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'The Last Word with Lawrence O'Donnell' for Thursday, January 3rd, 2013

Read the transcript to the Thursday show

January 3, 2013

Guests: Howard Dean, Nia-Malika Henderson, Chris Edwards

LAWRENCE O`DONNELL, MSNBC ANCHOR: So there`s a new Congress in town and
already it`s crazier than the last Congress. At least in the last Congress
no one, not one person voted for Alan West for speaker of the House.


JOE SCARBOROUGH, MSNBC`S "MORNING JOE": This is a party without any viable

casting their votes for speaker.

UNIDENTIFIED MALE: Who wants the job?

UNIDENTIFIED MALE: Boehner has no real challenger.

UNIDENTIFIED MALE: Why does John Boehner want this job?

CHRIS JANSING, MSNBC`S "JANSING & COMPANY": A bruised and battered John

MITCHELL: Slammed of course even by fellow Republicans.

LUKE RUSSERT, NBC NEWS CORRESPONDENT: They are not happy with Speaker
Boehner right now.

UNIDENTIFIED FEMALE: To the Honorable John A. Boehner of the state of

MITCHELL: There is a protest vote going on.

UNIDENTIFIED FEMALE: Is dully elected speaker of the House of

GOV. CHRIS CHRISTIE (R), NEW JERSEY: Petty. Personal politics.

JANSING: After a huge and angry backlash from members of both parties.

UNIDENTIFIED MALE: It`s inexcusable.


REP. PETER KING (R), NEW YORK: Disgraceful.


KING: Indefensible.


CHRISTIE: My party was responsible for this.

JANSING: John Boehner had scheduled a vote Friday.


JANSING: For an aid package for the victims of Superstorm Sandy.

RUSSERT: They are not happy with Speaker Boehner right now.

REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: We`re sent here not to be
something, but to do something.

SCARBOROUGH: You got the checkbook.

BOEHNER: It is a time to rise.

SCARBOROUGH: He has done a miserable job with the checkbook.

SEN. CHUCK SCHUMER (R), NEW YORK: Speaker Boehner`s speakership --

SCARBOROUGH: They better throw this ship around quickly.

SCHUMER: -- will continue to be a disaster.

RUSSERT: They are not happy with Speaker Boehner right now.

SCARBOROUGH: They are already on their way.

BOEHNER: It is a time to rise.

SCARBOROUGH: You`re making Nancy Pelosi the next speaker of the House.


UNIDENTIFIED MALE: They see a real opportunity for the 2014 elections.

RUSH LIMBAUGH, CONSERVATIVE RADIO HOST: Obama`s victory here has been
massive. Profound. Sweeping.

CHUCK TODD, MSNBC`S THE DAILY RUNDOWN: Palace intrigue is rampant.

UNIDENTIFIED MALE: Fascinating theater.

BOEHNER: Works in here not to be something.

Reid to go F himself.

BOEHNER: But to do something.

FALLON: Republicans told Reid that if he does F himself, they won`t pay
for his contraception.


O`DONNELL: Today Colin Powell got one vote for Speaker of the House.
Defeated former Republican Congressman and all around crazy guy Allen West
got two votes for speaker of the House. Eric Cantor got three votes, and
no, Eric Cantor did cast one of those three votes for Eric Cantor. Eric
Cantor voted for the winner, John Boehner, who got only 220 votes which
meant the 12 Republicans did not vote for Speaker Boehner, who in the last
vote for speaker two years ago, was elected unanimously by the Republicans.

"The Washington Post" notes that, "It was the closest any speaker has come
to not securing a first ballot victory since Newt Gingrich`s narrow re-
election to a second-term as speaker in January 1997. Following an ethics
admonishment. Every other speaker since the Eisenhower administration has
won his or her speaker`s election with more than 225 votes."

"The New York Times" reports Republican Congressman Tim Huelskamp of Kansas
saying, "I think it was a vote of no evidence. Huelskamp believes there
were a lot more Republicans who wanted to vote against Boehner. Still,
John Boehner stepped up to the microphone and read an acceptance speech
that was written for a statesman.


BOEHNER: If you`ve come here to see your name in the lights or to pass off
political victor as some accomplishment, you`ve come to the wrong place.
The door is right behind you. If you`ve come here to carry the standard of
leadership, demanded not by our constituents but by the times, then you`ve
come to the right place.



O`DONNELL: Chris Hayes, I`m just wondering in the -- in the speaker`s
speechwriting workshop, who do they think they were talking to with that?

CHRIS HAYES, MSNBC`S "UP WITH CHRIS HAYES": Who they were fooling?

O`DONNELL: I mean, it`s a cry. I love it. But who is he talking to?

