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'The Last Word with Lawrence O'Donnell' for Tuesday, May 10th, 2011

Read the transcript to the Tuesday show

Guests: Howard Fineman, Michael Isikoff, Rep. Chris Van Hollen, Jonathan Capehart, Joshua Green


LAWRENCE O‘DONNELL, HOST:  Democrats have an answer to Speaker John Boehner‘s demand for $2 trillion in spending cuts before raising the debt ceiling: start with welfare for oil companies.



SEN. HARRY REID (D-NV), MAJORITY LEADER:  I‘ve been planning to go to that fight for a long, long time, as you know.

MATT LAUER, NBC NEWS:  Raising taxes, that‘s a nonstarter.


REID:  Republicans want to keep handing billions of dollars to the oil companies.

O‘DONNELL (voice-over):  The standoff: Republicans want to cut Medicare, Democrats want to cut tax breaks for oil companies.

REID:  Oil companies are not struggling.  Yet, Republicans ending Medicare as we know it.

BOEHNER:  We‘re broke.  And for those who have substantial means, you can pay your own premium.

UNIDENTIFIED FEMALE:  We‘re asking seniors to take cuts in Medicare.  We‘re asking young people to have more people in their classroom.  We‘re asking teachers, firefighters, nurses to take cuts.

UNIDENTIFIED MALE:  Why the speaker is continuing to go down this road.

UNIDENTIFIED MALE:  A match made in heaven?

REID:  It‘s hard to imagine a more backwards set of problems.

UNIDENTIFIED FEMALE:  The average person just looks at the profit and say, and then how much are we pay for gas and says, you‘re kidding me, right?

UNIDENTIFIED MALE:  It‘s not about economics.  It‘s about ideology.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I want prosperity in this country to be widely shared.

O‘DONNELL:  After bin Laden, the president‘s to-do-list is all about the economy.

UNIDENTIFIED MALE:  His attention is turning to domestic issues.

OBAMA:  I want to give a big policy speech outside on a really hot day.

UNIDENTIFIED MALE:  Barack Obama is the commander-in-chief.

BILL RICHARDSON, FORMER NEW MEXICO GOVERNOR:  It‘s a great foreign policy triumph.

ANDREA MITCHELL, NBC NEWS:  The president‘s ratings for foreign policy at an all time high.  But handling the economy—at an all time low.

UNIDENTIFIED MALE:  The euphoria over bin Laden‘s death disappears and evaporates very, very quickly.

OBAMA:  There‘s always a next election.

O‘DONNELL:  And the field of Republican challengers is still challenging Republicans.

MITCHELL:  Newt Gingrich is finally preparing his race.

UNIDENTIFIED MALE:  Some huge obstacles, his third wife having an affair with a staffer.

CHUCK TODD, NBC NEWS:  But Sarah Palin, but she used to be known as a reformer.

UNIDENTIFIED MALE:  Too much foolishness at the front.


UNIDENTIFIED MALE:  I‘m not naming names.

BOEHNER:  A lot of good candidates out there.  Donald Trump would be one of them, maybe.

UNIDENTIFIED MALE:  Would you endorse him if he were to get the nomination?

UNIDENTIFIED MALE:  Material for “Saturday Night Live” but not a real discussion on the issues.

UNIDENTIFIED MALE:  We finally killed Osama bin Laden.  Osama, boom, you‘re fired.



O‘DONNELL:  Good evening from New York.

House Majority Leader Eric Cantor rang the opening bell at the New York Stocks Exchange this morning, just hours after his boss in the House of Representatives terrified those at Cantor‘s side and all of Wall Street with the threat that House Republicans will only raise the debt ceiling if and only—if Democrats agree to at least $2 trillion in spending cuts in the 2012 budget negotiations.

What Wall Street wanted to hear was, in the end, Boehner would do the responsible thing and make sure the debt ceiling was raised even if Republican conditions were not met.

Since the speaker failed to make that clear, one attendee at Boehner‘s speech called Boehner, quote, “disconnected from reality,” according to “The Hill.”

The second round of budget negotiations took place at the Blair House today under the leadership of Vice President Joe Biden.

Here is how the vice president characterized those discussions.


JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES:  Everybody is being straight, cordial.  All the facts are being laid on the table.  We‘re going through what we agree and what we disagree on.  And then we‘re going to go back after that is all over and figure out are there big chunks left, whether we can make any compromises.

REPORTER:  What do you agree on?

BIDEN:  We agree on a lot.  I‘ll tell you when it‘s over, OK?


