updated 6/26/2014 10:34:26 AM ET 2014-06-26T14:34:26

THE LAST WORD WITH LAWRENCE O`DONNELL
June 25, 2014

Guest: Michael Tomasky, Nia-Malika Henderson, Crystal Moore, Jarett Taylor

LAWRENCE O`DONNELL, MSNBC HOST: Hey, Rachel, you know how last night I
promised not to use the phrase, best new thing in the world for the thing
that I thought really was the new thing in the world?

RACHEL MADDOW, TRMS HOST: Yes.

O`DONNELL: Well, just so I know, when you finish, you`re kind of out of
the building quickly, you don`t watch the show, right? You got to your
home --

MADDOW: Cone of silence. I just hop into the cone of silence and ride it
home.

O`DONNELL: Good to know. Thanks a lot, Rachel.

MADDOW: Good night.

O`DONNELL: So, how serious is the Tea Party talk about creating a third
party?

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: It`s a loss for the Tea Party.

UNIDENTIFIED FEMALE: The Tea Party.

UNIDENTIFIED MALE: The Tea Party.

UNIDENTIFIED FEMALE: The Republican gets challenged by the Tea Party.

UNIDENTIFIED MALE: Thad Cochran pulls off a win in Mississippi.

UNIDENTIFIED FEMALE: They also shifted their strategy a little bit.

UNIDENTIFIED FEMALE: Cochran actually tried to move to the middle.

UNIDENTIFIED FEMALE: They focused on the money that he had brought home.

UNIDENTIFIED FEMALE: And it worked.

UNIDENTIFIED MALE: It did work.

UNIDENTIFIED FEMALE: Is this a strategy other Republicans threaten with
Tea Party challengers will employ?

SARAH PALIN (R), FORMER ALASKA GOVERNOR: If Republicans are going to act
like Democrats, then what`s the use in getting all gung-ho about getting
more Republicans in there?

UNIDENTIFIED FEMALE: What have you done for me lately?

UNIDENTIFIED MALE: Which Republican do I want?

UNIDENTIFIED FEMALE: Cochran voted for appropriations when they were
ravaged by Hurricane Katrina.

UNIDENTIFIED MALE: Do I want a Republican who has a history of bringing
resources to the state?

UNIDENTIFIED FEMALE: McDaniel said he wasn`t sure how he felt about that.

UNIDENTIFIED MALE: Or do I want a Republican who may not bring home
federal funds for schools and for military bases and projects.

PALIN: Promising bigger government, which is requiring higher taxes.

UNIDENTIFIED FEMALE: A lot of frustrated conservatives.

UNIDENTIFIED MALE: Outrage now, angry at the establishment.

UNIDENTIFIED FEMALE: Limitless pool of bitterness.

UNIDENTIFIED FEMALE: Could you see potentially, a break-off from the
party?

UNIDENTIFIED MALE: The civil war in the Republican Party.

UNIDENTIFIED MALE: That`s where the party is today.

UNIDENTIFIED FEMALE: Maybe that`s what the Tea Party should have done from
day one is start a third party.

(END VIDEOTAPE)

O`DONNELL: Remember Ross Perot? He drove Republicans crazy, because his
third party campaign in 1992 allowed Bill Clinton to take the presidency
away from Republicans by winning only 43 percent of the vote.

Now, the Tea Party, which has been nurtured by the Republican Party over
the last few years, is grumbling about splitting off into a third party
after a devastating loss for them last night in Mississippi, where the Tea
Party candidate Chris McDaniel, challenged the senior Republican Senator
Thad Cochran in the GOP primary. And no one is more angry about what
happened to Chris McDaniel than Chris McDaniel.

(BEGIN VIDEO CLIP)

CHRIS MCDANIEL, DEFEATED MS SENATORIAL CANDIDATE: There is something a bit
strange. There is something a bit unusual about a Republican primary
that`s decided by liberal Democrats. I guess they can take some
consolation in the fact that they did something tonight, by once again
compromising, by once again reaching across the aisle, by once again
abandoning the conservative movement.

(END VIDEO CLIP)

O`DONNELL: One translation of that is, there is something strange about an
American election that`s decided by American voters.

Senator Thad Cochran won with almost 51 percent of the vote. Cochran`s
margin of victory over McDaniel was more than 6,000 votes. Some of those
votes came from African-American Democrats wooed by Thad Cochran`s
campaign, and the Republican Party, which has spent $23 million this
election cycle defending Republicans from within their party, from Tea
Party challengers like McDaniel.

