updated 7/31/2014 10:20:38 AM ET 2014-07-31T14:20:38

THE LAST WORD WITH LAWRENCE O`DONNELL
July 29, 2014

Guest: David Cay Johnston, Janine Zacharia

LAWRENCE O`DONNELL, MSNBC HOST: Rachel, you broke my heart when you beat
up that little sports car. Me and little boys all over America.

MADDOW: I`ll bring you the wheel.

O`DONNELL: I thought for sure I was going to get to play with that little.

MADDOW: I`ll bring you the wheel. That`s all I got left.

O`DONNELL: OK, thank you very much, Rachel.

Tonight, as Israel continues to attack Hamas, the Israeli media has decided
to attack John Kerry.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Secretary of State Kerry is feeling the heat.

UNIDENTIFIED FEMALE: A ferocious attack, in the Israeli media.

UNIDENTIFIED MALE: Times of Israel published an op-ed calling Kerry`s
efforts a betrayal.

UNIDENTIFIED FEMALE: Obama and Kerry, it says, are playing with fire.

JOHN KERRY, SECRETARY OF STATE: This is not about me.

UNIDENTIFIED MALE: Felt that Secretary of State John Kerry`s efforts
reflected a Palestinian position.

UNIDENTIFIED MALE: It`s the fact that he is suggesting a cease-fire.

UNIDENTIFIED FEMALE: Come on, get real.

UNIDENTIFIED FEMALE: One columnist who alleged the secretary, quote,
"ruined everything."

SUSAN RICE, NATIONAL SECURITY ADVISOR: We`ve been dismayed by some press
reports.

UNIDENTIFIED FEMALE: Describe the proposal that Kerry put on the table as,
quote, "a strategic terrorist attack."

JON STEWART, COMEDIAN: What (EXPLETIVE DELETED)

KERRY: I`m not going to worry about personal attacks.

UNIDENTIFIED FEMALE: Quite vehement opposition and criticism.

UNIDENTIFIED FEMALE: This is reflecting a mainstream Israeli point of
view.

UNIDENTIFIED FEMALE: Americans are not the real partner.

UNIDENTIFIED MALE: Israel needs America.

UNIDENTIFIED MALE: Clearly, there`s not a lot of trust in this
relationship.

UNIDENTIFIED MALE: Such an open, hostile relationship doesn`t serve
anybody.

(END VIDEOTAPE)

O`DONNELL: Joining us now from Gaza with the latest developments on the
ground, NBC News` Ayman Mohyeldin.

AYMAN MOHYELDIN, NBC NEWS: Good evening, Lawrence.

For the first time since this conflict began, Hamas` military wing, the Al
Qassam Brigade, has released a video that they say shows its fighters
carrying out an attack inside Israel at an Israeli military post, just on
the other side of the border.

Now, according to this footage that was released in Gaza on the local Hamas
affiliated satellite station, the footage shows Palestinian fighters
crossing those tunnels Israel has been complaining about and expressing
tremendous amount of concern over the last several weeks if not months.

The video shows several Palestinian fighters entering this watch tower,
killing Israeli soldiers before they returned back into Gaza. But what it
really highlights and underscores is the ongoing fight that is taking place
here in Gaza. Despite weeks of Israeli airstrikes, artillery shelling, and
in some cases, wholesale destruction of entire neighborhoods to try and
target these tunnels, there are still tunnels that are operational
according to Hamas` military wing.

Now, there are some questions around the timing of this video. But again,
Hamas` military wing is saying this was shot recently within the past 24
hours and the Israeli military did confirm yesterday that there was an
incident that fit a description which its soldiers were killed.

Now, against that backdrop, the situation here in Gaza continues to worsen
on a humanitarian level. Today, the Israeli military according to
Palestinian sources struck two fuel tanks in Gaza`s main power plant. And
as a result of that, the electricity across the Gaza Strip has been shut
off. Palestinians have been, for the past several weeks, already suffering
from rampant power outages, now coupled with this power plant being
destroyed, you can imagine that it`s going to be much more difficult for
them to have any type of electricity.

In addition to that, the United Nations confirmed that two of its employees
here in Gaza were killed during an attack, during an attack -- during the
explosion that happened earlier this morning. And are also now calling for
an investigation as to what may have happened in the killing of these two
individuals.

Nonetheless, Israel carries out strikes on a regular basis. They have
intensified some of those airstrikes here in the Gaza Strip, including in
Gaza City, the largest city in the territory.

Lawrence, back to you.

O`DONNELL: Thank you, Ayman.

Secretary of State John Kerry has made multiple trips to Israel and the
region since the fighting started there on June 12th. For his troubles,
John Kerry got this thanks in an Israeli newspaper yesterday.

