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'The Last Word with Lawrence O'Donnell' for Monday, July 25, 2011, 9p show

Read the transcript to the Monday 9pm show

Guests: Chris Matthews, Melissa Harris-Perry, Howard Fineman, Ezra Klein, Rep. Joe Walsh, David Plouffe

LAWRENCE O‘DONNELL, MSNBC HOST: Good evening from New York.
The president is about to address the nation on the ongoing negotiations and stalemate over the debt ceiling increase that‘s being proposed in Washington. President Obama is expected to speak for about 10 to 15 minutes. He will surely seek to reassure the country, reassure financial markets that the debt ceiling must be raised and somehow will be raised by the August 2nd deadline.
Two minutes following the conclusion of the president‘s remarks, Republican Speaker of the House, John Boehner, will address the nation from the speaker‘s ceremonial office on the House side of the Capitol building.
MSNBC will have live analysis after both speeches. I‘ll be joined by Chris Matthews, Howard Fineman, and Melissa Harris-Perry, as well as White House senior advisor David Plouffe and Tea Party freshman Republican Congressman Joe Walsh.
President Obama tonight will likely reiterate his positions that he has taken in these negotiations, including his politically sensitive offer, revealed last week, to make changes to Medicare and Social Security in exchange for a Republican compromise on an increase in government revenue.
Here now, the president of the United States.
OBAMA: Good evening. Tonight, I want to talk about the debate we‘ve been having in Washington over the national debt—a debate that directly affects the lives of all Americans.
For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation‘s credit card.
As a result, the deficit was on track to top $1 trillion the year I took office. To make matters worse, the recession meant that there was less money coming in, and it required us to spend even more - on tax cuts for middle-class families; on unemployment insurance; on aid to states so we could prevent more teachers and firefighters and police officers from being laid off. These emergency steps also added to the deficit.
Now, every family knows that a little credit card debt is manageable. But if we stay on the current path, our growing debt could cost us jobs and do serious damage to the economy. More of our tax dollars will go toward paying off the interest on our loans. Businesses will be less likely to open up shop and hire workers in a country that can‘t balance its books. Interest rates could climb for everyone who borrows money - the homeowner with a mortgage, the student with a college loan, the corner store that wants to expand. And we won‘t have enough money to make job-creating investments in things like education and infrastructure, or pay for vital programs like Medicare and Medicaid.
Because neither party is blameless for the decisions that led to this problem, both parties have a responsibility to solve it. And over the last several months, that‘s what we‘ve been trying to do. I won‘t bore you with the details of every plan or proposal, but basically, the debate has centered around two different approaches.
The first approach says, let‘s live within our means by making serious, historic cuts in government spending. Let‘s cut domestic spending to the lowest level it‘s been since Dwight Eisenhower was President. Let‘s cut defense spending at the Pentagon by hundreds of billions of dollars. Let‘s cut out the waste and fraud in health care programs like Medicare - and at the same time, let‘s make modest adjustments so that Medicare is still there for future generations. Finally, let‘s ask the wealthiest Americans and biggest corporations to give up some of their tax breaks and special deductions.
This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. It would reduce the deficit by around $4 trillion and put us on a path to pay down our debt. And the cuts wouldn‘t happen so abruptly that they‘d be a drag on our economy, or prevent us from helping small business and middle-class families get back on their feet right now.
This approach is also bipartisan. While many in my own party aren‘t happy with the painful cuts it makes, enough will be willing to accept them if the burden is fairly shared. While Republicans might like to see deeper cuts and no revenue at all, there are many in the Senate who have said “Yes, I‘m willing to put politics aside and consider this approach because I care about solving the problem.” And to his credit, this is the kind of approach the Republican Speaker of the House, John Boehner, was working on with me over the last several weeks.
The only reason this balanced approach isn‘t on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a cuts-only approach - an approach that doesn‘t ask the wealthiest Americans or biggest corporations to contribute anything at all. And because nothing is asked of those at the top of the income scales, such an approach would close the deficit only with more severe cuts to programs we all care about - cuts that place a greater burden on working families.
So the debate right now isn‘t about whether we need to make tough choices. Democrats and Republicans agree on the amount of deficit reduction we need. The debate is about how it should be done. Most Americans, regardless of political party, don‘t understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don‘t get. How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don‘t need and didn‘t ask for?
That‘s not right. It‘s not fair. We all want a government that lives within its means, but there are still things we need to pay for as a country - things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research.
Keep in mind that under a balanced approach, the 98% of Americans who
make under $250,000 would see no tax increases at all. None. In fact, I
want to extend the payroll tax cut for working families. What we‘re
talking about under a balanced approach is asking Americans whose incomes
have gone up the most over the last decade - millionaires and billionaires
to share in the sacrifice everyone else has to make. And I think these patriotic Americans are willing to pitch in. In fact, over the last few decades, they‘ve pitched in every time we passed a bipartisan deal to reduce the deficit. The first time a deal passed, a predecessor of mine made the case for a balanced approach by saying this:

“Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? And I think I know your answer.”