O‘DONNELL:  One powerful deficit reduction measure the parties do not agree on is tax increases.  Speaker John Boehner reiterated the Republican position to NBC News‘ Matt Lauer this morning.


BOEHNER:  What some are suggesting is that we take this money from people who would invest in our economy and create jobs and we give it to the government.  The fact is: you can‘t tax the very people that we expect to invest in your economy and create jobs.

LAUER:  So, as you sit here today: raising taxes, that‘s a nonstarter.

BOEHNER:  It is off the table.

LAUER:  Off the table.

BOEHNER:  Everything else is on the table.


O‘DONNELL:  One measure Senate Democrats put on the table today was legislation ending several tax subsidies for the top five oil companies—subsidies Speaker Boehner once showed a willingness to repeal.  The legislation would save the U.S. government $21 billion over the next decade.

Unlike the president‘s proposal to use those savings to fund clean energy programs, Senate Democrats propose putting those savings toward reducing the federal deficit.


SEN. CLAIRE MCCASKILL (D), MISSOURI:  There is more hot air around this building about deficit reduction than any other topic right now.  And if we cannot end subsidies to the five biggest, most profitable corporations in the history of the planet that come from the federal taxpayer, then I think anyone should take us seriously about deficit reduction.


O‘DONNELL:  Joining me now, ranking Democrat on the House Budget Committee, Maryland Congressman Chris Van Hollen.

Thanks for joining us tonight, Congressman.

REP. CHRIS VAN HOLLEN (D), MARYLAND:  Good to be with you, Lawrence.

O‘DONNELL:  You were in the room with the vice president and the other budget negotiators today.  Here‘s your chance—tell us everything that happened in there today.

VAN HOLLEN:  Well, as the vice president said, it was a positive meeting.  We‘ve been looking for the areas of common ground.  But, it‘s, of course, going to get a lot more difficult when we begin engaging on the more controversial issues.

And you put your finger on the issue in the lead-in here, which is that you can‘t be serious about deficit reduction and at the same time say you refuse to get rid of subsidies for the big oil companies.  That just doesn‘t compute.  And that‘s what we heard from the speaker the other day in New York with a very serious face, saying, yes, I want to reduce the deficit.  And on the other hand, saying, well, let‘s keep shoveling taxpayer dollars out the door for the big oil companies.

So, you know, we‘re hopeful we‘ll be able to converge by the end of this story because it is absolutely essential that we reduce the deficits in the country.  But let‘s be real, that also involves dealing with the revenue side of the equation, not just the spending side.

O‘DONNELL:  Congressman, these kind of talks are normally referred to as budget summit meetings.  We‘ve seen these kind of things in the past where a full team of Democrats led by the vice president say from the White House but also Senate Finance Committee chairman, Senate majority leader, in this case, House members, like yourself, the Democratic side, leaders on the budget talks go in there against—or across the table from the same number of Republicans.

But you just have one Republican in there, Eric Cantor, negotiating for all of the Republican players in this game.  How does that work dynamically in the room, where it‘s one against all of you?

VAN HOLLEN:  Well, the Republicans decided to send one member from each chamber.  So, Eric Cantor from the House side, Jon Kyl from the Senate side.  And essentially what they‘ve done is they‘ve said that these are the two guys that are going to sort of present the Republican perspective.

So, look, at this point in time, we‘ve been going through a list of areas to try and find those areas where there‘s agreement.  And as I said, you know, very quickly, you‘re going to get into the more turbulent areas and the question will be not whether we can come together on the things where there‘s overlap, but whether we can, you know, have a give and take on those issues where there‘s not.

And that‘s why it‘s important that the Republicans take another look at this position they‘ve taken on things like the oil subsidies because John Boehner had it right a couple weeks ago, when he said, look, when we‘ve got big deficits, we, of course we need to look at the big oil subsidies.  And he quickly retreated from that position.

Hopefully, as these conversations go on, the John Boehner from a few weeks ago will re-emerge.

O‘DONNELL:  Congressman, John Boehner and Republicans generally have absolutely taken tax increases off the table.  Absolutely no tax increases will be considered.

Is there something that the Democrats have taken off the table with a comparable emphasis?  Is there one thing that the Democrats absolutely will not consider?

VAN HOLLEN:  Well, we‘ve made it absolutely clear that the Republican budget in the House, the Ryan budget, the Republican budget, is a total nonstarter.  And that reflected their priorities where they essentially said they wanted to end the Medicare guarantee, throw seniors over to the private insurance industry with rising costs, which they wanted the seniors to eat, at the same time that they wanted to actually cut taxes for millionaires.

