Guest: David Walker, Sherrod Brown, Drew Flott
ED SCHULTZ, HOST: I‘m Ed Schultz. This is THE ED SHOW.
SCHULTZ: Good evening, Americans.
Live from 30 Rock in New York City, it‘s THE ED SHOW on MSNBC.
Tonight, the clock is ticking on Chrysler. The president of the United Auto Workers isn‘t saying anything.
Another bailed-out bank posts good numbers for 2009, but the money still isn‘t reaching the middle class. Mainstream banks are doing just fine in this economy. What‘s the secret to their success?
Plus, tea party secession invading another country. It‘s the conservative freak in review.
Plus, “Joe the Plumber” joins the club “Psycho Talk.”
We‘ll have all of that and a great panel, but first tonight‘s “OpEd.”
The American auto industry is fighting for survival. Chrysler has 13 days to cut a deal with Fiat. General Motors‘ CEO was talking bankruptcy today. And we are in danger of losing a vital industry in this country.
How does the public feel about that? Seventy-six percent of the people now want bankruptcy, only 22 percent of the people think the government should help.
The public has bailout fatigue. That‘s understandable. But they used to believe that American auto industry was vital to our economy.
That‘s not true anymore. Only 37 people believe that bankruptcy would cause major problems with a ripple effect in the United States‘ economy.
The American people don‘t understand the stakes. I don‘t believe they do.
Michigan‘s got over 12 percent unemployment. Ohio has got almost 10 percent unemployment.
Who picks up the tab if these companies fail? We will. You and I will, the American taxpayer. We‘re losing the argument. The anti-union lobby has done a good job of framing public opinion, painting a picture that union workers are greedy and demanding, which takes me further tonight to the front office of the United Auto Workers.
Mr. Gettelfinger, I‘ve met you, you‘re a good guy, but your silence is absolutely stunning.
Do you know what happens to the American auto worker? He goes home at night and watches the news and flips on the channel and says, honey, they think I‘m making too much money. Then he goes to the next channel—well, there goes our health care. They want us to give that up.
Flip to the next channel. Well, we‘re not sure about our pension.
In the meantime, the silence is absolutely deafening.
Now, I understand Mr. Gettelfinger. He‘s in the middle of all these tense negotiations. A lot of media people are trying to get him on shows, and they‘re very silent. Nobody knows why.
He sends out an e-mail today via his people. He feels these negotiations are highly confidential and extremely sensitive.
OK. I get it. He‘s working this through with Obama‘s auto task force, with Fiat, with others, and he feels it‘s not in the interest of the people he represents to negotiate in the media.
I don‘t want to negotiate in the media for the American auto workers. I just want somebody to come out and say this industry is important, the ripple effect is going to hurt our economy, and the American middle class workers in Michigan, in Ohio, and in Indiana, they want to compete with foreign workers. They‘ve made concessions.
Just tell me something good. You know, if you‘re in an argument and you‘ve got people standing around, and you want to get them to believe what you‘re saying, you have to win in the arena of public opinion.
And the silence I think is hurting the American workers. Nobody is asking for open negotiations in the media, but I just can‘t understand why the UAW can‘t stand up once a week and say, hey, our people are good, our people make a great product, we‘re going to be part of this solution. And with Joe, not “Joe the Plumber,” but Joe the auto worker, when he goes home, he‘ll hear something positive, that somebody is out there fighting for him.
I don‘t get it. So what has happened? Look at the numbers I talked to you about just a moment ago, about how public opinion is starting to swing.
Well, if they don‘t hear anything positive, if they don‘t hear anything good about the American worker, where do you think the American people are going to go? Well, union people are greedy. Well, the workers, they just want all the money they can possibly get and, doggone it, they‘ve got better health care than anybody else should have.
I‘m struggling. I need the United Auto Workers to step up for the middle class. They play a role in this recovery, and if they‘re going to continue to be silenced, these numbers are going to get worse, and it‘s going to make it doubly tough to get taxpayer loans for them to turn this thing around.
The deadline has been set. I hope the Obama administration doesn‘t throw in the towel.
Now, with that, there are some leading indicators out there. There‘s a number of indicators out there that I believe are showing some positive signs that this economy is starting to turn a little bit.
For instance, Citigroup, better than expected when you talk about the numbers. They are off to a pretty good start this year.
The Dow up 25 percent from a record low. And also, the S&P 500, 25 percent up from last month.
They are also starting to pay back some of the TARP money. This is all good news. Reporting today there are seven banks that are paying back $467 million in TARP money. So I think that‘s a great start.
Joining us now is David Walker. Mr. Walker is the former U.S. comptroller general and head of the Government Accountability Office. He is now president of the Peter G. Peterson Foundation.
Mr. Walker, great to have you with us tonight.
DAVID WALKER, FMR. U.S. COMPTROLLER GENERAL: Great to be with you, Ed.