Those words were spoken by Ronald Reagan. But today, many Republicans in the House refuse to consider this kind of balanced approach - an approach that was pursued not only by President Reagan, but by the first President Bush, President Clinton, myself, and many Democrats and Republicans in the United States Senate. So we are left with a stalemate.
Now, what makes today‘s stalemate so dangerous is that it has been tied to something known as the debt ceiling - a term that most people outside of Washington have probably never heard of before.
Understand - raising the debt ceiling does not allow Congress to spend more money. It simply gives our country the ability to pay the bills that Congress has already racked up. In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every President has signed it. President Reagan did it 18 times. George W. Bush did it 7 times. And we have to do it by next Tuesday, August 2nd, or else we won‘t be able to pay all of our bills.
Unfortunately, for the past several weeks, Republican House members have essentially said that the only way they‘ll vote to prevent America‘s first-ever default is if the rest of us agree to their deep, spending cuts-only approach.
If that happens, and we default, we would not have enough money to pay all of our bills - bills that include monthly Social Security checks, veterans‘ benefits, and the government contracts we‘ve signed with thousands of businesses.
For the first time in history, our country‘s Triple A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet. Interest rates would skyrocket on credit cards, mortgages, and car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis - one caused almost entirely by Washington.
Defaulting on our obligations is a reckless and irresponsible outcome to this debate. And Republican leaders say that they agree we must avoid default. But the new approach that Speaker Boehner unveiled today, which would temporarily extend the debt ceiling in exchange for spending cuts, would force us to once again face the threat of default just six months from now. In other words, it doesn‘t solve the problem.
First of all, a six-month extension of the debt ceiling might not be enough to avoid a credit downgrade and the higher interest rates that all Americans would have to pay as a result. We know what we have to do to reduce our deficits; there‘s no point in putting the economy at risk by kicking the can further down the road.
But there‘s an even greater danger to this approach. Based on what we‘ve seen these past few weeks, we know what to expect six months from now. The House will once again refuse to prevent default unless the rest of us accept their cuts-only approach. Again, they will refuse to ask the wealthiest Americans to give up their tax cuts or deductions. Again, they will demand harsh cuts to programs like Medicare. And once again, the economy will be held captive unless they get their way.
That is no way to run the greatest country on Earth. It is a dangerous game we‘ve never played before, and we can‘t afford to play it now. Not when the jobs and livelihoods of so many families are at stake. We can‘t allow the American people to become collateral damage to Washington‘s political warfare.
Congress now has one week left to act, and there are still paths forward. The Senate has introduced a plan to avoid default, which makes a down payment on deficit reduction and ensures that we don‘t have to go through this again in six months.
I think that‘s a much better path, although serious deficit reduction would still require us to tackle the tough challenges of entitlement and tax reform. Either way, I have told leaders of both parties that they must come up with a fair compromise in the next few days that can pass both houses of Congress - a compromise I can sign. And I am confident we can reach this compromise. Despite our disagreements, Republican leaders and I have found common ground before. And I believe that enough members of both parties will ultimately put politics aside and help us make progress.
I realize that a lot of the new members of Congress and I don‘t see eye-to-eye on many issues. But we were each elected by some of the same Americans for some of the same reasons. Yes, many want government to start living within its means. And many are fed up with a system in which the deck seems stacked against middle-class Americans in favor of the wealthiest few. But do you know what people are fed up with most of all?
They‘re fed up with a town where compromise has become a dirty word. They work all day long, many of them scraping by, just to put food on the table. And when these Americans come home at night, bone- tired, and turn on the news, all they see is the same partisan three- ring circus here in Washington. They see leaders who can‘t seem to come together and do what it takes to make life just a little bit better for ordinary Americans. They are offended by that. And they should be.
The American people may have voted for divided government, but they didn‘t vote for a dysfunctional government. So I‘m asking you all to make your voice heard. If you want a balanced approach to reducing the deficit, let your Member of Congress know. If you believe we can solve this problem through compromise, send that message.
America, after all, has always been a grand experiment in compromise. As a democracy made up of every race and religion, where every belief and point of view is welcomed, we have put to the test time and again the proposition at the heart of our founding: that out of many, we are one. We have engaged in fierce and passionate debates about the issues of the day, but from slavery to war, from civil liberties to questions of economic justice, we have tried to live by the words that Jefferson once wrote:
“Every man cannot have his way in all things...Without this mutual disposition, we are disjointed individuals, but not a society.”
History is scattered with the stories of those who held fast to rigid ideologies and refused to listen to those who disagreed. But those are not the Americans we remember. We remember the Americans who put country above self, and set personal grievances aside for the greater good. We remember the Americans who held this country together during its most difficult hours; who put aside pride and party to form a more perfect union.