So, yes, that‘s a nonstarter.  And we made that absolutely clear.  And we‘ve also made it clear that any serious approach to deficit reduction involves a balance.  And that you can‘t do it just on one side of the ledger alone.

O‘DONNELL:  What are the prospects for coming to an agreement?

VAN HOLLEN:  Well, only time will tell.  What I want to make clear is that the Democrats say that in order to achieve our goal of, number one, making sure that the economy continues to grow rather than strangling the nation‘s recovery, but also to achieve deficit reductions over the long run, which you need for long-term economic growth, you need to have this serious approach.  And you‘ve had some bipartisan commissions out there that have said, look, you‘ve got to look at both sides of the equation.  I don‘t agree with every provision they‘ve proposed.  But at least they said you‘ve got to take both parts of this.

The Republicans have taken a position totally lopsided.  It‘s our way or the highway.  Their blueprint was laid out by the Republicans in the House with respect to ending the Medicare guarantee.

So, at this end of this movie, both sides are going to have to come together with a balanced approach.  And if the Republicans refuse to do that, I think it will be an indication that they‘re not really serious about deficit reduction.  Yes, they might want to strangle government, but it will be an indication that that‘s their priority rather than in fact dealing with the deficit.

O‘DONNELL:  Congressman Chris Van Hollen, I can‘t see the road to the agreement yet, but I hope you can.  Thank you very much for your time tonight.

VAN HOLLEN:  Thanks, Lawrence.  Good to be with you.

O‘DONNELL:  Joining me now, senior political editor for “The Huffington Post” and MSNBC political analyst, Howard Fineman.

Thanks for joining me, Howard.


O‘DONNELL:  Howard, you see Speaker Boehner very clearly setting his marker—absolutely no tax increases.  And, certainly, you know, the Democrats have said, as Congressman Van Hollen just did, that they will not go along with the Ryan budget.  But there doesn‘t—you don‘t seem the get the same sense of there‘s an absolute refusal to consider certain particular items the way Boehner has taken taxes off the table.

FINEMAN:  Yes, it‘s not quite the same.  I mean, if you were looking for equivalence, Lawrence, you might expect to hear Congressman Van Hollen and other say absolutely, no change to Medicare as it is.  And they don‘t quite say that.

The reason they don‘t quite say that is that the president himself had identified in his health care reform proposal the fact that Medicare and the health care system generally is out of control in terms of costs and need to be brought down.  So, the president kind of opened that topic.

And now, I think you can see some fissures, Lawrence, on the Democratic side over the question of whether you might means test Medicare in some way, you know, fiddle in it some way without changing the basic nature of it.  I think the Democrats are leaving themselves a little room on that side and taking really in that sense a less unified stand than Boehner‘s trying to do to satisfy his Tea Party constituency on his side.

O‘DONNELL:  Let‘s listen to what Senator McConnell had to say today about this.

I guess we don‘t have that.  We have an indication—a statement from McConnell where he said, “This is a serious crisis.  We must do something serious.  Entitlement reform needs to be a part of it.  That‘s the only way we‘ll send a message to the world that we are actually willing to make the tough decisions needed to get our fiscal house in order.”

What‘s funny about this, of course, Howard, entitlement reform is not a tough decision for a Republican.  That is a party line.  A tough decision for a Republican is some kind of revenue increase.

FINEMAN:  Right.

O‘DONNELL:  Whether it be specifically through rates or the other way to do it is what the Democrats are talking about now, cutting out all these tax subsidies what is in effect tax spending by the government for oil companies.  But there seems to be Republican resistance obviously even to that.

FINEMAN:  Sure.  Of course, there is.  And it‘s not just oil subsidies.

If you really want to look at spending—tax spending as they call it, tax expenditures by way of subsidies, it‘s oil and even bigger, agriculture.  And all kinds of other subsidies that the Republicans are just as enthusiastic about—if not more—than the Democrats.

When you‘re talking about agriculture, talking obviously about a lot of red states, you‘re talking about rural constituencies, you‘re talking a lot of red state Republicans—they‘ll fight tooth and nail to preserve those.  The Republicans don‘t want to open up that discussion at all.  Not just about oil, but about anything else.

O‘DONNELL:  Now, Howard, the exact date at which you have to raise the debt ceiling floats, as you know.


O‘DONNELL:  It depends on exactly how much tax revenue is coming in. 

It turns out they got more tax revenue this April than they anticipated.  And so, they‘ve let the date float a little bit later into the summer.  But when that day comes, there‘s going to have to be some kind of deal.