McDaniel was backed by FreedomWorks, one of the largest Tea Party groups.
And today, the president of FreedomWorks, Matt Kibbe, released a statement.
"It`s disgraceful that self-described GOP leaders like Mitch McConnell,
John McCain, the Chamber of Commerce and the NRSC would champion a campaign
platform of pork barrel spending and insider dealmaking while recruiting
Democrats to show up at the polls. If the only way the K Street wing of
the GOP establishment is win is by courting Democrats to vote in GOP
primaries, then we`ve already won."

"The Associated Press" had not even declared McDaniel a loser before Sarah
Palin said this last night.

(BEGIN VIDEO CLIP)

SEAN HANNITY, FOX NEWS: You would consider moving third party. Explain.

PALIN: Well, if Republicans are going to act like Democrats, then what`s
the use in getting all gung-ho about getting more Republicans in there? We
need people who understand the beauty of the value of allowing the free
market to thrive. So, yes, if Republicans aren`t going to stand strong on
the planks in our platform, then it does no good to get all enthused about
them.

(END VIDEO CLIP)

O`DONNELL: "RedState`s" Erick Erickson agrees, saying, "The Mississippi
race does crystallize for me the desires of many to start a third party.
In essence, Tea Party activists are the RINOs of Republican Party
campaigning on making the Senate conservative, used liberal Democrats to
preserve and incumbent Republican and defeat a conservative. The actual
conservatives are the outsiders, with the GOP establishment doing all it
could the preserve its power at the expense of its principles."

And Rush Limbaugh, who famously encouraged Republicans to cross over and
vote in Democratic primaries in the presidential primaries of 2008, had
this to say.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO HOST: They make a play at party unity. But it`s as
you say, it`s a one-way street. And it`s -- they will not in any way,
shape, manner or form support a Tea Party idea or candidate. But they want
the Tea Party to think so. They want -- this is the great trick that
they`re trying to perpetrate here.

(END VIDEO CLIP)

O`DONNELL: Joining me now is Republican strategist and MSNBC political
analyst Steve Schmidt and Michael Tomasky of "The Daily Beast."

Steve, the list of commentators talking about third party possibilities for
the Tea Party is a singularly unimpressive list. They are not the kinds of
people who make things happen in American politics, Sarah Palin, Erick
Erickson.

What is your take about where we are now with the Tea Party versus the
Republican Party?

STEVE SCHMIDT, MSNBC POLITICAL ANALSYT: Well, a couple things, Lawrence.
Look, first off, this group of people, for the most part, wouldn`t be able
to successfully organize a three-car motorcade, let alone a new political
movement, new political party with ballot access. That being said, this
group of people are also responsible for Republicans giving up six U.S.
Senate seats over the last two election cycles because of the assortment of
nutty candidates that were able to navigate the nominating process in these
low turnout and low turnout primaries.

And the reality is, if the Sarah Palin wing of the party did split off, it
would be -- it would put back into play many categories of voters that
Republicans used to compete strongly with but haven`t done well with in
recent years.

O`DONNELL: Mike Tomasky, do you see that as possible, that if there was a
Tea Party split and they somehow got a 50-state ballot candidate for
president that that would, as Steve suggesting, free up the Republican from
trying to appeal to that side?

MICHAEL TOMASKY, THE DAILY BEAST: Yes, it would. But still, it would
elect a Democrat. There`s just no way --

O`DONNELL: Because the math just wouldn`t work, right?

TOMASKY: Yes.

O`DONNELL: I mean, if the Republican tried to reach over, it seems to me
throughout the campaign the Republican would be thinking wait, if I just
got a few of those Tea Party people.

TOMASKY: Exactly. There`s no other way that the math works. It`s like
when people used to talk about a Mike Bloomberg independent presidential
candidate. If Bloomberg got in, the only thing he would have accomplished
is to have elected a Republican. That`s the fundamental fact of the math.

However, Lawrence, I do think this -- I think, you know, if you look at the
slate of candidates for 2016, presidential candidates, some of the Tea
Party people are looking pretty good. I mean, Rand Paul is the guy we call
the front-runner right now. He`s a Tea Party guy.

So the Tea Party wing of the movement can lose a couple more of these
primaries, and by the way, those are going to be interesting coming up,
Lamar Alexander and Pat Roberts primaries I think coming up. But the Tea
Party wing of the Tea Party is still in a position, if you ask me, to
nominate the standard bearer in 2016.

O`DONNELL: Steve, in Rand Paul`s case, it`s kind of interesting. It seems
to me that he`s gained credibility by the very carefully selected steps he
has made away from Tea Party rhetoric, for example, by just acknowledging
the fact that -- basic facts of government like, yes, we are going to raise
the debt ceiling and things like that.

