'The Last Word with Lawrence O'Donnell' for Tuesday, February 19th, 2013

THE LAST WORD WITH LAWRENCE O`DONNELL
February 19, 2013

Guests: Sam Stein, Dick Harpootlian


LAWRENCE O`DONNELL, HOST: Ten days to go until the next big drop dead
deadline in Washington, and the only thing that both sides can agree on is
that there are 10 days to go.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Just 10 days from now,
Congress might allow a severe budget cuts to take place.

UNIDENTIFIED MALE: President Obama tries to turn up the heat on
Congress.

OBAMA: Congress has to act.

ALEX WAGNER, MSNBC ANCHOR: Another day, another crisis.

TAMRON HALL, MSNBC ANCHOR: Another countdown.

WAGNER: In the so-called sequester.

CHRIS JANSING, MSNBC ANCHOR: The harshest budget cuts.

UNIDENTIFIED MALE: The way it`s structured is moronic.

HALL: Cuts would be so painful for both sides.

OBAMA: It won`t help the economy. It won`t create jobs. It will
eviscerate job-creating investments.

HALL: I think a lot of people at home believe this is ridiculous.

CHUCK TODD, NBC NEWS: Just 10 days left to prevent $85 billion in
spending cuts.

UNIDENTIFIED MALE: The sequester.

UNIDENTIFIED FEMALE: The sequester.

ANDREA MITCHELL, MSNBC ANCHOR: The sequester.

OBAMA: It won`t consider whether we`re cutting some bloated program
or a vital service.

WAGNER: They are indiscriminate.

OBAMA: It doesn`t make those distinctions.

UNIDENTIFIED MALE: It would be devastating.

OBAMA: If Congress allows this meat cleaver approach.

WAGNER: A lot like a meat cleaver.

OBAMA: Here`s what at stake.

UNIDENTIFIED FEMALE: People are going to start getting hysterical.

OBAMA: Thousands of teachers and educators will be laid off.

UNIDENTIFIED MALE: The president is counting on the Republicans
blinking again.

REP. PAUL RYAN (R), WISCONSIN: I believe it`s going to take place.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: The president promised it
would happen, he is the commander-in-chief.

RYAN: He`d like to replace it. But he hasn`t put any details out
there.

UNIDENTIFIED FEMALE: There is a stalemate. Time is running out.

OBAMA: Just 10 days from now.

WAGNER: Just 10 days.

OBAMA: These cuts are no smart. They are not fair.

UNIDENTIFIED FEMALE: The sky is falling, the sky is falling.

(SCREAMING)

OBAMA: They don`t have to happen. Congress has to act.

(END VIDEOTAPE)

O`DONNELL: Tonight, another dramatic deadline is looming for the
financing of the government of the United States of America. In just 10
days, an unprecedented $1.2 trillion in spending cuts will begin to take
effect.

And you know what that means for Congress? That`s right, six more
days left of recess.

That leaves President Obama and Republicans in Congress exactly four
days to work out an agreement on the way to avoid the spending cuts that
both sides say they don`t want. Those four days of course will, of course,
include three full days of Congress doing absolutely anything, and then a
final day of Congress looking like they may do something before giving up
completely.

And in the final hour, maybe doing something, and maybe not. Because
this deadline is actually a bit less dramatic than all the other dramatic
deadlines that have come before it.

Today, President Obama gathered emergency responders who the White
House described as the kinds of working Americans whose jobs are on the
line if congressional Republicans failed to compromise on a balanced
solution.

The president described the legislation he would be willing to sign to
avoid the drastic budget cuts that both sides say they don`t want.

(BEGIN VIDEO CLIP)

OBAMA: I`m willing to save hundreds of billions of dollars by
enacting comprehensive tax reform that gets rid of tax loopholes and
reductions for the well-off and well-connected, without raising tax rates.

(END VIDEO CLIP)

O`DONNELL: Then John Boehner says he was willing to close loopholes
in the tax code but only if the revenue obtained from that was used to
lower income tax rates. Today, President Obama framed the choice this way.

(BEGIN VIDEO CLIP)

OBAMA: So, now, Republicans in Congress face a simple choice. Are
they willing to compromise to protect vital investments in education and
health care and national security, and all the jobs that depend on them?
Or would they rather put hundreds of thousands of jobs and the entire
economy at risk just to keep the special tax benefits that benefit only the
wealthiest Americans and biggest corporations. That`s the choice.

(END VIDEO CLIP)

O`DONNELL: Joy Reid, that sounds like a choice, to President Obama,
but Republicans think it is more complicated than that, I guess.

JOY REID, THE GRIO: Yes, I guess it is the way we`ll do things now,
they want the Medicare cuts, they want the president to propose them so
that they can beat him up. They want draconian cuts to social programs.
They want things they know Democrats will never vote for.

And I think more than that, they just want to complain that the
president is mean, that he`s a bully, I`m really not sure there is a
purpose for this. We know there is a history for this. He started talking
about it in the intro, the last time this happened with the budget control
act in 2011, they literally waited until the last day, like literally the
president signed it the day before we`re going to lose the full faith and
credit by the United States by defaulting on our debt. So this is just the
way they do it.