SCHULTZ: I want to talk positive things. We just had a list of some things that are positive numbers that weren‘t there a month ago. Is that encouraging?
WALKER: Well, sure, it is. I mean, the fact is, I think we had a rational pessimism for a while when people were really in the blahs and the doldrums.
You can‘t place too much reliance though on what is happening in the markets on a short-term basis. You know, we‘ve got some structural problems we need to deal with, and hopefully we‘ll be able to get past this before too long.
SCHULTZ: How encouraging is it that these banks are starting to pay back some of the TARP money inside 90 days?
WALKER: Well, there‘s several reasons for that.
One, some banks were encouraged to take TARP money that didn‘t really need the TARP money. In some cases, they didn‘t even want the TARP money, but they were getting it at a very low cost to capital, and the Treasury Department didn‘t want there to be a negative inference on people who took it.
On the other—at the same time, you‘ve got some banks that want to pay it back because they don‘t want to be subject to the executive compensation limits. So it‘s a good thing, but, you know, there‘s a story behind the story.
SCHULTZ: Do you think that the Obama administration is playing this right with the public? Do you think they are too conservative with it, some of these indicators?
WALKER: Well, I think the president is clearly a leader. I mean, he‘s trying to move on multiple fronts at the same point in time. He‘s trying to communicate with the American people.
In many ways, you could say he‘s trying to do too much at once, if you will, and that we need to focus a little bit more. But let‘s hope that he‘s successful.
SCHULTZ: I got an e-mail today from a listener. I‘ve been on this program a lot about cheap money. We know what kind of cheap money Wall Street has gotten, and these bailouts and everything else. I mean, heck, we‘d love to give that deal in small business, as you well know.
A gentlemen says, “Ed, I‘ve seen all your shows on MSNBC. I know you‘re talking about cheap money for small business. I‘ve been trying to start up a business, but the SBA is sending me to a bank for a loan for 9-plus percent. Keep pushing the cheap money for the little guy.”
Why is there a double standard?
WALKER: Well, look, the engine of growth in this economy is small business. And you mentioned before, Ed, about the fact that a lot of the mainstream banks and the middle market banks are doing real well. That‘s because they didn‘t do a lot of the dumb things, a lot of the speculative things, if you will, that a lot of the bigger banks did, if you will.
We need to recognize what grows this economy, and that‘s small business.
And we need to do more to try to help there.
SCHULTZ: Now, I know you‘ve been a hawk on the big numbers. You and Senator Conrad have had a lot of conversations—he‘s chairman of the Budget Committee—about, you know, the long-term numbers.
Do you think that the Obama administration has in place a five-year plan to deal with this? I mean, on paper it looks good, but can they come through with it?
WALKER: I think the president is doing a number of things to try to help us in the short term. He‘s talking some words about the need to deal with our structural problems and to make some tough choices, and not kick the can down the road, but he doesn‘t have a plan yet.
We need a plan. We need a special process, a fiscal future commission, or something that will engage the American people, that will set the table for Congress to be able to take a tough vote on things like budget control, Social Security, health care, and tax reform. We need to do all of those things if we want to maintain economic growth going forward.
SCHULTZ: Mr. Walker, good to have you with us tonight.
WALKER: It‘s a pleasure to be with you, Ed. Take care. Bye-bye.
SCHULTZ: Thanks so much. I appreciate it.
Let‘s bring in Ohio Senator Sherrod Brown tonight. Now, we‘ve seen some positive things on Wall Street. I want to know if they are going to Main Street in Ohio.
Senator, good to have you with us tonight.
SEN. SHERROD BROWN (D), OHIO: Ed, thank you. Pleased to be on. Thanks.
SCHULTZ: Are we seeing any signs in the heartland of any kinds of positive recovery starting here in the first 100 days?
BROWN: We‘re starting to. I think that the economic recovery package has begun to matter with infrastructure. The middle class tax cut will take hold pretty soon.
Yesterday, I held an energy summit with Battelle Institute in Columbus, and we had somebody from the Department of Energy in Washington and somebody from Governor Strickland‘s office that works on energy issues. We had about 300 people. We expected about half that.
A lot of them were entrepreneurs, or people that had figured out that you can create jobs with clean energy, there are real opportunities in manufacturing. We‘re a manufacturing state, we‘re going to continue to be a manufacturing state. We‘re in the top five in investment, in jobs, and in solar energy and wind turbine and biomass and fuel cells.
Ohio‘s positioned to become the Silicon Valley of alternative energy, and it‘s because partly the stimulus package is helping, partly it‘s because the governor and a bunch of us have been working on this. But largely, it‘s because we‘re an entrepreneurial state and people are responding to this.
SCHULTZ: Well, if they‘re going to respond to it, they‘ve got to have—and I‘m on this—cheap money.
BROWN: That‘s right.
