updated 8/28/2014 6:50:55 PM ET 2014-08-28T22:50:55

THE LAST WORD WITH LAWRENCE O`DONNELL
August 27, 2014

Guest: William Taylor, Adrian Karatnycky, Howard Dean, David Rohde, Sara
Nelson


LAWRENCE O`DONNELL, MSNBC HOST: Not a good day for McConnell`s campaign
manager or for McConnell, Rachel.

RACHEL MADDOW, TRMS HOST: Yes, indeed. Thanks, man.

O`DONNELL: Thank you.

Tonight, we have what could be a different turning point in control of the
Senate with audio revealing what Mitch McConnell told a group of very rich
conservative Republicans.

And Russia now seems to be in the process of invading Ukraine, as President
Obama considers how to stop the reign of terror of the Islamic State.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Tanks, artillery and infantry are flowing into Ukraine.

JEN PSAKI, STATE DEPARTMENT SPOKESWOMAN: A Russian directed
counteroffensive is likely under way.

UNIDENTIFIED MALE: Ukraine saying they`ve been invaded.

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: What we would like to see
Russia roll back.

UNIDENTIFIED MALE: Any direct control over the pro-Russian separatists in
eastern Ukraine.

PSAKI: Russian government`s unwillingness to tell the truth.

UNIDENTIFIED MALE: A Russian invasion is for the U.S. government much more
politically troublesome.

REPORTER: Why not just say it`s under way?

PSAKI: I decided to say likely.

UNIDENTIFIED MALE: But that doesn`t mean it`s not happening.

UNIDENTIFIED FEMALE: Growing threat of a terrorist group ISIS.

UNIDENTIFIED MALE: The Islamist murderers in Syria and Iraq.

UNIDENTIFIED MALE: They are a clear and present danger.

JOHN KIRBY, PENTAGON PRESS SECRETARY: Dozens of Americans are potentially
becoming radicalized.

UNIDENTIFIED FEMALE: How close is the U.S. to airstrikes on ISIS in Syria?

UNIDENTIFEID MALE: It may be just a matter of time before airstrikes
begin.

UNIDENTIFIED MALE: Authorized surveillance flights, looking for targets.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Rooting out a cancer like
ISIL --

UNIDENTIFIED MALE: Combined political and military campaign.

OBAMA: -- won`t be easy and won`t be quick.

REP. ADAM SCHIFF (D), CALIFORNIA: Sucking us into that toxic brew.

UNIDENTIFIED FEMALE: Ghost of conflict past hangs over.

UNIDENTIFIED MALE: Will President Obama seek congressional authorization?

UNIDENTIFIED MALE: No matter what side you take --

UNIDENTIFIED FEMALE: It would be a slippery slope.

UNIDENTIFIED MALE: Welcome to the Middle East. This is how things work
there.

(END VIDEOTAPE)

O`DONNELL: If it looks like an invasion and sounds like an invasion, what
do you call it?

Well, tonight, there is strong evidence that Russia is, in fact, invading
Ukraine. While Vladimir Putin continues to deny Russian involvement in
that situation, Ukraine says that Russia has launched new military
incursions across Ukraine`s eastern border, sending troops, tanks, and
artillery into Ukraine to help the pro-Russian separatists.

The Ukrainian government also released videos yesterday showing men in
camouflage identifying themselves as Russian soldiers, who were captured in
Ukraine.

The State Department discussed these developments today.

(BEGIN VIDEO CLIP)

PSAKI: These incursions indicate a Russian directed counteroffensive is
likely under way in Donetsk and Luhansk. Clearly, that is of deep concern
to us.

We`re also concerned by the Russian government`s unwillingness to tell the
truth, even as the soldiers are found 30 miles inside Ukraine.

(END VIDEO CLIP)

O`DONNELL: According to "The New York Times," Russian troops are
essentially opening up a new third front in that war by attacking Ukrainian
forces outside a coastal town in the southeast, adding to the fighting that
continues into other eastern cities. "The Times" reports that Ukrainian
soldiers in that coastal town said they were cannon fodder for the forces
coming from Russia. As they spoke, tank shells whistle in from the east
and exploded nearby.

Last night, the U.S. ambassador to Ukraine tweeted, "The new columns of
Russian tanks and armor crossing into Ukraine indicates a Russian directed
counteroffensive may be under way. Escalation."

Joining me now is Adrian Karatnycky, a senior fellow at the Atlantic
Council. And William Taylor, former ambassador to Ukraine under both
President George W. Bush and President Obama.

Ambassador Taylor, when do we call an invasion an invasion? What does it
take to change the terminology from incursion to actual invasion?