Over the weekend, U.S. Secretary of State John Kerry ruined everything.
Very senior officials in Jerusalem described the proposal Kerry put on the
table as a, quote, "strategic terrorist attack."

John Kerry responded to that criticism at the State Department today.

(BEGIN VIDEO CLIP)

KERRY: I`ve spent 29 years in the United States Senate and 100 percent
voting record pro-Israel. And I will not take a second seat to anybody in
my friendship or my devotion to the protection of the state of Israel.

But I also believe as somebody that`s been to war that it`s better to find
a way if you can to solve these problems before you get dragged into
something that you can`t stop. And it seems to me that this is a
reasonable effort, fully protecting Israel`s rights, fully protecting
Israel`s interests, and Prime Minister Netanyahu himself said to me, can
you try to get a humanitarian cease-fire for this period of time? And if
it weren`t for his commitment to it, obviously, the president of the United
States and I would not be trying to make this effort.

Now, either I take his commitment at face value or someone who`s playing a
different game here? And I hope that`s not the fact.

(END VIDEO CLIP)

O`DONNELL: Joining me now, E.J. Dionne, "The Washington Post" columnist
and MSNBC analyst, and Janine Zacharia, former Jerusalem bureau chief for
"The Washington Post" and current visiting lecturer at Stanford University.

Janine, talk to us about the Israeli media and how tightly they are
connected to the Israeli government and how reliable quotes like that are
in the Israeli media from the Israeli government.

JANINE ZACHARIA, STANFORD UNIVERSITY: Well, they`re very much in sync, and
very often, you`ll hear when an Israeli goes on TV, I heard from a senior
official from the prime minister`s office, and that`s usually the prime
minister himself or maybe a top aide, or maybe the defense minster himself.

So they`re very much in sync. Very often, they`ll just run out with
whatever that senior official has told them and there isn`t much effort
always to try to get a confirmation from the United States side about
whether it`s what John Kerry said in the phone call or what President
Obama, as we saw as well, with the release of an alleged transcript of a
conversation between the prime minister and the president. So, they`re
very tightly synced.

O`DONNELL: So, E.J. Dionne, we have what`s possibly an accurate quote from
a very senior official or very senior officials in Jerusalem, accusing John
Kerry of launching, quote, "a strategic terrorist attack." This is the
thanks that John Kerry gets for trying to save lives in that region.

E.J. DIONNE, THE WASHINGTON POST: Well, that`s right. I mean, first
of all, Ari Shavit, whose column that appeared, is one of the best
journalists in Israel. He has many times been critical of the Israeli
government. Indeed, I remember back when Prime Minister Olmert went into
Lebanon to go after Hezbollah, he wrote a very tough column saying this was
a bad idea.

And I think one of the things you`re seeing in this particular war is that
public opinion in Israel is so overwhelmingly in favor in this war. The
polls, depending on which ones you read -- 85 percent to 95 percent that
unites left and right, right now in Israel.

But I think the issue here is that from Kerry`s point of view, in order to
arrange a cease-fire, as Gaza had to be brought in, and the way to do that
was to negotiate through Turkey and Qatar, and because we couldn`t deal
directly with Hamas. What people like Shavit and a lot of Kerry`s Israeli
critics said is he should have stuck with Egypt and the Palestinian
Authority. His proposal didn`t give Israel anything like it needed in
terms of military security.

So, you`ve got a split here, a substantive difference of opinion that`s
getting expressed through rather inflated and angry language.

O`DONNELL: I`ve got to say, I think it`s beyond inflated and angry when
you have an Israeli government official calling what the American secretary
of state has done a terrorist attack, a strategic terrorist attack.

DIONNE: I agree with you.

O`DONNELL: Janine, is this an all-time low in terms of Israeli political
rhetoric aimed at the United States?

ZACHARIA: I don`t know about an all-time low, Lawrence. It`s very
typical.

(CROSSTALK)

O`DONNELL: Janine, take a moment. Try to think of a worse one. Take your
time.

ZACHARIA: Well, you had -- let me just -- just recently when you had --
when the United States was negotiating about the Iranian nuclear deal,
moments after the president came out and did that press conference late at
night in the United States, Bibi Netanyahu took to the podium and called it
a historic mistake, right? I mean, the fight over settlements.

I was reporting in Israel back in 2010 when Joe Biden was there and
embracing the Israeli leadership and saying the alliance has never been
stronger. And then there was an announcement of new settlements in east
Jerusalem and the whole thing blew up.

So, I mean, this is very typical. What`s interesting about this, so is the
timing of it, at the moment when the United States and Israel should be
seen as lock step, you have this kind of bickering. I`ll tell you what it
is.