SCHULTZ: Are you convinced that there‘s not going to be a double standard, that these entrepreneurs who are in to the energy sector and turning green and trying to get us energy-independent, are they going to get the same break that Wall Street got.
BROWN: I think they‘re going to get help. I don‘t know if it‘s the same...
SCHULTZ: What kind of help, nine percent help or four percent help?
BROWN: No, no. Not like that.
First of all, I sat on the Banking Committee and watched the double standard between the questions asked of bankers and the questions asked of auto workers and auto companies. And while I think we should have asked the auto workers and the auto companies tough questions, they didn‘t ask the bankers the same questions, so I see that double standard.
What we‘re able to do in the economic recovery package is offer low interest and guaranteed loans to small—potential small entrepreneurs who are going to be doing alternative energy. There‘s a company in northwest Ohio, a little company that‘s gone from 30 to 80 employees. If they get some help and some low-interest loans and some guaranteed loans, they will double or triple their workforce and their output of these new solar panels that they had developed.
So we‘re going to see that. This program is going to be in place to help these small guys.
SCHULTZ: I hope so. That is the whole key.
I‘ve been pounding on this on this table for weeks now, because if we can‘t get this money, if we can‘t get access to money, if it can‘t be cheap, if we don‘t get the deal, there‘s a public perception out there of the double standard. And I‘m glad you‘re addressing it here tonight and owning up to it, Senator, because I really this is going to be the key in our economic turnaround.
Let‘s go back to what we were talking about a moment ago, and that‘s the automobile industry.
Is there any way that you think that Chrysler and—well, of course the CEO of GM today is talking bankruptcy. Is that a good move right now, to even talk about that?
BROWN: Well, I‘m hopeful that the discussion of bankruptcy from the administration and from GM is basically being used to kind of—to push the bondholders, to kind of use leverage against the bondholders to make them get more serious about the kinds of concessions they need to make. The workers have made concessions. Management has made concessions. The dealers are making concessions.
I don‘t think they‘ve come enough from the bondholders. And the bondholders have the most to lose, perhaps the most to lose under bankruptcy.
I don‘t want to see bankruptcy. I have so many autoworker retirees in my state that have earned these pensions, they‘ve earned this health care, and I want to make sure it‘s protected. And I want to keep them out of bankruptcy.
SCHULTZ: And Senator, what do you make of the silence of the United Auto Workers? Nobody is saying anything good about the American worker in this industry. I‘m taking issue with Mr. Gettelfinger tonight. I think he needs to step out.
What do you think?
BROWN: Well, I think Ed Schultz is making that case, and it‘s a loud voice, but there needs to be more.
You‘re exactly right. I mean, you used the term “middle class” and “unionization” in the same sentence. And you can look in the history of this country, the prosperity we‘ve had since post-World—post-World War II prosperity was at its greatest when we had the highest unionized workforce.
Let me give you one number. 1980, one percent—the top one percent took home nine percent of total income in the country. Twenty-five years later, the top one percent took 22 percent of all income home in the count try.
That says decline in education. We haven‘t done enough with education. We haven‘t had a progressive tax system. And we haven‘t had the high rate of unionization that builds the middle class.
That‘s really the key to our economy and that‘s what the Obama administration needs to focus on, perhaps more than anything.
SCHULTZ: I hope so.
Senator, great to have you on. I appreciate your time tonight.
BROWN: My pleasure, Ed, always. Thank you.
SCHULTZ: You bet.
Senator Sherrod Brown from Ohio tonight.
You know, I just keep thinking about the movie “The Gladiator.” You win the crowd, you win your freedom. I think that the United Auto Workers need somebody out there talking about winning the crowd.
This vilification of unions and the American worker and the middle class, it continues on. We see it and hear it all the time.
I think it‘s wrong. You won‘t hear that THE ED SHOW.
Next up, think the whole banking system is screwed up? Think again. Main Street banks are doing just fine. What do they know that Wall Street doesn‘t know?
We‘re right back.
SCHULTZ: Welcome back to THE ED SHOW.
You‘ve heard a lot about toxic assets, bailout billions, and CEOs who were pulling in perks and bonuses for failure. Tonight, let me tell you there are some bright spots, positive news.
You know, there are 8,500 community banks in America, banks whose boards are made up of local citizens, not profiteers. And their number one priority is to serve Main Street and serve them well.
To get the economy going again, banks need to start lending to small businesses. Community banks are doing it.
Thirty-five percent of money loaned to businesses with revenue under a million dollars are made by community banks. A lot of people don‘t know that.
Now, joining me from Baltimore, Maryland, the CEO of Revere Bank, Mr. Drew Flott.
Mr. Flott, good to have you with us tonight.
I don‘t want to paint a negative picture about lending in America, but a lot of Americans out there think that there is a real double standard taking place.
How is lending with community banks in America?
DREW FLOTT, CEO, REVERE BANK: Well, right now we don‘t have a lot of bad loans like they do at the larger banks. We‘re focused on our customers instead of focuses on internal issues. And quite frankly, we have liquidity and we have money to lend.