WILLIAM TAYLOR, FORMER U.S. AMBASSADOR TO UKRAINE: I think we would call
it an invasion once we see Russian forces coming across the border, which
we have seen. This is clearly an invasion.

O`DONNELL: What are the implications for the State Department at this
point? They seem to not want to quite go that far rhetorically.

TAYLOR: The implications are that we treat this as an invasion, which
means several things. We expand sanctions that we put on. We now cover
maybe 30 percent of the banking system, we should cover entire banking
system in Russia.

But sanctions are not enough. We need to provide military equipments,
security equipment, defensive weapons to the Ukrainian military so that
they can defend themselves against this invasion.

And third, we need to supply the financing to the Ukrainian government so
that they can continue to move forward on their reforms.

O`DONNELL: Let`s listen to what the State Department spokesman said today
about this question of whether this really is an invasion.

(BEGIN VIDEO CLIP)

PSAKI: These incursions indicate a Russian directed counteroffensive is
likely under way in Donetsk and Luhansk.

REPORTER: Why not say it`s under way rather than likely?

PSAKI: I decided to say likely.

(END VIDEO CLIP)

O`DONNELL: Adrian Karatnycky, what does that likely provide for her?

ADRIAN KARATNYCKY, SENIOR FELLOW, ATLANTIC COUNCIL: It has created a sort
of method of acting, which is to say stealth invasion, stealth warfare
against other countries, which is unprecedented, that long-term conflicts
done by first irregular forces and now regular forces of the Russian army,
pretending that they are independent insurgent fighters are -- you know,
this mechanism has been used throughout this conflict and created a kind of
convenient wiggle room for the West not to confront fully what Mr. Putin is
doing.

And I think the ambassador is right, Ambassador Taylor is absolutely right.
If we accept it as an invasion, it walks like an invasion, it marches like
an invasion, it shoots like an invasion, it is an invasion. And I think
that that calls for upping our ante as well, because Mr. Putin is upping
the ante.

In the last couple of months, Ukraine has made tremendous gains against
these Russian proxy fighters in eastern Ukraine. They took over about 70
percent of their territory. They liberated areas with about 1.5 million
people that had been formerly under rebel-held.

And now, they are, you know, the Russians are trying to stabilize the gains
that the rebels have made in the past and maybe to push back the Ukrainians
because there is a negotiating process that is beginning. And Mr. Putin is
in a weak position and he`s trying to fight his way back into a stronger
position to extract more concessions, both from the West and from Ukraine.

O`DONNELL: And, Adrian, what would your version of upping the ante be? Do
you agree that you go to the entire banking system and what else?

KARATNYCKY: Absolutely. I think that Ukraine needs lethal weapons, it
needs electronic technology. These are responsible, trained military
forces. They are generally behaving within the rules of the laws of war.

I think we could have a conference that the Ukrainian forces should be able
to be absorbed and to be trained and have, you know, technologies that --
including drones and other technologies, better equipment for
communication, better gear. This war thus far has been fought with Soviet
era equipment.

Now, it`s clear that Putin is sending in regular Russian forces taking off
their insignias and just putting them into the fray to kind of change the
balance of power and to push the Ukrainians back.

And I think the Ukrainians need this not just to push back the Russians but
as a long-term deterrent. Ukraine now has to deal with a belligerent and
very erratic neighbor with a lot of power and power projection and it
needles the West`s help to withstand that security threat.

O`DONNELL: Ambassador Taylor, you have enough experience dealing with the
presidential menu on this kind of a situation. What do you imagine is
being presented to President Obama as his options and, surely, there`s more
than one school of thought in the White House and the adviser group about
this.

TAYLOR: There are several schools of thought. There are those in various
parts of the government who are concerned about provoking the Russians.
They are concerned that if we provide lethal equipment, lethal weapons,
that this will provoke the Russians.

My sense is that there is another group in the government who recognized
that they`ve been provoked, that they are already moving across and they
are supplying the equipment, the weapons, the Russians are supplying the
weapons, the equipment, the leadership, the financing to these separatists.

So, the two sides are arguing back and forth. My own view is that these
weapons are necessary now.

O`DONNELL: And, Adrian Karatnycky, there`s a report -- Bloomberg is
reporting that the FBI is investigating whether Russia is tied to a
possible hacking of JPMorgan possibly in retaliation for the sanctions that
are already there.

What is your sense of the capacity both overt and covert for Russia to
respond?

KARATNYCKY: I think Russia has a range of capacities. And I think we have
to -- if this situation is not regulated, we -- I think there is a -- I
wouldn`t call it a new Cold War, but a kind of an ongoing tension between
the democratic world or the Euro-Atlantic world and Russia over a long
period, we can look at some of these I would say exotic and alternative
methods of combat.