Is there some—can you envision some sort of face-saving scenario for Republicans in which they agree to make bigger decisions later than at the actual moment of raising the debt ceiling?

FINEMAN:  Well, a few points here, Lawrence.  I think, first of all, Speaker Boehner left open a little bit in New York the possibility of whether he might go along with some kind of, sort of, temporary extension at some point—just as they did during the budget debate last month.  So, that‘s a possibility, number one.

Number two, in terms of the personalities, I think the president, I know from talking to White House aides the president thinks that he can deal with Boehner in the end.  This may be a fatal miscalculation on the president‘s part, but that‘s what he believes.  That John Boehner the president has told others is kind of like the guys he dealt with back in Illinois in the legislature there; Boehner just wants a deal; Boehner‘s being pressured by the Tea Party, et cetera.  You know, that might be a miscalculation by the president.

Meanwhile on Boehner‘s side, I think he thinks that he has the upper hand here, politically and strategically, and he thinks the president will eventually cave.

So, you have the potential of a grand miscalculation on both sides.  And what Tim Geithner, the secretary of treasury, desperately doesn‘t want is the countdown clocks to start appearing on MSNBC and CNBC and so forth, you know, so many days and hours and minutes and seconds to default, because that could create a psychology that would be incredibly damaging.  It would take hold in the markets and really do great damage to the dollar and to the American economy.

That‘s what Geithner is worried about.

The White House thinks they‘ve gotten private assurances from Republicans on this.  I‘m not sure they‘re worth the dollars they‘re printed on.

O‘DONNELL:  And, Howard, the crisis you mentioned could occur even if we did raise the debt ceiling at the last minute, but just in a month of ramping up to that crisis point, you could create that kind of difficulty in the markets.

FINEMAN:  Yes, and that‘s what—that‘s what Geithner say he‘s worried about and I believe him.

O‘DONNELL:  Yes.  MSNBC political analyst Howard Fineman, thanks for joining me tonight.

FINEMAN:  Thanks, Lawrence.

O‘DONNELL:  Still to come this hour, the killing of Osama bin Laden inside Pakistan opened up new rifts between the U.S. and its troubled ally.  How the naming of a CIA station chief could damage the relationship even more.

And which fake Republican candidate with a fake campaign suddenly lost all that support he was so proud of just two weeks ago?


O‘DONNELL:  The U.S. suspects the outing of the CIA station chief in Pakistan after the capture of bin Laden was intentional.  NBC‘s chief investigative correspondent Michael Isikoff joins me with more on the growing problems between Pakistan and the United States.

And she was once a governor who raised taxes, worked across party lines, and left her state in great financial shape.  What happened to her?


O‘DONNELL:  Tensions between the United States and Pakistan appear to be growing despite U.S. efforts today to publicly downplay the problems.

An official tells NBC‘s Andrea Mitchell there is reason to think that the Pakistani spy agency intentionally outed the identity of a CIA station chief.  The official calls that unacceptable.  It would be the second time Pakistan has done so in the past five months.

“The Washington Post” reports the leak may be retaliation for last week‘s raid on the Osama bin Laden compound, which Pakistan was not told about.

Democratic Senator Dianne Feinstein, who chairs the Senate Intelligence Committee, tells “Talking Points Memo” she plans to have her own team investigate what Pakistan knew about bin Laden and will hold classified hearings on the breakdown in U.S. in U.S.-Pakistani relations.

Joining me now, NBC News national investigative correspondent, Michael Isikoff.

Thanks for joining me tonight, Michael.


O‘DONNELL:  Michael, Pakistani officials seem to be finding their ways of getting back at the U.S. here.  They are doing their own leaking—leaking at least one conflicting indicator about what happened during that raid.  They‘re saying to ABC News that one of bin Laden‘s adult sons went missing during the raid.  The Obama administration says that all of the adult men on the compound were actually killed during the raid.

What do we make of this kind of factual conflict?

ISIKOFF:  Well, first, it‘s hard to imagine that somebody could have gone missing in that raid with all the U.S. Navy SEALs around, it‘s an enclosed compound.  You had lots of troops on the ground with guns.  If somebody was running away, you would imagine that they would have been caught.

But the really amazing thing here is that in the week—more than a week since the raid took place, the tensions between the Pakistanis and the U.S. have actually gotten a lot worse.  And they seem to be growing by the day.  I mean, this outing of the—of the station chief in Islamabad really infuriated U.S. intelligence officials.  And they were making that very clear today.