SCHULTZ: And what are the rates? You know, I mean, I‘m hearing rates are high, 8, 9, 10, 11 percent. Why can‘t community banks work with the government or even just bring these rates down to get this economy going again?
FLOTT: Well, the rate is based on the individual credit. And I can‘t get into pricing a specific deal, but I can tell you that in a community bank, it‘s not all put into a box. And if it fits in the box, great.
We look at the deal individually. If it‘s a good deal, we price it somewhere—you know, somewhere in a reasonable range above prime.
SCHULTZ: But would you say that most bankers across the country have gotten very conservative and they‘re going to need a little stimulus of their own on the community bank level to get this economy going again?
FLOTT: Well, the small businesses—I‘m a small business. I‘m an entrepreneur. I started my bank in 2007, so I know what they are talking about.
I started my business in a tough time, and so I look at projections. I look at people, how they are doing versus their projections, and I make a decision on whether or not I believe in them. Well, the only way I can do that is if I actually know the customer, if I get face to face and spend some time and get to know what their needs are.
SCHULTZ: OK. Here‘s the next level where I think the conversation has to go in America. Community banks, solvent, good business, community partners. They know who their customers are.
Do you see any role at all where the federal government could come in and
say, you know, if you drop your interest rate on this small business by
three or four percent, we‘ll help back it up? I mean, isn‘t there a role -
I mean, we‘ve got to have some kind of Main Street stimulus to turn this thing around.
FLOTT: Well, Ed, there‘s lots of good businesses that are on Main Street that aren‘t getting money lent to them, not because they don‘t have strong financials, it‘s because they are an industry that the big banks aren‘t interested in.
FLOTT: And that‘s tossed to the small bank. And so, as a small banker, I‘m looking at the deal on its merits.
And so, you know, the pricing of the deal, I‘m a small bank. I‘m trying to be fairly aggressive. I don‘t want to get into specific pricing with you, but certainly 8, 9 percent sounds high to me in my market.
SCHULTZ: All right.
Mr. Flott, great to have you with us tonight. I appreciate your time, and I‘m a big fan of community banks.
I mean, look, this gentlemen is the spirit of America right here. He wants to make a dollar, but I tell you what, if the government is going to back these guys up on Wall Street, why can‘t we work some kind of partnership to get these small businesses into the banks?
They‘re using our tax dollars. I think it‘s an issue that needs to be pushed.
Next up on THE ED SHOW, “Psycho Talk,” “Joe the Plumber” versus the IRS.
His crazy new crusade, next up in “Psycho Talk.”
Stay with us.
SCHULTZ: Welcome back to THE ED SHOW.
Have you heard some of the crazy things that are being said by conservatives?
It‘s time for “Psycho Talk.”
It‘s Friday. And on Fridays, we like to look back and see who checked into the “Psycho Talk” zone this week. Here it is.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: If you‘ve got kids in school, you‘ve got them in college, get them the hell out of college. They‘re brainwashing them.
UNIDENTIFIED FEMALE: Burn the books!
UNIDENTIFIED MALE: Would it be your recommendation that they go into, militarily, with air strikes and/or boots on the ground, into these so-called feral cities where these pirates are taking hold? Is that what you‘re suggesting?
JOHN BOLTON, FMR. U.N. AMBASSADOR: Yes.
REP. MICHELE BACHMANN ®, MINNESOTA: We also were the site of the six flying imams.
UNIDENTIFIED MALE: I‘m not paying taxes anymore. I‘m not doing it. You want to fight them? I‘m not paying taxes anymore. I quit.
(END VIDEO CLIP)
SCHULTZ: Now “Joe the Plumber” is getting in on the act.
(BEGIN VIDEO CLIP)
JOE WURZELBACHER, “JOE THE PLUMBER”: Are you sick and tired of being forced to file a tax return every year, wasting your precious hours preparing tricky IRS documents and constantly worrying about a tax audit? I‘m “Joe the Plumber” and I‘m not a politician.
(END VIDEO CLIP)
SCHULTZ: OK. Let‘s stop there, Joe. I‘m pretty sure you didn‘t pay your taxes, but that‘s another issue.
Let‘s get to Joe‘s solution. He wants your vote to abolish the IRS and replace it with a fair tax, except there‘s a twist. I‘ll tell you about that on the other side of this. Listen.
(BEGIN VIDEO CLIP)
WURZELBACHER: We, the people, never voted for the IRS, but we can vote them out. Fair tax—fair tax will stimulate the economy without the government digging into your pocket. The answer is vote for the fair tax. Act now.
Listen, this is a vote that will not be ignored. Join me, and I guarantee your vote will count.
(END VIDEO CLIP)
SCHULTZ: You guarantee my vote will count? What? How?
Now, here‘s the twist. You have to pay 99 cents to vote. That‘s right.