That‘s who we remember. That‘s who we need to be right now. The entire world is watching. So let‘s seize this moment to show why the United States of America is still the greatest nation on Earth - not just because we can still keep our word and meet our obligations, but because we can still come together as one nation. Thank you, God bless you, and may God bless the United States of America.
O‘DONNELL: That was the president speaking from the East Room in the White House.
Two minutes from now, we will be taking you to the ceremonial office of the speaker of the House, just off the floor of the House of Representatives for a statement by Speaker John Boehner of Ohio in response to the president‘s remarks.
The president did not make any new news tonight in the speech, he began with an outline of the deficit history, our current deficit history, and how we got to here. How he entered office with a deficit of over a trillion dollars, it has now risen. He said it is the responsibility of both parties to solve that deficit, and he outlined his balanced approach, his balanced approach being one of spending cuts and tax revenue increases and then made the case for his balanced approach—ending with a pitch, in effect, to viewers and listeners to if you agree with his balanced approach, please, let Congress know.
Ultimately, that was the only action the president suggested taking—that anyone take, coming out of this speech is viewers who support his position on the balanced approach that includes tax revenue increases should let Washington know. He pointed out that many Republicans in the Senate have come to the agreement that we need the balanced approach that includes tax revenue increases, and then said that the only reason, the only reason that we are stuck is because of a faction in the Republican House of Representatives that seemingly will not compromise on anything.
He‘s pointed out that Speaker Boehner had come to a personal agreement with the president that the balanced approach that included tax revenue was something that could be done in a compromise. He quoted Thomas Jefferson towards the end of the speech on the matter of compromise—since this is a speech seeking compromise, saying that every man cannot have his way in all things.
The speaker is expected to speak for approximately six to seven minutes. Here he is now.
REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Good evening. I‘m John Boehner. I serve as Speaker of the whole House—of the members of both parties that you elect. These are difficult times in the life of our nation. Millions are looking for work and have been for some time, and the spending binge going on in Washington is a big part of the reason why. Before I served in Congress, I ran a small business in Ohio. I was amazed at how different Washington D.C. operated than every business in America. Where most American business makes the hard choices to pay their bills and live within their means, in Washington more spending and more debt is business as usual. Well, I‘ve got news for Washington, those days are over.
President Obama came to Congress in January and requested business as usual, yet another routine increase in the national debt that we in the House said, “not so fast.” Here was the president asking for the largest debt increase in American history, on the heels of the largest spending binge in American history. And here‘s what we got for that massive spending binge, a new health care bill that most Americans never asked for. A stimulus bill that was more effective in producing material for late-night comedians than it was in producing jobs. And a national debt that has gotten so out of hand, it has sparked a crisis without precedent in my lifetime or yours.
The United States cannot default on its debt obligations. The jobs and savings of too many Americans are at stake. What we told the president in January was this, that the American people will not accept an increase in the debt limit without significant spending cuts and reforms. And over the last six months, we‘ve done our best to convince the president to partner with us to do something dramatic to change the fiscal trajectory of our country. Something that will boost confidence in our economy, renew a measure of faith in our government, and help small businesses get back on track.
Last week, the House passed such a plan, and with bipartisan support. It‘s called the Cut, Cap, and Balance Act. It cuts and caps government spending and paves the way for a Balanced Budget Amendment to the Constitution, which we believe is the best way to stop Washington from spending money that it doesn‘t have. Before we even passed the bill in the House, the President said he would veto it. I want you to know I made a sincere effort to work with the president to identify a path forward that would implement the principles of Cut, Cap, & Balance in a manner that could secure bipartisan support and be signed into law. And I‘ll tell you, I gave it my all. Unfortunately, the president would not take yes for an answer. Even when we thought we might be close on an agreement, the president‘s demands changed.
The president has often said we need a balanced approach which in Washington means, we spend more, and you pay more. Having run a small business, I know those tax increases will destroy jobs. The president is adamant that we cannot make fundamental changes to our entitlement programs. As the father of two daughters, I know these programs won‘t be there for them and their kids unless significant action is taken now. And the sad truth is that the president wanted a blank check six months ago, and he wants a blank check today. This is just not going to happen. You see, there is no stalemate here in Congress. The House passed a bill to raise the debt limit with bipartisan support. And this week, while the Senate is struggling to pass a bill filled with phony accounting and Washington gimmicks, we‘re going to pass another bill—one that was developed with the support of the bipartisan leadership of the U.S. Senate.