Fundamentally, Israel wants to be loved by everyone, the United States, the
international community. But more than that, they want to be left alone
and want to prosecute this war the way they want to, and they don`t want to
hear, as E.J. pointed out, from Turkey and Qatar how to do it. Bibi
Netanyahu is going for strategic -- well, I don`t want to say strategic,
because he`s not being strategic -- a very strong tactical win against
Hamas and the Kerry proposal wouldn`t have allowed him to do that.

O`DONNELL: E.J., because I heard what Netanyahu said, as Janine pointed
out, about the possible Iranian deal. What he said was, it was a mistake,
a historic mistake. They could use that language about John Kerry`s
proposal. They could have said it`s a mistake. It`s a historic mistake.
It`s a gigantic mistake. They could have done that.

They could have -- but they didn`t. What they said was a strategic
terrorist attack. It seems to me those were strategically chosen words
given to what you`re telling us is a very reliable reporter in Israel,
knowing that those specific words would be printed about the American
secretary of state.

DIONNE: Well, two things. We don`t know at what level of the Israeli
government that quote comes from. So, I don`t know --

O`DONNELL: He says very senior officials.

DIONNE: Right. But because the Israelis obviously today have been backing
away from this, expressing their love and respect for John Kerry, but I
think that we are facing a reality that the Obama administration has a
very, to put it charitably, to Mr. Netanyahu -- a very complicated
relationship with Mr. Netanyahu. We weren`t happy with the person he chose
his ambassador to the United States. Netanyahu gave some signs he favored
Romney during the election.

So, this has not been a warm relationship. I think that in this case,
Janine is right, they did not like the idea of Turkey and Qatar coming in
on the side of Hamas in these -- in these negotiations. Kerry`s view was,
we can`t talk to Hamas because they`re a terrorist group and this is the
only way we can reach them.

And so, you know, there is a cool relationship. "Haaretz", the newspaper,
a left liberal newspaper, went out of its way to write an editorial saying,
wait a minute, Barack Obama and the United States are not the enemy.

So, there are some people over there trying to say, wait a minute, we have
to pull back from this.

O`DONNELL: Let`s listen to what the Israeli ambassador said to Andrea
Mitchell today about this.

I guess they lost the video of it. What he said -- now, they tell me they
have it. OK. We`ll roll it now.

(BEGIN VIDEO CLIP)

AMB. RON DERMER, ISRAELI AMBASSADOR TO U.S.: I said yesterday publicly, in
the name of the prime minister, I directly spoke to the prime minister who
told me to make clear that the attacks on Secretary Kerry are unwanted. I
think what people don`t understand, you have reporters there in Israel that
might understand this -- 87 percent of the Israeli people are against the
cease-fire.

ANDREA MITCHELL, MSNBC ANCHOR: We cited that yesterday. That`s the
Channel 10 polling.

DERMER: Right, 87 percent. Now, Moses didn`t get a number of 87 percent.
Eighty-seven percent -- why are they against the cease-fire?

I think part of the problem and the criticism of Secretary Kerry is not
what he did this or that, it`s the fact that he`s suggesting a cease-fire.
When the prime minister wanted to propose a cease-fire and voted for a
cease-fire, he also faced withering criticism in Israel.

(END VIDEO CLIP)

O`DONNELL: Janine, your reaction to the ambassador`s statement?

ZACHARIA: Look, I mean, we could -- Ron Dermer is a very adept, sort of
echoing Bibi, answering in a debate as "New York Times" wrote. I`ve known
him for a long time. But this is -- you know, as E.J. was saying, this
gets to the heart of the problem. And the U.S.-Israel relationship is very
cool between President Obama and Prime Minister Netanyahu. And that`s what
you see explain here.

Just before I came on air, someone in my Twitter feed wrote in Hebrew, only
two more years of Hussein Obama and then we`re done with him. I mean,
that`s sort of emblematic of the attitude there.

What`s more interesting, though, and beyond this Kerry spat, which will get
resolved and they`re going to get a ceasefire in the next couple of days, ,
is just how different the war and the Israeli people are seeing is, from
the war of the international community is seeing, because of the way the
Israeli media is shaping the overall coverage. To me, that is the key
element, and it`s very different.

For example, on one of the top news channels, it was the fifth story that
Israel knocked out the power plant in Gaza. That was leading the headlines
all day here today. And so, you`ve got this fundamental disconnect between
Israel and the United States over even what`s happening, never mind what
Kerry might have said in a private phone call, right, or in a negotiating
session.

O`DONNELL: Janine Zacharia, thank you for your invaluable perspective on
the Israeli media. We have to have you back with more of that.

And, E.J., thank you for joining us.

DIONNE: Thank you.

O`DONNELL: Coming up, a foreign policy win for President Obama, as he gets
Europe to back the USA versus Russia.