Mr. Putin is not mounting a regular war against Ukraine, and he will not
mount a regular response to the typical array of pressure points that the
West is going to put against them. It will probably be some asymmetrical
warfare, including these kinds of unfortunate, you know, hacking efforts.

O`DONNELL: NATO is saying that Russia has amassed up to 20,000 troops near
the Ukraine-Russia border.

Ambassador Taylor, what would it take to get a stronger response out of
Europe?

TAYLOR: It took the shooting down of a civilian airliner to get a strong
response out of Europe on sanctions. I believe that this overt invasion --
we now have an invasion. This should be what the Europeans need in order
to respond. NATO will meet next month and have some decisions to make
about how to support Ukraine. There are several ideas on the table that
the Europeans will be able to step up to and support.

O`DONNELL: Ambassador William Taylor and Adrian Karatnycky, thank you both
very much for joining us tonight.

KARATNYCKY: Good to be here.

O`DONNELL: Coming up: in the latest turn in the endless, horrible
consequences of President Bush`s mistaken war in Iraq, President Obama is
now faced with the problem of the terror of the Islamic State. One of the
many things no one who supported the Iraq war saw coming. Howard Dean will
join me.

And Mitch McConnell is in the political fight of his life against
Democratic challenger Alison Lundergan Grimes. If Mitch McConnell loses
his re-election, we might be looking back at today as the turning point in
that campaign.

(COMMERCIAL BREAK)

O`DONNELL: Authorities in Arizona are now investigating the shooting death
of a gun range instructor. We reported this here last night, who died
after 9-year-old girl lost control of an Uzi submachine gun. In 30 states,
there is no minimum age for possession or use of so-called long guns like
rifles or shotguns. That Uzi, depending on the model, could be considered
a long gun.

Up next, President Obama`s next steps on the Islamic state.

(COMMERCIAL BREAK)

O`DONNELL: The mother of the American journalist Steven Sotloff released
this statement today asking the leader of the Islamic State for mercy for
her son.

(BEGIN VIDEO CLIP)

SHIRLEY SOTLOFF, MOTHER OF CAPTURED JOURNALIST: As a mother, I ask your
justice to be merciful and not punish my son for matters he has no control
over. I ask you to use your authority to spare his life.

(END VIDEO CLIP)

O`DONNELL: After authorizing surveillance flights over Syria, President
Obama is reportedly now weighing other possible options. A Pentagon
spokesman said this today.

(BEGIN VIDEO CLIP)

KIRBY: I think we`ve all recognized, Secretary Hagel, Chairman Dempsey,
that there`s no way to address ISIL without doing it regionally. And that
means without considering the threat they pose inside Syria, the sanctuary
they have there, the training, the resourcing they have there.

So, we`re looking at this from a regional perspective. It doesn`t
necessarily mean the military option is the only or best option. It`s
certainly an option available to the president. But we recognize that this
regional threat has to be built with.

(END VIDEO CLIP)

O`DONNELL: Republican strategist Bill Kristol said this earlier this week
on Laura Ingraham`s radio show.

(BEGIN AUDIO CLIP)

BILL KRISTOL: Someone said on a panel with me, oh, you know, we can`t just
bomb. I mean, we have to really think about this and have a long debate
and discussion. You know what, why don`t we just -- we know where ISIS is.
What`s the harm of bombing them, at least, you know, for a few weeks and
seeing what happens? I don`t think there`s much in the way of
unanticipated side effects that are doing to be bad there.

(END AUDIO CLIP)

O`DONNELL: Of course, Bill Kristol did not anticipate any of the side
effects of President George W. Bush`s invasion and take over of Iraq. One
of those side effects, of course, is the Islamic State itself.

Joining me now is former Vermont Governor Howard Dean, former head of the
Democratic National Committee. And David Rohde, a Pulitzer Prize-winning
reporter for "Reuters". He`s also the author of the book "A Rope and A
Prayer", about his experience as a prisoner held by the Taliban for seven
months.

Howard Dean, there we have Bill Kristol, one of the real supporters of the
Iraq war, absolutely confident about what to do now.

HOWARD DEAN, FORMER DNC CHAIRMAN: Yes, it`s not so easy. As you pointed
out, actually I said when I was running for president 11 years ago, this is
a likely outcome, that Iraq would be split in three parts and one governed
by al Qaeda, but I guess ISIL is just as bad if not worse.

Look, we have to take out ISIL. That is -- it`s not a regional problem.
It`s an international problem. We will be a target of them. And if that
means going into Syria, I think that`s fine.

I don`t think it`s up to me or Bill Kristol or any other armchair
commentators to decide what our military strategy would be. But if the
president were to say we needed to bomb the Islamic State in Syria, (a), it
would make sense, because how can you take half a war to somebody? You got
to go after them all. And (b), I would support the president.