SCHMIDT: Look, I think that Rand Paul has transcended his Tea Party roots.
I don`t think he`s someone now as some of the other individuals you just
mentioned is hook, line, and sinker a Tea Party member. I think that he`s
a very serious candidate for the Republican nomination and I think is
someone that has the ability and he`s out there talking about the necessity
to expand the base of the party.

And, you know, to the point that Michael made about the math not working, I
would like to point out the math doesn`t work now for Republicans. If you
look at the states that just the Democrats have won six out of the last six
elections, there are 242 electoral votes with 270 needed to win -- and
without exception, every single demographic in this group that`s growing,
Democrats are gaining market share. Every demographic group that`s
shrinking, Republicans are gaining market share. It is a profound
marketing problem.

So, Republicans have to be able to change the electoral calculus by being
able to win back some of these growing constituencies in the country that
we use to be able to compete with that, on a whole series of issues,
whether it`s immigration for Hispanics, spills over to Asians, a bunch of
issues that have disqualified Republicans from consideration in the eyes of
single women, there are many, many issues that would come off the table
that would allow a Republican Party to put itself forward as a limited
government, fiscally conservative, socially tolerant organization that is
attractive to a lot of 21st century voters in a way it hasn`t been in
recent years.

O`DONNELL: Let`s listen to something Sean Hannity said on his radio show
today.

(BEGIN AUDIO CLIP)

HANNITY: Anybody that threw in with Thad Cochran, the RINO, anybody that
threw in now, I have no respect for. If you guys don`t understand that
conservatives are a big part of this base, and to fall into this power trip
to hang onto power with your fingernails and use Democrats in a Republican
primary and use Democratic tactics, which is even worse, and to literally
encourage people to break into this -- to join into this primary scheme is
so despicable, I could not -- I can`t -- I would not support this man after
these tactics were used.

(END AUDIO CLIP)

O`DONNELL: Mike, that provokes a lot of questions. The first one I had is
when did Thad Cochran stop being a conservative?

TOMASKY: Yes, seriously. I was thinking today that this is somewhat
analogous to -- somewhat, OK? -- to the Lieberman situation in 2006, when
Ned Lamont won the Democratic primary in Connecticut and Lieberman
continued to run as an independent, and in general election was reelected
with a lot of Republican votes. And that made a lot of Democrats and
liberals mad.

However, here`s where that analogy breaks down. Joe Lieberman was, by
2006, an apostate within the Democratic Party over his incredibly
enthusiastic support for the Iraq war and I think he appeared in the 2004
Republican convention.

And, you know, Cochran is in no way, shape, or form that kind of a figure
within the Republican Party. To hear them talk about him like this is
preposterous.

O`DONNELL: The difference being, though, on the Ned Lamont liberal things
was that, yes, a bunch of liberals preferred Lamont, but they didn`t sound
like this after the results came in.

Steve, that -- this kind of bitterness, I didn`t hear any of it privately
or publicly after the election. I think there might have been real
disappointment in wishing Lamont were the senator, but, you know, it wasn`t
like this.

SCHMIDT: Look, there`s two types of churches. There`s the type of church
that goes out there and tries to get converts in the church`s door and
there`s the type of church that hunts heretics. And the Republican Party,
particularly this wing of the Republican Party, is in the heretic hunting
business.

By no rational process do you get to a place where Thad Cochran is anything
but a conservative. And so though it really is silly talk, and it`s
destructive for the ability of the party to be in a majority place in the
country.

O`DONNELL: Steve Schmidt and Mike Tomasky, thank you both for joining me
tonight.

TOMASKY: Thanks a lot.

SCHMIDT: I appreciate it, Lawrence.

O`DONNELL: Coming up, a unanimous decision from the United States Supreme
Court about your privacy, the privacy of your cell phone. Very, very
important decision for everyone.

Also coming up in the rewrite tonight, Jon Stewart got into the IRS scandal
last night. He did a great job, a funny job. And he left out a couple of
things, just like all the rest of the media does, and we`re going to add
those things when we come back.

(COMMERCIAL BREAK)

O`DONNELL: As everyone knows by now, this thing, your cell phone, is
spying on you all day long, getting incredibly valuable information about
you, and you didn`t need Edward Snowden to tell you that, but the Supreme
Court now understands that. They understand the importance of the cell
phone in any kind of a criminal investigation.

So, they have given the cell phone particular constitutional protections,
when it comes to search and seizure. Very important United States Supreme
Court unanimous decision today.

And my personal Supreme Court expert, Ari Melber, is going to join -- you
know what? Hey, is ari wired in the New York studios? Is he ready to go?

