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'The Last Word with Lawrence O'Donnell' for Wednesday, July 13, 2011

Read the transcript to the Wednesday show

Guests: Richard Wolffe, Simon Hobbs, Ari Melber, John Heilemann

LAWRENCE O‘DONNELL, HOST:  Another tense meeting at the White House tonight where President Obama once again refused to accept a single Republican proposal.  And according to Eric Cantor, this time, it was the president who walked out.



UNIDENTIFIED FEMALE:  Well, they are playing a great brand of soccer.

UNIDENTIFIED MALE:  It is over.  The United States are in the World Cup finals.

UNIDENTIFIED FEMALE:  Marched right through opponent France.

O‘DONNELL (voice-over):  The USA beats France, and Barack Obama scores.

UNIDENTIFIED FEMALE:  Wait until you hear how much money his campaign officially raised.


CHUCK TODD, NBC NEWS:  More than 550,000 donors.

UNIDENTIFIED FEMALE:  His support is coming from the grassroots.

CARNEY:  He‘s willing to go big here.

CHRIS JANSING, NBC NEWS:  A shock and awe report.

UNIDENTIFIED MALE:  What a juggernaut this was for the president.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  Mr. McConnell said I think the day I was elected that his job was to try to see me beaten.

O‘DONNELL:  Now, I‘m not the only one who knows the president is winning.


UNIDENTIFIED MALE:  That‘s waving the white flag.

UNIDENTIFIED FEMALE:  Republicans don‘t have a chance.

UNIDENTIFIED MALE:  Mr. McConnell who waves the white flag.

UNIDENTIFIED MALE:  McConnell balks, Boehner squawks, and Cantor crows.

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  They tried Gettysburg, the strategic retreat.

O‘DONNELL:  Republican leaders continue to try to win the spin game.

UNIDENTIFIED MALE:  The Senate Republican leader says, hey, I got this other sort of nifty back-up plan.

UNIDENTIFIED MALE:  This is a complete betrayal of the Tea Party.

UNIDENTIFIED MALE:  Let‘s be in a position to blame Barack Obama.

LUKE RUSSERT, NBC NEWS:  Mitch McConnell‘s attempt to try and become Senate majority leader.

O‘DONNELL:  Tea Party Republicans aren‘t exactly on the same page.

UNIDENTIFIED MALE:  The inmates are truly running this asylum.

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE:  We cannot go on scaring the American people.

UNIDENTIFIED MALE:  We‘ll be introducing a piece of legislation that promises that.

BACHMANN:  This is a misnomer.

UNIDENTIFIED MALE:  As I fumble around here for the acronym, it guarantees that America will keep its promises.

O‘DONNELL:  And the Republican presidential candidates continue to be challenged by pledges they just can‘t keep.

STEPHEN COLBERT, THE COLBERT REPORT:  There‘s something out there called the marriage vow.

UNIDENTIFIED MALE:  Michele Bachmann, who attempted to explain why she did sign it.

BACHMANN:  That statement was not on the document that I signed.

UNIDENTIFIED MALE:  The former Minnesota Governor Tim Pawlenty has announced he will not sign the marriage pledge.

COLBERT:  Stephen Colbert pledge shock collar.  If the candidate ever forgets the pledges he has signed and I don‘t know, inadvertently says we should raise taxes on the top 2 percent of -- 


O‘DONNELL:  Good evening from New York.

The normally disciplined congressional Republicans are now in an all-out panic in the most difficult negotiation they have faced to date with President Barack Obama.  As the president holds to his bluff that he wants a big deal, a $4 trillion deficit reduction package, the Republican leadership has gone from retreat from $4 trillion to $2 trillion, then from yesterday‘s surrender position outlined by Republican Senate leader Mitch McConnell to today‘s total outright confusion about what to do or think next.

They should, by now, have realized that they were tricked by the president into weeks of discussion of trillions in possible spending cuts.  Eric Cantor and John Boehner, the lead Republican negotiators went into those discussions with the vice president and the president with no real experience in negotiating anything this big, anything half as big as this with an opposition party.

They forgot the maxim often repeated by participants to the press, “Nothing is agreed to until everything is agreed to.”  And with some of the Democrats at the table doing the smart thing, continuing to smile and nod as the Republicans targeted spending cuts they would like, the rookie Republican negotiators made the mistake of thinking they had reached areas of agreement with the Democrats when, in fact, absolutely nothing had been agreed to, not one dollar, not one spending cut had been agreed to because everything was never agreed to.