O`DONNELL: David Rohde, we`ve -- this feels very familiar. We had al
Qaeda and we had to stamp them out and we went after that, or we seemed to
go after that, then take the eye off of that a bit, a lot, to go to Iraq.
And here, we have this successor of sorts to al Qaeda. And now, we have to
stamp them out and we never really stamped out what`s driving all of this
in the first place.

DAVID ROHDE, REUTERS: It`s true and very frustrating to Americans after
Iraq and Afghanistan. But, you know, we -- they are a threat, the Islamic
State. We need some sort of new thinking and smart thinking about what`s
going on. What`s frustrating is our kind of ideological debate where Bill
Kristol saying, well, we`ll just bomb them and bombing alone is going to
solve the problem. You know, that`s not going to work.

I understand on the left, there is a deep aversion to any kind of military
force.

I think what`s needed and what the administration need is a sort of clear
strategy here, and a key element are these local -- you know, the countries
in the region. Will Turkey, will Saudi Arabia, Qatar, the UAE and Jordan,
you know, work with us and provide ground forces? You know, we know an
American ground invasion could make things even worse, but I honestly don`t
think we can ignore this threat either.

O`DONNELL: Howard Dean, what evidence is there that the United States has
the power to extinguish somehow the passions that are driving the Islamic
state?

DEAN: Well, we don`t. I think that`s a very good point that David made.
We have no business with boots on the ground in the Middle East. That does
make things worse, and that`s one of the causes of what we`re seeing now.

And he`s also right, what we can do to extinguish groups like ISIS on the
battlefield is support groups like Peshmerga, the Kurdish force. If --
depending on the motivation of the Saudis, I`m not so trustworthy of the
Saudis, since they were financing these people for a while, and may still
be for all I know.

But on the ground, local people need to fight their own battles. We can
support them. We can`t take the battle on for them.

What can we do otherwise? We`ve got to support moderates. There`s a
moderate Sunni group. I think it`s great that we got rid of Maliki,
because he was clearly inflaming the sectarian differences. We need to
bring the Sunnis that we can work with and have worked with in the past
back into the fold.

I think Iraq as a country is lost but that doesn`t mean we can`t rely on
moderate Sunnis to come up with their own nation state, which is not
extremists.

O`DONNELL: David Rohde, I want to get your reaction to the mother
releasing that video today, no one knows better of what she`s going through
than you, having been held as a prisoner by the Taliban yourself.

What was your reaction to that, that mother`s plea?

ROHDE: Well, it was heartbreaking and the person who knows better is my
mother and my wife who went through this horrible ordeal as well. My wife
made messages just like that one.

I applaud the Sotloff family for putting that out. It`s a desperate plea,
trying to get mercy for their son. I`m not sure, you know, it`s going to
work and coming back to allies, Qatar, which won the release of the other
American who returned home today, Theo Curtis, you know, has funded some of
these jihadist groups. It appears that`s how Qatar was able to get Curtis
released, either a close relationship or maybe a ransom.

We have to ask these Arab nations to make a decision, they`re either going
to fight these Islamists or not. They are going to help us or not. If we
don`t have any allies, there really isn`t anything we can do in the region.
But, you know, for the sake of the Sotloffs and then for so many local
people that have died in Syria and Iraq, there needs to be a serious
approach to this problem. We need to ask countries to step up. If they
won`t, you know, we have to leave. And I just feel horribly for the
Sotloffs, both -- you know, Steven himself and his family.

O`DONNELL: David Rohde and Howard Dean, thank you both very much for
joining us tonight.

ROHDE: Thank you.

DEAN: Thanks, Lawrence.

O`DONNELL: Yes.

Coming up: we have a new front-runner for the next Republican presidential
nomination.

And in the "Rewrite" tonight, Mitch McConnell is in the race of his life --
the political race of his life against Alison Lundergan Grimes. We have
news developing in that campaign tonight.

(COMMERCIAL BREAK)

O`DONNELL: In the spotlight tonight: road rage is turning into air rage.

Apparently, some of those angry drivers who honk their horns and shake
their fists and do worse to other drivers are actually on their way to the
airport, where they bring their rage with them onto airplanes. The latest
rage issue for airline travelers is how far you recline your seat.

Here`s NBC News correspondent Katy Tur.

(BEGIN VIDEOTAPE)

KATY TUR, NBC NEWS CORRESPONDENT (voice-over): For two passengers on
United Flight 1462 from Newark to Denver, a spat over five inches of extra
space was all it took to force an emergency landing in Chicago. And it all
began with a $22 gadget called the knee defender.