And Chris Christie breaks a very big promise, and millions, millions of tax
dollars for a Noah`s ark theme park. That could never happen here, right,
not with separation of church at state? But it is in tonight`s "Rewrite".

(COMMERCIAL BREAK)

O`DONNELL: Do you believe the Bible story of Noah`s ark? You shouldn`t.
And your tax dollars should not support a very expensive depiction of it.
All of that is in the "Rewrite", coming up.

(COMMERCIAL BREAK)

O`DONNELL: President Obama announced more sanctions on Russia today as
Vladimir Putin continues to support and arm the separatists in eastern
Ukraine. This time, President Obama is not alone.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We`ve also made it clear, as
I have many times, that if Russia continues on its current path, the cost
on Russia will continue to grow. And today is a reminder that the United
States means what it says. Today, building on the measures we announced
two weeks ago, the United States is imposing new sanctions in key sectors
of the Russian economy -- energy, arms, and finance.

At the same time, the European Union is joining us in imposing major
sanctions on Russia. Its most significant and wide ranging sanctions too
date. Because we`re closely coordinating our actions with Europe, the
sanctions we`re announcing today will have an even bigger bite.

(END VIDEO CLIP)

O`DONNELL: The new sanctions by the United States include blocking exports
of goods and technologies to Russia`s energy sector, expanding sanctions to
Russian banks and suspending credit and finances that encourages companies
to develop in Russia. European Union sanctions include cutting off
financing to state-owned banks in Russia, supporting this -- stopping the
export of equipment for the country`s oil industry, prohibiting the imports
and exports of arms and halting the export of technology to the Russian
military.

These new sanctions come a day after the White House concluded that Russia
violated a landmark arms treaty by testing prohibited cruise missiles,
though the incident is not related to Russia`s involvement in Ukraine. The
violation of the 1987 treaty signed by President Reagan and Mikhail
Gorbachev only increases the tension between these two countries.

Joining me now is Steve Clemons, Washington editor at large for "The
Atlantic" magazine, and here in New York, MSNBC.com executive editor,
Richard Wolffe.

Richard, so the president finally, apparently got the Europeans to come
along.

RICHARD WOLFFE, MSNBC.COM: Amazing. Yes, no, this is a huge deal. I
realize that sanctions roll into one another and presidents talk to leaders
all the time. But to get the Europeans to sign onto this against all of
their natural inclinations is really quite extraordinary. It says a lot
about just how much Russia has fumbled this one. It wasn`t enough that
they shot down a plane, or at least the separatists they backed shot down a
plane. It`s the mistreatment of the bodies, it`s the military buildup,
it`s the defiance for the inspectors and the investigators.

Across the board, Russia has messed up so badly that European countries
don`t have great economies are willing to take these kinds of actions.
This is a big win for the president.

O`DONNELL: Steve Clemons, what will these sanctions mean for Russia?

STEVE CLEMONS, THE ATLANTIC: Well, I think it slowly shuts down Russia`s
deepening enmeshment with the West. I think you`re going to see a
separation. You had Sergey Lavrov, the foreign minister, out basically
saying Russia will become less dependent on the rest of the world and
become more self-generating in its economy or turn to China or other parts
of the world.

The one thing that`s not part of the sanctions, thus I agree with Richard
that the Europeans really stepped up in this, but gas is not part of this
deal. Oil is, and they use energy roughly, but I talked to several
European energy firms, and infrastructure firms and they all made very
clear that gas is not going to be impacted by this. So, they haven`t gone
as far as the media has thus far been depicting it.

O`DONNELL: Richard, every step the president takes here, he also has to
keep an eye on the negotiations on the Iranian problem and the ways in
which Russia has been helpful there and could continue to be helpful and he
has to somehow keep that alive.

WOLFFE: And also Russia`s involvement with Syria. This is a world of
frenemies, and that`s not the Silicon Valley kind. I mean, there are real
national security implications to every piece of this.

But Russia is building up its forces. It is a significant destabilizing
effect on Ukraine. And that`s why the Europeans are getting involved.

By the way, no one believed Lavrov. The Russian economy is more -- it`s
going to be more self sufficient in the same way Argentina will be self-
sufficient after it defaulted on its debt. What this will do is increase
national export gas exports which really don`t exist right now for
American. It will strengthen the American economy. Good luck to Lavrov,
but this is a situation where, right now, the national security needs for
Europeans trump whatever America thinks it`s going to get with Iran.

O`DONNELL: And, Steve, what about the Russian input in what the president
is trying to accomplish in Iran?

CLEMONS: Well, think thus far we see Russia still cooperating. But I
think the big question, and the president got asked today, whether we`re on
if edge of a new Cold War. And President Obama said, no, this directly
relates to Ukraine.