Naively thinking they were making progress in those negotiations with the White House, which, it turns out, really were only discussions, not negotiations, the rookie Republican negotiators were lulled into allowing the clock to run down on the time left before the treasury risks default and hits the debt ceiling on August 2nd.  The president timed his changing of the subject to taxation perfectly.

Once the Republicans realized the president was truly insistent, not bluffing in any way about the need to include additional tax revenue in any sized deficit reduction package, they abandoned the negotiations, they gave up on $4 trillion, then they gave up on $2 trillion, because any package they negotiated, the president was insisting must have tax revenue in it, any package of any size.  And so, the Republicans had nowhere to go, there was no size package they could negotiate.

The naive Eric Cantor very proudly and very loudly refused to attend anymore meetings as soon as the president became insistent on taxation.  That, of course, gave the president exactly what he needed at that time—the image of the reasonable man trying to do the responsible thing but unable to severe the cooperation of irresponsible juveniles who would sooner run away than fulfill their oath of office and bear their responsibilities of leadership.

America‘s moneyed interest who spend millions trying to keep Republicans in charge of the tax code so that they will save billions in taxation in their corporations and their personal fortunes looked on with increasing alarm.  Now, those moneyed interests are desperately trying to teach economically illiterate Republicans in Congress that there are worse things that can happen to their wealth than taxation.

“The Huffington Post” reports today the report issued this week says, quote, “asking what the U.S. economy might look like after a possible U.S.  Treasury default is akin to asking what you will do after you commit suicide.”

Having taken the debt ceiling hostage for the last six months, John Boehner and Mitch McConnell, who have finally made it clear the debt ceiling must be raised are trying and failing to figure out how to release their hostage without suffering a unanimous press judgment that they were beaten badly in this hostage taking, humiliated really, by President Obama, the same president whose reaction to hostage taking by Somali pirates was to shoot them in the head.

The president‘s calm—no, not his calm, his deadly coldness face-to-face with these inexperienced, incompetent political hostage takers has thrown them and their usually-bombastic cheerleaders cowering in fear. 

Consider the lead editorial today in Rupert Murdoch‘s “Wall Street Journal”

normally a champion of the most ludicrous Republican policies and strategies, encouraging—which is to say ordering—a full surrender on the part of Republicans on the debt ceiling, saying of Mitch McConnell‘s strategic surrender yesterday, quote, “who can blame them?”


They have finally caught on to what they say today has been, quote, “the president‘s strategy all along, take the debt limit talks behind closed doors, make major spending cuts seem possible in the early days, but then hammer Republicans publicly as the deadline nears for refusing to raise taxes on business and the rich.”

Murdoch‘s editorial writers who normally find themselves in fundamental agreement with the right wing blogosphere are putting down any possible mutiny against the McConnell surrender.  Quote, “The hotter precincts of the blog were calling this a sell out yesterday, though they might want to think before they shout.  The debt ceiling is going to be increased one way or another and the only question has been what, if anything, Republicans could get in return.  If Mr. Obama insists on a tax increase and Republicans won‘t vote for one, then what‘s the alternative to Mr. McConnell‘s maneuver?”

The president‘s statements about what may or may not happen to Social Security checks in the event of a debt ceiling crisis has inspired the Murdoch editorial writes to advise freshman Tea Party Republicans to not trust the polls they are looking at today.  Quote, “The polls that now find that voters oppose a debt limit increase will turn on a dime when Americans start learning that they won‘t get Social Security checks.”

If the Republicans had a plan that they thought would work when they took the debt ceiling hostage, it could only have been the misguided expectation that when the moment came for the presidential decision in these discussions, Barack Obama would simply cave to the hostage takers‘ demands.  Ironically, others who shared that view as the possible outcome, here on the left side of our politics, have positions in the blogosphere and megaphones that have—in which they have trumpeted their distrust of Barack Obama‘s strength of character and his command of presidential power.

As of tonight, the one person who we know is not panicking about what to do next is Barack Obama.

Eric Cantor, however, has just described the meeting tonight at the White House this way to reporters.  “He, the president, got very agitated, said that he had sat there long enough, that Ronald Reagan wouldn‘t sit here like this, and that he‘s reached the point that something‘s got to give.”