ARI MELBER, "THE CYCLE" CO-HOST: I`m here.

O`DONNELL: I`m not going to just talk about you being here.

Ari, before you get up here next, I really have to just stop and thank you
for your 2 1/2 months there in New York, in the anchor chair of THE LAST
WORD, doing a fabulous job that you did. The other side of the country in
L.A., if I was there, we would be show business hug right now.

MELBER: Can I give you a hug?

O`DONNELL: We`d be doing the show business hug, yes.

MELBER: You`re welcome. And thank you, Lawrence, as I said. It`s been a
real fun ride. I know it`s exciting for a lot of people to have you back
here.

O`DONNELL: All right. You`re up next on the Supreme Court. Thanks, Ari.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

O`DONNELL: Now, according to "The New York Times," you don`t have to be
famous to have a biographer. According to "The Times," we all have now,
their phrase, a virtual biographer of our daily activities, and that
biographer knows more about us than our best friends do.

That biographer knows where we are every minute of the day. That
biographer is the most effective spy and surveillance tool ever invented
and we pay it to spy on us.

(END VIDEO CLIP)

O`DONNELL: Who was that guy? Just file that under any excuse to use old
video of the show, because it saves us from typing up that same script
again.

The chief justice of the Supreme Court is oddly the youngest man on the
Supreme Court, and he`s plenty young enough to have written a very knowing
opinion about cell phone technology. The court released that opinion today
and it says police cannot search and seize your cell phone without a
warrant.

Joining me now as billed to discuss this opinion, my personal Supreme Court
expert, Ari Melber, co-host of MSNBC`s "THE CYCLE".

Ari, take us through this opinion. I got to say, it didn`t surprise me
very much because it seemed to be the logical extension of what has always
been involved on the telephone side of the police ability to get telephone
information. Before there were cell phones, they had to get a warrant in
order to get your telephone records and to do any kind of a tap.

MELBER: Yes, I think that`s absolutely true when you talk about doctrine
or the logic here. What the court said today in this unanimous opinion is
not only is your phone special and protected under the Fourth Amendment,
that basically being an old privacy protection applied to new technology,
but they went further and said if anything, when you look at the way people
live their lives today, what`s in the phone in terms of personal data,
personal information, personal communication, web searches that may reflect
your plans, your state of mind, your privacy -- all of that is more
important to people than what`s in their home or office.

The court basically, as you mentioned, Roberts being the younger one, the
average age is 68 years old, but the court acknowledging that in a way that
could have profound repercussions, because so many police departments
argued the opposite, that they should get some sort of exception and be
able to go into people`s phones without a warrant.

O`DONNELL: And, Ari, that exists now, doesn`t it? If the police say they
pull you over, if you`re leaving the scene of a crime or speeding and they
pull you over and they look in your car, if they see something on the front
seat of the car, it`s something they can see, they are allowed to seize
that and examine that.

MELBER: That`s right. If it`s a real emergency, or in the law, they call
that exigent circumstances, and the court said that still applies. So if
you say, oh, let`s say they thought there was a missing bomb and they
thought you were texting about the whereabouts, they would still have that
emergency exception.

What they don`t have and what this unanimous opinion really put a stop to
was trying to turn that sort of loophole into a broad policy of taking
anyone`s phone during an arrest and saying, oh, we get to search that
incident to arrest almost automatically or part of due course. And again,
you think that through and you say wait, maybe you did something wrong.
No, you`re not guilty of anything. You haven`t had your day in court. You
haven`t seen a lawyer yet.

The idea that on first impact with any police officer they should get to go
through everything is actually a very invasive policy that a lot of
departments were trying to use.

O`DONNELL: And it seems to me the modern phone would require you in effect
to testify against yourself because you can`t get into my phone to get
anything without me telling you what that code is to get into that phone.

MELBER: Right. That code and the idea of basically rummaging through it
is asking you to incriminate yourself, whether they get the password or
they hack in.

And the other interesting part is, although Roberts didn`t say it directly,
you can`t look at this opinion today without seeing it has a fundamentally
liberal premise in its approach, because there weren`t phones or anything
imaginable like that when the Fourth Amendment was drafted. All this talk
about pure originalism or the Scalia school, you can`t really -- he was on
the opinion, but you can`t really be serious about that and apply things in
a modern way. This was the right decision. It went further than some of
us expected and it`s a rare note of unity on the court.

O`DONNELL: Scalia went with the Founder`s original intent on cellular
technology.

Ari Melber, thank you very much, not just for joining me tonight, thank you
very much for the last couple of months.

MELBER: Thank you very much, Lawrence.