HAYES: I don`t even know who the constituency for John Boehner is anymore,
right? Because there is no -- I mean it`s clear that he`s out of sync with
the center of gravity in the Republican caucus. anymore. Because it is
clear that the center of gravity in the Republican caucus, and that`s been
clear probably since the dawn of this Tea Party Congress back in 2011, the
112 Congress.

It`s also clear that he doesn`t want to be this kind of post -- ideological
partisan figure, right? Who`s like the dealmaker because he was the one,
let`s remember, in the fiscal curve discussion who kicked it over to
McConnell. Right?


HAYES: He could have tried to play that role.


HAYES: And from the beginning said we`re ditching the Hastert rule, I`m
going to cut this deal, I`m bringing it to the floor no matter what. He
could have played that role. So he`s neither the kind of ideological
fighter nor is he the wheeler-dealer, and so the question is, what the heck
is John Boehner`s role?

O`DONNELL: Well, let`s listen to what Rush Limbaugh had to say about this
deal. Rush Limbaugh, who previously has been one of the leaders of the
Republican Party. Let`s listen to this.


LIMBAUGH: The Republicans keep throwing away aspects of their core beliefs
under this silly belief that that`s how we`ll get things done. We`ll
finally get to what now? We`ll get this tax business off the table and now
we can focus on spending.

We are running out of core beliefs to throw away, folks. Obama`s victory
here has been massive. Profound. Sweeping. Unbelievably large.


O`DONNELL: Governor Howard Dean, when you listen to Rush Limbaugh today,
you would think that all governing ended in America and there is nothing
left to do. We`ve obviously got a debt ceiling thing coming up. We`ve got
more budget negotiations going forward.

What do you think -- how do you think the president`s position for what`s
coming forward?

FMR. GOV. HOWARD DEAN (D), VERMONT: Well, it`s very interesting. I
thought that the bill was a big victory for the president. Not such a
victory for policy. When they took the tax cuts off the table for people
under $450,000 a year, the Democrats really have limited themselves in
terms of how they`re going to deal with this deficit.

And make no mistake, they do have to deal with the deficit. Unlike what
Dick Cheney said so famously six or eight years ago, the deficit does
matter because from a Democrat`s point of view it eventually cuts off
social programs that we don`t want cut off.

The fascinating thing here is the battle inside the Republican Party which
we knew was inevitable with Barack Obama`s re-election. You`ve got the
right wing driven by people like Rush Limbaugh who has a number of people
who are pretty loyal to him, I think, in Congress, driving the truck in a
different direction than most of the American people and hopefully --
hoping to drive it right into the ocean.

Of course they see that as the promised land. And you`ve got Boehner who I
actually think is trying to do the best he can without much equipment, to
do the right thing for the country. I think Boehner`s kind of an old
fashioned Republican who thinks he really should try to make deal to get
along. And unfortunately there`s not much of a place for that in the
Republican Party these days.

O`DONNELL: Yes, I think it`s really hard to tell what Boehner really is
since he came into leadership in the post-crazy period. Meaning, they had
crossed the line into crazy.

HAYES: Right.

O`DONNELL: So we`ve never seen him, Chris, operate in any kind of sane
legislative arena like we saw with people like Bob Dole and some of those
earlier Republican legislative leaders.

HAYES: Right. And I think -- I want -- I mean, the one thing I`ll say
here is, I don`t want to fall into the trap of fetishizing deal making,
right? I mean I think -- I think --

O`DONNELL: Leave that to me.

HAYES: Right. Exactly. Yes.


That`s your job.


HAYES: Because I do think, look, if -- you know, if you actually -- if
you`re saying -- if your -- if your beliefs are such that the deficit is a
problem and I actually basically non one believes that in Washington, D.C.,
I think some tiny percentage of people who say they care about the deficit
actually care about the deficit, because the behavior of Congress is to do
nothing really about the deficit.

What they do is they get together, they negotiate and they blow up after
the deficit.


HAYES: Let`s remember that happen in the lame duck session after the Tea
Party revolt. It`s happening here if you look at the baseline analysis of
what would have happened if we just let everything expire versus what we
were going to get. And so, I actually have this kind of -- what I would
prefer is a genuine clash of ideological equals that created a deal in the
middle. Rather than this kind of weird dysfunctional internal breaking
inside the Republican Party.

I would like to see a kind of meeting on the field of battle between
genuine left radical and genuine right radicals about this that come to
some sort of negotiated solution rather than trying to negotiate with this
party that is essentially dysfunctional internally right now.

O`DONNELL: But, Governor, what would that look like? It`s hard for me to
imagine since we`ve actually never seen it.

HAYES: Right.

O`DONNELL: That battle that Chris is talking about.

DEAN: You know, I can tell you -- Lawrence, I can tell you what the
solutions would look like. Because I`m on a lot of these shows with people
pretty conservative Republicans, and there`s a lot of ground for agreement.
For example, you don`t have to cut benefits for Medicare but you do have to
pay from now on on Medicare by the patient and not by the procedure.
That`s going to control health care. That`s the solution to the Medicare
problem that you can find middle ground on that.