A Democratic aide tells NBC, Cantor‘s account of tonight‘s meeting is completely overblown.

Joining me now is Richard Wolffe, MSNBC political analyst and author of “Renegade: The Making of a President.”

Thanks for joining me tonight, Richard.


O‘DONNELL:  Richard, these reports are dribbling out about what happened in the White House at this meeting, Eric Cantor trying to give an account in which he describes the president as walking out, which I think is proof that Cantor now knows what a horrible, horrible political choice it was for him to proudly and loudly walk out of the meetings earlier.

WOLFFE:  Well, I was just talking to White House sources earlier this evening just before the show began and they tell me that, yes, the president ended the meeting, but Cantor‘s position has been overblown, his account is overblown.  And they say the president did express frustration after a long meeting in which they discussed many things and made some progress.

But in the end, the president‘s position was this—he said and I quote, “Everything happening in this room is what the American people hate about this town.”  He said that the negotiators, the House leaders had until Friday to figure out a deal and he urged them to stop reading from their talking points, that they had to come up with a compromise and that meant if they didn‘t come up with a compromise, they would be facing default.

So, this was a contentious meeting.  He thinks that the Republican position, that the debt increase has to be matched dollar-for-dollar with spending cuts is just not feasible in any way.

So, this is a president who has reached the point of no return, but the idea that he lost his cool—in my experience, everything this president does, even behind closed doors has been measured, has thought through, and his expressions of frustration are one more marker along that line.

O‘DONNELL:  Yes, I don‘t think you‘re going to get the American public to believe that the president who got those Somali kidnappers, who got Osama bin Laden with calm, cool deliberation in the White House Situation Room is a guy who‘s going to lose his head in a meeting like this.

And, you know, look, I‘ve got a bunch of experience in presidential meetings in the White House in budget negotiations.  Guess who always ends a meeting in the White House?  The president—it‘s over when the president gets up to leave, whenever the president has to leave, he gets up to leave.  There‘s no news there.

I want to read you, Richard, what one Democratic aide told NBC News about what happened in the White House meeting today, said the meeting was tense but constructive, Republicans were called on the carpet for trying to have it both ways, insisting the cuts be dollar for dollar if the debt ceiling raised, and warning about the Moody‘s warning on the debt.  And finally saying Eric Cantor sat there speechless.

This is now that thing that always happens in these closed-door meetings.  The press isn‘t in there and so each side runs to the microphone and tries to get control of the imagery of what really happened in there.

But, Richard, what is your sense of what happens next?

WOLFFE:  Well, I think it is interesting that the White House is—has got this idea that Boehner and Cantor were still reciting talking points behind closed door, that somehow this hasn‘t been a serious debate and a compromise session behind closed door.

That really means that the negotiations haven‘t actually begun, because every time there has been a serious proposal, whether it‘s the big deal with Boehner or this parliamentary maneuver with McConnell, they have been undercut by people like Eric Cantor.

They have to be able to agree with one another as Republican leaders, they need to be able to lead their own party because—I know we keep saying in places like this, you know, it doesn‘t matter for House Republicans, they are safe in their seats.  You know, you don‘t have much power as a Republican leader unless you‘re in the majority.

So, they are looking at a suicidal option for themselves.  Unfortunately, the suicidal option also takes in the rest of the American economy, that means you, me, everyone watching this show.

O‘DONNELL:  Well, “The Wall Street Journal” editorial is warning them they‘re not safe in their seats, that the polls, as they put it, would change on them on a dime if we hit the debt ceiling.

NBC‘s Chuck Todd is reporting tonight that the president told Eric Cantor he would veto, actually veto a short-term extension if they passed one in the House.  That would somehow have to get passed in the Senate.

Will the president really exercise a veto if on August 1st they pass a short-term that would take them past August 2nd?

WOLFFE:  My sources also say that veto would be in play here.  That is a serious response from this president.  Again, to people who think he doesn‘t have the spine for this debate or to continue this fight, they are mistaken.  Just as they are mistaken for thinking that default or the threat of default won‘t hurt the credit rating of the United States treasury.

O‘DONNELL:  And here‘s why you can veto a debt ceiling bill, even at the last minute, because to write a debt ceiling bill that works, you only need one sentence of legislation that changes the number in the debt ceiling.  We‘ve passed them like that before, and at the very last minute after a veto at 11:00 p.m., they could get one passed before midnight if they had to.

