'The Last Word with Lawrence O'Donnell' for Monday, August 1st, 2011

Guests: Jared Bernstein, Jonathan Alter, Luke Russert, Rep. Barney Frank, Robert Greenstein, Ari Melber

LAWRENCE O‘DONNELL, HOST: After brilliantly making the Republicans look ridiculous at every stage of the negotiations, after slowly but surely educating the public about the importance of raising the debt ceiling, and after turning voter sentiment against the Republicans, in the end the president blinked.
(BEGIN VIDEOTAPE)
(MUSIC)
CHUCK TODD, NBC NEWS: You know, it‘s only Monday.
LUKE RUSSERT, NBC NEWS: It could be a long night here on Capitol Hill.
O‘DONNELL (voice-over): Here‘s how the deal got done.
UNIDENTIFIED MALE: For now, it looks like crisis averted.
O‘DONNELL: Friday, the House passed Boehner‘s bill, then the Senate killed it.
The House of Representatives has passed Speaker John Boehner‘s twice-revised budget control act.
Saturday, Harry Reid tried to round up votes for his bill.
SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: The spectacle going on in the Senate.
O‘DONNELL: Republicans voted down the Reid bill in the House before he could get a vote in the Senate.
REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Bipartisan opposition to Senator Reid‘s proposal.
O‘DONNELL: Then Michele Bachmann used the House of Representatives to make a campaign speech.
REP. MICHELE BACHMANN ®, MINNESOTA: Guaranteeing insane, castigating Republicans, blank checks.
ANDREA MITCHELL, NBC NEWS: Lack of a debt deal.
BACHMANN: No plan to show leadership. Tisk, tisk, tisk.
O‘DONNELL: While Democrats met with the president.
SEN. HARRY REID (D-NV), MAJORITY LEADER: I appreciate everyone‘s patience.
O‘DONNELL: On Sunday, the Reid bill got a majority vote in the Senate.
CHRIS JANSING, NBC NEWS: We are waiting for the Senate to vote.
REID: We are cautiously optimistic.
O‘DONNELL: But a majority was not enough.
UNIDENTIFEID MALE: The Senate stands in recess, subject to the call of the chair.
TODD: That was the hold up yesterday.
O‘DONNELL: So there were more meetings.
REP. NANCY PELOSI (D-CA), MINORITY LEADER: So we‘ll all have to take a look.
BOEHNER: Hello?
TODD: Hours and hours waiting.
O‘DONNELL: But on Sunday night—
REID: Parties have come together.
MCCONNELL: There‘s now a framework.
JANSING: And so, there you have it.
O‘DONNELL: So, the president interrupted Sunday night TV.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The leaders of both parties in both chambers have reached an agreement.
O‘DONNELL: And now everyone‘s happy.
UNIDENTIFIED MALE: I‘m not happy for this deal.
UNIDENTIFIED MALE: I‘m not going to vote for this deal.
REP. BARBARA LEE (D), CALIFORNIA: The single worst piece of public policy.
MITCHELL: It is a house of cards.
O‘DONNELL: And his campaign staff finally told Mitt Romney what he thinks.
UNIDENTIFIED MALE: He says he will not support this deal.
(END VIDEOTAPE)
O‘DONNELL: The United States House of Representatives has just passed the largest deficit reduction package in history and the most ill-conceived and unfair deficit reduction package in history without having a single hearing on what is actually in the bill, without having a single hearing on how the spending cuts in the bill will affect the American people and without having a single hearing on how the spending cuts will affect the American economy.
The bill is the product of a know-nothing Republican House of Representatives that loudly flaunts its economic illiteracy and that held hostage no Congress before had even dared tamper with, raising the statutory debt ceiling.
A Democratic president and Democratic majority leader of the Senate would never have agreed to the stupidest deficit reduction package in history if the stupidest Republican Congress in modern history had not taken the debt ceiling hostage, because it was the only way that they believed that they could find the way to raise the debt ceiling 95 House Democrats, including minority leader, Nancy Pelosi, voted in favor of the bill, along with 174 Republicans, including Speaker John Boehner, who traditionally, the speaker, does not vote on legislation.
During the vote, the House of Representatives applauded Arizona Congresswoman Gabrielle Giffords, who appeared in the Capitol and cast her first vote since she was critically wounded in the January Tucson shooting rampage. She voted in favor of the legislation.
Senate Majority Leader Harry Reid announced the Senate has reached a unanimous consent agreement to do a roll call vote tomorrow at 12:00 noon. The bill is then expected to pass and head to the president‘s desk where he said he will sign the legislation into law just hours before the United States would have defaulted on its obligations.