Obviously, I expect that bill can and will pass the Senate, and be sent to the President for his signature. And if the President signs it, the crisis atmosphere that he has created will simply disappear. The debt limit will be raised. Spending will be cut by more than one trillion dollars, and a serious, bipartisan committee of the Congress will begin the hard but necessary work of dealing with the tough challenges our nation faces. The individuals doing this work will not be outsiders, but elected representatives of the people, doing the job they were elected to do as outlined in the Constitution. Those decisions should be made based on how they‘re going to affect people who are struggling to get a job, not how they will affect some politician‘s chances of getting reelected.
This debate isn‘t about President Obama and House Republicans, it isn‘t about Congress and the White House. It‘s about what‘s standing between the American people and the future we seek for ourselves and our families. You know, I‘ve always believed, the bigger government, the smaller the people. And right now, we have a government so big and so expensive it‘s sapping the drive of our people and keeping our economy from running at full capacity. The solution to this crisis is not complicated, if you‘re spending more money than you‘re taking in, you need to spend less of it. There is no symptom of big government more menacing than our debt. Break its grip, and we begin to liberate our economy and our future. We are up to the task, and I hope President Obama will join us in this work. God bless you and your families, and God bless the United States of America.

O‘DONNELL: That was Speaker of the House John Boehner responding to the president‘s address to the nation over what the president called a stalemate over the debt ceiling negotiations. Speaker Boehner said there was no stalemate, making the case that there was no stalemate simply because he has been able to pass some bills in the House of Representatives only that address this with absolutely no possibility of passing that legislation through the United States Senate. Ignoring the stalemate, he ignored many of the specifics raised by the president in the president‘s address.
To consider both of these speeches, joining me now, the host of MSNBC‘s “HARDBALL,” Chris Matthews and MSNBC contributor Melissa Harris-Perry.
Chris, your reaction to first the president‘s speech.
CHRIS MATTHEWS, HOST, “HARDBALL”: Well, I thought the president used a couple of words we‘re familiar with, “fair and balanced,” that was FOX commercial there. I thought that was interesting—fair, then balanced, then fair again, and then balanced again, over and over again to make a case for his position.
I thought he came off like the good mother in the Old Testament story of King Solomon who was willing to give the baby to the other mother, rather than have it killed. Whereas mother, the unfair, rather, the dishonest mother was willing to kill the baby rather than have the other have it.
I thought he was—I still think he‘s leaning towards compromise and the Republicans are leaning against compromise. There was a dishonest statement by Speaker Boehner, who I normally think is straight talk—I don‘t know who wrote that speech for him tonight, there was no—as you were suggesting, there was no bipartisan action by the Congress on the Republican proposal. That vote in the House, I believe, was 234 votes for the passage of cut, cap, and balance bill and only 5 Democrats within that 234, which was, in itself, up to the level of Republican support in the House.
So, that was no bipartisan bill. I don‘t know who‘s writing his stuff. We had a senator on today on “HARDBALL” who said the same thing. It must be the talking points put out by somebody, the RNCC or somebody, but it‘s not the truth and it‘ wrong for the speaker of the House to go on television again the president say something that‘s not true.
There was no passage of a bipartisan budget measure or debt ceiling increase measure at all. He shouldn‘t have said that, I think it taints the whole statement.
O‘DONNELL: Melissa, the speaker did not address the way the president singled him out in his speech, in the president‘s speech to say that Speaker John Boehner was one of the Republicans who was willing to agree to a balanced approach, what the president calls a balanced approach, one that includes some tax revenue increases, and the speaker did not answer this question that the president asked in his speech based on that balanced approach, “How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries?”
say it was a little upset or stressed out listening to the president‘s
speech, because when he first started describing sort of the first approach
he said there was two approaches and he started describing the first approach. And I actually thought he was describing a Republican approach which was, you know, cut, cut, cut. And I thought, oh, OK, you know, he‘s saying things about the other side, then I realized, oh, no, that‘s what the president is advocating, all of these cuts.

But I was sort of taking a deep breath, he gave Boehner a lot of cover here. He said, look, Boehner is a reasonable guy. In fact, there‘s a whole portion of the party that really wants to do the right thing here, we want to find a way to cut these things, we have an understanding that entitlements are going to have to be reformed, so let‘s try to move forward.
And so, when Boehner comes on behind that and says as Chris just says, a number of things that were dishonest but also, I think, not responding in any kind of honest way to this reality about the need to raise revenues by asking people to pay their fair share. He says look, you know, I‘m the father of two daughters.
But, you know, I‘m the daughter of a mother who relies on Social Security, and the fact both of these speeches were meant to soothe the markets, but I‘m worried about soothing the anxieties of American citizens who right now are worried they are not going to have their most basic needs taken care of because they are fighting in Washington at this point over something that is not real. This is not a real crisis. It could be solved this hour if they decided to.
O‘DONNELL: Chris, I was surprised the president did not make news. Here is the president coming out, asking for network time in the middle of something we‘ve never had before, which is correctly put by him, a stalemate over raising the debt ceiling.