UNIDENTIFIED MALE: It keeps people from reclining.

TUR: Especially designed for coach class flyers who need protection from
reclining seats. Officials say a man seated in economy plus was using the
device, which attaches to the tray table, to stop the woman in front of him
from reclining her seat, try as she might.

MICHAEL CODY, PASSENGER: As the woman put her seat back into the guy, and
he shoved her forward and she threw her drink on him.

TUR: Halfway through the flight, the pilot landed the plane. The two
unruly passengers escorted off by police.

Wile the FAA doesn`t prohibit these devices like the knee defender, most
airlines, including United, have banned them.

(END VIDEOTAPE)

O`DONNELL: That was NBC News` Katy Tur.

Joining me now is Sara Nelson, a flight attendant with United Airlines and
president of the Association of Flight Attendants. And Josh Barro,
correspondent for "The New York Times" and an MSNBC contributor.

Sara Nelson, I`ve been in united economy. Plus, there`s a lot of extra
room in those seats. I`ve flown across the country in those seats. It
just seems outrageous that that guy would be fighting for any incursion
into his little space -- into his large space there.

SARA NELSON, PRES. OF ASSOC. OF FLIGHT ATTENDANTS: What`s also outrageous
is that flight attendants have to deal with conflicts like this every
single day on our aircraft. Flights are fuller than they`ve ever been
before, and passengers are fighting for space and they`re fighting for
their own personal space on board the aircraft. We have to deescalate
every single day.

O`DONNELL: Josh Barro, it`s tough enough up there for people like Sara
Nelson trying to keep order in an aircraft. And now you have this company,
which is selling and marketing disorder in aircraft.

JOSH BARRO, MSNBC CONTRIBUTOR: Yes. And they`ve been saying that all the
interest that this news story has created has caused a spike in sales of
the knee defender. But, I mean, look, but I think these fights could be
avoided if we all understood that one of the things that you pay for when
you pay your airfare is the right to decline your seats. That`s why
there`s a button on your armrest allowing you to do that.

And I understand some people don`t like it when the seat in front of them
reclines, but that`s something you can maybe politely discuss with the
passenger in front of you. I wrote a piece saying, you know, if you really
care that much, maybe offer the passenger in front of you some money to not
recline his seats, to give up that right that he paid for when he bought
the airline ticket, but you`re not entitled to just modify the seat of that
person in order to prevent them from using it as intended.

O`DONNELL: The Chicago police -- the plane made this emergency landing in
Chicago. The TSA officers met the flight. There were no charges brought
because it was just a customer service issue.

Sarah Nelson, it was a customer service issue. All the customers on that
flight had their flight and their day and probably more than their day
ruined by this guy who brought this banned device, banned by United
Airlines, onto that plane.

NELSON: Yes, Lawrence, you know, I`ve been on thousands of flights and
I`ve said thousands of times, sit back, relax and enjoy your flight to
Chicago, because someone is not going to comply with the instructions and
someone else is going to throw water in his face and we`re going to
inconvenience 200 passengers because we have to get on the ground because
there`s a major serious threat on board that could compromise the safety of
the flight.

So this is serious stuff. Passengers have to comply with instructions from
the flight attendants. And I`ve talked to several flight crew who have
encountered these knee defenders. And in every case they said they`ve been
able to get the passenger to remove them from the seats.

So Josh as a point, but we also have the point that passengers are fighting
for space on board the aircraft every single day. This is just conflict
that`s being created. We have fewer staff on board than ever with the
flight attendants trying to deal with these situations. And we have
contract negotiations that protracted so that flight attendants are not
being compensated fairly for this work that they have been doing every day
that is getting harder and harder.

O`DONNELL: And a couple of airlines have solved the problem by preventing
their seats from reclining at all. Josh Barro, that`s what we`re being
driven to here with this kind of madness in the air.

BARRO: Well, not only that, but on Spirit, the seats that don`t recline
are only 28 inches apart as opposed to 31 to 33 that is typical on other
airlines. So yes, I believe Spirit, they like to claim their seats are
pre-reclined which is the polite way of saying they don`t recline at all.

But you also have increasing options in coach on airplanes. United,
American and Delta all have these options where you can pay, you know,
typically somewhere between $20 and $60 for additional leg room. So if you
deeply care about whether your knees are going to be impacted by the seat
in front of you, you have that option increasingly on flight. Although, as
we saw in this case, some people take that option as still not enough for
them and you can still get these conflicts.

O`DONNELL: Well, you know, there`s been a lot of laughing about this story
today, as if though, just one of the things that happened in the sky. But
if you were on that plane or a plane like it with your baby, who you were
trying to get home and one of these wise guys with the knee defender
brought your plane down, as happened here, there would be nothing to laugh
at about.