The bill creates a bipartisan congressional committee to recommend by Thanksgiving more savings, $1.4 trillion over the next 10 years. The White House and congressional leaders spent today selling the compromise to progressives who said it cut too much and two Tea Party Republicans who said it didn‘t cut enough.
(BEGIN VIDEO CLIPS)
JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: The truth of the matter is there is sort of a damage hanging over everyone‘s head, this is the debt limit. Unless certain compromises were made, we would default on our debt.
REID: Neither side got what they wanted. But it‘s in the essence of compromise.
BOEHNER: It gives us the best shot that we‘ve had in the 20 years that I‘ve been here to build support for a balanced budget amendment to the Constitution, to put the kind of fiscal handcuffs on this Congress that are sorely needed.
(END VIDEO CLIPS)
O‘DONNELL: Joining me now, Democratic Congressman Barney Frank of Massachusetts, the ranking member of the House Financial Services Committee.
Thanks for joining me tonight, Congressman.
REP. BARNEY FRANK (D), MASSACHUSETTS: You‘re welcome.
O‘DONNELL: A very difficult day in the House of Representatives.
I‘ve never seen a messier piece of legislation be brought to a vote there.
Tell us how you voted and why.
FRANK: Well, I voted no. But let me say primarily, the Republicans came to power promising all these procedural changes, openness, amendments, et cetera, there was not now a single Republican procedural promise left unbroken. The way they have acted the last few weeks, of course, has been as high-handed, is arbitrary and as little democratic as it could be.
I wanted to vote yes. I didn‘t want to see a default. In fact, I voted earlier for clean default. I think a default puts a lot of pain on the people least able to deal with it.
And I don‘t want to see the Tea Party succeed in its campaign to degrade our capacity to work together, which we call government. And so, I was—earlier this morning thinking well of it, but then I saw the details. The bill puts caps on military spending and caps on domestic spending, but it exempts from any cap at all spending for Iraq and Afghanistan.
Now, that‘s well over $100 billion a year. I can‘t vote to give a blank check for spending in Afghanistan and then cut important programs for police and fire on the streets of the city—the cities I represent.
It also said, look, when we go forward we‘re going to have a 50/50 split between in cuts for military and non-military. I was for that because we‘ve overspent in the military. I was glad to finally get that.
But when, again, I read the specifics, that 50/50 split was only for the next two years. To the next eight years, there was no guarantee the military wouldn‘t overdo it.
Finally, we did in the health care bill put some cost savings into Medicare. On top of that, this bill would cut 2 percent out of Medicare all from providers. That may sound like a bit, but they‘ve already have the margins, and when you cut providers, you cut access to individuals who may not be able to get a doctor.
You also cut hospitals and, frankly, hospitals are an important source of employment for people trying to get in the economy.
So, I didn‘t want to vote for it. I couldn‘t vote for a bill which exempted spending for Afghanistan and Iraq and did not sufficiently limit military spending.
O‘DONNELL: Congressman Frank, there‘s a report in “The Huffington Post” that the vice president told Democrats the White House was, indeed, considering using the 14th Amendment if it came to that, if it was stuck and there was nothing coming from the Congress to the White House to raise the debt ceiling.
Did you hear the vice president say that, can you confirm that for us?
FRANK: No, I think that‘s a—I think that‘s people hearing more than he said. He did say that he did not think it would be even possible to think about it unless there was a dire emergency. So, in other words that the president would have used it in that case, I guess I would say he was saying that a dire emergency would be a necessary condition for invoking it, but maybe not sufficient.
And I must tell you, I think that invoking the 14th Amendment would have played into the effort to delegitimize democracy in the government. And, look, I think it‘s important to have some kind consistency to principle. I‘ve been one of those very critical of the over-empowering of the executive under George Bush. And, unfortunately, in the military area, President Obama has done a little of that.
This would be a great increase in executive power about which I wanted to be more careful than some of my friends.
O‘DONNELL: Congressman Frank, we now go to the question of the
composition of this super committee that will be created, and it‘s—it‘s
equally divided between Democrats and Republicans and equally divided
between the House and the Senate. But there is a third branch of
government that is not included. Why isn‘t the vice president, an
additional, the 13th member of this super committee or the secretary of
treasury, some member of the Bush—the Obama administration since they do
have, through the veto power, a voice and the single-largest vote of this -
-

(CROSSTALK)
FRANK: Because the president felt, and I disagreed in the end, I understood the stakes, that it was important to avoid default. Clearly, the Republicans wouldn‘t have agreed on a Democratic member in the committee—I think that were the case. But that‘s the reason. Frankly, if we had the votes through that, we wouldn‘t have had to go through the whole charade—not charade, unfortunately, much more than a charade. We wouldn‘t have had to go through the whole thing.