O`DONNELL: OK. Coming up, Bill and Hillary Clinton and their money. Some
people think they have too much of that. Ezra Klein and Nia Malika
Henderson will join me.

And later, an exclusive update on that police chief who believes she was
fired for being gay. She`s going to join us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

DAVID GREGORY, NBC NEWS: Do you understand some people have been critical
of Mrs. Clinton, Secretary Clinton, who initially had to explain talking
about being dead broke coming out of the White House, or it was said in an
interview --

BILL CLINTON, FORMER PRESIDENT: I do. I might understand it differently
than you do.

(LAUGHTER)

(END VIDEO CLIP)

O`DONNELL: The Clinton campaign, which as you know on this program, is
officially under way, and has been for a long time, has money troubles, too
much money.

Here`s more of how Bill Clinton handled the issue with David Gregory.

(BEGIN VIDEO CLIP)

CLINTON: It is factually true that we were several million dollars in
debt. Everybody now assumes that what happened in the intervening years
was automatic. I`m shocked that it`s happened. I`m shocked that people
still want me to come and give talks. So, I`m grateful.

GREGORY: But when you say you pay ordinary taxes, Secretary Clinton did,
unlike other people who are really well-off, who pay taxes maybe just off
capital gains, can you understand as a political matter that can strike
people as being out of touch?

CLINTON: Yes, but she`s not out of touch, and she advocated and worked as
a senator things that were good for ordinary people, all her life, and
people asking the questions should put this into some sort of context.

(END VIDEO CLIP)

O`DONNELL: Joining me now is Nia-Malika Henderson, national political
reporter for "The Washington Post", and Ezra Klein, editor in chief of
Vox.com, and an MSNBC policy analyst.

Nia, as far as I can tell, I personally am not aware of any interest in how
the Clintons have earned their money outside of the media`s interest. And
this is that stage of a presidential campaign which I say is already under
way, in which because there really is anything going on, and because the
voters aren`t close to thinking or speaking about it, the media then speaks
for the voters and says, hey, what about all that money you have?

NIA-MALIKA HENDERSON, THE WASHINGTON POST: I think that`s right. I mean,
if you remember in the Romney campaign, there was all this concern about
how he made his money, and so it is almost like, there`s like a mini
campaign going on now with Hillary Clinton. I think in some ways that`s
good for her, right, because if she in fact decides to run, even though you
think she`s already running, she`s going to, you know, dust the cobwebs off
and really get out there. She`s rusty, I think we know that very much.

So, in some ways, this is sort of like a trial balloon, sort of a mini
campaign. She can sort of know what the press is going to be throwing at
her and get her answers ready. I think so far, they haven`t been great at
answering these questions, but I think they`ve got a long way to go.

O`DONNELL: Now, you know, Bill Clinton saying they`re broke, of course, to
Americans, if they actually -- were did care about this. He had a job that
paid $400,000 a year. He paid no rent. He had no housing cost. What he
had was a stack of legal bills from law firms who absolutely were never
going to do a single thing to collect if it wasn`t easy for the Clintons to
pay. So it wasn`t anything like the debt Americans live with.

But Ezra, it seems to me the issue has nothing to do with how much money do
they have or anything like that. If there`s a political issue here for
someone to eventually play with its sort, and Nia was just talking about
which how did you earn your money? We saw Democrats and Newt Gingrich and
others talk about Mitt Romney earning his money in ways that hurt other
people, cutting jobs in different companies they would take over. And the
way the Clintons have earned their money for the most part has been in
lecture fees and people don`t know really where those speaking fees have
been coming from and they have come from some very big money interests.

EZRA KLEIN, COLUMNIST, THE WASHINGTON POST: I think that`s right.

One, to go to how broke they were or weren`t. You can`t go that broke that
many millions of dollars into debt unless you`re pretty rich or unless you
are pretty rich or unless you are pretty huge earning.

People don`t give you millions of dollars in legal services if they don`t
believe you can pay it back. So that really was an a bit of an odd
statement for them to make. That was an out of touch statement.

But to your point here, I think that is right. I think there are two
pieces of the Clintons finances that will be fascinating if they get
unwound. One is who they have both been speaking to which is, you know,
they are obviously political animals, so most of the folks they`re dealing
with I`m sure they vetted to a pretty high degrees. It`s a lot of the
aluminum manufacturers association of Ohio, things kind of thing. But
there will be people who, whether they knew it or not end up looking worse
in two or three years.