You have to pay to vote for nothing.
He‘s profiteering from this. It‘s a vote that doesn‘t mean anything.
That‘s why it‘s “Psycho Talk.”
SCHULTZ: Welcome back to THE ED SHOW.
The hour glass has been turned on the American worker and the auto industry in this country. The new chief executive officer of General Motors just said bankruptcy is probable but not preferred. I‘d like to know, what is the upside of publicly talking about bankruptcy when we have no problem letting billions of dollars go down the street here in New York to Wall Street. And we‘re told that we just can‘t let them fail. We can‘t let the banks fail. We can‘t let the financial structure of the country fail. Folks, the financial structure of the company is the middle class. We cannot let the American auto manufacturers go down into the toilet. We can‘t do it.
And now, it appears to me that this new CEO is nothing but window dressing. That‘s what this change was. Nothing has really changed. I want to hear the Obama administration come up and say this, failure is not an option. We‘re going to make sure that this works and we‘re going to honor the contracts of the American workers and we‘re going to honor past generations.
Do you realize that if we allow them to go to bankruptcy and oh, gosh, tulips are going to come up all over the place and it‘s a new day dawning, life is good, and everything else, wait a second, there are going to be a lot of retirees who believed in the Obama administration, that change was coming. There‘s going to be a lot of retirees out there that are going to lose benefits. What did they do to do that? Were they in the front office to make those decisions? We bail out the banks but we‘re not ready to give the manufacturers of cars in this country the lot? The lot of support which is needed to keep this middle class engine going in this country. So I need to know what the upside is. What is the upside of bankruptcy? The confidence of the American people, when you‘re selling something, you have to make sure that the customer is confident that this is going to be a great product and that this company is going to be around and I think this is wrong headed. I think it‘s going down the wrong road. It‘s more about this double standard that I‘ve been talking about.
Joining me now is the CEO of carlist.com, Lou Ann Hammond. If you disagree with me on this, I have all night to listen to you. What do you think?
LOU ANN HAMMOND, CARLIST.COM: Ed, I think there‘s something happening that is people think that this is only Detroit‘s problem and they don‘t understand that they into to personalize this problem, because 90 car dealers a month are going out of business. That means 90 car dealers that are going out of business affect 90 cities a month because their sales tax are going away. I was talking to John Mackelroy (ph) from Automind Detroit (ph). He said there was one city that lost 16 percent of its budget because a mega dealer went under.
SCHULTZ: Is it a good plan for the Obama administration and the government to get in and buy some vehicles like they have announced that they are going to do? Is this going to do anything?
HAMMOND: What President Obama is doing is $285 million for 17,600 vehicles, that‘s around $16,000 vehicles apiece. I would have rather them have put that money into an account, had people that had a 1974 car, 1974 cars are 69 times as more pollutant in evaporative emissions than a 2000 car. If they could had gotten $10,000 if you turned in your 1974 car and bought a 2005 to 2009 car, that would have saved us all kinds of evaporative emissions, it would have gone through a car dealer, it would have stimulated car sales in a retail market, not a sweet (ph) market. It would have given sales tax to the cities, it would have given DMV registrations to the cities, would have helped the cities instead of the government.
SCHULTZ: What do you think we‘ll get from GM on June 1st? Do you think we will get a real plan?
HAMMOND: I‘ve met with Fritz Henderson before and I think that he has a solid backing of the accounting method that they are using. I think he is looking right now very realistically about what will happen and he will report on June 1st what is good and what is bad in GM.
SCHULTZ: How many people will actually be hurt as far as benefits are concerned from your calculation if they do go the route of bankruptcy?
HAMMOND: That will come out on June 1st. Unfortunately, this is one part where you see a difference in perception and reality. People aren‘t looking at the fact that UAW people, members are just workers. They got exactly the same kind of retirement benefits and health care that Congress got. And if we were to go to Congress and say, you know what, we are way in debt and can‘t afford to give you the pension and health benefits that we said we were, then we would see what was really going to happen with Congress. Unfortunately, UAW, I was talking to David Cole (ph) from the Center for Automotive Research, and he said at the height of the UAW, they had 1.5 million workers. Now they have maybe 25 percent of that. It‘s not the UAW members that were a problem. It‘s the UAW management that had the strategy of continuing to get members and they didn‘t do that. They used to have a monopoly here in this state, in this country, and they don‘t. They could have gone after suppliers.
SCHULTZ: They‘re awful quiet now. I don‘t hear them selling the American worker to the rest of the country and I think you‘ve got to win in the arena of the public opinion. Lou Ann, good to have you with us .
SCHULTZ: . I appreciate your time. Thanks so much.
Let‘s bring in our panel now, Mike Allen, chief political correspondent for Politico, radio talk show host, Jack Rice, and Democratic strategist Todd Webster is with us tonight. Todd, I want to start with you first because I know you spent a lot of years on Capitol Hill because you know what political backlash all about. If they go bankrupt and if they go that route, how much of a push back is this going to be from the public to the Obama administration? What is the fallout here?