MSNBC political analyst Richard Wolffe—thank you very much for joining me tonight.

WOLFFE:  You bet, Lawrence.

O‘DONNELL:  Coming up, Rupert Murdoch surrenders.

Plus, how Harry Reid got Republican senators to pass a really stupid vote today.  That‘s in the “Rewrite.”

And the first indicator that the president‘s base is not abandoning him.  How can you tell?  A wicked huge fundraising number.  We‘ll break it down.  Who‘s giving and how much, next.


O‘DONNELL:  Coming up, as predicted here last night, Willard M. Romney today refused to sign the marriage pledge Republican presidential candidates are being asked to sign.

And how Harry Reid made sure Republicans were listening to Grover Norquist and not to common sense when Reid forced a vote today in the Senate on millionaires‘ income taxes.  That‘s in the “Rewrite.”


O‘DONNELL:  At 4:40 a.m., before President Obama went back to work on preserving the full faith and credit of the United States government, his reelection campaign announced it has already raised more money than any presidential campaign in history at this stage and more than double all the money raised by all of the Republican candidates running for president.  The president‘s campaign did this in the face of repeated cries heard from guests on this program and others and many other programs and many blogosphere outlets for most of the last year that the president was alienating his base by abandoning the public option in health care bill last year, or failing to close the terrorist prison camp in Guantanamo Bay, or agreeing to an extension of the Bush top tax rate.  And more recently, by even being willing to listen to Republicans discuss their politically suicidal wish list for spending cuts in Medicare and Social Security.

The president had been warned here and else where that this alienation would first appear in the inability to maintain the Obama grassroots fundraising effort that broke online fundraising efforts in the last campaign.  The president has now broken his own records.

Joining me now is Ari Melber, a correspondent for “The Nation.”

Ari, thanks for joining me tonight.


O‘DONNELL:  So, this is our first indicator of something you and I, others, have been talking about on this show from last year in the health care debate, how alienated is the base when President Obama is forced to, he would put it, abandon a campaign promise like a public option, closing Guantanamo, keeping—getting rid of the top Bush tax rate going back down on the Clinton rate.  None of those things happened.  Other things did in their place.

The base in this first fundraising report seems to be understanding.

MELBER:  That‘s right.  I mean, I think what you‘re looking at here is tremendous success, record breaking against obviously, the Republicans who are not in great shape at an accumulative $35 million, but more importantly, against Obama‘s own record which was impressive.  And many people have said that when you‘re a challenger, when you‘re on defense, and when you‘re asking people to really propel you, you have a better argument than you do as an incumbent, any incumbent, let alone as you say one who is seriously, I think, disappointed members of his coalition at times.  The big number that jumps out at me that‘s gotten a lot less attention from the media today is 260,000 new donors.



O‘DONNELL:  I missed that number.

MELBER:  And anyone watching at home knows there‘s a difference between your neighbor who‘s always talking about Obama, oh, I gave last cycle—you got 260,000 people that they found, located, targeted, or reached, who are giving and that is huge.

O‘DONNELL:  Yes.  And that kind of fundraising, the finding of new ones is hard especially when you presumably saturated the possibilities last time around in 2008.

And, you know, look, and part of this money was raised for the DNC, which has higher limits, like 5 grand.  Some of those—a lot of those contributions are $5,000 contributions.  But most of them, the overwhelmingly majority of them in the presidential campaign fund were under $250.  So, these really are people looking in their wallets saying, how much can I afford, I don‘t normally do this.  This really is a voter reaction in effect.

MELBER:  I think so.  And I think it does show something about what we talk about on this show and a lot of places, which is there‘s an enthusiasm gap.  That is, OK, you don‘t expect someone who‘s disappointed about Guantanamo to vote for a Mitt Romney.  But you say, well, will they give less, or will they do less.

And what we‘re seeing increments of about $60 to $80 depending if you count all the funds together or just the Obama campaign funds, either way, according to the Obama campaign, under 100 bucks.  That‘s a small donation.  That is not only fat cats.

O‘DONNELL:  Now, Adam Green of the Progressive Change Campaign Committee put out a statement today.  And he‘s one of the people who‘s come on here and voiced this worry that the president could be alienating his base of support.  He offers this distinction, this perspective on the report today.