But the bigger question is, is that true? When you look at the many
different terrains which we`ve had conflict from LBGT rights to what`s
going on in Syria, to issues about Edward Snowden, to what may go on with
Ukraine in the Moldova and other kinds of vice tightening steps that
Ukraine is taking. Remember, Putin looks like the Ronald Reagan of Moscow
to Russians. His popularity continues to surge inside Russia while he`s
detested around the world, and that`s the deal he`s making.

So, to a certain degree, the big question is, are we on the precipice of a
very different strategic picture, which means a global competition with
Russia, as opposed to what President Obama said, we`re just looking at
Ukraine. And I don`t buy the Ukraine picture because Russia seems to be
digging in and willing to pay a price and it wouldn`t be paying this high a
price just for Ukraine.

O`DONNELL: Let`s listen to exactly what the president said when he was
asked about the new Cold War.

(BEGIN VIDEO CLIP)

REPORTER: Is this a new Cold War, sir?

OBAMA: No, it`s not a new Cold War. What it is is a very specific issue
related to Russia`s unwillingness to recognize that Ukraine can chart its
own path.

(END VIDEO CLIP)

O`DONNELL: He seems to say it, Richard, he seems to keep this
compartmentalized. How does Vladimir Putin react to it?

WOLFFE: Well, as Steve points out, Putin`s popularity is increasing even
at the Russian economy is declining. There`s no Cold War -- we`re not
facing against each other with a threat of nuclear annihilation right
there. There is that small difference here.

As dramatic as we like to make all these crises to be, this isn`t the
middle of the Cold War. And so, I understand that presidents have very
full plates and at times like this, it looks unbelievably overwhelming.
But it`s not even as overwhelming as it was for President Bush after he
launched the disastrous war in Iraq and al Qaeda was still present
throughout the world.

This is bad but it`s not as bad as it`s even been in recent history.

O`DONNELL: Steve Clemons and Richard Wolffe, thank you both very much for
joining me tonight.

WOLFFE: Thank you.

CLEMONS: Thank you, Lawrence.

O`DONNELL: Coming up, Chris Christie breaks a promise -- a big money
promise.

(COMMERCIAL BREAK)

O`DONNELL: In the spotlight tonight, Chris Christie`s broken promise.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: I have said consistently,
consistently, that one of the causes of the problem was that the state,
over the last 17 years, has only twice made any payment, any payment --
never a full payment, any payment to the pension system.

New Jersey has once again become a model for America. And assurance to the
hardworking men and women in government, all across New Jersey, that when
the time comes for them to retire, their pension will be there for them to
collect.

Here`s what I did in New Jersey. I put out this pension benefit plan
first, in September. And I did 30 town hall meetings across my state
selling the plan.

But with bipartisan leadership, we saved taxpayers $132 billion over 30
years, and saved retires their pensions. We did it.

(END VIDEO CLIP)

LAWRENCE O`DONNELL, MSNBC ANCHOR: But that was then, and this is now. And
now, Chris Christie wants to cut the amount of money he would pay into the
state pension funds by more than half.

According to "the Washington Post," Chris Christie answered a question
about the state`s pensions like this. Promises were made that can`t be
kept. Welcome to the real world, folks.

Joining me now is Pulitzer-prize winning journalist David Cay Johnston,
columnist for the "National Memo" and author of the book, "divided, the
perils of our growing inequality" and Brian Murphy, the former managing
editor of politicsnewjersey.com and an MSNBC contributor.

David, how did New Jersey come to this?

DAVID CAY JOHNSTON, COLUMNIST, NATIONAL MEMO: Well, when Christine
Whitman, another Republican was elected office in 1994, she stopped putting
money into the pension plan so that she could finance tax cuts. And as you
just heard the governor say, there have only been two years in the last 17
that they put money in.

Chris Christie got elected and got votes by saying I will see to it that we
put in the necessary money, an extra $600 million for seven years, that his
office said would be sufficient to provide people with the benefits they
earned for their retirement.

O`DONNELL: Now, he was very clear, Brian, in his rhetoric there in the
past that he did consider this to be benefits money earned by these people.
And he has now decided, even though they earned it and he as much said the
government owes it to them, they`re not going to get it.

BRIAN MURPHY, MSNBC CONTRIBUTOR: Well, there is the tour guide for the
real world. And in that world, it looks an awful lot like he never
intended to keep that promise to put $600 million in. Because as soon as -
- even in -- legislators complain about this all the time when he made his
state of the state address back in January, he was already directing his
treasury department to begin adjusting the --

O`DONNELL: Why go brag about it at the Republican convention, why make it
that visible if it`s something you planned later to go back on?

MURPHY: Well, I mean, this isn`t really all about pensions, right, the
back story here? And the bigger story is that he would like to have the
same platform that Scott Walker has, right? And be the enemy of public
employee unions.