O`DONNELL: And, Ari, the Republican proposal is OK, fine, let`s just
reverse the last deal that we did, because they`re saying like yes, we can
plug the loopholes, but only if you reduce the rates, the rates that they
just raised.

ARI MELBER, THE NATION: Yes, there`s no take-backs. So I think they
sort of messed that up. I don`t think they were going to get a do-over on
that.

And there is sort of a Zen quality here, which is if everything is
urgent, nothing is urgent. If everything is a crisis nothing is a crisis.
And for the Republicans who keep trying to manufacture this crisis to get
cuts that otherwise don`t exist as you know, consensus positions in the
body of politics that have not been ratified by any election, I think this
sort of manufactured crisis game has obviously worn thin.

And as you pointed out Lawrence this one has a little less riding on
it than the others. Although there are serious jobs at stake, I wouldn`t
minimize it. But there`s a problem for them to try to continue to play a
hostage game when the public is sick of it.

O`DONNELL: Joy, we knew it was coming, once we saw who the president
was playing golf with this weekend, we knew the tweet was coming. Couldn`t
say exactly what the words were.

Eric Cantor`s spokesperson tweeted, president says his door is open
but he spent more time in 2013 with Tiger Woods than with all congressional
Republicans.

REID: Yes, as if he would just spend quality time with them --

O`DONNELL: They could have golfed this out if the president --

REID: Darn it, a bourbon and a golf club, that is all they needed to
get John Boehner on board. This relationship is broken for other reasons.
And you know, they are the ones that broke it. They don`t want to do
business with this guy because they fundamentally want different things.
The president and the Republicans are not going to go after social programs
than they want. They are going to continue to insist on revenue, which
Republicans don`t want to give anymore of. These two sides just can`t come
together.

O`DONNELL: Ari, I know you come to the show to hear Rush Limbaugh`s
reaction to everything that happens. So here is the Rush Limbaugh take.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO HOST: Obama`s appearance today, it is not about
the sequester. This is about defining who his enemy is, lying about them.
This is about wiping them out. This is about the House in 2014. That`s
the next big thing everybody is looking at here.

(END VIDEO CLIP)

MELBER: You think Barack Obama had never won an election before.
That is I guess the weirdest part. Barack Obama has won all of his
elections except for the primary against Bobby Rush in his first H race.

He is a winner, not a loser. He will not be running for president
gain. He is done with the winning part of his career. And he is trying to
govern. And he met them more than half way.

So I guess this is all about the Rove thing where you project your
weakness onto the other guy. If you`re Rush Limbaugh or you`re a House
Republican and only look at things politically, as we were talking about
just last night, Lawrence, then, all you do is say, oh, the other guy is
being political and the other guy is, you know, getting ready for an
election that doesn`t really exist, because while, yes, Obama wants
Democrats to do well, he is out of the election game.

O`DONNELL: In government, the election is always on people`s minds.
So if you take Limbaugh`s position, just grant it for a second, so who is
winning at this thing? If the Obama job here is to make the American
Congress look bad so that they can run against them in 2014, he seems to be
doing a good job of that.

REID: Yes, he`s doing it because he has some great partners called
the Republican Party. Listen, unless you have agreed with -- sometimes
conspiracy theorists that I agree with every other day, that I believe in
every other day, that they want a sequester, that the Republicans feel it
is the only way to get social cuts, and there are some Democrats that feel
it`s the only way to get the social cuts, maybe this is all theater, and
they all really want the sequester to happen, and then it will happen
because of that.

MELBER: I look at it this way, Joy. I think, basically, this is the
dream they cannot have convert to reality. You talk to Democrats and you
say, hey, that idea about actually getting more people, including poor kids
into pre-school, let`s do, Democrats go, great, let`s do it because we want
the kids to go to school. That`s actually literally really what we want.

When you talk to Republicans and say we want to these programs down
and cut the military down, they can`t deal with it. If not only it`s not a
good way to run the government, because they know it. They know their own
districts, you go down to the South, these districts don`t want to see
these many military bases closed. That`s why we have the whole BRAC
program, because neither party has ever wanted to do the kind of cuts.

And that`s the real problem that goes to the substance of it, they may
want to shrink government, but they can`t fully get behind a full cut like
the sequester offers.

O`DONNELL: There`s -- when you look at the reactions today, there is
Mitch McConnell saying, you know, here is the president playing politics.
But there`s no substance. This is the kind of political theater critique
that the Republicans are offering. They don`t say here`s what we would
like to do, Mr. President.

REID: Right, and the reason they don`t do that is because at least
Republicans have learned one thing, which is that almost everything they
believe in is unpopular, deeply popular. So they can`t say that out loud.
They tried to trick the president into saying it for them and for him
proposing Medicare cuts, so that they can attack him for it.