“Every one of President Obama‘s donations came in before he began pushing cuts to the Social Security, Medicare, Medicaid benefits that our grandparents and middle class families depend on.  If President Obama continues down the path to a disastrous deal, he will lose millions in donations and millions of volunteer hours from people who once passionately supported him.”

Two things I say about that is there‘s no evidence that the president was pushing any such cuts.  The evidence at this stage of the game, according to Mitch McConnell‘s own account of it, is that the president was sitting there faking some kind of possible agreement that he never reached on those things.

But, what do you make of Adam‘s point in general?  Because a lot of the other factors I mentioned—Guantanamo, public option, all those things—were already present in our politics and had already been used as predictors for a weaker base of support.

MELBER:  Well, this is the closest thing we‘re seeing on the left to a pledge or a Grover Norquist style accountability movement.  I think it‘s an interesting tactic.  I interviewed Adam today as well, but he‘s been on the forefront here.

But I think it is misplaced to argue in the face of these numbers that there‘s a significant that is tens of thousands of grassroots donors who are going to oppose or show their distrust of certain decisions they probably do disagree with by doing a donor strike in this way.  I don‘t think the evidence is there.  That‘s what‘s interesting about the numbers today.

And the other point I‘ll make quickly is, Barack Obama today, at this point in his presidency, has more support among Democrats than any Democratic president in the last 50 years.  So, in the broad-based polling, Democrats are standing by this president.

O‘DONNELL:  And the Democrats who complain about, you know, Obama‘s discussion about the social safety net seem to have no idea or weren‘t old enough to know that Bill Clinton was the first and only president to repeal a provision of the Social Security Act, in effect, abolishing welfare to no objection, no objection from that side of our politics.

Ari Melber of “The Nation,” thank you very much for joining me tonight.

MELBER:  Thank you.

O‘DONNELL:  Coming up: the marriage vow pledge story that keeps on giving.  As predicted here last night, Mitt Romney today refused to sign it, and Tim Pawlenty did, too.

And Senate Republicans make a critical error in judgment.  OK, that‘s not really news, but Harry Reid actually gave them every opportunity today to avoid a very stupid vote, and, of course, the Republicans still made the very stupid vote.  That‘s in tonight‘s “Rewrite.”



STEPHEN COLBERT, “THE COLBERT REPORT”:  There‘s something out there called the Marriage Vow.  OK, this pledge is put out by the Iowa Conservative Christian Group, the Family Leader. 

CANDY CROWLEY, CNN ANCHOR:  This is a pledge you would sign? 

RICK SANTORUM ®, PRESIDENTIAL CANDIDATE:  In fact, I actually did sign it. 

CROWLEY:  You did sign it. 

SANTORUM:  When I first read it, I was taken aback.  I can‘t argue that I wasn‘t. 

COLBERT:  Yes, he signed it, but only after he was taken aback, OK?  It goes like this.  Ready.  Oh, my God.  What the—oh, no.  What the—holy (EXPLETIVE DELETED).  What the—OK.  All right. 


O‘DONNELL:  And the day after that installment of “The Colbert Report,” Willard M. Romney and Tim Pawlenty have decided that, unlike Rick Santorum, they were really too taken aback to sign the Marriage Vow.  Last night, Romney became the first serious candidate—well, he thinks he‘s a serious candidate—to decline the pledge to oppose divorce, same-sex marriage, marital infidelity, pornography, Sharia Law, other institutions that do not suit Iowa Christian conservatives. 

Romney‘s spokeswoman told the AP that he “strongly supports traditional marriage but the oath contained references and provisions that were undignified and inappropriate for a presidential campaign.”

That provoked the man behind the pledge, Bob Vander Plaats, to tell “Talking Points Memo,” “one of the reasons we put the pledge together was for a person or candidate like Governor Romney, because it‘s been well documented that Governor Romney has been all over the board when it comes to marriage or abortion or universal health care.  I don‘t think that‘s going to do his campaign any favors in the state of Iowa.”

Vander Plaats did not react as strongly to the word that Tim Pawlenty also declined to also sign the pledge today, telling TPN that he appreciated Pawlenty‘s statement.  That statement said Pawlenty supported traditional marriage and the pledge‘s core principles.  But “rather than sign on to the words chosen by others, I prefer to choose my own words, especially seeking to show compassion to those who are in broken families through no fault of their own.” 