TODD WEBSTER, DEMOCRATIC STRATEGIST: Well, Ed. It‘s good to be with you. Congrats on the show and things are looking great so far. But I think you‘re right. The administration thus far has put together a stimulus bill to try to get money out there and to try to get the economy moving again and longer term they are looking at two things that the U.S. auto industry needs in the long term. One is better health care reform and universal coverage, which will alleviate a significant burden to them and secondly is more investment in green energy and renewable fuels. Both of those investments over the long term will help the auto industry. But if these industries are allowed to go bankrupt, these key industrial Midwest states, there will be a tremendous political backlash.
SCHULTZ: Mike Allen, what about that? Is the Obama administration ready to throw all these Reagan Democrats under the bus, that came and voted for him from Michigan, Ohio and Indiana, I think this could be a real problem for him in the midterm.
MIKE ALLEN, POLITICO: Well, there‘s no question about it, Ed. If the car dealers could come up with a launch the way you have, they would be in a much better shape. THE ED SHOW looks out for the little guy and a lot of little guys are going to get hurt her. I can tell you the Obama administration‘s logic. What they say is that American consumers have voted with their feet on these American cars and people are not buying them. And they think that given some of the fallout over AUG, some of the other scandals, that the president is standing up to car executives actually makes sense. That it‘s a populist play that makes sense.
But you‘re right about the auto workers and, Ed, think of the people in these communities that are affected by a car dealer. You know, your guest was talking about the number of car dealers that are closing. Ed, there‘s going to be a bunch more. A very scary statistic. Fourteen hundred .
SCHULTZ: Yeah, the ripple effect, Mike, I tell you, I‘m surprised they want to roll those dice. Jack, I‘ve been talking about the double standard here a lot. We throw billions at Wall Street but now all of a sudden we‘re getting cold feet on the automobile industry. What‘s your call?
JACK RICE, RADIO TALK SHOW HOST: Ed, I totally agree with you. Honestly, I don‘t care about GM. I really don‘t. I‘m worried about the 3 million people who are tied to the domestic auto industry. I care about all of the pensioners who have worked their entire lives and if GM goes belly up, and some people are pushing them to do that, what about those people? That‘s the question I have. It‘s not about the GM. It‘s about the ripple effect that comes if you let them sink. That‘s what we should be talking about.
SCHULTZ: What about that, Mike?
ALLEN: They just point out one thing clear to you and should be clear to the viewer, the word bankruptcy, even though it‘s pretty scary, the administration has taken pains to point out here what is called an orderly bankruptcy, which could be a way to save these companies. We‘re not going to get around closing a bunch of dealers, as many as 900 more dealers to close this year after 200 closed in the first year. That‘s a lot of Little League teams in small towns that are not going to get sponsored.
SCHULTZ: But you know, Mike, orderly bankruptcy to a middle class family or somebody who is retired, you show me a cut, I‘ll show you a cut. And Todd Webster, where are the Democrats on this? They have the White House, the House and the Senate and they are going to let this industry go down? How are they going to do that?
WEBSTER: I don‘t think that they will, ultimately, Ed. I think everybody is on their Easter break this year and they are coming back to town on Monday. They are certainly not going to take this and the Midwest caucus is strong, Michigan caucus a lot of these folks have strong delegations and I think you‘re going to hear a lot out of them.
ALLEN: Ed, I‘m not so sure. I can tell you the West Wing‘s strong opinion is that they cannot keep throwing good money after bad with these companies. I agree with your point about the workers but there is exasperation with these companies. They don‘t get it. They have not admitted the things that are going wrong. To this day they don‘t seem to get their mistakes.
SCHULTZ: Fellas, look, we have MIT. We have got the best institutions of higher education in America. We have Harvard. Doesn‘t anybody have an MBA coming out of college anymore that knows how to do the bottom line? We‘ve got to be able to make things this country. We can‘t just be a service industry and the financial service of paper shuffling. We‘ve got to make something. I‘ll tell you what, fellows. We‘re going to come back with more on this and other subjects tonight. But mark my words, if they go bankrupt and they—and the Obama administration allow this is to happen, there will be a political fallout in the midterm because they can‘t throw them under the bus. This is something that middle class families are going to remember. We‘ve got to figure out how to make this work in this country.
All right. More coming up in just a moment.
The government is going to start giving TARP money to insurance companies. What does that mean for your policy? Mort Zuckerman is here to explain it next on THE ED SHOW. Stay with us.
SCHULTZ: In my playbook today I‘m going to call a timeout to start this out.