If we had the votes to do it, we‘d have the votes to do what was logical, what even Ronald Reagan understood --, a clean debt increase.
Look, here‘s the problem, Lawrence—we had a group of people who did very well in the last election and who have because of the fears of other Republicans—they are not all Tea Party Republicans, but they are all people afraid of a Tea Party Republican family. People controlling the Republican Party in the House who want to tear down the government.
That puts us in a difficult situation because people ready to cause a wreck, people ready to say no, get a certain advantage in a negotiation—that‘s unfortunately part of the theory. So, we were not prepared.
You know, Joe Biden talked about the story of King Solomon, said he solved this problem by saying I‘m going to cut the baby in half, the true parent to the baby said, oh, my God, don‘t cut it baby in half, I‘ll give in—was some extent the president and we were in that situation. We‘re the parent in the notion we could come together as civilized people and do things, put out fires, build highways, and educate children, and shelter (ph) the very poor.
And you have the people ready to cut the baby in half. Unfortunately, they had an advantage. That‘s why the whole thing got into it.
But as I said, if we had the votes to have a 7-6 commission instead of 6-6, then we‘d have the votes to go dispense the whole rigmarole and go right to a clean debt limit.
O‘DONNELL: Congressman Frank, is a quick summary to why the Democrats compromised as much as they did here is that the president and the Democrats believe that the Republicans are as crazy as they say they are?
FRANK: Yes, and by crazy I mean it‘s composed of two elements. One, sheer ignorance. Ignorance of what the consequences would be of a default.
And look, here‘s again part of our problem. If there‘s a default, the richer you are, the less it would hurt you. The more money you‘ve got saved up, the less you would be damaged.
And, again, I voted against this because it went too far. But what I mean is I was looking for reason to vote for this, it would be the most vulnerable people. Members of the Congressional Black Caucus were the ones very concerned, although many of them, of course, had to vote against it because of the reasons I did.
But—so, some of them are ignorant of the effects. Others, and this is the domination, they don‘t understand the private sector can only do so many things, tax cuts don‘t put out fires, that you don‘t want to give your children too much debt, that you don‘t want to give them bridges that are going to fall apart, air that makes them sick when they breathe it, water that‘s too dirty.
You don‘t want children running around homeless. They even—they don‘t believe in that. There‘s a disbelief in government.
Now, the one good thing about this is it sets up a very important debate for next year—which is this: we‘re going to consider next year, whether or not we got the Bush tax cuts expire for the very wealthy or we make very severe cuts in education and transportation and others. It‘s time for the American people to decide if they want a decent level of services, I believe, then we have to have in addition to some constraints, more revenue, more revenue meaning taxes.
And what we‘re talking about is this: $3 per $1,000 for every dollar you make over $200,000. That versus cuts in education and cuts in health care, and cuts to the homeless, and cuts in Medicare. That‘s a debate we have to have next year.
O‘DONNELL: Congressman Barney Frank of Massachusetts—thank you very much for joining me on this difficult day in the House of Representatives.
Coming up: what happened behind the scenes as Congresswoman Gabrielle Giffords returned to the Capitol for the first time since she was shot in January.
And Bill Maher is in the “Rewrite” tonight. Bill rewrites America‘s understanding of socialism.
(COMMERCIAL BREAK)
O‘DONNELL: Coming up, everyone confines something they hate in this deal. Is there anything good in it for the president and the Democrats? A closer look at the polices is next.
And later, the one thing that had Democrats and Republicans cheering on the House floor, the return of Gabby Giffords.
(COMMERCIAL BREAK)
O‘DONNELL: Now for a closer look at the deficit reduction agreement and its impact, President Obama got what he said was most important to him and most important to the economy, an agreement to increase the debt limit through the 2012 election. And the Republicans got what was most important for them, an agreement with no new tax revenue in it.
Here are the other key elements of the deal. The agreement includes more than $900 billion in spending cuts over the next decade, although only $22 billion of those cuts would go into effect in the first year. More than 1/3 of the $900 billion in cuts would come from defense spending. There are no cuts to Medicare, Medicaid, and Social Security in the agreement.
The agreement calls for a special joint committee of 12 members of Congress, three from each party, from the House and the Senate, to make recommendations for an additional $1.5 trillion in deficit reduction before Thanksgiving of this year. Those recommendations will be guaranteed a vote in the House and Senate before Christmas.