Joining me now, national affairs editor for “New York Magazine,” John Heilemann.  John, thanks for joining me tonight. 


O‘DONNELL:  You‘re a man about town here in New York.  I don‘t suppose you happened to see this show last night. 

HEILEMANN:  I, in fact, never miss this show.  So I have, in fact, seen your—

O‘DONNELL:  This is going to be tricky, then, to justify showing you a clip from last night‘s show. 

HEILEMANN:  But it‘s so good, I would love to see it again. 

O‘DONNELL:  I wanted to see a prediction made on this show last night. 


O‘DONNELL:  No one in the political media has yet noticed that this particular provision presents an awkwardness for front runner Willard M.  Romney, who is himself the product of polygamy.  His great grandmother was one of five wives of his great grandfather.  That‘s five at the same time. 

So signing a polygamy should make Romney‘s hand tremble a bit even now. 


O‘DONNELL:  So, you see, polygamy is one of the things you vow to oppose here.  You know, in the present tense, which Romney does.  He opposes it in the present tense. 

HEILEMANN:  That was actually better the second time. 

O‘DONNELL:  I thought so too.  So this pledge was designed, in more ways than Vander Plaats is willing to admit, about Mitt Romney, because there is in Christian fundamentalism in Iowa a real issue with Mormonism. 

HEILEMANN:  There is.  Look, this was an issue that the Romney campaign was concerned about in 2008.  They thought that part of the problem he had breaking through with Evangelical voters was the fact that there are a lot of Evangelicals who because that Mormonism is a cult.  And they believe that it‘s not a real branch of Christianity.  It‘s not Christianity.  And the polygamy aspect of it is certainly part of that. 

O‘DONNELL:  Yes.  Romney would have no trouble in the Democrat primary, because they don‘t rely on religious defining of the candidates the way Republican primaries do.  The other thing in here is Pawlenty‘s refusal.  It‘s interesting politically that Pawlenty‘s refusal to sign the same document seems to get a pass in Iowa. 

HEILEMANN:  They believe—I don‘t know.  This group may, in the end, be as upset with Pawlenty‘s position as they are with Romney, though they have not been as vocal about it as of now.

But Look, Tim Pawlenty does have among Evangelical voters a lot more credibility.  And he has been campaigning in a very active way, trying to court that vote.  Mitt Romney is, more or less, at this point at least, staying out of Iowa, and therefore not doing anything to actively court Iowa Evangelicals.  Tim Pawlenty has made some inroads there already, and so he‘s got some good will to bank.

O‘DONNELL:  I think the smart move by Pawlenty, and to a certain extent Romney here, in not signing this is they are going to keep the pledges coming.  Pick one early that you refuse to sign, then take that position of, you know, the only oath I will take is the oath of office. 

HEILEMANN:  Absolutely right.  We‘re in the middle of a pledge-ademic.  There are so many of them.  The way—they all look at your good friend and foil, Grover Norquist, and see that getting people to sign pledges is a way for relatively marginal groups to have a huge outside influence on the process.  so you see these things proliferating all over the place.

The one Republican candidate right now who from the very beginning has said that he will not sign any pledges whatsoever is John Huntsman.  That comes across sounding very principled.  In fact, it‘s also just a very shrewd piece of politics, because once you start signing one, it‘s a slippery slop.  You have to kind of sign them all. 

O‘DONNELL:  Yes, and it‘s all over Republican politics.  National affairs editor for “New York Magazine,” John Heilemann, thank you very much for joining me tonight. 

HEILEMANN:  As always, Lawrence.

O‘DONNELL:  Earlier today, Senate Republicans blocked a resolution proposed by Harry Reid that would increase income tax rates for incomes over a million dollars.  Their utterly stupid move gets them tonight‘s Rewrite. 

And later, more trouble for the embattled News Corp.  Congressman Peter King is calling for the FBI to look into whether Rupert Murdoch-owned company hacked into the phones of 9/11 victims.  That‘s Republican Congressman King.  That‘s coming up.


O‘DONNELL:  Time for tonight‘s Rewrite.  As President Obama continues to run rings around Republicans, he got an important assist today from Senate Majority Leader Harry Reid.  The president has gotten Republicans to abandon all hope of getting a massive spending cut package by insisting it include a much smaller package of tax revenue increases.  Not tax rate increases; the president‘s demand is simply that Republicans support closing egregious tax loop holes, the area of the tax code where giant corporations and the super rich get away with murder, legal tax murder.