So, I think what you‘ve got here while you have on the one hand, the Zardari government trying to paper over the differences and talk about how strong the alliance is between the U.S. and Pakistan.  You have below that, within the ISI, in the Pakistani military, people who, you know, have a long and documented history of having ties to terrorist groups—more on that is going to be coming out in the next few weeks—who feel humiliated, embarrassed here and are striking back.

O‘DONNELL:  But in a positive sign today, NBC News is quoting U.S.  officials now who say that Pakistan will allow Americans to question bin Laden‘s three wives—the Pakistanis have in custody.

ISIKOFF:  Right.  And that‘s a good thing.  I mean, you know, although

if you take a step back, there‘s been a lot of talk about, you know, did we

why didn‘t we take the wives and the children with us?


I talked to some U.S. officials today who are making the point, you know, what would we have done with them?  Where would they have take—where would we have taken them?  They are not wanted terror suspects.

There is this little thing called the rule of law.  On what grounds would we have effectively kidnapped the people living in that compound who we had no reason to believe were directly linked to any terror acts who certainly weren‘t wanted by the U.S.

So, I think all said and good, U.S. officials were pleased that the Pakistanis took custody of these individuals.  And at some point, you know, if we can get access to them and we can learn a little bit more, great.

O‘DONNELL:  “The New York Times” reported new details in the raid today, saying that President Obama was originally given a plan where the special ops team was under orders not to engage Pakistani forces.  The president then overruled that, change the order to allow SEAL Team Six to fight there way out of Pakistan if necessary.

Why is the Obama administration allowing details like that to leak when they‘re trying to improve their relationship with Pakistan?

O‘DONNELL:  Well, look, come on, Lawrence.  I mean, you know—I mean, leaks don‘t necessarily all come with the approval of the president and his national security team at the top.  There are lots of different agencies in the U.S. government.  There are lots of people who want to get versions of their story out there.

And I suspect that‘s what this was.  It clearly didn‘t serve the diplomatic interest of the United States right now.  But if that‘s what happened, then, you know, there are going to be people in the government who are going to talk about it.

O‘DONNELL:  NBC national investigative correspondent, Michael Isikoff, thanks for joining me tonight, Michael.

ISIKOFF:  Thank you, Lawrence.

O‘DONNELL:  Ahead in this hour: Cuba gives up on Cuban socialism and looks north for inspiration for a new kind of socialism.  That‘s in the “Rewrite.”

And Donald Trump‘s well-deserved humiliation continues with a disastrous showing in a poll he considers a big deal.



REP. AARON SCHOCK ®, ILLINOIS:  I notice a huge difference when I get my work out in the morning and when I don‘t with how productive I am throughout the rest of the day.

LAUER:  I‘m being told to ask you are you single, by people downstairs curious about that apparently.  Yes?


LAUER:  OK, simple answer to a weird question.


O‘DONNELL:  That‘s Republican Aaron Shock of Illinois with those shocking abs, the youngest and cutest member of Congress on “the Today Show” this morning. 

Talking about this, his shirtless expose on the cover of this month‘s “Men‘s Health” magazine, the 29-year-old congressman says he‘s encouraging people to stay healthy by working out and eating right.  We hear at THE LAST WORD are patiently awaiting Sarah Palin‘s attack on the Republican congressman for echoing First Lady Michelle Obama‘s anti-obesity campaign. 

What the sculpted congressman was not talking about this morning was his vote for the Republican plan to dismantle Medicare.  The Democratic National Campaign Committee, however, didn‘t miss this opportunity to Rewrite the magazine cover. 

It‘s called “End Medicare.”  It says, “who needs Medicare with abs like these.”  It promises tips to get grandpa on the treadmill and says, “the congressman is standing up for billionaires, big oil and protein shakes.” 

When Aaron Shock is not work on his six pack, he represents Illinois‘s 18th congressional district. 

Still ahead in this hour, Donald Trump‘s collapse.  Trump has dropped from first to fifth in a poll.  And the last episode of his TV show lost over a million viewers. 

Republicans are now craving a presidential candidate they can take seriously. 

And later, Cuba‘s Raul Castro assures that the only way to, quote, “secure the continuity and irreversibility of socialism in Cuba is to bring in capitalism.”  That‘s in the Rewrite.



REP. JOHN BOEHNER ®, HOUSE SPEAKER:  There are a lot of good candidates out there.  Donald Trump would be one of them maybe.  He really hasn‘t said if he‘s running or not running. 