We do have to cut the Pentagon which we haven`t done yet and we do have to
cut some human services program which I`m not going to want to have cut but
there`s going to have to be a compromise. That`s why I thought we ought to
go over the cliff. We`ve got a lot of cuts in the Pentagon. We had a lot
of tax increases and we had a lot of cuts in human services. There`s
something for everybody to hate but that was actually not a bad compromise.

It`s just that the guys that made the compromise are in Washington. And as
Chris said, I totally agree, they don`t really have any commitment to
killing the deficit. And they rarely hoisted themselves in their own

This fiscal cliff was a farce because it was of their own making and it
turned out to be probably much better than what they actually passed.


HAYES: Yes, I mean, one of the -- one of the big lessons, right, the
takeaway here, was what you had been saying forever was the cliff was not a
cliff, right? I mean, the metaphor only works if the --


O`DONNELL: That`s true. And by the way, we all have to thank Ben Bernanke
for calling it a fiscal cliff.

HAYES: I know. I know.

O`DONNELL: Because I was thinking in the last week, what if he had never
called it that? Everyone in cable news will be trying to come up with a
really dramatic phrase for what this was.

HAYES: Right.

O`DONNELL: And I`d be kind of torn because I know it isn`t really that

HAYES: Right.

O`DONNELL: But the dramatist in me would want it.


But thank you, Ben Bernanke, for giving us that title.

HAYES: And the irony, of course -- I mean, the irony --

DEAN: I`ll tell you what is -- I`ll tell you what`s a -- I`ll tell you
what`s a really big -- what is really a cliff, though, is the debt ceiling.



DEAN: Now that is a serious cliff.

O`DONNELL: Yes, it is.

DEAN: This was not.

HAYES: That is. Right.


HAYES: And that I think is the really -- is the problematic situation
here. You now -- we`ve done this thing again and again and again, right?
So what we have is a sort of legislation through permanent crisis and
legislation through permanent crisis now where with a weakened leadership.
And I think that`s actually a really toxic combination, right? That you
have -- I would much rather have strong leadership happening where you can
actually have this kind of parliament -- almost parliamentary fight between
the two parties but the kind of dysfunction we`re going to see in the House
internal Republican caucus on the 113th.


HAYES: I think it might actually produce worse outcomes in the

O`DONNELL: But Governor, it seems we have --


DEAN: I`m sorry.

O`DONNELL: -- strengthened leadership on the Democratic side and weakened
leadership on the Republican side.

DEAN: Well, Pelosi was always very strong. I mean, for her to get that
health care bill through the House was the mark of a really strong speaker.

HAYES: A miracle.

DEAN: She did what John Boehner hasn`t done. She made the deals and broke
some arms behind the scenes.

HAYES: Right.

DEAN: And then went out and announced that she had the votes. You can`t
start putting stuff on the table when you know you haven`t had the votes
here. The problem with the Republicans is that they have some people who
genuinely care more about their deep seated ideology than they do about the
future of the country and they were willing to drive this country -- I
don`t know what the heck Boehner is going to do on the debt ceiling.

They are willing to drive the country over any cliff that they can imagine
to get their point across. And that is why people are not happy voting for
Republicans these day. And we can do better in 2014 than a lot of people

HAYES: And what he`s going to do is is ditch the Hastert rule again.
That`s my --

O`DONNELL: Yes, he`s going to have to. He`s going to have to do it with
the same kind of vote he did it this time.

Governor Howard Dean and Chris Hayes, whose show "UP WITH CHRIS HAYES," you
can see on Saturdays and Sunday mornings at 8:00, which is what I`m doing
Saturday and Sunday mornings at 8:00. Thank you both for joining me

HAYES: Thank you.

O`DONNELL: Coming up, John Boehner has a very, very big problem, yes, and
it is named Chris Christie.

And in tonight`s episode of socialism lives, the crazy Republican socialism
that Mitch McConnell quietly squeezed into the fiscal cliff bill. This is
something that no one else is really talking about because it`s the only
kind of socialism that both Democrats and Republicans in Congress truly

And in the "Rewrite" tonight, you know the Republican lie about taxes
killing jobs? Well, I`m going to tell you the story about the one time
that it was true. That a new tax killed jobs and Democrats did the tough
work of fixing it without a single Republican vote.


O`DONNELL: What`s the toughest thing you`ve ever negotiated? A car loan?
The purchase or sale of your home? Well, negotiating with Republicans on
raising taxes is a wee bit harder than that.

In the "Rewrite" tonight I`m going to tell you a story about actually
trying to do that myself and just how difficulty I think it was for
President Obama to do it. That`s coming up.