But the Republicans consider closing loop holes, even the ones that are being stretched far beyond their intended scope, to be exactly the same thing as raising income tax rates, which, of course, to any sane mind, it isn‘t. 

Today in the Senate, Harry Reid made income tax rates the issue, specifically one rate, just the top income tax rate, and why there should be a new top income tax bracket for people with incomes over a million dollars. 

Reid brought this issue to a vote in the Senate with a non-binding resolution entitled “Sense of the Senate on Shared Sacrifice,” which reads “Congress makes the following findings, the ‘Wall Street Journal‘ reports that median pay for chief financial officers of S&P 500 companies increased 19 percent to 2.9 million dollars last year.  Over the past ten years, the median family income has declined by more than 2,500 dollars.  Twenty percent of all income earned in the United States is earned by the top one percent.” 

That‘s 20 percent of all income earned in this country is earned by the top one percent of individuals.  “Over the past quarter century, four-fifths of the income gains accrued to those top one percent of individuals.  It is the sense of the Senate that any agreement to reduce the budget deficit should require that those earning one million dollars or more per year make a more meaningful contribution to the deficit reduction effort.” 

This is so easy for anyone to vote for, Democrat or Republican.  “Make a more meaningful contribution to the deficit reduction effort” means almost nothing.  You could vote for it thinking that everyone making over a million dollars should pay one more dollar in income taxes or 100 more dollars in income taxes.  Whatever you want. 

If you‘re a Republican and you vote for this, it doesn‘t in any way bind you to a Democratic bill that might come along someday saying that people making a million dollars or more should pay an additional two or three percent in income taxes.  You could always just say no, that‘s too meaningful of a contribution, I meant something much less than that. 

Still, Harry Reid got a majority, 51 Democrats, to vote for this resolution.  And every Republican, obviously including every Republican running for reelection, to cast a very, very stupid vote against this resolution.  Harry Reid knew he needed 60 votes to pass his resolution and he knew he couldn‘t get 60 votes.

But he got what he wanted, Republicans on the record voting on the record opposing sanity in the tax code at the very top.  Minutes after the vote, the Massachusetts‘ Democratic party chairman took the handoff from Senator Reid and began using the vote to win back Teddy Kennedy‘s old Senate seat, issuing this statement, “once again, Senator Scott Brown has gone along to get along with Washington, D.C. Republicans‘ efforts to protect the wealthiest Americans and special interests.” 

How unpopular is the Republican vote on this resolution?  Consider the words of thoughtful Republican columnist David Brooks, “according to the Gallup Organization, only 20 percent of Americans believe the budget deal should consist of spending cuts only.  Even among Republicans, a plurality believes there should be a mixture of tax increases and spending cuts.  Yet, the GOP is now oriented around this 20 percent.  It is willing to alienate 80 percent of voters and commit political suicide.” 

Every day, in every way, President Obama and Senator Reid will continue to try to find more ways to invite congressional Republicans to commit political suicide.  And unless the Tea Party Kool-Aid affect cools off, Republicans will continue to accept those invitations.


O‘DONNELL:  When news broke this morning that Rupert Murdoch surrendered and withdrew his 12 billion dollar bid to take over British satellite provider BSkyB, that was only the beginning of another very bad day in the life of Rupert Murdoch. 

First, as tomorrow‘s “Telegraph” puts it, former British Prime Minister Gordon Brown got his revenge in a speech before the House of Commons. 


GORDON BROWN, BRITISH PRIME MINISTER:  As early as the Winter of 2002, senior police officers at Scotland Yard met the now-chief executive of News International and informed her of serious malpractice on the part of her newspaper staff, and criminals undertaking surveillance on their behalf.

And the new investigation will no doubt uncover why no action was taken within News International. 

News International and every other responsible paper should be in future be obliged to publish, not on page 35 or 27, but on page one, apologies to all individuals whose rights have been infringed. 


O‘DONNELL:  Then, here in the United States, California Senator Barbara Boxer and West Virginia Senator Jay Rockefeller called on Attorney General Eric Holder and the Securities and Exchange Commissions to investigate whether News Corp has violated any U.S. laws allegedly bribing police officials to gain access to private telephone information and records. 