But the other piece of it, and I don`t think this is not how they make
their money, but it`s important, is the Clinton global initiative, which
has raised just tremendous quantities of money, much more than the Clintons
have made personally. And it`s raised it from folks who run other
countries. It raised it from very, very rich people. And it`s entirely
possible between now and the 2016 campaign some of the folks who Bill
Clinton got huge donations from, will come to no look so good. That they
will do things between now and then or things will come out that they did
before that even though their money was going towards a good cause, it`s
not somebody who folks are comfortable having aligned to the first husband.

O`DONNELL: And Nia, of course, the response there will be look what good
the global initiative does. You know, he has the money he was raised. But
look at what the money was used for. And it`s pretty easy to play out how
this dialogue would go in a political theater.

And normally, you would say, were it not for the last Republican
presidential primary, Republicans aren`t the ones that are going to come
attacking you for how you have made your money or how much you have. But
look what Newt Gingrich did with it against Mitt Romney. They have gone
there.

HENDERSON: Yes. And I think the real sort of parallel that we might see
in 2016 is what the sort of framing of John Kerry in 2004, who I think was
worth something like $200 million. A lot of that was from his wife. But
the way they framed him was that he was sort of a culturally elitist and
out of touch, right. And you even saw George H. W. Bush try that same
rhetoric with Dukakis, right? He talked about, you know, liberals getting
their ideas from the Harvard faculty club.

So I think that`s what you`ll see around Hillary Clinton. It won`t be so
much about where she`s gotten her money, but I think that will be the case.
And I think you`ll dig into the CGI and dig in to those speeches. But I do
think it will mainly be about her being an out of touch liberal who just
doesn`t understand the concerns of regular Americans.

O`DONNELL: It seems to me, Ezra, that as spring training goes for
presidential campaigns, it just seems to me this is going to be easy for
the Clintons. They are going to figure out the language of how to deal
with this. They`re never going to like the numbers because they`ve made
way over $100 million and they will never going to like saying that.

And you know, and when Bill Clinton talks about tax rates, you know, when
you`re paying 30 percent if you did that of $100 million, you`re left with
a lot of money. But it just seems to me that this is going to be an easy
rhetorical fix for them when they get themselves steadied on it.

KLEIN: Yes, this is a huge advantage for Hillary Clinton. It`s actually
why I think these last two weeks have been good, not bad for her 2016
campaign, if it happens, which is that she can do something no one else can
do. Which is she can basically run a capsule national campaign. She can
release a book and act like it`s a presidential campaign, get under that
kind of scrutiny and begin the process of getting good at campaigning
again. She`s going to make big mistakes in 2014, but her opponents will be
making them in 2016, when she is already learn how to campaign. And many
of them are learning how to do a national campaign for the very first time.

O`DONNELL: Nia Malika Henderson and Ezra Klein, thank you both for joining
me tonight.

HENDERSON: Thank you, Lawrence.

KLEIN: Thank you.

O`DONNELL: Thank you.

Coming up, in the "rewrite," Jon Stewart`s hilarious take last night on the
IRS so-called scandal. And a few things that were not included in the
daily shows treatment of the IRS scandal that you just might want to know.
Just a couple of footnotes to what Jon Stewart did last night.

(COMMERCIAL BREAK)

O`DONNELL: And now for the good news. Jeff Bowman went back to work last
week. Jeff Bowman survived the Boston marathon bombing. He was the man in
this photo seen around that world that day, the man being rushed into an
ambulance by Carlos Arandondo (ph).

Jeff Bowman became an important witness in the investigation of the
bombing. Jeff was the one who remembered seeing a suspicious person before
the bombing and after he woke up, after surgery, he wrote, quote, "bag, saw
the guy, looked right at me." Jeff Bowman described the face, described
the bag, described every detail he could recall and his descriptions helped
investigators who were looking at photos and videotapes trying to find the
suspects. When Jeff Bowman awoke from surgery, learned he lost both of his
legs above the knee. He eventually learned to walk again. He wrote a book
called "Stronger." He got engaged. He is about to be a father.

On June 18, Jeff Bowman returned to his job at Costco, returned to the
place where his manager took time off to help Bowman`s family, where his
co-workers raised have money for him and visited him throughout his
rehabilitation. Back at Costco.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. DARRELL ISSA (R), CHAIRMAN, HOUSE OVERSIGHT COMMITTEE: Please rise to
take the oath. Raise your right hand. A little higher.

(LAUGHTER)

JON STEWART, COMEDIAN: That was easy. Now, turn around and wiggle. We
all might want to do that to the head of the IRS, what does raising your
hand higher have to with telling the truth? I can lie. Wait, I can --
hold on. I can lie. I can lie. I can no longer lie for my hand is too
close to God.