And Sara Nelson, I wish your employer, I wish United Airlines would sue
this passenger for the cost, all of the cost, fuel cost, everything, that
was involved in having to land that plane in Chicago and then get all of
those passengers to Denver. And I wish every one of the passengers on that
plane would sue that guy with the knee defender. They all have a claim.

NELSON: Well, that`s right. And it should be a real concern for anyone
who is flying, because if you are not complying with flight attendant
instructions, you could find yourself with a fast track down to an airport
you didn`t intend to land at and you`re not going to go on. And you may be
facing federal fines up to $25,000.

So this is very serious. Passengers should take it seriously. And thank
goodness, Lawrence, a year ago we were talking about keeping knives off the
airplanes. So let`s be really happy that the woman had water and not a
knife. And we need Congress to pass keep knives out of our skies act so we
don`t have to have that battle again.

But this is serious. You are right. We need to take this seriously and I
think that people need to understand there could be serious consequence it
is they engage in this kind of activity and don`t comply with flight
instructions.

O`DONNELL: And Josh Barro, there`s an element of bullying in this. You
know, I`m going to sit here, because I`m over six feet tall, and this guy
is claiming he`s over six feet tall, he has to defend his knees. I`m over
six feet tall and I have this recline seats, you know, come in. And yes, I
wish they weren`t there. I also know that I have no choice. There is
nothing I can do about it. I bought this seat. And by the way, the
contract on the ticket says I obey the rules of the airline.

BARRO: Well, and he also over six feet tall but he didn`t (INAUDIBLE) that
has 36 inches of seat.

(CROSSTALK)

BARRO: Yes. So no, I think it is an element of bullying, but then this
woman turned around and threw water on him. So I think there`s plenty of
blame to go around here. But I think again this fighting arises out of the
ambiguity that both people feel like they have the property right in the
position of the seat. People who don`t want the seat recline feel like
they`re entitled to have n upright seat in front of them. People who do
want to recline feel like they are entitled to recline. And I think is we
can get people in the same page, they don`t have to like the position of
the seat but if, at least they understand that one or the other of these is
the norm, we wouldn`t have these disputes.

O`DONNELL: Well, there is some shared blame here, but I am judging most of
it to go to the guy with the knee defender. I would get those people off
the planes. This thing is a horrible thing, it is ruing air travel.

Josh Barro and Sara Nelson, thank you both very much for joining me
tonight.

BARRO: Thank you.

NELSON: Thank you, Lawrence.

O`DONNELL: Coming up, in the rewrite, Mitch McConnell is in big trouble in
Kentucky, and Alison Lundergan Grimes has him in a race that he never
dreamed he would be in at this stage.

And then, the Republican presidential nomination, there`s a new front
runner, and he`s already got the bumper stickers ready.

(COMMERCIAL BREAK)

O`DONNELL: And now for the good news. I mean, really great news. Boston
marathon bombing survivor James Costello got married last Saturday to a
(INAUDIBLE) nurse who helped him recover at a rehabilitation hospital.
They began dating and got engaged in December. Everything in the wedding
from the dress to the flowers to the location was donated. And in turn,
Christa and James are donating to a foundation that helps military couples
with wedding expenses.

The rewrite is next with Mitch McConnell and some billionaires.

(COMMERCIAL BREAK)

O`DONNELL: In the rewrite tonight, Republican Senate leader Mitch
McConnell is a proud Kentuckian and a proud father of three daughters. But
he chose to spend Father`s Day this year as far away from Kentucky as he
possibly could get in the continental United States. He was happily
ensconced in the palatial St. Regis monarch beach resort in California.
The beach front neighborhood savored by the richest in one of the state`s
most Republican counties. He was surrounded by billionaires and mere
millionaires at a conference hosted by the billionaire Koch brothers, where
conservatives fervently shared their hopes and dreams for America.

Mitch McConnell did not have to enlist them in his dream of winning back
control of the Senate for Republicans, because the people in attendance
have already been heavily contributing money to that effort. What Mitch
McConnell gave them was a picture of what that dream come true would look
like on the Senate floor, and that dream was caught on audiotape which
surfaced today in the nation and on the undercurrent Web site.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: That means that we can pass
the spending bill. And I assure you that in the spending bill, pushing
back against this bureaucracy by doing what`s called policy riders in the
bill. No money can be spent to do this or to do that. We are going to go
after on healthcare, on financial services , on the environmental
protection agency across the board. All right, across the federal
government, we are going to go after it.

Now look, I don`t want to over promise here, but even still we (INAUDIBLE).
But this is a battle and we (INAUDIBLE). We are going to push back against
his regularity over-reached. It`s the reason why this is no important
(INAUDIBLE).