He`s deeply unpopular with public employee union. He comes across -- he
goes out and says he`s very popular with firefighters. He`s popular with
volunteer firefighters. Not once who are in the payrolls of municipalities
and counties. And that`s sort of been -- that`s a big part of this appeal
in this sort of -- the story that he`s told the voters in New Jersey is
that he`s battling unions, and he`s on like the side of people who aren`t
in unions, and trying to scale back through any means necessary the clout
and power that they have in the state.

O`DONNELL: David, the Republican and Christie message is look, we`re
fighting the good fight for bringing fiscal sanity to government and part
of that is reducing this giant bite that these public employees are taking.
They`ve been getting away with finance murder against the treasuries for
years, and now I, Chris Christie, am coming in to save the day. What is
the counter depiction to what is occurring here?

JOHNSTON: Well, good politics and terrible policy. This is thievery. The
headline in my column on "National Memo" is "Governor Christie embraces
theft." And that`s exactly what`s going on here. Imagine you open your
paycheck next week and half the money is there and your boss and the boss
says, well, promises were made that can`t be kept, welcome to the real
world.

If the governor wants to negotiate lower earned benefits, that`s one thing.
But that is not what he is proposing here and it is immoral. It is
violates fundamental notion that you have a contract that you have to
honor, like it or not. And that is what I find trouble. This is just a
subtle delayed form of stealing wages from people who did the work they
were hired to do and earned benefits for their old age.

O`DONNELL: Because clearly, Brian, if you had told them in the original
negotiation of these packages, look, the retirement benefits we may not
pay, they would have said OK, wait, then switched that into our current
paychecks, put it into my paycheck instead of putting it into my retirement
account, since you eastern not going to put it into that retirement
account.

MURPHY: And ahead of this, too, you know, the state pension fund also
encompasses local and county employees. And those local and county
governments have done their responsibility by putting money into the state
pension system. It`s just the employer of the 80 -- some 1,000 state
employees, that employer, the state of New Jersey that is being the dead
beat in this larger system. And sort of messing it up for all the local
governments that have made tough choices and actually balanced their
budgets and done what they were supposed to do on behalf of their
employees.

O`DONNELL: David, one way of describing this from Chris Christie`s
perspective is, you know, my predecessors refuse to pay their bills and I
think that`s a pretty good idea.

JOHNSTON: Well, you know, his predecessors refuse to pay it and you can
feel sorry Christie, but he ran for office saying I`m the guy who is going
to be responsible here. We`re going to put the money aside to take care of
this. I`m going to fix the problem. And if you can`t trust a man that he
will be honest about paying people in full for the work they performed, can
you trust him about anything else?

O`DONNELL: Brian, there`s a lot of questions about what you can trust
Chris Christie about these days. In the scheme of things in New Jersey,
how important is this in the politics of New Jersey compared to say the
investigation of the bridge scandals and the other things?

MURPHY: It`s a fight I think he would like to pick. I think it`s one that
he thinks it helps him nationally. This week, he`s made a statement on
pensions and come out in favor of bail-over form. He`s doing these
interesting things, pensions have a big constituency in New Jersey. Bail
reform doesn`t it really, I think all of it is about the national stage
that he is positioning himself on these trips to Iowa and New Hampshire and
everywhere else.

O`DONNELL: David Cay Johnston and Brian, thank you both for joining me
tonight.

MURPHY: Thank you.

JOHNSON: Thank you.

O`DONNELL: Coming up, John Boehner was forced to talk about something he
hates to talk about today -- impeachment.

And in the rewrite tonight, Noah`s ark gets a tax subsidy. Yes, a tax
subsidy for Noah`s ark. Now, Noah`s park is one of the many things in the
bible that you don`t have to believe to be a good, religious bible thumper.
We`ll get into that in the rewrite.

(COMMERCIAL BREAK)

O`DONNELL: And now for the good news, and we are staying close to home for
our good news tonight, we are a new member of "the Last Word" family. Our
technical production manager, Jeff Edelman (ph), is the proud daddy of the
new baby daughter Danny Gabrielle. Mommy and baby are home doing very
well. And Danny`s big sister, Josie, has a big new job, the job of helping
mom and dad with the new baby. Congratulations to the Edelman family.

(COMMERCIAL BREAK)

O`DONNELL: Every once in a while, there`s just that one thing that makes
you want to come to work today. This is that one thing for me.

In the rewrite tonight, another episode of the merger of church and state.
This time, in Kentucky where the state of tourism, the state tourism board
gave preliminary approval today for $18.25 million in state government
funding for a Noah`s ark theme park.

The Kentucky tourism development finance authority voted unanimously to
approve government financial support for the Noah`s ark theme park that
plans to begin construction next week and hopes to open two years from now.