(END VIDEO CLIP)

O`DONNELL: That was part of Jon Stewart`s brilliantly funny bit last night
on Lois Lerner`s lost IRS e-mails. For Jon Stewart, the IRS commissioner`s
testimony was a turning point.

(BEGIN VIDEO CLIP)

STEWART: So up until now, the whole thing is annoying. But not quite
going. Here`s where it gets somewhat going.

UNIDENTIFIED MALE: The IRS has historically only preserved backup tapes
for six months.

STEWART: All right. The government agency whose entire business model
relies on forcing Americans to live as borderline hoarders, only keeps
their (bleep) for six months?

(CHEERS AND APPLAUSE)

STEWART: You know, you never get a notice from the IRS saying please bring
your records down to us, if you can find them.

(END VIDEO CLIP)

O`DONNELL: The IRS commissioner testified in detail about the severe
limitations on IRS workers` computer capacity, which Jon Stewart summarized
this way.

(BEGIN VIDEO CLIP)

STEWART: But even if the IRS deleted the tapes, why can`t they just get
the e-mails from her inbox? Spoiler alert, it`s stupid and preventable.
Each IRS employee`s e-mail box back then only held 150 mega bytes of
information, also known as five pictures of your family or one picture of
Anthony Weiner`s (bleep). Boom!

Yes. He has a somewhat large penis, 150 mega bytes. That`s one percent of
what Gmail offers you for free.

(END VIDEO CLIP)

O`DONNELL: Jon Stewart went on to make the very important point in a very
funny way that the IRS computers are primitive because America doesn`t want
to pay for the government America wants and expects. America doesn`t want
to pay the relatively small amount of money it would cost to bring IRS
computers into the 21st century, but America demands that the IRS work
perfectly.

Even with its ancient computers, the IRS should work perfectly. And
remember, spending money to improve IRS performance does not increase the
deficit, because it increases the IRS` ability to collect revenue for the
government. It makes money for the government.

But Republicans refuse to do that. In fact, their latest idea is to
continue cutting the IRS` budget, this time by $341 million. That`s a lot
of computing power you can buy with that.

Here are some helpful facts that didn`t quite make it into the daily shows
report last night, and actually don`t make it into most news reports about
the IRS story.

The IRS did not suspiciously lose all of Lois Lerner`s e-mails. They did
suspiciously lose some of them. But the IRS turned over to Congress most
of Lois Lerner`s e-mails. You rarely hear that in news reports. They
turned over most of her e-mails, including all of the e-mails from the
period that Congress is most interested in, the months preceding and the
months during the last presidential campaign.

Now, let`s do a multiple choice test to see just how well the news media
has been keeping you informed about Lois Lerner`s e-mails. How many of
Lois Lerner`s e-mails have been turned over to the House of
Representatives?

A, none. B, hundreds. C, thousands. D, 67,000. E, who is Lois Lerner?

OK, time`s up. It is, of course, d, 67,000 e-mails, as I`m sure most
viewers of this program know. But America mostly does not know that
because the news media simply doesn`t have the time to add a sentence about
those 67,000 e-mails in their IRS scandal stories.

Another fact that is never included in the scandal reports is that, none of
the political organizations that applied for 501c 4 status actually needed
to apply for it. It is a status they could simply claim without apply for
it. So the application process that some of those political groups
complained about and that the Republican members of Congress who they
support complained about, it`s actually an unnecessary (INAUDIBLE) process.

Another fact rarely included in the news reports of the IRS scandal is that
not one Republican political group that applied for 501c4 status was denied
501c4 status. Not one Republican application was denied. The one
political organization that managed to somehow get denied 501c4 status was
a liberal organization called emerge America.

For most of the American news media, that remains one of the secret facts
of the IRS scandal. And of course, the most important secret fact of the
IRS scandal is that no political group should ever be granted 501c status
under any circumstances because the law says explicitly that they
shouldn`t.

The law says a 501c4 organization must be quote "operated exclusively for
the promotion of social welfare," as you heard me say many times.

As viewers of this program know, that law was contorted in 1959 by a
regulation written inside the IRS as a guideline for how to enforce the
501c4 law, and that regulation said that 501c4 organizations must operate
primarily for social welfare. That was the new word, the regulation was
indirect contradiction of the law. It changed the word exclusively to
primarily.

Now, the speaker of the House is ready right now to see the president of
the United States for, in the speaker`s words, failing to enforce certain
laws as written. But the speaker is not including 501c4 law in his lawsuit
because the speaker does not want that law enforced as written.

And no president since Eisenhower has enforced that law as written. They
have instead struggled to enforce the regulation, which is simply too vague
to enforce. The word primarily has no legal meaning. The word exclusively
does.