(END VIDEO CLIP)

O`DONNELL: Mitch McConnell had absolutely no difficulty convincing his
audience how important control of the Senate is. They realized correctly
that it is the single most important thing at stake in this year`s
election. Campaign contributors know that, which is why Mitch McConnell`s
reelection campaign to the Senate is attracting more money on both sides
than any other Senate campaign in the country and is on track to become the
most expensive Senate election in history.

Senator McConnell is in the fight of his political life to save his Senate
seat, because his Democratic challenger, Alison Lundergan Grimes is
consistently tracking within a couple of points of Mitch McConnell in
polls, which is basically a tie, and that is normally a very bad indicator
for an incumbent, because generally the remaining undecided voters tend to
break for the challenger.

McConnell has been a senator in Kentucky for 30 years. Voters who haven`t
already made up their minds to vote for him probably have a reason why
they`re not going to vote for him. And no one in politics understands that
better than Mitch McConnell himself. Which is one of the reasons he flew
out to California to tell conservative billionaires what they wanted to
hear so they would pour even more money into his campaign.

There is much more at stake in control of the Senate than what Mitch
McConnell discussed with his audience on Father`s Day. He didn`t even
mention the Senate`s unique power to control presidential appointments,
especially appointments to the United States Supreme Court, the most
important appointments of all, because Mitch McConnell was so focused on
speaking very directly to the concerns of the billionaire business class,
pushing back against the bureaucracy, pushing back against regulatory
overreach. That was his message. I will make it easier for you to do
business.

He actually understated the importance of control of the Senate. And what
he ended up doing is promising that if he becomes a majority leader of the
Senate next year, he will make sure that the Mitch McConnell led United
States Senate will accomplish absolutely nothing, because every single
thing that he actually promised to the billionaires would be vetoed by
President Obama if it ever made its way to the White House in the form of a
bill passed by the House and Senate, every single thing. The strangest
thing that Mitch McConnell said to his audience on Father`s Day was this --

(BEGIN VIDEO CLIP)

MCCONNELL: The worst day of my political life was whom President George W.
Bush signed McCain-Feingold into law in the early part of his first
administration.

(END VIDEO CLIP)

O`DONNELL: So that was the worst day of Mitch McConnell`s political life.
Not the day that Bill Clinton signed the biggest tax increase in history
into law. Not the day that Mitch McConnell had to bend to President
Obama`s will and himself vote for an increase in the top income tax
brackets. And not the day when he realized that there were no weapons of
mass destruction in Iraq after he voted for an exploratory war in Iraq to
find the nonexistent weapons of mass destruction.

No, no, the worst day of Mitch McConnell`s political life is when a
campaign finance Bill became a law, a largely ineffectual law with the
unrealized aspiration of controlling money in politics. Since the passage
of that law, money has flowed into politics in greater amounts and Mitch
McConnell found himself in the middle of the current of that powerful flow
of money in Republican politics when he said that the worst day of his
political life is when a campaign finance bill became a law.

Jonathan Hurst, Alison Lundergan Grimes` campaign manager, told the Courier
Journal today that such a statement is outrageous. There have been many
bad days this country has had over the last 30 years, and he`s saying
that`s the worst day of his career.

The worst day of Mitch McConnell`s political career might turn out to be on
November 4th, 2014, when Kentucky voters will choose between Mitch
McConnell and Alison Lundergan Grimes.

(COMMERCIAL BREAK)

O`DONNELL: We have a new poll of Iowa Republicans showing us what the
lineup looks like there for the next Republican presidential nomination,
and the lineup has some familiar names, but there`s a front-runner who is
way, way out ahead of everybody else. That`s next.

(COMMERCIAL BREAK)

O`DONNELL: We have a new front-runner for the next Republican presidential
nomination and he is old front-runner. That`s right the guy who was the
front-runner for the last Republican presidential nomination is still the
front-runner for the Republican presidential nomination.

Thirty five percent of Iowa Republicans favor Mitt Romney for the next
Republican presidential nomination, according to a new Suffolk
University/"USA Today" poll. Mitt Romney has a 26-point lead over the
second place finisher in that poll, Mike Huckabee, who is the choice of 8.8
percent of Iowa Republicans, followed by Chris Christie at 6.5 percent.
Rick Santorum at 5.9 percent, leaving Rand Paul and Ted Cruz tied at mere
5.2 percent. The much touted Jeb Bush and recently indicted Rick Perry are
tied at 4.7 percent. And Marco Rubio is finishing out the field,
commanding 2.3 percent of current Republican voter support in Iowa. So the
big question for Mitt Romney tonight is, is he ready for more of this?

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE REPORTER: I have to ask you, are you calling Mitt
Romney a liar?