I understand that he had to teach some basic things about this to the general public, but he doesn‘t get another chance at this, does he? The national address over the stalemate on the debt ceiling—if he was going to make news about it, wasn‘t he going to have done it here?
MATTHEWS: I think there‘s concern in the media—our media about that. He asked for time in primetime to go on national television. Usually, presidents only ask for that when they want an announcement, to make news as you put it.
But, clearly, he did not. In fact, he openly stated this is a debate that he‘s engaged in, not a news-making event. I think that‘s why the networks chose, I think, wisely, to give the opposition its turn. But it did put the president on an equal level. Obviously, technically, you saw the advantages of the White House press corp., they know how to put a press together.
Poor Speaker Boehner, once again it was a slim shot operation by the Republicans. He was looking off north by northwest there somewhere, something up in the air there, I‘m not sure what it was, but clearly it wasn‘t the normal sort of presentation where you look at the camera.
And, by the way, I still don‘t know why they keep the president by putting a podium up, a lectern, acting like they‘re addressing the nation, like to the president.
It would be far better of doing what Nixon did years ago with the “Checkers Speech,” stand up in front of a desk like an average person, lean against, put his body against the back, the front of the desk, and talk like a regular person to other regular people. But they continue to try to pretend they are some sort of counter-bully pulpit when they are not that.
So, I think both sides blew it in terms of format tonight. The president shouldn‘t have gone on national television to give a political address. And I don‘t think the opposition did much in matching it.
O‘DONNELL: But, Melissa, the president, seems to me, did have to at some point educate the public, who‘s not paying attention to every turn here, who doesn‘t hang on every word in his press conferences, doing a minor sampling of this debate as it goes forward, that there is something important at stake here. He said it‘s a dangerous game that we‘ve never played before. He did everything he could, it seems to me, to get the uninitiated out there to understand the stakes involved in raising the debt ceiling.
HARRIS-PERRY: I mean, sure, look—you know, his talking points were this is George W. Bush‘s debt, right? This is his credit card. These were bad choices made in the previous administrations that we are still paying for.
You know, his second point was it‘s not all the opposition that is the problem, that‘s really this right wing faction represented by the Tea Party who are being unreasonable, who are acting like freshmen, frankly, who are not taking seriously their responsibility relative to the country.
But here‘s the problem, every—every element of this that is—that is technical, that is about how much, that is about how long, all of that gets washed away in one big reality that the American public walks away from after these, you know, 20 minutes. It‘s that Washington is broken, that the people whom we pay, right?
We talk all this stuff that the government is too big. But the main vision of government we have other than DMV bureaucrats are these guys, in Washington, talking to us. And the more that the president helps to create the idea that it is broken—and he simply helps to create the idea it is broken by spending network time, primetime, doing this. It actually benefits the GOP, because the GOP more than anything else is simply saying government doesn‘t work. It can‘t solve your problems, there‘s nothing about it that, you know, will lead us to job creation.
You know, the president said at one point, look, people are working hard all day and they are not paying attention. People wish they were working hard all day, so I think the issue is the more it looks broken, the more it looks like infighting, the better it serves the other side.
O‘DONNELL: Thanks, Chris Matthews, and, Melissa Harris-Perry, who will be sitting in for Rachel Maddow tomorrow night, rest of the week.
Thank you both for joining me tonight.
MATTHEWS: Thanks, Lawrence.
HARRIS-PERRY: Thanks, Lawrence.
MATTHEWS: Coming up, Chris‘ favorite debating partner, Republican Congressman Joe Walsh with the Tea Party reaction to both president and Speaker Boehner‘s speeches. And later, White House senior advisor David Plouffe joins us.
OBAMA: The only reason this balanced approach isn‘t on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a different approach, a cuts-only approach, an approach that doesn‘t ask the wealthiest Americans or biggest corporations to contribute anything at all.
O‘DONNELL: That was the president addressing the nation just minutes ago, this is our special MSNBC live coverage of the president‘s address and the response to the president‘s address by House Speaker John Boehner.
Joining me now, Republican congressman and Tea Party caucus member, Joe Walsh.
Thank you very much for joining me tonight, Congressman.
REP. JOE WALSH ®, ILLINOIS: Great to be with you, Lawrence.
O‘DONNELL: Congressman, the president said we‘re left with a stalemate. John Boehner said there is no stalemate. How could the speaker say there is no stalemate?
WALSH: There is a stalemate. And again, it should come as no surprise that I was disappointed in the president‘s speech. But let me—let me comment directly upon it.
It was interesting, he mentioned the two approaches, and I agree with him on this, most of the Republican caucus does believe we need to cut spending, pure and simple. And the biggest disappointment, Lawrence, I had in this speech was I don‘t think the president knows where large swaths of the American people are.