O`DONNELL: Before heading back to Hawaii on Tuesday night, President Obama
congratulated Congress for passing legislation to avoid the fiscal curve
and then he outlined his political new year`s resolution of sorts.


incomes. Fixing our infrastructure. Fixing our immigration system.
Protecting our planet from the harmful effects of climate change. Boosting
domestic energy production. Protecting our kids from the horrors of gun

It is not just possible to do these things. It`s an obligation to
ourselves. And the future generation. And I look forward to working with
every single member of Congress to meet this obligation in the new year.


O`DONNELL: Today on the day that the surviving children of Sandy Hook
Elementary in Newtown, Connecticut, returned to class, the day that the
children of the 113th Congress showed up for their first day of work, two
of the adults in that group, Democratic Congresswoman and gun control
advocates, Carolyn McCarthy and Diana DeGette, introduced a bill banning
high capacity ammunition magazines. and the twitter feed @gundeaths has been keeping track of the
number of gun deaths in the United States since the massacre at Sandy Hook
Elementary. Just since then in the 20 days since then, since the women and
children of Sandy Hook Elementary were murdered, we have had 409 additional
gun deaths in America.

Joining me now, Sam Stein, "Huffington Post" White House correspondent and
political editor and an MSNBC contributor, and Nia-Malika Henderson,
"Washington Post" national political reporter.

I want you to listen to something that Joe Scarborough said this morning on
his show here at MSNBC.


SCARBOROUGH: The seeds are being planted right now for the destruction of
the House Republican majority. They`re being planted before they --

BRZEZINSKI: We haven`t even talked about guns.

SCARBOROUGH: Are sworn in today. We haven`t even talked about Sandy Hook.
We haven`t talked --

BRZEZINSKI: Think about that.

SCARBOROUGH: -- being wrapped as the party of Wayne LaPierre instead of
the party of Ronald Reagan. The extremism that is going to be wrapped
around this party. They start, the men and women being sworn in today,
start behind the 8th ball, they are already on their way to making Nancy
Pelosi the next speaker of the House.


O`DONNELL: Nia-Malika, I am hoping that Joe Scarborough is right that
there is a political price to pay for inaction on what the president calls
keeping our children safe in schools.

Well, you know, the president obviously wants to move pretty vigorously on
this. He appointed Joe Biden to a special commission. And usually when
you hear of something`s going to a special commission, it`s where things go
to be buried and to sort of die. But it looks like he wants to act with
some urgency here. But I think again the problem is going to be the House

The House GOP has gotten more southern over these last years. The entire
Republican Party and you`re going to have Congress votes there who live in
these very red districts where gun culture is part of -- part of society.
And I think even as we have these conversations around gun control, you`ve
had very few, and I can`t think really of many Republicans who have come
out to say listen, we need to take a look at the actual gun control policy.

They usually point to mental health issues, they talk about video games,
they don`t necessarily point to the fact that there are these high capacity
clips that are out there and that people can get assault as a weapon. So I
think it`s going to be a real, real high hill for the president to climb to
actually get something passed through the House GOP.

O`DONNELL: Let`s listen to what the president said about it to David
Gregory on "MEET THE PRESS."


DAVID GREGORY, MSNBC`S "MEET THE PRESS": Do you have the stomach for the
political fight for the new gun control laws?

OBAMA: You know, David, I think anybody who was up in Newtown, who talked
to the parents, who talked to the families, understands that something
fundamental in America has to change.

GREGORY: But can you get it done? I mean the policies --

OBAMA: And so the question is, are we going to be able to have a national
conversation and move something through Congress? I`d like to get it done
in the first year.


O`DONNELL: Sam Stein, it doesn`t sound like he has any intention of giving
up on this. It`s not like she`s going to give it his best.

SAM STEIN, MSNBC CONTRIBUTOR: Yes, I -- you know, these things have a
particular way of playing out, though, in the past, which is that the time
for political action -- the best time for political action is right around
when the tragedy takes place and the further you get away from it, the less
likely it is for passage.

You know, obviously there`s legislation that`s going to be introduced in
this Congress. There`s going to be a re-introduction of the assault
weapons ban by Senator Feinstein. And then as you mentioned atop, there`s
the reintroduction of a ban on high capacity magazines. And I think that
if you were objectively looking at the landscape you would say it`s much
harder the former passing. Much easier to see the latter passing.

There actually has been some Republican lawmakers have expressed openness
to putting a prohibition on the production of high-capacity magazine.
Still, you know, it`s going to take a lot of presidential leadership. It`s
going to take a lot of media doggedness to keep the spotlight on this issue
and not let it recede into the -- into the background like it has in the
wake of other past instances of gun violence.

O`DONNELL: Let`s consider one of the other things we know is on the
legislative schedule coming up that gets in the way of this kind of thing,
at least temporarily. And that is the debt ceiling.