Part of their letter reads “the reported allegations against News Corporation are very serious, indicating a pattern of illegal activity, and involve thousands of potential victims.  It‘s important to ensure that no United States laws were broken and no United States citizens were victimized.”

Senator Frank Lautenberg and Robert Menendez also wrote letters urging Holder to conduct an investigation.  And now New York Congressman Peter King is calling for an FBI investigation into whether News Corp employees hacked into 9/11 victims‘ voicemails. 

George Mombio (ph), a writer for the U.K.‘s “Guardian Newspaper” summed up his thoughts on today‘s developments in this Tweet, “this is our Berlin Wall moment.” 

Joining me now, cNBC‘s Simon Hobbs.  Simon, thanks for joining me tonight. 

SIMON HOBBS, CNBC ANCHOR:  Good evening, Lawrence. 

O‘DONNELL:  Simon, this news about the possibility of hacking into 9/11 victims‘ telephones here in New York is very ominous for Murdoch.  When we go back in time, that would be under the police commissionership of the convicted criminal, Bernard Kerik, who is known to have had a close relationship to the “New York Post” and the Murdoch empire. 

It seems as if there is some smoke here.  What are the chances of an investigation being aimed directly at the weak link there, Bernie Kerik, who‘s in jail right now? 

HOBBS:  I‘m afraid I don‘t really have information about that, to be honest with you, Lawrence.  Clearly there will be an investigation, because, as you can see, you‘ve got all guns now blazing in order for the United States to react to what we‘re learning from the United Kingdom. 

Let me just explain to you what‘s gone on there.  You have had a most formidable uprising there, the like of which really we have not seen, from the left of politics, from the Democrats.  For a long time in the U.K., they were out of control, the tabloid newspapers, Murdochs and others. 

Do you remember how Diana died, hounded by the paparazzi.  But they were too scared and they were too scared specifically of Rupert Murdoch, because his newspapers, in election campaigns, won elections. 

Then, suddenly, you have this coincidence of events over the summer in the United Kingdom where the left—the Democrats—our Democrats became like a tinderbox.  Then you got that one spark that ultimately ignited them.  It was the revolution that a 13-year-old girl had been abducted and, in fact, she had been murdered.  But journalists working for this woman here at the “News of the World” had actually hacked into her mobile phone in order to get her messages and write about them. 

Not only that, they had deleted some of the messages in this murdered girl‘s phone, so the police and her family thought that maybe she was still alive.  Then you have this rage that has come just through today, as is evidenced in the House of Commons, where they have passed just a motion to say that Rupert Murdoch should not take over BsKyB, which is the equivalent of Direct TV in the United Kingdom. 

But that was enough for Murdoch to just pull right back.  Murdoch has never really done that before.  He‘s a fighter.  You see it in Fox News.  You see it in the establishment of BSkyB.

But he‘s pulled back for once.  The question is where does he go and where does News Corp go from now.  And importantly, Lawrence, will those FCC licenses ever come up for question as result of the behavior of what went on after 9/11?  It‘s a long line.  It‘s a long chain of events from what might be freelance operators, as he has mentioned in the letters to the attorney general, which you just mentioned, and whether you could actually hang that on senior executives at News Corp. 

But I think for the left here, that will, without question, now be the game. 

O‘DONNELL:  Simon, there is an often repeated principle in business that every organization resembles its head, that a company will behave overall the way the head behaves.  You will see those indications.  I‘ve experienced it in every company I have worked in, and also in government, that the head of the organization determines the conduct that‘s going on underneath, either directly or indirectly. 

Is that the sense that the British government has about the Murdoch empire, that this is absolutely an extension of the way Murdoch thinks about obtaining information? 

HOBBS:  Very much so for those newspapers, which are frankly the runt of the News Corp group.  It makes its money from movies here in the United States and from television here in the United States.  But, of course, those are the newspapers that he built personally. 

The family—and you‘ll know there‘s huge nepotism with his son and his daughter, bringing them on board to run News Corp.  They‘d like to get rid of the newspapers.  But Murdoch has always clung on to them. 

Maybe now he will.  That‘s one of the options. 

O‘DONNELL:  Simon Hobbs of cNBC, thank you very much for joining us tonight. 

HOBBS:  Good night, 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. 

RACHEL MADDOW, MSNBC ANCHOR:  Good evening, Lawrence.  Thanks very much.  And thanks to you at home for staying with us for the next half hour. 


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