The TARP program is expanding. Life insurance companies are now eligible for TARP money. Why do these companies need bailout funds? Is this just another mechanism in place to help out the big guys? Where is the mechanism to help out the little guys? Last week the Treasury Department said it decided to extend TARP bailout funds to certain life insurance companies. A number of life insurance companies have struck deals to qualify for the funds. We‘re talking about companies like Hartford Financial Services, Prudential Financial, and Lincoln National. They‘ve won holding company status as lenders, which qualifies them for TARP funds. Now we don‘t know which companies have applied for the bail out funds, we also don‘t know who the Treasury Department is going to give the money to, if anyone.
Met Life has said that they don‘t need to participate in the government bailout program. But here‘s my problem with this. You have to ask yourself a question. I have a life insurance policy, you have a life insurance policy. How good is it? Are we going to get paid? Are our families going to get paid? Why do these companies need bailout funds? Someone in the Obama administration I think is going to have to address this to the American people and joining us now is Mort Zuckerman, publisher and owner of “The New York Daily News”. And editor in chief of “U.S. News and World Report”. Mr. Zuckerman, good to have you with us tonight.
MORT ZUCKERMAN, PUBLISHER, “NEW YORK DAILY NEWS”: Good to be here, Ed.
SCHULTZ: Should consumers be concerned that insurance companies getting into this?
ZUCKERMAN: Sure, consumers have to be concerned. They have insurance policies with a lot of companies, if the companies go under, if their assets are worth less than their liabilities there is going to be a real problem. That‘s the whole reason why you have this, as you call it, a bailout, but a way to shore up the insurance companies. They are an important part of the financial world. This economy does not function without a functioning financial world.
SCHULTZ: Do you think they need to money, or is this just an offer for maybe the government to make some money?
ZUCKERMAN: The government will not put the money into insurance companies if they don‘t need it. All they are concerned about, the insurance companies have assets. The assets are stocks and they are loans. They finance a lot of buildings, they do a lot of financing of long-term—unlike it banks which tend to finance short term, the insurance companies finance long term. We need that kind of financing in the economy in order to unleash the economic activity that so far has been held back via financial freeze-out.
SCHULTZ: From your expertise, do you think that insurance companies should be reeled in in the way that they handle money?
ZUCKERMAN: Well, the fact that none of us know enough about the way that they have handled money. Generally speaking, they have been much more cautious and conservative and say a lot of the banks which bought these toxic assets. I don‘t think they have much in the way of toxic assets.
But everything, all financial assets have collapses in value. And when the tide went out, everybody was found to not be wearing a bathing suit. So you have a problem here and they have to make sure that the insurance companies don‘t fail. It is not something we all like. We resent the fact that the big financial institutions are getting this kind of money. It‘s just what I call the evil of two lessers. The worse alternative is if they go under, it will create economic havoc, cost us a lot more and cost a lot more jobs.
SCHULTZ: Well, here‘s the thing. If these insurance companies dip into TARP money, are my rates going to go down? Are consumer rates going to go down now that they are playing with taxpayer dollars?
ZUCKERMAN: No. I think that‘s not the purpose of it. The purpose of it is to make sure that they can meet their obligations of all of these insurance claims that are going to be in effect put on their door step in the matter of course, in the ordinary course of business and some of them are going to run out of money and that would create a panic in this country.
SCHULTZ: I have to go off subject here and ask you about the newspaper industry. Gosh, there‘s a lot of them going down. Is it over? Is there still a future for newspapers in this country?
ZUCKERMAN: Well, right now we‘re facing the—the newspaper industry is facing two hugely negative trends. One is, a lot of advertising, and to some extent a lot of readership has gone over to the Internet. And that has really affected—Take classified ads for example. That‘s almost all left newspapers. It used to be an enormous economic base for newspapers.
But the second biggest thing is we are in a huge advertising recession which is the main revenue source of newspapers and, therefore, and that‘s just a reflection of what is happening to the economy at large. So a lot of newspapers are going to survive. A lot of them won‘t because they just don‘t have the backup resources in order to get through this very difficult patch which is the worst the newspapers have had in probably 200 years.
SCHULTZ: Well, you‘re going to remember this first appearance on THE ED SHOW, because me being a salesman, too, I‘ve got to ask for an order. You guys got to advertise on MSNBC.
ZUCKERMAN: We would like to advertise on MSNBC. In fact, we‘d like to get your leftovers to come into the newspaper.
SCHULTZ: Do you have an opinion on what we should do as a country as GM and Chrysler are at a very pivotal time right now?
ZUCKERMAN: Look, I hope we can save GM and Chrysler. But the essence of how ever we save them is that they have to be competitive there afterwards. We are not going to be able to provide billions and billions of dollars if they cannot become profitable businesses and that means they have to get their costs down because over half of the cars made in this country are made by foreign companies who have domestic manufacturing and they are beating the pants off of our domestic manufacturers because their costs are too high. Something has to be done for that.
If it isn‘t, the whole thing is going to collapse. If not today, next week, next month, next year. So they have to find a way to reduce their costs. That‘s what this whole thing is all about.