That deficit reduction can include tax revenue and, according to the White House, it should include tax revenue, the balanced approach the president has called for.
If the super committee is deadlocked and cannot make recommendations to Congress or if the super committee‘s recommendations are voted down by Congress, automatic spending cuts will be triggered. Fifty percent from domestic spending and 50 percent from defense spending, with Medicare, Medicaid, and Social Security protected from any triggered spending cuts.
Republicans believe the draconian spending cuts and domestic spending cuts that would be triggered are incentive enough for Democrats on the super committee to come to agreement and Democrats believe the triggering of sharp defense cuts is an incentive to force Republicans on the super committee to reach an agreement.
And the White House seems to believe that the scheduled expiration of the Bush tax rates on December 31, 2012, is yet another incentive for Republicans to reach a reasonable agreement on deficit reduction.
(BEGIN VIDEO CLIP)
JAY CARNEY, WHITE HOUSE PRESS SECRETARY: If it fails, either to produce something or if Congress fails to act on it, you can be sure that the president will honor his promise to veto any legislation that would extend the Bush high income tax cuts beyond 2012, which would, of course, create nearly $1 trillion in revenue raisers when that happens.
(END VIDEO CLIP)
O‘DONNELL: OK, that makes absolutely no sense. Let me try to walk you through this. I hope I don‘t get myself tangled up in it.
What the White House and the media so far seem to not understand about that is that the president will never, ever have a chance to veto legislation that would extend only the Bush top tax bracket. No Democrat or Republican has offered or will ever offer a bill that extends only the Bush top tax rate. If such a bill were offered and passed in both bodies, which will never happen, yes, the president would veto it.
But the president‘s firm veto threat you just heard is for a mythological tax bill that no one has ever suggested and no one will be in favor of. Republicans want to maintain all of the Bush tax rates, including the bottom one. Not just the top tax rate.
Democrats and president want to maintain all the Bush tax rates except the top Bush tax bracket. That is what the president campaigned on in his presidential campaign, that is what he tried to achieve last December, and the game of chicken on the tax rates that so far the Republicans have won simply comes down to this, if Republicans take no action, all of the Bush tax breaks will expire and every tax bracket, including the bottom tax bracket, which is currently at 10 percent, that will go up to 15 percent. They‘ll all go up.
And so far, the president and the Democrats are more in favor of preserving the lower Bush tax brackets than they are in favor of raising the top tax bracket. That, and only that, is why the president didn‘t raise the top tax bracket back in December and that is why legislatively he will never be offered a stand-alone opportunity to do nothing but raise the top Bush tax bracket.
Until the president decides that, if necessary, in order to get the top income tax bracket raised, he is willing to see every tax bracket go up, then the Republicans will always, always win the fight to extend the Bush tax rates.
Joining me now, MSNBC contributor Jared Bernstein, former chief economist to Vice President Biden and senior fellow at the Center on Budget and Policy Priorities; and Robert Greenstein, the founder and president of the Center on Budget and Policy Priorities.
Thank you both for joining me tonight.
ROBERT GREENSTEIN, CENTER ON BUDGET AND POLICY PRIORITIES: Good to be here.
O‘DONNELL: Bob, I have been waiting eagerly for your analysis of this bill. I know this is a hard assignment for you because it came out so quickly. It‘s the most rushed giant package I‘ve ever seen, especially in deficit reduction territory. Give me your take on what we‘re looking at here.
GREENSTEIN: Yes, we put out our take an hour or two ago. You know, Lawrence, I‘m reminded of the 1950s sitcom “The Life of Riley” where the main character says what a revolt and development this is.
The Tea Party, I think, did very well here. This is a package with large spending cuts and no revenues. Now, to be sure, the joint special committee, which is charged with coming up with $1.5 trillion in savings by Thanksgiving could raise revenue, but Speaker Boehner has already said he will not name a single Republican to the committee who would vote to raise any revenue. I think it‘s pretty much a foregone conclusion that the joint committee will fail.
There‘s no way Democrats on the committee are going to agree to $1.5 trillion in entitlement cuts. That‘s what Boehner and the Republicans want.
You remember that when Boehner and the president a couple of weeks ago were negotiating a deal that raised the Medicare age and increased Medicare co share charges, Medicaid cuts affected Social Security cost of living adjustment, all those things combined produced about $650 billion in entitlement cuts. This committee is supposed to come up with $1.5 trillion.