I want to listen to what Senator Toomey has to say about that.


SEN. PAT TOOMEY (R), PENNSYLVANIA: Our opportunity here is on the debt
ceiling. The president has made it very clear, he doesn`t even want to
have a discussion about it because he knows this is where we leverage. We
Republicans need to be willing to tolerate a temporary partial government
shutdown which is what that could mean.


O`DONNELL: Nia, there is a dangerous ignoramus speaking. It is not a
government shutdown. It is a worldwide possible depression. But he`s just
one vote in the Senate and he can vote against it and they can just bypass
him and ignore him. He shouldn`t be a problem but that is still thinking
that may control the way John Boehner has to try to work this in the House.

HENDERSON: That`s right. I mean, you have the Republicans going into
these next fights on the sequestration, of the debt ceiling, essentially
positioning themselves, saying that they have leverage. I`m not really
sure that they necessarily do because here again, we have the specter of
the collapse of the global economy. And so this idea that they have the
leverage going into this fight, I`m not really sure it`s going to bear
itself out. There`s a lot of bluster going on at this point.

I think ultimately they`re going to have to raise the debt ceiling. And
you`ve seen the president go out and make this care already and he did
that, I think, very effectively with this fiscal cliff. He has a very good
argument to make and that is these are bills that you have to pay.

O`DONNELL: Yes. I think the president`s resolve is that he is confident
that Republican contributors, the big corporate contributors, are going to
insist to Boehner and McConnell that they get this debt ceiling thing taken
care of. That they don`t put them through that kind of scare again.

Sam Stein and Nia-Malika Henderson, thank you both for joining me tonight.

HENDERSON: Thank you.

STEIN: Thanks, Lawrence.

O`DONNELL: Coming up, Chris Christie versus the Republican Party. That`s

And later, the Republican socialist that was just tucked into the fiscal
cliff deal by Mitch McConnell.


O`DONNELL: We are still receiving contributions for the KIND fund, the
Kids in Need of Desks, including one recently from a loyal viewer of this
program, Liz Smith. The legendary columnist who is now a repeat donor to
the KIND fund. Thank you once again, Liz.

And I am actually still thinking of people I should have sent Christmas
presents to and then donating desks in their name. And also contributing
to the new Girl`s Tuition Program that we started this year in the KIND

And UNICEF continue to send gift notifications to the people I name in my
contributions. And, you know, when you -- when you donate in someone`s
name you actually write -- you type the gift card yourself. And so now I`m
titling them all, you know, happy holidays or happy new year, because it`s
like way too late for any merry Christmas stuff.

And you can, of course, contribute to the KIND fund throughout the year.
We are actually very close to raising $1 million for the KIND fund just in
this holiday season alone. That`s tuition scholarships for hundreds of
girls in Malawi. That will pay for thousands and thousands of desks that
will be built by workers in Malawi who will be able to provide for their
families through their jobs building those desks. And desks will be used
over the course of their life by another 100,000 kids in Malawi.

In the now two full years that we have been raising money for the KIND
fund, you have contributed a grand total of $5,433,468. The workers making
those desks thank you. Their families thank you. The kids who are using
those desks today and will use them for many, many years to come thank you.

And of course I thank you.



CHRISTIE: I called the speaker four times last night after 11:20. And he
did not take my calls.

JOHN HEILEMANN, NEW YORK MAGAZINE: John Boehner`s Christmas present to
Chris Christie is this thing.


O`DONNELL: In the spotlight tonight, Chris Christie`s chosen opponents and
they are not Democrats. Chris Christie who is not yet running for
president but who is running for re-election as governor of New Jersey
started running against House Republicans yesterday after the failure to
get Sandy relief to a vote in the House.


CHRISTIE: It is why the American people hate Congress. It`s why they hate
them. And Governor Cuomo and I are as frustrated as two people can be
because unlike people in Congress we have actual responsibilities. If the
people of New Jersey feel betrayed today by those who did this in the House
last night, then they have good company. I`m with them. Last night it was
my party responsible. Both parties could take plenty of responsibility
over time. But last night my party was responsible for this.


O`DONNELL: So you have to wonder. Is what helps Christie in a New Jersey
gubernatorial campaign going to help in a national presidential campaign as
a Republicans?


HEILEMANN: Every moment that Christie was speaking his approval rating was
going up in New Jersey, a point every 60 seconds.

SCARBOROUGH: And by the way, he started at 72 percent.

HEILEMANN: Yes. There is not much further for him to go. And nationally
-- I mean, again, you know, Chris Christie, 2016, it`s not a bad police to
be, to be in opposition to a Congressional Republican Party. I`m saying
even within the Republican Party.


O`DONNELL: Jonathan Capehart, you know, I listen to Chris Christie and I
just think, why doesn`t that guy just say what`s on his mind?