UNIDENTIFIED MALE:  Could you endorse him if he were to get the nomination?. 

BOEHNER:  I would expect that we haven‘t seen all of the candidates yet.  I understand my good friend Newt Gingrich is about to announce.  I think he brings an awful lot to the debate.  There are a lot of candidates and the process of going through a presidential primary will sort out the good from the bad.  And we‘ll end up with a very good candidate. 


O‘DONNELL:  A new poll shows a major shift in the field of Republican presidential candidates.  The robo poll done by Public Policy Polling shows the lead going to Mike Huckabee, who has shown absolutely no sign of even leaning toward running for president. 

Mitt Romney comes in second at 18%.  Newt Gingrich is at 13 percent.  Non-candidate Sarah Palin is at 12 percent.  Ron Paul has eight percent, which ties him with Donald Trump.  This represents the bursting of the Trump bubble. 

In the same poll four weeks ago, Trump was in the lead with 26 percent.  Public Policy Polling calls the drop of 18 points over four weeks one of the quickest rises and falls in the history of presidential politics. 

Michele Bachmann is now at seven percent in the poll.  And the dark horse in the race, Tim Pawlenty, is pulling up the rear at five percent. 

Joining me now, MSNBC contributor and editorial writer for the “Washington Post,” Jonathan Capehart.  Thanks for joining me tonight. 

JONATHAN CAPEHART, “THE WASHINGTON POST”:  Hey Lawrence.  Great to be here. 

O‘DONNELL:  So we‘re done with Trump.  We don‘t even have to talk about him.  The “Celebrity Apprentice” ratings have collapsed.  The whole thing has collapsed.  We heard Speaker Boehner saying he expects more candidates to get into the race. 

John Huntsman the one out there who‘s making very, very serious moves to get into the race.  What happens when Huntsman enters the race?  Who does that effect the most?  I have a feeling this is bad news for Romney. 

CAPEHART:  Sure.  They‘re both Mormon.  They‘re both statesman within the party.  John Huntsman, up until last week or a couple weeks ago, was the U.S. ambassador to Beijing.  The problem he‘ll have is explaining how could he go from being ambassador appointed by President Obama and then turning around and running against him. 

But that doesn‘t trump—no pun intended—the problem he has with -

doesn‘t trump the problems that Mitt Romney has, because Mitt Romney, former governor of Massachusetts, was the one who basically—and the Obama administration will say it—is the architect behind what people are now calling Obama-Care. 


Mitt Romney‘s health care plan for Massachusetts served as the model for what President Obama and Congress were able to pass. 

O‘DONNELL:  There‘s 30 points of mirage in that poll.  Between Huckabee and Palin, both whom are—Palin‘s not running.  Huckabee not running, most likely not running.  Those points have to go somewhere.  That interest has to go to other candidates. 

As the field starts to take shape, who‘s going to start to rise? 

CAPEHART:  I see if Huckabee does indeed say he‘s not running and Sarah Palin finally acknowledges the obvious she‘s not running, then I think those supporters, by and large, will probably go to Michele Bachmann who is—I call her the Tea Party queen.  She‘s usurped Sarah Palin in that role. 

She‘s probably expected to announce that she‘s going to form an exploratory committee sometime soon.  So I think the Huckabee, Palin supporters will go for her. 

O‘DONNELL:  Those 30 points are clearly looking for the most conservative candidate. 

CAPEHART:  Right, because those are the primary voters.  The most conservative people within the Republican party are the ones who are most reliable to go out and vote in primaries, in the same way that the most liberal people and progressive people in the Democratic party are the most reliable ones to go to vote in Democratic primaries. 

O‘DONNELL:  There‘s a new Gallop poll that is showing that a majority of Republicans, 52 percent, want a major third party to compete with Democrats and their own party.  You couldn‘t ask for indicators of more dissatisfaction within the Republican party with the candidates that are being presented to them. 

CAPEHART:  Right.  We saw it.  We knew this was the case the moment Donald Trump went from being sort of the joke candidate to the serious candidate and beings the person who was number one in the polls.  You know, as we discovered and as we knew all along, truth hurts. 

O‘DONNELL:  I‘m going to give Donald Trump almost THE LAST WORD in this segment.  I want you to listen to something that he said on Fox News.


DONALD TRUMP, “THE APPRENTICE”:  I have heard over a lifetime that if you have really accomplished a lot and done a lot, you cannot run for high political office.  I can see why.  I can see now why Ross Perot dropped out. 


O‘DONNELL:  Dropped out.  Finally he‘s making the noises we expect him to make on his road to dropping out. 