The 501c4 law is an easily enforceable law because it`s an absolute law, as
written. There is no bend to it. And organization cannot be engaged in
any political activity if the organization has 5014-c status, according to
the law, as written, which has not been enforced since 1959.

Now, there`s a lot of fun to be had with the difference between the words
exclusively and primarily. And some of our amateur comedians have given it
a try.

(BEGIN VIDEO CLIP)

REP. GERRY CONNOLLY (D), OVERSIGHT COMMITTEE: Now, if I said to my spouse,
honey, we have an exclusive relationship, and I mean by that 49 percent, I
probably would have problems in my relationship.

(END VIDEO CLIP)

O`DONNELL: What kills me about this is that Jon Stewart and "the Daily
Show" writers could do a fantastic job with the difference between the
words exclusively and primarily. And now they won`t because some of our
amateur comedians got there first and it just wouldn`t be creative for now.

So I offer a special plea to congressional staffers. Please, please,
please, tell your bosses leave the political jokes to Jon Stewart.

(COMMERCIAL BREAK)

O`DONNELL: Crystal Moore, the formal police chief of Latta, South Carolina
appeared on this program in April telling us she was fired from her
position because she`s openly gay. The mayor of Latta, Earl Bullard, says
he fired her because of her performance. But on an audio recording
allegedly of the mayor appears to support Moore`s claim.

(BEGIN VIDEO CLIP)

MAYOR EARL BULLARD, LATTA, SOUTH CAROLINA: I would much rather have, and
I`ll say this to anybody`s face, I would much rather have somebody who
drank and drank too much, taking care of my child than I had somebody whose
lifestyle is questionable around children.

(END VIDEO CLIP)

O`DONNELL: Yesterday, voters overwhelmingly approved a referendum to
change the town`s former government, stripping the Mayor Bullard of much of
his power and giving that part of town council (ph). That opened the
possibility that Crystal Moore would get her job back as police chief. But
today the mayor hired a new police chief.

Joining me now in an exclusive interview is former police chief of Latta,
South Carolina, Crystal Moore. Also joining us is Latta town councilman
Jarett Taylor.

Crystal, what -- take us through this sequence of what it felt like for you
when you saw what the town council did in changing the powers and suddenly
the mayor takes this action to hire someone else?

CRYSTAL MOORE, FORMER POLICE CHIEF, LATTA, SOUTH CAROLINA: I was
devastated. The whole thing since I`ve been fired, the council has been
standing behind me, the citizens, the supporters have been standing with
us. And then the council brought up the referendum to change the form of
government, so I was faithful that I would be back. The citizens came out
and they voted. They showed their support. They came to the polls in
thunderstorms and rain, and we won 328-147.

I felt like, OK, I`ve been hired back. I have any job back that I worked
hard for 23 years to have. I`ve done nothing wrong. There were bogus
reprimands that I have policies and procedures that he wrote me up for. So
I thought I had my job back. I was ecstatic. Then 9:30 this morning, I
come up to talk to the officers and final out the mayor has hired a new
police chief. So it`s like a nightmare that will not stop.

O`DONNELL: Jarett Taylor, what can you do about that?

JARETT TAYLOR, COUNCILMAN, LATTA, SOUTH CAROLINA: It`s our understanding
from the mayors association that it`s against the law to write a contract
out unilaterally, and he needed council approval to do that. So we are
going to test his ability to put the new chief on the contract. The
council supports Crystal 100 percent, all six council member and we are
still behind Crystal.

O`DONNELL: Crystal, that just sounded to me like you have the local law on
your side, and having the council on your side wanting to enforce that law
sounds pretty powerful. It doesn`t feel to me like we`ve gotten to the
last chapter of this story.

MOORE: That what we thought, we had end of the story last night, you know,
with the turnout, because he said he would do what the citizens wanted. He
told the newspapers, he told council members meaning he would do what the
citizens wanted. And once again, today, he has done the opposite of what
the citizens want and opposite of what the policy says.

O`DONNELL: Well, Crystal, it sounds to me like with the council on your
side, the way this is going to go from here is the local law either allows
him to do that or it doesn`t. I`m betting on you, Crystal, at this point
of getting back in there as the next police chief.

MOORE: Well, thank you, sir. We`re working hard on it and we`re not going
to give up.

O`DONNELL: Crystal Moore and Jarett Taylor, thank you both very much for
joining me tonight. I really appreciate it.

TAYLOR: Thank you, as well.

MOORE: Thank you for having all our supporters with us, too.

O`DONNELL: Thanks, Crystal. I really appreciate it. Thanks.

Chris Hayes is up next.


END

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