I held three town halls this weekend, probably 400 to 500 people, and I would poll everybody in these town halls, and, Lawrence, I come from a swing district. And by far the option that most Americans wanted, and it wasn‘t heck no, don‘t raise the debt ceiling, it was we know we have to raise it, but cut spending and reform the way Washington spends so we never get here again.
I think that‘s where most Americans are, and I think that‘s why they sent us to Washington.
O‘DONNELL: Well, Congressman, I can‘t argue with you on the views of your district, and certainly, they must have views similar to yours because they voted for you.
But we do have polling a clear majority of not just all Americans, not just of all Democrats, but a clear majority of Republican voters nationwide approve of the president‘s balanced approach that includes tax revenue increases through closing of egregious loopholes and other adjustments in the tax code. Let‘s not debate what the American people want.
The question is where do we go from here?
Let me ask you this question: would you rather reduce deficits and interest rates by raising revenue from people who are not paying their fair share like hedge fund managers that pay less than their secretaries or would you rather accept larger budget deficits, higher interest rates, and higher unemployment?
WALSH: Lawrence, again, a false choice, but it‘s an interesting one.
O‘DONNELL: Congressman, I want to stop you. When you consider your answer to this—that is the question that President Obama quoted in his speech, which was asked by Ronald Reagan, the single most important hero of the Republican Party. Ronald Reagan said he would rather increase tax revenues where they could in order to solve these kinds of problems.
WALSH: Lawrence, it always slays me when this president quotes Ronald Reagan.
O‘DONNELL: Because he agrees with Ronald Reagan, Congressman, and you don‘t.
WALSH: Those two presidents, Lawrence, had two enormously different visions of this country. One president, President Reagan, Lawrence, got government out of the way and off the backs of the American people, and we enjoyed a 20 to 30 year growth period.
This president, Lawrence, respectfully, has put the backs of government on top of the people. The American people are suffocating out there right now, Lawrence. You talk about the wealthy, the top 5 percent of the people in this country pay 60 percent of the taxes for the first time in our history we have 51 percent of the American people that aren‘t paying any income taxes.
Lawrence, our government is too big. We have a government that spends too much, and we‘re bankrupting future generations, and we‘re not going to change that until we change this town.
O‘DONNELL: Congressman Walsh, you know that the government got bigger every year under the Reagan presidency, so much bigger every year under the Reagan presidency that Ronald Reagan had to ask you in Congress, you weren‘t there, but Congress, he had to ask Congress for a debt ceiling increase 18 times, and Congress gave him a debt ceiling increase 18 times.
Would you have voted no on every one of the 18 Ronald Reagan debt ceiling increases?
WALSH: Lawrence, I‘ll give you an honest answer, I don‘t know.
What‘s interesting to me is --
O‘DONNELL: So there might have been a debt ceiling increase you might have voted for, just not an Obama debt ceiling increase.
WALSH: No, no, 20 or 30 years ago, who knows?
What I find interesting—you‘re right in your history, why is the debt ceiling such a big issue now? And I guess my answer would be is because the crisis is so big, one, this president for six months has ignored the problem, two, and the American people sent people to Washington to no longer give this city a blank check.
I would argue the American people finally woke up. You keep talking about this Tea Party movement, Lawrence. I think that movement is a lot bigger than your profession—or actually, either party understands.
O‘DONNELL: I‘m going to put Congressman Joe Walsh as a maybe for voting for the Reagan debt ceiling increases.
Congressman Joe Walsh, thank you very much for joining me tonight.
WALSH: Thank you, Lawrence.
O‘DONNELL: Coming up, senior White House advisor David Plouffe joins me from the White House.
OBAMA: The new approach that Speaker Boehner unveiled today, which would temporarily extend the debt ceiling in exchange for spending cuts, would force us to once again face the threat of default just six months from now.
In other words, it doesn‘t solve the problem. We can‘t allow the American people to become collateral damage to Washington‘s political warfare.
O‘DONNELL: That was the president addressing the nation from the East Room, beginning just 45 minutes ago. He spoke for about 20 minutes, explaining the current stalemate—what he called a stalemate in the debt ceiling negotiations.
Joining me now, senior White House advisor, David Plouffe.
David, thanks for joining me tonight.
DAVID PLOUFFE, WHITE HOUSE SENIOR ADVISOR: Thanks for having me, Lawrence.
O‘DONNELL: Could you trace for us, David, how the administration went from at the beginning of the year, Tim Geithner, Jack Lew, asking for a clean debt ceiling increase, the kind we used to do all the time, a one-page bill that changed a number in law—all the way over to this point where the president has been through negotiations on a variety of very big deficit reduction bills of unprecedented size, including those with the tax revenue and now the one today that he‘s endorsed with Harry Reid that does not include tax revenue? How does it get from a “let‘s do a clean bill one sentence bill” to let‘s do these kind of giant reduction bills attached to a debt ceiling?