SCHULTZ: Mr. Zuckerman, good to have you on with us tonight.
ZUCKERMAN: Thank you, Ed.
SCHULTZ: Thanks so much.
Tea parties, leaving the union and bashing the president. The Republicans think this is the way back. This week has been a bad one for the GOP. We have week in review coming up next. Stay with us.
SCHULTZ: Welcome back to THE ED SHOW. It was quite a week for the Grand Old Party. Let‘s take a look back at some of the highlights. Newt Gingrich kicked it off on a Sunday with a dandy. President Obama, you see, he just couldn‘t do anything right with this hostage situation. Here is the Newtster.
(BEGIN VIDEO CLIP)
GINGRICH: This is an administration which keeps trying to find some kind of magical solution that doesn‘t involve effort and doesn‘t involve risk and doesn‘t involve making hard decisions. We have the most powerful Navy in history. We have the capacity to police the area if we need to, we have an entire NATO alliance which has total naval dominance in the region. Nobody has the will to do anything.
SCHULTZ: We know how that all turned out. The captain got home tonight. So the White House got a victory on national security. The GOP through a tea party, yes, the biggest and brightest of the Republican Party and all of the 2012 hopefuls joined hundreds of protestors with tea bags and signs. The protest wasn‘t enough for one governor. He took things up a notch, Texas style.
(BEGIN VIDEO CLIP)
GOV. RICK PERRY, ® TX: We‘ve got a great union. There‘s absolutely no reason to dissolve it but if Washington continues to thumb their nose at the American people, who knows what may come out of that.
(END VIDEO CLIP)
SCHULTZ: Back with me tonight, the political panel. Mike Allen, Jack Rice, Todd Webster. Mike Allen, we looked for a Republican highlight this week, we just couldn‘t find one. Did you see one anywhere?
ALLEN: Of course not, Ed, but none of this matters. My friend Todd Webster will tell you if the economy is better next year two, years from now, history tells you Democrats, the president are going to be very difficult to beat if it‘s not Republicans will have a real opportunity. Until then, all of this nonsense does not make a difference.
SCHULTZ: What do you think, Todd?
WEBSTER: I have to say for 30 years Republicans have been running on the tax cut issue and it doesn‘t have any salience or any relevance. Obama just passed $250 billion in tax cuts a month ago. Most people I think now accept the fact that, you know, like going to a proctologist, it‘s unpleasant but it‘s necessary. You have to do it and the alternative is much worse.
So I think for my Republican friends, not Mike, but my Republican friends, it‘s time to find a new set of issues. They‘ve worn this out.
Jack Rice, you‘re an independent leaning conservative kind of a guy. Where does the Republican Party go from here? Is this just give up time or what? All they do is sling mud.
RICE: This was a fascinating week, any way, Ed. Come on. I thought it was the left that is supposed to hate America. After listening to Governor Perry here, the secessionist movement is on a role. We listened to Joe the Plumber and apparently the hatred has spread to the right.
SCHULTZ: Well, it sure seems like it has. Somebody has got to break out as a leader. Todd Webster, who do you think it will be?
WEBSTER: Look, Barack Obama came to office in January. He‘s having his 100th day. He came at a time when it‘s the worst economic crisis since the Depression. Two wars are going on. He‘s like a doctor who has come into the operating room with a patient who was comatose to perform open heart surgery while there‘s a ticking time bomb about to go off. He‘s like Dr. House and MacGyver combined. He has done a heck of a job. Now he is on his Latin American trip and he‘s getting plaudits from around the world so I think he‘s doing very, very well.
SCHULTZ: Mike Allen, how does Cuba play with the American people and is the president headed in the right direction?
ALLEN: Well, he is and he‘s delivering on his promise to do something differently. People in South Florida are very excited about this. You saw tour companies already booking them, getting larger planes, a little bit of debate whether by going you help an enemy government. But by and large, people are pleased by this. And it‘s a step in the direction the president has promised to go.
Almost everything you see him doing on these foreign trips are delivering on promises that were made before. Let‘s also see what you see doing on Capitol Hill, that‘s why he‘s not backing off. He wants to be the president that the people elected.
SCHULTZ: Quickly, Jack, what‘s the big story next week for the president?
What do you think?
RICE: There‘s so many things to talk about. How much time you got? Maybe we‘ll see another tea party. He can just sit back and watch and laugh like the rest of America.
SCHULTZ: Gentlemen, good to have you with us. Thanks so much for joining us.
SCHULTZ: That‘s THE ED SHOW. I‘m Ed Schultz. For more information on THE ED SHOW, go to ed.msnbc.com, check out my radio Web site, wegoted.com and get text alerts about THE ED SHOW sent to your phone.
Just text the word “Ed” to 622639. We‘ll see you back here on Monday at 6:00 p.m. Eastern. HARDBALL WITH CHRIS MATTHEWS is coming up right now on the place for politics, MSNBC.
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