O`DONNELL: Why is he holding back?

CAPEHART: What does he hold back?

O`DONNELL: So here`s the thing. I get it. I mean, this is great New
Jersey governor campaign stuff.


O`DONNELL: But on a Republican primary presidential stage, I was mad at
the Republicans for not sending more money to my state. What has that
worked for anything?

CAPEHART: Right. I mean, it works well. What he did yesterday works well
on the national stage. If he -- if he had -- you know, could somehow magic
carpet ride over the primary process and become the nominee by acclamation,
that would work well in the national campaign trail, but going from Georgia
to South Carolina, to New Hampshire, to Michigan, and bringing that stick
there, and saying exactly what you said, I`m not sure how much -- how well
that will work, that I do think the one thing that does work for Christie
is just this sort of unbridled truth telling.


CAPEHART: He`s not afraid to take it to President Obama and say, you know,
he`s groping for leadership in the -- in the darkness and then he is not
unwilling to take it to, quote, "The House majority and their speaker, John
Boehner," when it suits his purposes.

I mean -- and I think, for him to say, you know, Congress -- Congress is a
problem. Congress can`t do it`s job. I`ve got a job to do. We all have
jobs to do but Congress can`t do its job. That resonates. Of course his
approval rating is going to go up after this.

O`DONNELL: We saw a version of this kind of maverick in Republican primary
presidential politics before in 2000. That was the McCain campaign. The
Straight Talk Express. I will say things that the other guys won`t say.
It was a strategy chosen because he was on his way to losing.



O`DONNELL: But it got him to second place. I mean, this is a quality that
people like about him and maybe he`s got enough time between now and the
presidential campaign for people -- for Republicans, anyway, to forget the
specifics about this and not care that what he was talking about was
government spending.

CAPEHART: But remember, here`s the difference between John McCain and
Chris Christie. John McCain was suspect among -- among conservatives,
among the Republican Party base in 2000 and once again also in 2008. Chris
Christie would go into the Republican presidential race as someone that
Republicans like.


CAPEHART: That conservatives like. And we`ll see how long it takes for
that -- for those good feelings to wear off of Christie once people start
diving in to the specifics of what he`s talking about.

O`DONNELL: And I think what a lot of politicians forget, and pundits
forget, is that people are willing to vote for -- for candidates who they
disagree with on some things --


O`DONNELL: -- because they like that candidate.

CAPEHART: Right. Right. Because they like that candidate and they also
like the fact that the candidate is not afraid to tell the truth even when
it`s in convenient and even when it`s hard.

O`DONNELL: Jonathan Capehart, never afraid to tell the truth. Thank you
very much for joining me tonight.

CAPEHART: Thanks, Lawrence.

O`DONNELL: Coming up. How hard is it to get Republicans to vote for a tax
increase? It is unbelievably wicked hard. I know, I tried to do it the
last time an income tax increase was moving through the Congress. Guess
how many Republican votes I was able to pick up for that bill? Guess how
many President Clinton was able to get for that bill? The answer is not
quite as many as President Obama was able to get. And that`s coming up in
the "Rewrite."

And later the crazy Republican socialism that Mitch McConnell squeezed into
the fiscal cliff bill.


O`DONNELL: Are you tired of hearing about the fiscal cliff deal or talking
about the fiscal cliff deal? I`m not. And I have to beg your indulgence
on this one. Because I used to write tax law in the Senate. And so I -- I
just can`t stop talking about the tax bill that just went through Congress
especially since tax bills go through Congress so rarely. Especially tax

And so next in the "Rewrite," I`m going to tell you what it was like for
President Clinton and for me, when we were both trying to get Republican
votes for a tax increase. Let`s just say we didn`t do quite as well as
President Obama did.



BOEHNER: It`s a very simple equation. Tax increases destroy jobs.


O`DONNELL: So that`s the big lie, right? That`s the big Republican lie
about taxes. And yes, the way John Boehner just said it, it`s a lie. We
did the biggest tax increase in history in 1993, the economy soared. And
unemployment went down dramatically. That`s the Democratic Party`s answer
to the Republican`s big lie. But then, there is the time that taxes did
destroy jobs and Democrats admitted that and fixed it, and they fixed it
without any help from a single Republican.

As mentioned here last night, the last time Congressional Republicans voted
for a tax increase was in 1990 under President George H.W. Bush, and that
included a tax increase that was a brand new tax. A luxury tax on cars,
private planes and private boats. The automobile industry was not hurt by
the luxury tax on cars. It meant a $300 tax on a $33,000 car over 20 years
ago which back then was a very expensive car.

But the luxury tax on boats, it wiped out jobs in the boat building
communities in Rhode Island and Maine and elsewhere. It was not a tax on
commercial fishing boats. Just new boats, recreational boats, priced over
$100,000. It was never going to hurt the cop or the autoworker or the
teacher who goes out on the lake in the summer with a little boat and a
little outboard. Just new boats, big boats, over $100,000, something that
no one actually needs. A perfectly targeted luxury tax, right?