PLOUFFE: Well, we‘ve always maintained we didn‘t think the debt ceiling should be held hostage. But the president is committed to deficit reduction. He believes it‘s important for our economy.
There‘s a very progressive case for deficit case for deficit reduction, which is, you know, the numbers don‘t lie. If we don‘t begin to live within our means and significantly cut the deficit in the not-too-distant future, we weren‘t only going to be able to pay for Medicare and Social Security and defense, we won‘t have money for things like college loans, medical research, kids health care.
So, we have to get our fiscal house in order so that we obviously reduce the deficit and leave a better fiscal situation for future generations—but also so we have the future to invest in things that are going to create good jobs and the programs for our citizens.
O‘DONNELL: David, the president, it seems to me, keeps moving to whatever the new legislative reality is. If something gets ruled out as impossible, he realistically moves to something that looks at least more possible than just what became impossible.
Here‘s was Speaker Boehner coming out tonight, responding to the president, saying let‘s do cut, cap, and balance. I mean, that‘s going backwards. They are moving backwards in these negotiations.
PLOUFFE: Well, listen, the president, as you mentioned, was working with Speaker Boehner to try and do a deficit reduction package that was balanced, that had revenue, that had tough spending cuts, but ones that we thought the country could live with. That was our preferred approach.
That broke down, speaker walked away from that. And now, we have a stalemate.
And the president said tonight, of the options in front of us, Senator Reid‘s option is the best one to get through the default crisis. We still have a lot of work to do on the deficit.
And, listen, you know, there was a report that just came out on your competitor, CNN, that, you know, one of the ratings agencies is saying that if the Boehner plan is passed, it means a downgrade. So, that means a tax increase for just about every American and higher interest rates.
So, as the president said tonight, that doesn‘t solve the problem. We need to do both the smart thing in the short-term here to make sure we don‘t default, but also don‘t have this hanging over our economy five or six months from now. And then we need to get to the serious work of deficit reduction, which is going to require smart entitlement reform but also tax reform.
In the Republican approach—listen, six months from now, we know what‘s going to happen. If they get their way, this committee that Congress is setting up will hopefully do a good job. But if they don‘t, if that committee stalemates, the House Republicans are going to say, here‘s our $1.8 in spending cuts, historic cuts in things like Medicare, education and Social Security. It would basically enshrine the Paul Ryan budget into the law and we‘re not going to sign up for that.
And so, over the next few days, what we need is politicians here in Washington compromise a little bit, particularly House Republicans. That‘s the only way we‘re going to get out of this impasse.
O‘DONNELL: David, the president identified Speaker Boehner as one of the Republicans, he mentioned Republican senators not by name, but then Speaker Boehner specifically as one of the Republicans who was willing to reach some kind of compromise that would include tax revenue increases, what the president calls the balanced approach.
I didn‘t hear the speaker proudly announcing to the American people he was being so flexible in the negotiations, that he was willing to come to some kind of agreement with the president on that.
Was that an attempt to politically isolate the speaker from his colleagues in the House of Representatives?
PLOUFFE: No, it wasn‘t. I think that the speaker—I think the president wanted to make clear to the American people that despite our disagreements, you know, we have been able to find common ground, and with the speaker we really tried to find common ground on the deficit.
I think his caucus—you know, that is a tough sell. I think had we marched forward, we could have marshaled the votes for it, putting together enough Republicans or Democrats to do a balanced approach. But it is true. In the Senate, you have Republicans of all ideological spectrums saying that they would be supportive potentially of a balanced approach.
And that‘s what we need to do here both in the short and long-term.
O‘DONNELL: David, that‘s about all the time we have for tonight. I just want to congratulate you on your moment here, participating in history in the White House—the first presidential prime-time address on raising the debt ceiling.
PLOUFFE: Hopefully, the last, Lawrence.
O‘DONNELL: Hopefully the last one. David Plouffe, thank you very much for joining me tonight.
Still to come, a look at the policy side of tonight‘s speech with MSNBC analyst Howard Fineman and Ezra Klein.
OBAMA: Unfortunately, for the past several weeks, Republican House members have essentially said that the only way they‘ll vote to prevent America‘s first ever default is if the rest of us agree to their deep spending cuts-only approach. If that happens and we default, we would not have enough money to pay all of our bills. Bills that include monthly Social Security checks, veterans benefits, and the government contracts we‘ve signed with thousands of businesses.
O‘DONNELL: That was the president from the East Room of the White
House in an address that began just a little over an hour ago, addressing
the nation in primetime—the first president to do so on the stalemate
over raising the debt ceiling, a subject that has never been and the
exclusive subject of a presidential address before
Joining me now: MSNBC political analyst and senior editor for “The Huffington Post,” Howard Fineman, along with MSNBC contributor and “Washington Post” columnist, Ezra Klein.