So, if Boehner will not allow, if the Republicans will not allow any revenue to be on the table for the joint committee, and they say they won‘t, there‘s no way the Democrats on the committee will agree to $1.5 trillion of entitlement and a deeper domestic cuts. The joint committee will jail and we will be set up for these big, across the board cuts, to kick in in January 2013, and we will fight about this throughout the entire election year in 2012.
The outcome isn‘t—is in doubt at this point.
O‘DONNELL: And there is nothing stupider than indiscriminate across the board cuts that aren‘t legislated individually.
Jared, take us to the larger economic impact of this. Here we are in a very fragile economy, where it turns out, with revised numbers, our economic growth has been worse than we thought it was and the actual recession was deeper than we thought it was.
JARED BERNSTEIN, MSNBC CONTRIBUTOR: True.
O‘DONNELL: We‘re going to pull money out of the economy now. One of the good news seems to be only $22 billion is coming out in the first year, when the economy will be the most fragile.
But what do you see as the overall impact here?
BERNSTEIN: Well, first of all on a somewhat positive note, the economic impact of putting the debt ceiling and a potential default behind us is obviously, clearly to the good. Now, that‘s sort of like saying it feels really good I‘m not banging myself in the head with this hammer anymore—
O‘DONNELL: Right. Right.
BERNSTEIN: -- because that was self-imposed hysteria. But many of us were getting nervous.
You‘re right about the magnitude of the cuts in 2012, $21 billion or $22 billion, about twice that in 2013 in terms of reduced outlays, and that‘s—that‘s a relatively small part of the story. I think what‘s much more worrisome, where some of the kinds of things Bob was starting to get at and in particular what you heard Barney Frank talk about.
You know, the people who are going to get stung by this, especially in the out years when those cuts get larger, and when if Bob scenario was true, the trigger kicks in and you start having the indiscriminate sequester cuts going to effect are people who have a tough time even when the economy is doing better.
And, by the way, most forecast for the economy to still be kind of the slog a few years out.
So, if you‘re worried about kids, if you‘re worried about education, if you‘re worried about innovation, if you‘re worried about infrastructure, if you‘re worried about the precise kind of investments that can actually make this economy and recovery improve, this is a very tough bill when you get out a few years.
O‘DONNELL: Jared, you were in the White House when this election night happened in 2010, that I think sort of preordained everything that we‘ve seen happen this year.
Did they have a meeting this next day, the day after the election, that was about the debt ceiling? I mean, on election night, I knew the debt ceiling was going to be the most difficult thing we‘d see this year. Did—when did they start strategizing how they would handle the debt ceiling?
BERNSTEIN: Well, probably not soon enough. I do recall that after that election, there was the beginning of an important shift and emphasis away from the recovery and jobs and trying to kind of plant the seeds of something that would really make the difference on the economic side and much more concern about what the electorate, at least an interpretation of what the electorate was telling us in the midterms, is that we want to start cutting spending and reducing the deficit.
So, I think the beginning of the pivot that we saw so dramatically began then.
You know, one of the big opportunity costs of this debate is that for the past couple of months, and especially the past few weeks, as the economy has been deteriorating, we have not been talking about jobs, about the economy, about paychecks, about what really matters for people.
So, that‘s a problem that began back then.
O‘DONNELL: Bob, it seems to me the only way that the president might be able to get revenues discussed in this super committee, which as you‘ve identified, Boehner has promised there will be nothing but anti-tax Republicans on it is for the president to actually come around and say, OK, if it comes to it, I am prepared to allow all, all tax rates to go up—because that‘s the only position he can take that would be in any way threatening to where the Republicans are playing the tax game now.
GREENSTEIN: And his Republican opponents in the presidential race would probably love him to say that, and then they‘ll beat him up for raising taxes on the middle class.
Lawrence, I think what this deal does is it sets up a massive showdown for the lame duck session after the presidential election in 2012. Think about it. The across the board cuts will take in January 2013, not 2012.
So, here we are, we‘re in November/December 2012, the Bush tax cuts expire at the end of the year. These huge across the board cuts are scheduled to kick in on January, and the debt ceiling, we hit it again in January 2013.
Huge showdown, that‘s probably when the big conflagration and big decisions will be made.
O‘DONNELL: Bob Greenstein, founder and president of the Center on Budget and Policy Priorities, and MSNBC contributor Jared Bernstein—thank you both very much for joining me tonight.
BERNSTEIN: You‘re welcome.
O‘DONNELL: Coming up, we‘ll look at who the political winners and losers are in this deal and what the voters will remember about all this next year.