New boats over $100,000 but that tax instantaneously killed boat building
jobs in America. It did not kill mega yacht building jobs in foreign
countries where the mega rich went to buy their newest floating palaces.
It did not kill boat selling jobs here in the United States because the tax
didn`t apply to used boats. So the buyer who was looking at a $200,000 new
boat or $1 million new boat took another look at the market here and went
out and bought a used boat. Maybe a year or two old. And didn`t pay any
tax at all. No matter who much they paid for the used boat.

John Chafee, then a Republican Senator from Rhode Island, teamed up with
Democrat George Mitchell of Maine who also happens to be the majority
leader at the time to teach the Senate that the luxury tax on boats was
basically raising zero revenue, it really was, and it was killing jobs
which meant it was actually losing money for the Treasury because those
unemployed boat builders were no longer paying any income taxes.

A classic case of unintended consequences which we set about to fix in 1993
when the Senate was working on a huge deficit reduction bill that cut
Medicare spending and increased income tax rates and while we were at it,
got rid of the luxury tax on boats.

John Chafee was then known as a moderate Republican from Rhode Island.
Today his voting record would qualify him as a liberal Republican from
Rhode Island. John Chafee liked most of what we were doing in that deficit
reduction bill. He did not like tax increases but he had voted for tax
increases before under Republican presidents. He certainly thought the
Medicare cuts were a necessary step and he loved, and I mean he loved, the
elimination of the luxury tax on boats.

At that point there was nothing more important to Republican John Chafee in
the Senate than repealing the Rhode Island job-killing luxury tax on new

Before putting the repeal in the bill I personally went to John Chafee and
tried to get his vote for the tax bill on the condition that we put in the
repeal of the luxury tax on boats, and I couldn`t get his vote.

John Chafee`s dear friend, then the chairman of the tax committees, Senator
Moynihan, tried to get the vote on the basis on the repeal of the boat tax
and a broader appeal to John Chafee`s old fashioned Republican sense of
fiscal responsibility. And he could not get John Chafee`s vote.

There were other Republican votes we were hoping to get. All Senators who
would now be considered liberals in the Senate but we couldn`t get one of
them, not one of Republican vote because the bill contained increases in
income tax rates.

Now if you know that story, if you have ever actually personally tried to
get a Republican in the House or Senate to vote on an income tax rate
increase proposed by a Democratic president, if you`ve done that and
perhaps only if you`ve done that, then you understand how hard it was for
President Obama to get a tax increase out of a Republican House of
Representatives and out of a Senate where the Republican can block

Most pundits and members of Congress for that matter have never negotiated
anything more complicated than a car loan or a mortgage and some of them
will surely continue to criticize the president`s negotiating skills, but
the president was playing a very long game here. Literally years of
strategizing. Including allowing a two-year extension of the Bush rates in
order to get strategically positioned so that he could force Republicans to
cast a vote they vowed never to cast.


SEN. JOHN MCCAIN (R), ARIZONA: I stand on my record and my record is 24
years of opposing tax increases and I oppose them and I will continue to
oppose them.


O`DONNELL: So, first of all, Senator Barack Obama had to beat Senator John
McCain to win the presidency. Then he had to go and win re-election while
his Republican opponents were saying this every day.


REP. ERIC CANTOR (R), MAJORITY LEADER: We say, we weren`t elected to raise
taxes. We want to go and help people get back to work.


O`DONNELL: And President Obama was not just trying to get these guys to
vote for a tax increase. He needed them to vote for an extension of
unemployment benefits which were going to be cut off on New Year`s Day.
The dynamics of the fiscal cliff gave the president a strategic advantage
in negotiating the tax side of what he wanted to do. But he had absolutely
no leverage on the unemployment side of the bill.

He was also absolutely determined to not let that lifeline be cut off to
those people who have been out of work for so long. And so he made a minor
concession to Republicans on exactly where the top tax bracket would kick
in. And the president and the Democrats very cleverly set that threshold
at exactly where it would be today if the Clinton tax rates had never been
repealed. A 39.6 percent tax rate on incomes over $400,000.

When we enacted the 39.6 percent rate in 1993 it was on incomes over
$250,000. Adjusting for inflation which the IRS actually does every year
with the tax brackets that $250,000 in the last 20 years has moved all the
way up to $397,000, and so the Republican Party which voted unanimously
against the 39.6 percent top tax rate under President Clinton provided more
than enough votes to restore it under Obama.

