIP O`NEILL, FORMER SPEAKER OF THE HOUSE: Are you going to
follow the leader that brought you here? Are you going to run, I ask you,
to just think of that. President is right. We need this tax bill. I ask
for your vote.

(END VIDEO CLIP)

MELBER: O`Neill often said he disagreed with President Reagan but
they compromised on big economic plans for the country. That was back when
compromise wasn`t a dirty word to the Republican party.

MSNBC`s owned, Chris Matthews, writes about the historic relationship
in his book "Tip and the Gipper." And Lawrence sat down with Chris last
week to talk about the pivotal period.

(BEGIN VIDEOTAPE)

LAWRENCE O`DONNELL, MSNBC ANCHOR, THE LAST WORD: All right, Chris,
let`s get my review out of the way, right away. I love this book OK, "Tip
and the Gipper, when politics worked." And that`s what everyone is craving
a world in which politics could work. That`s why we are so eager to read
this book. I love this book because I love these characters in here. Who
I have the sad feeling we are not going to see again.

CHRIS MATTHEWS, MSNBC ANCHOR, HARDBALL: You know, when I first got
that feeling watching Bill Clinton speak. I was in the press (INAUDIBLE)
at the U.S. house, and Bill Clinton was the new president. He had this
wonderfully modern, well educated cabinet. All right, diverse and educated
and I`m missing the old days. I loved when it was a big Irish guy who
believed in liberalism, and a big conservative guy, and they are about the
same age and they fought like hell and you think they could be civilized
with each other.

But they really cared, a great philosophical debate. And I was
fortunate to be there with the whole six years. It was a dream to be in
that room.

O`DONNELL: You captured beautifully here, I love the first meeting
between Reagan and speaker and the Tip. The president goes up to the
speaker`s office on Capitol Hill. A lot of fun things happened in that
meeting. There is a moment you have here Where Ronald Reagan is proudly
telling Tip O`Neill how well he worked with the Democrats and the
California legislature. And Tip says that was the minor leagues. You`re
in the big leagues now.

MATTHEWS: This is -- and Reagan later told (INAUDIBLE), his
biographer, this is when I love it they blow it. When they think I am not
that bright because Pat Brown thought that.

O`DONNELL: Reagan took it as an insult.

MATTHEWS: Yes. he didn`t like it at all. But he knew it worked for
him. That was the irony was Reagan always like being underestimated
because he will always beat the next guy in the next race. He never lost a
race. He always won. And he did it by getting the other guy to think he
is sort slow. He sort of an actor. Pat Brown thought he would beat him
for governor. But he didn`t like the fact that Tip didn`t respect the
(INAUDIBLE) from governor of the big state of the country for eight years
had taken on a very difficult truculent Democratic crowd up there in
Sacramento. And Tip was acting like you are playing triple A ball.

O`DONNELL: You know, I got to say, thought those are little Boston
and Irish thing. And there, where we cannot resist the little dig in a
little moment. So then, then next thing that happens is does Ronald Reagan
go back up to the White House angry at this guy, O`Neill, and bitter, no.
The next thing that happens, here comes an invitation. But first social
invitation to the White House it to Tip O`Neill and his wife.

MATTHEWS: And dinner at the White House where Tip said how am I going
to dislike this guy? How am I going to get out of? So they get upstairs.
They have dinner the whole night. They drink. They have a stiff drink to
start with. Then, they start that you were suggesting, testing each other.
They keep telling each other the best Irish story they ever heard.

Now, Reagan, during his down days, little monster and that Hollywood
got him a job working in Vegas before he got the GE theater job, telling
Irish jokes on stage in Vegas. So, knew a bunch of them. The difference
is Tip told jokes as he grew up with them. Reagan learned them and spoke
with a broad. He was a Hollywood Irishman. But they had that in common,
definitely.

O`DONNELL: Reagan gets in there. He does the big tax cut. Tip
thinks this is crazy. The Americans are going to know that this is crazy.
You cannot increase defense spending and cut taxes and balance the budget.
Can`t be done. And in fact Tip is proven right. Within a year, 1982, next
year. Reagan gets himself involved with Bob Dole in trying to pass a tax
increase.

MATTHEWS: Because he overdid it.

O`DONNELL: Because they overdid it.

MATTHEWS: Tip had a choice. Let this guy sink in his own stew. This
is what I like about. They didn`t play Mickey mouse. They weren`t cheap.
They were not cheap shot artists. When the guy was in trouble and it was
good for the country, they are doing it. That`s the difference today.
They would go to the guy. So Tip said, he went to the Republican party and
said look, this guy got you elected, most of you people here. You better
back him on this. I know it is raising taxes but it has got to be done.
And he said all we want is 100 votes in the Republicans and I will deliver
the rest, more than 100 and he did. But he gave a great speech.