The ark park, and I so wish this was located in Boston, the ark park is the
latest beneficiary of one of this country`s stupidest forms of socialism,
government handouts to private companies. Usually justified by the never
provable notion that the company will generate enough economic activity in
the state to more than pay back the cost of its subsidies through increased
tax revenue to the state. That is theory under which sports socialism has
thrived in this country and you, the taxpayer, have subsidized the
construction of lavish sky boxes that you`ll never see in the playpens of
professional athletes who might actually have to make a million or two less
a year if the stadiums they play in were actually capitalistic enterprises.

When the ark park is up and running, the state of Kentucky will send an
annual check to the -- the state of Kentucky will send a check to the ark
park in gratitude for all of the tourism. The 500-foot replica of Noah`s
ark will be bringing to Kentucky. Of course, many readers of the old
testament will not consider the new ark to be a replica at all, because to
be a replica of something, that something would have had to have actually
existed before.

And the whole Noah`s ark thing is one of the many elements of the bible
that science has made impossible to believe. Since the dawn of science,
one of the principle missions of theology for religions based on the bible
is to explain what the really bible means when it says that thing no one
believes anymore like the penalty for adultery is death, no one believes
that anymore. The bible is littered with death penalties that no one
believes anymore. The bible says the penalty for not observing the Sabbath
is death. No one believes that anymore. But we still have millions of
people who claim to be literal followers of the bible when in fact they are
not.

Many Republicans came to be literal followers of the bible, but not one has
ever called for a known adulterer, even a politician known adulterer, to be
put to death because they don`t believe that anymore. And the only way the
ark park will be able to keep some people believing what they`re seeing is
a replica of what Noah actually built is to, let`s say underplay certain
aspects of the story of Noah.

Like for example, when Noah built this 500 foot wooden ship, Noah was 600
years old. Yes, that`s what the bible says. Noah was 600 years old.
Luckily, he had some help, though, because when he was 500 years old, Noah
had three sons. So they surely got it built about four times faster than
they could have, if Noah was doing this alone.

And remember, the reason Noah had to build this ship is because God told
him that God was so angry, just outright blind angry at the way his
creation human beings were behaving, that God decided to murder every man,
woman and child and fetus on earth, except Noah and his family. And while
he was at it, God`s rage made him decide to kill every form of animal life
on earth, including birds and butterflies, not because they did anything
wrong at all, but because God felt like it. He did not tell Noah to move
his family deep into a cave so that God could burn the entire surface of
the earth destroying every living thing on it. Instead, he told him he was
going to flood the earth with water. There by making it an even more
hospitable and fun place for fish. Why killer sharks were a more favored
species in God`s eye than doves we don`t know.

But one of the tour guides is going to get that question at the ark park
the day that I get down there to check that place out. So this 600-year-
old guy with his 100-year-old sons builds a 500-foot boat into which he
marches not two animals of each species as is commonly believed, but as God
ordered him, seven pairs of every kind of clean animal, a male and its
mate, and one pair of every kind of unclean animal, a male and its mate.
And also seven pairs of every kind of bird, male and female.

So, seven pairs of deer and one pair of pigs. Never mind how every species
on earth was suddenly supposed to get the message to show up at Noah`s ark
just in time to get on board. But assuming they did, there would be a
very, very long line to get on that boat.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Two camels, two lions, two ostriches, two leopards, two
tigers, two zebra. Here`s the crux of my point. Just one species on the
ark at the moment, the giraffes, like on that bird`s longer legs, OK. Five
million more species to get on there. So two animals on the ark, 10
million more animals to go.

(END VIDEO CLIP)

O`DONNELL: The fake Noah`s ark is going to be 510 feet long, 85 feet wide
and 55 feet high. It will presumably have four or five floors, or decks,
and it will surely be able to fit hundreds of animals, especially since you
only have to fit two camels in there, especially since you only have to fit
two camels in there because they are unclean animals according to the
bible.

It`s OK. Relax. Take it easy. You can disbelieve the story of Noah and
still be a good Christian or still be a good Christian or still be a good
Jew. You don`t have to believe that God got himself so blindingly enraged
that god decided to wipe out, to murder every living thing above water on
the planet. You don`t have to believe that.

The story of Noah`s ark is just one of many, many, many things in the bible
that good Christians and good Jews no longer believe. I can`t wait to see
what Noah looks like at the ark park. What does a 600-year-old guy look
like? How long is a 580-year-old beard?