And Congresswoman Gabrielle Giffords surprised a lot of people on the House floor, not with her vote, just by being there.
(COMMERCIAL BREK)
O‘DONNELL: Still to come this hour, the politics of the debt ceiling deal and why people are comparing it to Satan sandwiches and Satan fries. Jonathan Alter and Ari Melber join me next.
And tonight, it‘s Bill Maher‘s turn to explain to you why we‘re all socialists now. That‘s in the “Rewrite.”
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
OBAMA: I believe we need a balanced approach.
I believe we need a balanced approach.
It is possible for us to construct a package that would be balanced.
We‘ve got the American people who agree with that balanced approach.
I continue to believe that a package that is balanced and actually has serious debt and deficit reduction is the right way to go.
We can do it in a balanced way that doesn‘t hurt anybody badly, that doesn‘t put the burden just on one group.
This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much.
(END VIDEO CLIP)
O‘DONNELL: The president gave up his balanced approach that would include tax revenue in order to get a deal with the Republicans in the end.
In the spotlight tonight, the language used to describe the debt ceiling negotiations has gone way beyond mere winners and losers. Instead, you hear talk about hostages, terrorists, extortion, causalities.
Congressman Emanuel Cleaver, Democrat from Missouri, tweeted, “This deal is a sugar-coated Satan sandwich. If you lift the bun you will not like what you see.”
The American people offered up their descriptions in a new “Washington Post”/Pew Research Center poll, it asked, if you had to use one word to describe your impression of the budget negotiations in Washington, what would that one word be? The top picks: ridiculous, disgust, disgusting, disgusted, stupid, stupidity, frustrating, frustrated, poor, poorly, terrible, disappointing, disappointment, disappointed, childish, joke, mess, messy, pathetic, crazy, bad, idiot, idiotic, disaster, disastrous, suck, sucks, sad, bull, bull crap—and I cleaned up that last word.
So, will voters reward anyone for the debt ceiling deal?
Joining me now are Ari Melber, correspondent for “The Nation” magazine, and Jonathan Alter, MSNBC political analyst and author of “The Promise.”
Jonathan, what do you see here as a possible win on the Democratic side and the president in this?
JONATHAN ALTER, MSNBC POLITICAL ANALYST: First of all, I think both
the president and John Boehner are in the loser category. Folks are saying
to hell with all these guys, it‘s a very bad deal for Washington in general
and Boehner and Obama represent Washington. So, they are losers.

But in terms of the parties, I think the Republicans lost more in this whole exchange than the Democrats, because they were pretty accurately and consistently portrayed as an extremist party and the polling shows that they are off the rails. So, if presidential elections are about capturing the center, this wasn‘t so bad for the Democrats.
O‘DONNELL: Ari, the president‘s instincts were good on how to handle Somali pirates when they took hostages, but here the president knew he was dealing with a hostage taking, and he never came out and said, OK, these are the limits. This is what I will not allow you to do in this hostage taking, and I didn‘t get what I wanted to see which is real serious veto threats starting earlier, starting a few weeks ago, and, if necessary, an actual veto, including today, because they are empowered in both bodies at the last minute to pass these things very quickly.
I just announced at the beginning of the show that Harry Reid is moving this bill tomorrow by the unanimous consent of the Senate. Chuck Schumer was on here saying, you know, Senate rules make this stuff go slowly. No, you don‘t, if you get unanimous consent. That means Rand Paul has given his unanimous consent to allow this debt ceiling thing to go because even he knows it has to go.
It seems to me there was more of a veto threat possibility here for the president to wield earlier in this process to avert what is happening to them now.
ARI MELBER, THE NATION: I think that‘s right. I think you can do a veto threat. I think you can also do a demonstration if you believe they were really going to do this, that the Republicans were actually going to make this country default, which is a claim now that has become something of a conventional wisdom, although I, to this day, doubt whether in the final hours, that would happen.
But if you do believe that, then the only responsible thing to do as a chief executive is plan for it, do whatever CEO would do, which is to get ahead of that deadline. What do I mean? Well, the president could have come out a month ago and said he was going to start withholding Social Security checks for say the top 5 percent income earners as a preventive measure, start closing the state parks one day a week, start closing air traffic controllers, which is a federal program that‘s imperative for our security and our safety in the air, but might something you have to start scaling back incrementally to free up the funds to deal with the situation.
Any one of those things, I think, would have hit people at a gut level as a bottom line reality more than just having the “Bachelorette” interrupted for 20 minutes as the president gives a somewhat meandering speech, saying, I swear, it‘s about to get really bad, but I‘m going to prevent it, so you should worry but not worry too much.