NEWT GINGRICH, CNN HOST, CROSSFIRE: Yes.

UNIDENTIFIED MALE REPORTER: Mitt Romney, can he beat Obama?

REP. MICHELE BACHMANN (R), MINNESOTA: No, he can`t beat Obama.

RICK SANTORUM (R), FORMER PRESIDENTIAL CANDIDATE: He is the worst
Republican in the country.

MITT ROMNEY (R), FORMER MASSACHUSETTS GOVERNOR: I`m looking forward to
finding your facts on that. Rick, again -- Rick --

I`m speaking, I`m speaking --

The way the rules work here is I get 60 seconds and you get 30 seconds to
respond. Anderson --

GOV. RICK PERRY (R), TEXAS: You say you --

ROMNEY: Would you please work? Are you just going to keep talking?

(END VIDEO CLIP)

O`DONNELL: Joining me now is Republican strategist and MSNBC political
analyst Steve Schmidt. He is currently advising Rick Perry`s legal defense
team. So Steve, Iowa Republicans seem to be nostalgic for that kind of
debate scene we saw from four years ago.

STEVE SCHMIDT, MSNBC POLITICAL ANALYST: Look, I think that Governor Romney
said he`s not going to be a candidate. But there`s a lot of affection for
him inside the Republican Party. There`s a documentary that followed him
for the last several years of his campaigns. It showed the man as a man of
great character, a lot of personal qualities that people admired. I think
a lot of Republicans look at the chaos in the world and say the country
would have been in a much better position had Mitt Romney been president.
And these polls are the function of name I.D. if you tested al gore in the
democratic matchup against Hillary Clinton, he would have astoundingly high
numbers, as well. But what I really think it points out is how wide open
the Republican field is for 2016.

O`DONNELL: Well Steve, yesterday on a radio show Mitt Romney said he`s not
running, you know, the standard line, then he said, you know, circumstances
can change. So he is popping that door open, and this poll -- I mean, I
don`t see how he can look at that poll and not think about it.

SCHMIDT: Well, look, I`m sure he will think about it. But he also said in
that interview that circumstances could change if all of the other
candidates coalesced around him and he was acclimated to the nomination is
how I read it. But I don`t think that`s likely to happen. Most of the
people who are considering runs for president obviously are very ambitious,
and will view this election as their time, their chance to run and very
much, you know, through the prism that Mitt Romney had his time and his
chance. And so, and Governor Romney acknowledged that I think in the
interview. So I`ll be surprised if he runs, but early on in the race, not
surprised to see him leading the field.

O`DONNELL: Steve, as we know these early polls tend to have a very big
name recognition factor in it. And it`s often the primary thing people are
responding to, which could explain a lot of this, but it cannot explain why
Jeb Bush ends up in this poll, pretty far back there, actually tied with
Rick Perry at 4.7 percent. And Jeb Bush is the guy that a lot of
Republicans talked about as the one that can come in to a field where,
prior to (INAUDIBLE), no obvious front-runner and Jeb Bush can come in and
really grab this thing. But he`s polling pretty badly right now for
someone who has very high name recognition and that capacity people
believed to jump into this race and grab it.

SCHMIDT: Look, I think a lot of Republicans have looked at Governor Bush
as the analog to Hillary Clinton. And if he got in the race he would
command the same levels of support. He would bring to bear the same level
of financial organization, capacity to raise the money necessary. And I
don`t think that survey bears that position, that position of strength out.

So certainly I think if Governor Bush gets in the race, he`ll be a
formidable candidate. But again, this is going to be a race just like in
2008, for a long time I think it`s going to bounce around. You`re going to
see a lot of people up top falling away. It`s a wide open race, and I
think there`s some candidates that aren`t even polled there that could
likely make an impact going forward.

O`DONNELL: And let`s remember it`s an Iowa poll and Iowa is not all that
good about producing results that then lead to the nomination.

SCHMIDT: No, it typically hasn`t. But, you know, certainly it will help
shape the debate. It help winnow the people that make it through. But
again, Lawrence, we have talked about this. One of the things in the super
PAC eras that presidential campaigns used to add, when they ran out of
money. Presidential campaigns do not have to run out of money. All right,
they need is one financial benefactor and they can go all the way to the
nomination. So you have candidates ultimately who have no chance of
winning who can have an outside impact on who the nominee is. So going to
be another wild, wide open race for the presidency on the Republican side.

O`DONNELL: Well, let`s see how many bumper stickers Mitt Romney has left
over.

Steve Schmidt, thank you for joining us tonight.

SCHMIDT: God to see you, Lawrence

O`DONNELL: Thanks. Chris Hayes is up next. Tonight, these are all in.

END

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