CAPEHART:  Right.  That because he‘s achieved so much and he‘s such a smart guy and she‘s—

O‘DONNELL:  So proud of himself. 

CAPEHART:  So proud of himself for doing what he‘s done, he just can‘t handle—America can‘t handle him.  The press can‘t handle him.  So he‘s going to stay out.

O‘DONNELL:  Going to stay with TV.  “The Washington Post‘s” Jonathan Capehart, thank you for joining me tonight. 

The Cuban government just released hundreds of new guidelines that are intended to bring capitalism into the socialist country.  But you‘ll never hear either of the Castro brothers say the word capitalism.  That‘s in the Rewrite. 

And as governor of Alaska, Sarah Palin defied the Republican party, fought big oil companies, and even vetoed a bill banning benefits for same-sex partners of state workers.  How then did she become the face of right-wing anger and extremism?  That‘s coming up.


O‘DONNELL:  Time for tonight‘s Rewrite.  The Communist Party of Cuba continues its relentless march toward capitalism, of course.  But the Castro brothers can never admit that their revolutionary ideal of a pure socialistic economy is impossible to maintain, and the more Cuba clings to it, the more Cuba suffers. 

Fidel actually hinted at this as far back as the first party congress when, after the first 15 years of strict Cuban socialism, he said, on December 17th, 1975, “there is no doubt that in the organization of our economy we have erred on the side of idealism and sometimes even ignored the reality of the objective economic laws we should comply with.” 

Yesterday, the Cuban government issued hundreds of new guidelines intended to open the Cuban economy to more capitalism.  Of course, the word capitalism never appears in the guidelines and never appears in current Cuban President Raul Castro‘s official explanation of what the guidelines are intended to do. 

In a speech about the new guidelines a few weeks ago, Raul Castro said, “I can assure you that the guidelines are an expression of our people‘s will contained in the policy of the party, the government and the state to update the economic and social model in order to secure the continuity and irreversibility of socialism, as well as the economic development of the country and the improvement of the living standard of our people.” 

So when the Castro brothers are forced to accept the irreversibility of more capitalism in the Cuban economy, it must be described as in Raul‘s words, “securing the continuity and irreversibility of socialism.”

Cuba is as hung up on refusing to admit that its economy includes some capitalism as the United States is hung up on the refusal to admit that our economy includes some socialism.  No other countries in the world are so fixated on the refusal to acknowledge the inevitable mix of socialism and capitalism in their economies. 

Under the new Cuban guidelines, Cubans will be allowed to legally buy and sell homes for the first time, as well as automobiles.  Some private farming will be allowed.  There will be an expansion of legally allowed self employment. 

The new guidelines will, as if following Paul Ryan‘s lead, shrink the social safety net.  The ration book which all Cubans get and provides them with government subsidized food and other items will be trimmed.  Raul Castro sounded downright Republican in criticizing the ration system. 

He said, “since the ration book is designed to provide equal coverage to 11 million Cubans, there are more than a few examples of absurdities, such as allocating a quota of coffee to the newborn.” 

You don‘t have to read between the lines to know that the ration book is on its way to becoming Cuba‘s version of our food stamp program.  Instead of providing government subsidized food for everyone, Cuba will eventually be providing it for those only who need it, just like we do. 

Raul Castro said, quote, “the social welfare system is being reorganized to ensure a rational and deferential support to those who really need it.  Instead of massively subsidizing products as we do now, we shall gradually provide for those people lacking other support.” 

In other words, we have started the process of scaling back Cuban socialism to something much closer to American socialism.  I have explained in this space before how “Newsweek” reached the logical conclusion, expressed on its February 16th, 2009 cover “We Are All Socialists Now.” 

We are all socialists in this country who support public education, state funded universities, government-run hospitals, Medicare, Social Security, classic socialistic programs that have sensibly found their way into the American economy. 

The truth is in this country, we‘re all socialists to varying degrees and we‘re all capitalists.  If the Castro Brothers allowed “Newsweek” to publish a Cuban edition, which they never will, its cover this week would surely be “We‘re All Capitalists Now.”


O‘DONNELL:  Now for a look at the Sarah Palin we never knew.  Not the Sarah Palin who ran a simple minded losing campaign for vice president and quit her job as governor, whereupon she obviously gave up any hope of running for elected office again, but continued to fool most pundits and fuel book sales and lecture fees and the rating of her TV show by pretending to flirt with the notion of running for president. 