I have not heard one word of criticism of President Obama`s negotiating
skills from anyone who has ever been in the room with a real live
Republican one-on-one trying to get that Republican to vote on a tax

I was in the room with President Clinton when he caved on the big item in
the tax bill in 1993. Some of you might remember the so-called BTU tax, a
tax that Al Gore was supporting on all energy sources. It was the
centerpiece of the Clinton tax bill and the president gave up on it. In
the Oval Office on the day that we told him that we did not have the votes
for it in the Senate. And that was the right thing to do. The
presidential thing to do.

I never admired President Clinton`s quick decision making more than in that
moment when he set us free to go pursue a simple old fashioned increase in
the gasoline tax. So instead of a big shiny new environmental tax, we got
a tiny little 4.3 cent increase in the gasoline tax. And when the bill
passed in the Senate at 2:00 in the morning, the time these bills always
passed in the Senate, there were no reports of President Clinton caving on
the BTU tax.

The president did what he had to do to get the job done. The president did
what he had to do for the good of the country. That`s what the oath of
office promises he will do.

And so the Clinton top income tax rate of 39.6 percent is back in law
tonight. Because once again, the president did what he had to do to get
the job done. The president did what he had to do for the good of the


O`DONNELL: And now it`s time for tonight`s episode of socialism lives.
Republican socialist Mitch McConnell was upset by the Agriculture Subsidy
Bill pushed through the Senate Agriculture Committee by Democratic
agricultural socialist Debbie Stabenow, because the Democrats didn`t want
to give away quite as much government money to the super rich
agribusinesses. So Republican socialist Mitch McConnell substituted his
own version of an even bigger giveaway to agribusinesses, especially giant
dairy producers, and he stuck it in the fiscal cliff deal.

David Rogers, Capitol Hill`s most experienced reporter, writes in
"Politico." "The upshot is a victory for Southern agricultural interest
with the greatest stake in a costly system of direct cash payments to often
already profitable producers."

Joining me now is Chris Edwards, the director of Tax Policy Studies at the
Cato Institute and a former senior economist on the Joint Economic

Chris, as a socialist myself, and you of course at Cato Institute oppose to
all forms of socialism, we will agree on few things other than --


How much I dislike, and I think you dislike these agriculture subsidies,
now they -- as I understand it, they squeezed this in because through the
tortured agricultural socialism that we`ve had for decades here, there was
something crazy that was going to happen to milk prices if they didn`t
stick something in this bill.

right. If Congress didn`t do something at the last minute here, the milk
programs would go back to 1949 law, which would have doubled the price of a
jug of milk at the cash register from about $3.50 a gallon to $7 a gallon.
All farm subsidy programs are expiring currently and they`ve been -- all
extended for nine months. But I agree -- I agree with you, Lawrence. All
of these programs are solvate, they`re crazy. We don`t need them and they
are -- they are big government Republican socialism mainly, these farm
subsidy programs.

O`DONNELL: And talk about European socialism. This is European socialism,
this is what the French have been doing for their farmers forever. And the
big -- the biggest complainants about this around the world are struggling
countries who are trying to compete on a world market with rich subsidized
farmers in Europe and the United States.

EDWARDS: You`re absolutely right. I mean, the U.S. program is like a
reverse Robin Hood program. We take from average taxpayers and we give to
mainly wealthy farm families with $20 billion a year in cash subsidies. So
just to put a number on this, the average farm household in the United
States makes $84,000 a year in income. The average family makes for

So farmers are about 25 percent higher income than the rest of us Americans
and yet we`re subsidying them to the tune of about $20 billion a year. It
makes no sense. And these farm subsidies, they`re for the economy, they`re
bad for the environment, they absolutely make no sense.

O`DONNELL: And we put African farmers, for example, at a tremendous
disadvantage in worldwide competition and then we go over there and we say
what can we do to help your poverty after doing this farm -- Chris, are
there any examples worldwide of a country that have this kind of
agricultural socialism that just kind of tried to move into a freer market?

EDWARDS: Well, the best example is New Zealand. Back in the 1980s, lots
of center government was in budget trouble. And they virtually abolished
all their farm subsidies which for New Zealand was an important thing
because their agricultural economy is even bigger than the American
agricultural economy. You know, as the size of the overall economy.

Well, New Zealand farmers have thrived since the abolition of subsidies.
The New Zealand farmers and their farm labor groups are against subsidies
now. So New Zealand farmers adjusted, they became entrepreneurs, they cut
their costs, they diversified their land use, they`ve done extremely well
without subsidies and now New Zealand farmers go around the world to tell
other farmers hey, you don`t need subsidies and we don`t need subsidies in
this country either.

O`DONNELL: And here we continue to rely on European socialism instead of
New Zealand capitalism and agriculture.

EDWARDS: That`s right.

O`DONNELL: Chris Edwards of the Cato Institute gets tonight`s LAST WORD.

Thanks, Chris.

EDWARDS: Thanks, Lawrence.

O`DONNELL: "THE ED SHOW" is up next.


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