Come on you guys. This guy brought you here. Why don`t you --?

O`DONNELL: Here is the speaker. The democratic speaker of the House
on the House floor giving a speech to Republican members and you have it in
here word for word where he says to them, you got here because of the
freshmen. You got here because of him. Show loyalty to him. Trying to
teach them Boston Irish lesson about politics.

MATTHEWS: The grownups were united. And that is the great thing
about the whole relationships because when Social Security needed fixing
they got together. When taxes needed to be fixed, they got together. When
Northern Ireland, we had troubles, of course, you and I know about that.
They got together on that. When it came time for the speaker to go visit
rather, the speaker to see (INAUDIBLE), the new soviet leader, he laid the
way for Reagan. HE said look, I got a letter from the president. You are
talking about how times changed. I have a letter from him. And by the
way, he is a sincere guy. He will sincerely negotiate with you. Plead, he
unites our country too. We are behind him. That kind of unity is chilling
today.

O`DONNELL: Now, Tip thought as you told the story in the book here.
Tip thought that Ronald Reagan didn`t really win the presidency. Jimmy
Carter lost. He thought it was a rejection of Jimmy Carter. But over the
Reagan presidency, his attitude certainly, but that didn`t mean he thought
the Reagan presidency was illegitimate. He worked with it right from the
start.

MATTHEWS: Well, he carried Massachusetts. I think that was a
message. The liberal Massachusetts, not as liberal as everybody says it
is, but it is Liberal. When that went along with the other 44 states.

I almost think the people that I grew up with working class Irish,
middle class Irish and Italians have always been this sort of Reagan
Democrats we called them. With the people that Tip knew really well. And
when they came up to and said I love this guy, Reagan. Be nice to him. I
think they really got to Tip. It really did.

O`DONNELL: The lesson for today, when we see this Congress struggling
the way it is. I mean, this is the structure that Reagan was elected into
which is, House of Representatives, of an opposing party. We saw it work
back when you were working there for Tip O`Neill.

MATTHEWS: Without getting too enumerating here, it`s in the book.
But first of all, respect the electorate. Tip respected the fact that
Reagan won big. He said, look you won all the states. And we are going to
respect you. You are going to get a honeymoon. When was the last time a
politician got a honeymoon in this country? He, you know, he let him get
his -- as your (INAUDIBLE) said, chief counselor said give him his
schedule. Up or down, fair square. No games. Reagan got his program
through the first year because he had a fair vote. No games were played.

Secondly respect each other`s titles. I mean, Tip always said the
president of the United States. And Reagan had the best congressional
relations team ever. He respected Congress and Tip said so.

Third, look for compromise when you have t like the tax thing in `82,
the Social Security deal. Make deals when you have to. And look for
common ground because, the trouble with today is these politicians don`t
want to be seen with each other, you know, like common ground with Chris
Christie in New Jersey, you know. You have a common interest in fixing the
dangers like what happened in the storm. It is common ground. Work on it.
I think that was something that Tip and Reagan did a lot.

O`DONNELL: You tell the story. I often wondered what was it look to
work with Chris Matthews in the Congress? We who have been staff, you
know. And I have an idea in here, especially when you tell the story about
the night you met Ronald Reagan. He is abut out to give the first state of
the union address that you did something that I don`t know any else would
have done, any other staffer worked on would have done.

MATTHEWS: Well, but the irony is that the president --

O`DONNELL: That`s why we need a Chris Matthews right here.

MATTHEWS: When the president comes to give the state of the union
back in my days in 80s. The holding room, the green room, as you call in
television, was by the ceremonial office. I had this gigantic desk in
front of the office. I was like a mandarin. And inside that room was the
president of the United States from the opposing party. So, I wanted to
greet him. I went in and I said.

O`DONNELL: I just have to tell America, I can`t stress to you,
America, enough, how there is no other staffer on Capitol Hill who would
thing the president is waiting in the next room, to give the state of the
union address. I think it`s time he met me.

MATTHEWS: (INAUDIBLE). When I walked in, I said, welcome Mr.
President to the room where we plot against you. And Reagan said, oh, no,
not after 6:00, the speaker says we are all friends after 6:00. First I
heard about it was from the president.

O`DONNELL: But you report it early in the book, and Tip said to the
president early on, we are all friends after 6:00 p.m. and he meant it and
it turned out true with those two.

MATTHEWS: You know, there is a wonderful story that has the, I
remember, I love Thursday nights in the House because that`s when they had
the big volt. And after one of the nights when two guys red-faced yelling
at each other. And the Republican guy after the vote, the House was
emptying out. They are all going to catch their plane. He walked across
the aisle. And he walk up to the guy he had been fighting with. And said
what are you going to do this weekend? What are you going to do this week.
They guy (INAUDIBLE) and can you say hello to your wife for me and walk by.
I said that is, if Madison saw that, James Madison saw that, if Jefferson
saw that, that`s what we wanted, civility here.