No, this is a look at the Sarah Palin who ran a clever insurgence campaign for governor and then became the governor who stood before the Republican National Convention in 2008 and legitimately made this claim. 


SARAH PALIN, FORMER GOVERNOR OF ALASKA:  This was the spirit that brought me to the governor‘s office when I took on the old politics as usual in Juno.  When I stood up to the special interests and the lobbyists and the big oil companies and the good old boys. 


O‘DONNELL:  What her Republican handlers did not allow her to say in that speech is that the way she stood up to the big oil companies in Alaska was that she raised taxes on the big oil companies in Alaska.  In that same speech, Palin‘s new writers filled her with right wing resentments.


PALIN:  I guess a small town mayor is sort of like a community organizer.  Except that you have actual responsibilities. 

I might add that in small towns, we don‘t quite know what to make of a candidate who lavishes praise on working people when they‘re listening and then talks about how bitterly they cling to their religion and guns when those people aren‘t listening. 


O‘DONNELL:  Joining me now is Joshua Green, a senior editor of “The Atlantic”, whose latest article “The Tragedy of Sarah Palin” is in the magazine this month.  Thanks for joining us tonight, Joshua. 

JOSHUA GREEN, “THE ATLANTIC”:  Good to be here. 

O‘DONNELL:  Just when I thought I knew everything about Sarah Palin, you have to come along with this article that teaches me how much I don‘t know.  What is the tragedy of Sarah Palin? 

GREEN:  The tragedy of Sarah Palin that I write about in the piece was that the Palin who governed Alaska was really nothing like the Sarah Palin who became a national political figure.  Palin in Alaska took on the Republican party.  She took on the oil companies that had dominated and over a quarter of a century corrupted the state of Alaska to the point that the FBI came in and made arrests and hauled off state legislators. 

She came in as a reformist third way politician and really cleaned up the state.  Alaska today has a 12 billion dollar budget surplus, as a result of a law she passed.  Alaskans don‘t seem to like her very much anymore.  But she really left the state in pretty decent shape. 

The tragedy is that she didn‘t run on the national stage as what she really had been in Alaska. 

O‘DONNELL:  The—when she did this move against the oil companies, did she have to reach across the aisle to Democrats in the legislature for that, didn‘t she? 

GREEN:  She really did.  The oil companies essentially took over the Republican party in Alaska in the early 1980s and controlled it.  The only mechanism for breaking that oil company lock was to get a few reformist Republicans like Palin and essentially independents in the Democratic party and break that lock. 

That‘s exactly what Palin did.  It was a really significant accomplishment if you understand the history of Alaska politics and the forces that were gripping that state before she became governor. 

O‘DONNELL:  In your article, you quote Hollis French, a Democratic state senator.   And he said, “she had the appearance of someone who was willing to go in a different direction.  We subsequently learned that she will throw anyone under a bus.  But that wasn‘t apparent at the time.  It looked like real moral courage.” 

GREEN:  I think in fairness, it was real moral courage.  Palin was an up and coming Republican legislator who took on the entrenched Republican governor of her own party.  She took off after the state Republican party chairman and basically did something that most people would consider suicidal for her political career. 

But what she got out of that was she cleaned up the state.  She emerged as a reformer.  At the time John McCain chose her to be his vice president, she really was a sort of maverick type of figure like we used to associate John McCain with being, back in the sort of 2000 era John McCain. 

O‘DONNELL:  When the Republicans and McCain and Bill Kristol got excited about her, looked at her before she was chosen for vice president, didn‘t they see things that they didn‘t like, these raising taxes on oil companies and things like that? 

GREEN:  I‘m not sure it‘s that clear cut.  The state of Alaska owns most of the oil in Alaska.  So raising taxes on oil companies is really just getting more—of Alaskans getting their fair share of revenue.  It‘s not quite the same thing as taxing private enterprise. 

But what Palin had done was to come in and really kind of wow the state with her obvious natural, innate political skills and win over not just Republicans, ordinary Republicans in the state who were disgusted by the corruption, but also Democrats, independents, and even liberals. 

So she seemed to be a very powerful, very compelling, very charismatic person.  She was the most popular governor in the country in 2007.  She really seemed to have a political future that I think would have appealed to folks like Kristol. 

O‘DONNELL:  Joshua Green of “The Atlantic,” thanks very much for your time tonight. 

GREEN:  Great to be with you, Lawrence. 

O‘DONNELL:  You can have THE LAST WORD online at our blog,  You can follow my Tweets @Lawrence. 

“THE RACHEL MADDOW SHOW” is up next.  Good evening, Rachel.


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