Now, Hollywood will ask you to believe almost anything, for a couple of
hours any way. Hollywood asks you to believe in ferries, hobbits, Jeddah,
Smurfs, all manner of gremlins, Godzilla. But in Hollywood, Noah is 50
years old. Because even Hollywood can`t buy the 600-year-old guy thing.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: This whole talk about
impeachment is coming from the president`s own staff and coming from
Democrats on Capitol Hill. Why? Because they`re trying to rally their
people to give money and to show up in this year`s election. We have no
plans to impeach the president. We have no future plans. Listen, it`s all
a scam started by Democrats at the White House.

(END VIDEO CLIP)

O`DONNELL: Started by Democrats? I guess John Boehner must have forgotten
some of this.

(BEGIN VIDEO CLIP)

SARAH PALIN (R), FORMER ALASKA GOVERNOR: Impeachment is a message that has
to be sent to a president that we`re not going to put up with this
lawlessness.

UNIDENTIFIED MALE: I personally am calling to impeach the president of the
United States. This is impeachable.

UNIDENTIFIED MALE: And I think it is time to start talking about
impeachment. Somebody has to get this guy under control. He`s out of
control.

REP. MICHELE BACHMANN (R), MINNESOTA: Whether or not this is an
impeachable offense is one that Congress would have to make the
determination over.

REP. STEVE STOCKMAN (R), TEXAS: We want all tools available to use,
including THAT impeachment.

PALIN: The one tool they have are articles of impeachment.

STOCKMAN: The impeachment.

UNIDENTIFIED MALE: This is impeachable.

PALIN: Let`s get going on that.

(END VIDEO CLIP)

O`DONNELL: Joining me now, the co-host of MSNBC`s "the Cycle" and more
than occasional host of "the Last Word," the hardest working man in cable
news, Ari Melber.

Ari, all this talk of impeachment, and I actually want to show this thing
that Boehner was referring to. He said the president`s own staff talked
about it and Democrats talked about it. Let`s look at this.

(BEGIN VIDEO CLIP)

JOSH EARNEST, WHITE HOUSE DEPUTY PRESS SECRETARY: I think there are some
Republicans, including some Republicans running for office, hoping they can
get into office so they can impeach the president.

DAN PFEIFFER, WHITE HOUSE DIRECTOR OF COMMUNICATION: Speaker Boehner, by
going down the path of this lawsuit, has opened the door for the path of
impeachment at some point in the future.

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: The Republicans are
trying to sue the president on the path to impeach the president and we`re
trying to create jobs.

We should be open those tracks of impeachment to swing the president. It
should be legislating.

(END VIDEO CLIP)

O`DONNELL: Ari, I get why some wild Republicans are talking about this,
but why do Democrats refer to it?

ARI MELBER, MSNBC HOST, THE CYCLE: I think it`s a great question. You
know, Lawrence, you worked in Washington. They say it`s Hollywood for ugly
people and they say it is also a great town for lawyers who don`t want to
actually practice law. And if you are a lawyer, you know that if you want
to impeach the president, there has to be an impeachable offense. No one
has identified one, not the Republicans you mentioned and then, not the
democratic officials that you just showed. I think there is a desire by
some Republicans to kick up energy in their base and by some Democrats to
use this to try to rally for the midterms. I actually think both maneuvers
are somewhat irresponsible in the sense that this president hasn`t done
anything obviously approaching any kind of illegality or any mix in
landscape. And so, if it is a political desire on either end, the puncher
punch back, I think it`s out of place. We should really only talk about
impeachment when there is a need for a constitutional check on a runaway
presidency.

O`DONNELL: And John Boehner clarified what they want their lawsuit against
the president to be about. I mean, we already knew it was about the
employer mandate, but Boehner has a statement where he says they want to
focus the -- on the president`s decision to extend twice the deadline to
institute the employer mandate. He also makes a point in his statement
saying the fact that we agree with the change that should have been made in
the law makes this case clearer to the court. I mean, people have been
pointing out, you know, that there`s Boehner wanting to sue the president
over something that Boehner was in favor in. And that seem kind of
naughty, but that`s his response to them.

MELBER: Yes. I think the Boehner lawsuit is really pathetic. I think it
doesn`t work for them much politically, because they talked about all these
supposedly extreme executive actions and all they came up with is, of
course Obamacare, you know, rules and procedure provision that, as you
point out, they`ve all been on actually been on the record of pretty much
in line with.

But I think it does go politically to the Republican problem here which is
on the one hand, they cater the certain elements of their base to have a
real deep seated emotional non-logical antipathy to the president. On the
other hand, they don`t have laws to support the kind of pursuit they want
to do.

O`DONNELL: Aril Melber gets tonight`s last word.

And Ari, let me tell you something: Washington is not Hollywood for ugly
people -

MELBER: No?

O`DONNELL: -- when Ari Melber is in Washington.

Thank you, Ari.

MELBER: Sure.

O`DONNELL: Chris Hayes is up next.

END

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