Again, I don‘t blame the president for that situation. I blame the Republicans for claiming to go that close, whether or not they would really do it.
But I do think as you say, the timing could have been very different for the chief executive.
O‘DONNELL: We have NBC/”Wall Street Journal” polling. If it‘s ready, we can put in the screen. If we don‘t have it—basically, it tracks through the years, starting in January, with the “Reuters” poll, 70 percent of the public against raising the debt ceiling. The president took on an education campaign, he stayed at it relentlessly, we got it to the point where by July, the president had convinced the country that yes, the debt ceiling needed to be raised, and when those polls actually added to the responded, the information about what the debt ceiling actually was, the numbers went even higher.
And so, Jonathan, the president had succeeded in the education he needed to give to the public. He succeeded in turning the public against the Republicans‘ position on excluding tax revenue, yet he never stepped up and issued what would have been the necessary veto threats in order to get his position forced into this final agreement.
ALTER: Well, I‘m not sure the veto threats would have been credible given the deadline, given the timing. Look, there are going to be a million Monday morning quarterbacks, historians will be busy wondering he should have taken the 14th Amendment off the table, that would have been a good hammer to have over their heads in negotiations. There was no reason to take that off the table.
So, there are tactical errors you could point to.
But I‘m actually at this point, Lawrence, more interested in what‘s going to happen now, between now and September 15th, this super committee is going to be named. These hearings will be public. This will be one of the most famous or perhaps infamous committees in the entire history of the United States Congress. We are going to be arguing about these points from now until Christmas, which will prevent us from pivoting to jobs, unfortunately.
So, this is the beginning of something, not the end of something.
O‘DONNELL: Jonathan Alter, MSNBC political analyst, and Ari Melber, correspondent for “The Nation” magazine—thank you both for joining me tonight.
MELBER: Thank you, Lawrence.
ALTER: Thanks, Lawrence.
O‘DONNELL: Coming up, it was the moment Congress need, the return of Gabrielle Giffords a mere seven months after being shot to cast her vote today.
(COMMERCIAL BREAK)
O‘DONNELL: First, “Newsweek” did a cover story telling us that we‘re all socialists now, then I on this program made the case we‘re all socialists now, and now, Bill Maher has done it. No one—no one can make the case more entertainingly than Bill Maher, he‘s going to do it for us. “The Rewrite” is next.
(COMMERCIAL BREAK)
O‘DONNELL: Time for tonight‘s “Rewrite.”
Tonight‘s guest rewriter is friend of the show, Bill Maher, who‘s added a new twist to a truth first revealed in the mainstream media in 2009 by “Newsweek” when it ran a cover story entitled “W are All Socialists Now.”
I have, of course, been calling myself a socialist since I first read the definition of socialism in the first economics class I took in college.
And what “Newsweek” and I mean is, not that we choose the socialist option every time, but we do consider socialism a reasonable option under certain circumstances—in fact, under many circumstances. As any introductory economics course can tell you, there‘s no capitalist economy anywhere in the world and there is no socialist economy anywhere in the world, not even Cuba.
We are all mixed economies, that is, mixes of capitalism and socialism, and we all vary that mix in different ways. China has more capitalism and a lot more capitalism than Cuba, but it also has a lot more socialism than we do.
Our socialists programs include the biggest government spending program, Social Security, Medicare, Medicaid, as well as welfare and the socialist program I hate the most, agriculture subsidies.
Yes, I‘m a socialist, but I hate bad socialism, and there is plenty of bad socialism out there. Just as there is plenty of bad capitalism out there like the capitalism that pollutes our rivers or makes health care too expensive for so many people. I can argue every side of this because every side of this is true, capitalism is good, capitalism is bad, socialism is good, socialism is bad. All of those things are true at the same time.
That‘s why we have a mixed economy, an economy in which we‘re trying to use the best, most efficient forms of capitalism, and the best, most efficient forms of socialism where necessary. So, my full truth is I‘m as much a capitalist as I am a socialist. But since we live in the only mature country in the world where socialist is considered so dirty a word that no one dare admit to being one, I feel more compelled to stand up for the socialist side of me than the capitalist side of me.
But enough about me. It‘s Bill Maher‘s turn tonight in the rewrite where he takes his turn trying to rewrite America‘s understanding of socialism.
(BEGIN VIDEOTAPE)
BILL MAHER, COMEDIAN: New rule, it‘s time to stop fighting it and just come out of the closet and the group I‘m talking about is the American public and the love they are denying is their love of socialism.