Ezra, looking at the two speeches, the president‘s speech and then Speaker Boehner‘s speech, compare and contrast for us the policy positions outlined by each of them.
EZRA KLEIN, MSNBC CONTRIBUTOR: Obama‘s going for what he likes to call the balanced approach. And the balanced approach is some level of tax increases. Now, remember that the deal Obama offered Boehner about a week ago now, or maybe a little bit less than that was $1.2 trillion in tax increases for $4 trillion in deficit reduction total.
Boehner walked from that. But Boehner did say he would be OK with an $800 trillion tax increase if there were $4 trillion in debt reduction total. So, in some strange way, the two aren‘t as far apart as you‘d think, but they can‘t bridge that final gap.
So, now that that broke apart, Boehner has gone all the way to the other side, he‘s arguing for constitutional balanced budget amendment, he‘s arguing for no tax increases at all.
But Obama is sort of held to that same deal and is trying to continue to offer it to Boehner.
O‘DONNELL: Let‘s listen to what the president said about the Tea Party and the unwillingness to compromise.
OBAMA: Now, I realize that a lot of the new members of Congress and I don‘t see eye to eye on many issues. But we were each elected by some of the same Americans for some of the same reasons. Yes, many want government to start living within its means, and many are fed up with a system in which the deck seems stacked against middle class Americans in favor of the wealthiest few.
But do you know what people are fed up with most of all? They‘re fed up with a town where compromise has become a dirty word.
O‘DONNELL: Howard, he never said the words “Tea Party.” He kept saying “new members of Congress.” I wonder who he was talking about.
HOWARD FINEMAN, MSNBC POLITICAL ANALYST: Well, I don‘t know why he didn‘t just come out and say it, but a couple things here. First of all, I want to say that with the “Huffington Post,” we‘re reporting that many of the Web sites in Congress, the members of Congress‘ Web sites are down, apparently because of traffic, because the president said at one point, you know, let your member of Congress know how you feel. And apparently a lot of them did.
So, the speech was effective in that sense, number one.
Number two, I have to disagree slightly with Ezra here, because what mystified me about this speech by the president is, he gave a great speech for a policy of a few months ago or up to last week that‘s no longer where the ball game is. And the president slipped into the speech the fact that he‘s now in favor of the Senate plan that is the Harry Reid plan, which also contains no revenues in it.
So after giving a whole speech about the balanced approach that he‘s supposedly for, the fact is what the White House is supporting now in a last-ditch effort to do something other than what the Republicans want to do, that would require another circus like this six months from now is a cut-only plan that would, though, take the debt ceiling debate past the 2012 election.
The president didn‘t dare explain that in any detail because it would undercut everything he just said, and it also would further infuriate the left wing of his own party. That completely mystified me.
O‘DONNELL: Ezra, let‘s go to that. The Reid plan, it seems to me, is a perfect one for calling the Republicans‘ bluff, if nothing else because it does do, as Howard said, the dollar-for-dollar exchange on debt ceiling increase with spending cuts and spending cuts only, no uncomfortable tax revenue increases for Republicans. And Republicans are opposing it.
KLEIN: Yes. Howard is right, by the way, that the president did endorse the Reid plan today, and they‘re still arguing for revenues after saying he‘d be OK with the cuts-only bill.
The Reid plan, what it does is $1.2 trillion in discretionary spending cuts and then it adds another trillion in savings from winding down the wars and then another $100 billion in mandatory spending, and in the so-called congressional super committee to cut spending.
It‘s actually, oddly enough, very similar to the first phase of the Boehner plan—the place where the two are on cuts are not all that different. But it is, as you say, it‘s designed to call the Republican bluff. It‘s dollar for dollar—it‘s beyond the dollar limit you need to actually raise the debt ceiling.
And the hope is that you can show that the Republicans aren‘t going to go there. It‘s only because they refuse to raise the debt ceiling g without cutting Medicare.
FINEMAN: Can I say, Lawrence, I think that‘s the speech that the president should have given tonight. I hate to be a Monday night quarterback—but, look, they‘re clearly—if he‘s not willing to support this Reid plan, which has no revenue raisers in it, and they‘re saying no, then clearly, the only reason that they want to say no is that they want to do this again in six months. And he should have said that.
O‘DONNELL: Howard Fineman and Ezra Klein, thank you very much for your time tonight. Howard, you were hired as a Monday night quarterback tonight. That‘s why we want you here.
FINEMAN: OK, Lawrence. Thank you.
O‘DONNELL: Thank you both, very much.
FINEMAN: And welcome back football.
O‘DONNELL: That‘s right. We will be live again tonight with 11:00 p.m. with a late edition of “THE LAST WORD” and continuing coverage of the president‘s address to the nation. You can have the last word online on our blog,, and you can follow my tweets @Lawrence.
“THE ED SHOW” is up next.
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