O`DONNELL: Everyone working there used to see that. I can read that
passage today.

MATTHEWS: You were on bob dole`s staff you. Were friends.

O`DONNELL: That`s what we used to see all the time all.

MATTHEWS: Yes.

O`DONNELL: Chris Matthews, "Tip and the Gipper, when politics
worked."

I love this. Everybody out there should be reading this. You can see
the way it used to be and the way we can hope it can work again.

Chris, thank you.

MATTHEWS: Thank you, Lawrence.

O`DONNELL: Can you stay more and we will do more online.

MATTHEWS: I`m talking to an expert.

O`DONNELL: You know what I want to talk about online? Chris
Matthews, the character in this book.

Chris Matthews, thank you very much.

MATTHEWS: Thank you.

(END VIDEOTAPE)

MELBER: And you can head over to our facebook page at
facebook.com/thelastword, for the rest of that interview.

Still to come here tonight, the real face of the government shutdown.
We talk to a federal worker who John Boehner sent home about what is really
at stake.

(COMMERCIAL BREAK)

MELBER: And up next, the real consequences in the real world for the
government shutdown.

(COMMERCIAL BREAK)

MELBER: The consequences of the government shutdown are much more
serious than the panda-cam that was turned off this morning. More than
800,000 federal workers were ordered to stay home with no promise that they
will even receive back pay for these forced days off. But sometimes their
voices are lost in all of political gamesmanship.

Today, President Obama wrote a letter explaining why he doesn`t think
these public workers are nonessential.

He writes, you do all this in a political climate that too often in
recent years treated you like a punching bag. You have endured three years
of federal pay freezes, harmful sequester cuts, and now, a shutdown of our
government. And yet, you persevere continuing to serve American people
with passion, professionalism and skill.

Well, joining us now, one of those 800,000 furloughed federal workers,
Carolyn Federoff, an attorney for department of housing and urban
development.

How is this shutdown today affecting you and the people your agency
serves?

CAROLYN FEDEROFF, ATTORNEY: Well this shutdown, you know, up until
this past week, we have been scrambling in preparation for a shutdown. We
were getting last minute projects out the door, trying to make sure that as
much work as possible was accomplished so that we could minimize the impact
on the American public.

However, as the week carries on, as the weeks carry on. There will be
more and more of an impact on the people that we serve.

MELBER: Like what for example?

FEDEROFF: Well, for example. We are the only provider of mortgage
insurance for nursing homes and for apartment complexes. There is no
private market for mortgage insurance of this sort. And if we cannot write
commitments for mortgage insurance then that is -- many prompts that
construction won`t begin, things will not be refinanced, businesses will be
adversely affected by our inability to carry on our market work.

MELBER: And I know you are a member of a union. Is there a role for
organized labor here to advocate both on the shutdown as policy and also on
whether people who are being forced to go home despite committing the
public service where those people will even get their money back, get paid
for this time.

FEDEROFF: Yes, I am an officer with the American federation of
government employees. And we are playing a role in this. We are very
concerned about the impact of sequester, on continual budget battles, on
our very programs, on our ability to deliver the best services possible.
It also impacts our members of course. Our members are VA nurses, our
border patrol agents, our bureau of prison guards. They are continuing to
work right now without any promise that they will be paid. And certainly,
that they won`t be paid on time.

And then, of course, we have employees who are not working and the
chances are very good with this Congress, being as mean spirited as, as it
is, that we won`t see any pay at all.

MELBER: And, Carolyn, how does this fit into, you mention mean
spirited Congress. There is also a Republican effort in this Congress that
around the country to really go after workers in government. State, local,
federal. In fact, since the recession, we have seen over half a million
people in that line of work basically put out of work which is a huge
effect on the labor markets in general. And also problematic for all these
public services, do you see the shutdown of a piece with the larger
political attack from the GOP?

FEDEROFF: Yes. I firmly believe that they want to break government.
They want to make service as poor as possible. So that people don`t
believe in the value that we can provide to our communities on a daily
basis. It is very disheartening for those of us who have been engaged in
public service as long as high have, 27 years, to leave to that generation
that`s coming in behind us, a system that just feels small and mean and
incapable of accepting the creativity and energy that they have to give to
the job.

MELBER: Yes. And that`s important point you just hit. Because the
it goes beyond a policy dispute. And into whether there is an effort to
actually s actually sabotage government service itself.

Thank you for spending some time with us.

Carolyn Federoff gets tonight`s "Last Word."

I`m Air Melber. I have been in for Lawrence O`Donnell. You can catch
me and my colleagues on "the Cycle," weekdays at 3:00 p.m. eastern on
MSNBC. You can find me on twitter @arimebler.

Chris Hayes is up next.

END

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