Yes, Americans say they hate socialism, but when it comes to Social Security, Medicare, unemployment, Fanny Mae and Freddie Mac, corporate welfare, bailouts, and farm subsidies, what we really say to socialism is, I can‘t quit you.
Or take Michelle and Marcus Bachmann, or as I like to think of them, America‘s indoor Palins.
Yes, the Bachmann‘s tireless advocates at cutting people off from the government tit, turns out they live on the tit. Their farm takes farm subsidies. Their counseling clinic takes Medicaid, and their mortgage was underwritten by Freddie Mac.
That‘s what‘s so hard of being a closeted lover of big government, you have to lie to yourself. But that‘s why I‘m here tonight for a special message for all you deniers, it gets better.
Yes, there are millions of people in the world just like you, in nice places like Switzerland and Sweden. For their tax dollars—for their tax dollars, Europeans get full health care coverage, a generous pension, day care, long paid vacations, maternity leave, free college, and public transportation that doesn‘t smell like pee.
They get universal health care—we get a Blue Angel‘s fly over at the Fiesta Bowl. They get paid maternity leave—we get the Octomom. They‘ve got Airbus—we‘ve got the bus.
Isn‘t there anything we still do better? Even their paranoid racist loners look like speed skaters. And ours look like porky pig.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: We all want to welcome back our wonderful colleague, Congresswoman Giffords here.
(CHEERS AND APPLAUSE)
(END VIDEO CLIP)
O‘DONNELL: A warm bipartisan reception for Arizona Congresswoman Gabby Giffords, who made a surprise return to the House floor tonight to cast her vote in support of the debt ceiling deal.
Joining me now from Capitol Hill, NBC‘s Luke Russert.
Luke, you were in the House chamber and the press gallery at the time, what was it like to be in the chamber when she was acknowledged?
LUKE RUSSERT, NBC NEWS CORRESPONDENT: It‘s an absolutely amazing heart-felt moment, Lawrence. There was not a dry eye in the House in the House, if you will.
It was truly special in the sense this debate about the debt had really brought out the cynicism that just plagues this country, especially this city. Both sides are going at each other in the most heated of ways, Republicans and Democrats, no unity at all throughout the entire process, especially towards the end. Reporters were especially drained.
As I said to one person, we didn‘t know there was a deal coming, almost looked like I had a front row seat to our country self destructing, but then Gabby Giffords walks in through those doors, and immediately all that turmoil, all that stress, all that anger, all that animosity went away immediately, and people from both sides understood the gravity of the moment, how amazing it was. Here‘s somebody shot in the head and came back to Washington to perform the duty which she was elected to do by her constituents, to exercise her power to vote and participate in democracy.
It made all the other things that so encompassed the capitol and D.C. and American policy seemed just very small, even if it was for 10 minutes when everyone gave her a standing ovation. It was a truly special moments.
And you saw, I mean, there‘s tears in Republicans eyes, there‘s tears in Democrats eyes. John Lewis, someone (INAUDIBLE) the civil rights movement, seen his fair share of violence, went over and hugged Gabby Giffords and immediately tearing up and then hugged Nancy Pelosi afterwards.
And, you know, we found out Speaker Boehner found out an hour before it happened, greeted Gabby Giffords privately off the side of the floor. Nancy Pelosi and Debbie Wasserman Schultz knew about this yesterday and actually keep this, as they call it, a state secret.
It certainly was a state secret that turned into, I think, everyone would agree, an absolutely wonderful surprise—absolute, wonderful surprise, considering all that has gone on in terms of partisanship, Lawrence.
O‘DONNELL: Luke, the headline of “The Huffington Post” for more than the last hour has simply been “Giffords Returns,” not the House of Representatives has just passed the biggest deficit reduction package in history—
RUSSERT: Right.
O‘DONNELL: -- over a lot of Democratic opposition.
Who knew this was going to happen and did they know it was going to be bigger news than the vote count in the end?
RUSSERT: I don‘t think anyone knew it was going to be bigger news than the vote count, but only the folks who know this as far as I‘m concerned, Nancy Pelosi and Debbie Wasserman Schultz, state secret, like they said, and it‘s turned out to be the story. And you know what? It should be the story because it‘s an amazing story of the human spirit triumphing over evil, Lawrence. It‘s amazing.
O‘DONNELL: NBC‘s Luke Russert—thanks very much for joining me tonight, Luke.
RUSSERT: Good night.
O‘DONNELL: “THE RACHEL MADDOW SHOW” is up tonight with guest host Chris Hayes. Good evening, Chris.
END
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