Republicans understand that when they explain out loud the things
they`d like to do, people recoil from them. So, now, they`re trying to
find a way to get it to happen by just complaining about Barack Obama. But
you know what? So that isn`t working either.

O`DONNELL: The president suggested sort of a backup plan today.
Let`s listen to that.

(BEGIN VIDEO CLIP)

OBAMA: If they can`t get such a budget agreement done by next Friday,
the day these harmful cuts begin to take effect, then at minimum, Congress
should pass a smaller package of spending cuts and tax reforms that would
prevent these harmful cuts, not to kick the can down the road but to give
them time to work together on a plan that finishes the job of deficit
reduction in a sensible way.

(END VIDEO CLIP)

O`DONNELL: Sounds sensible enough.

MELBER: It`s sensible, I feel for him. He is the president, he has
obligations we don`t have. Sitting on the sidelines, I sometimes wish he
would fully let the bluff play out, and say this is what it looks like.
That is something that President Clinton managed to do and show the real
cost, because we all rely on this essential government programs.
Unfortunately, people don`t realize that until the crisis becomes not
threatened, but real.

O`DONNELL: Well, he seems to be letting that happen -- there is
nothing he can do. I mean, it is going to happen. And he`s just making a
suggestion, hey, guys, how about something smaller now if you can`t get the
big deal done?

REID: Yes, and sometimes maybe that`s what Congress needs. They need
that less. I mean, I was just in Washington over the weekend. And you go
in all the museums where you don`t have to pay an entrance fee to get in.
They`re all subsidized by the taxpayer.

You have so many government workers, I spoke to woman there who was
talking about the fact that she`s like, you know, we`re always the villain,
but we`re there doing the hard work, people don`t know that we`re doing.
Federal workers are always the bad guy.

You know, we have this federal government that is invisible to us,
because we don`t understand that the government is things like the post
office or the police or the things that we need and need.

Everyone sort of says in theory they`d like to cut government. But
when you explain what it is, nobody wants to cut it.

O`DONNELL: You know, I rely on air traffic controllers more than most
people. And I`m going to be relying on them next Friday, first day of the
sequester. And so, in the next segment, I`m going to find out where I`m
actually going to fly.

Joy Reid, and Ari Melber, thank you both for joining me tonight.

MELBER: Thanks, Lawrence.

REID: Thanks.

O`DONNELL: Coming up, you see what`s happening here, on the sequester
thing, the Democrats are the Republican`s enablers. The Republicans get to
be really, really crazy because they know the Democrats will be
responsible. But what would government look like with no Democrats? What
would Republicans do?

The answer is they would raise taxes and they might even raise taxes
higher than Democrats would. And I will prove that to you in tonight`s
rewrite.

And later, Stephen Colbert`s sister is running for Congress. She will
join us here tomorrow night. And we will have the latest on her campaign
tonight, including what her possible opponent, former Governor Mark Sanford
said today on "The Today Show" about crazy love South Carolina style.

And later, the right wing`s run at splitting the Republican Party for
good. They`re offering cash prizes if you can come up with a way to run
people like Karl Rove out of town forever.

(COMMERCIAL BREAK)

O`DONNELL: So, as I was saying on the first day of the sequester
budget cuts next Friday, I`m actually scheduled to fly across the country
making one stop and a change of planes on the way. And now, we`re hearing
we may not have so much air traffic controllers working that day and not so
many security lanes open at the airport. And I could be facing a travel
nightmare and a lot worse things could be happening next Friday night.
We`ll have a preview of the scary budget cuts in the sequester with Ezra
Klein and Jared Bernstein next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: If Congress allows this meat cleaver approach to take place,
it will jeopardize our military readiness, border patrol agents will see
their hours reduced. FBI agents will be furloughed. Federal prosecutors
will have to close cases and let criminals go. Air traffic controllers and
airport security will see cutbacks, which means more delays at airports
across the country. Thousands of teachers and educators will be laid off.

(END VIDEO CLIP)

O`DONNELL: President Obama made it real today, showing exactly what
will be cut if the sequester spending cuts take effect next week. The
president also made it clear that any potential replacement for the
sequester must be balanced.

(BEGIN VIDEO CLIP)

OBAMA: Republicans have proposed some ideas, too, and so far at least
what they have expressed is a preference where they would rather have these
cuts go into effect than close a single tax loophole for the wealthiest
Americans. Not one. Well, that`s not balanced. That would be like
Democrats saying we have to close our deficits without any spending cuts
whatsoever. It`s all taxes.

That`s not the position Democrats have taken. That`s certainly not
the position I have taken.

(END VIDEO CLIP)

O`DONNELL: Today, the budget comedy team of Simpson-Bowles released
another version of their deficit reduction plan that Congress will never
do. Simpson-Bowles 2.0 is an attempt to split the difference between the
president`s current position and the congressional Republican`s current
position on spending cuts and tax revenue increases.

Joining me now are our MSNBC analysts, Ezra Klein of "The Washington
Post", and Jared Bernstein, former chief economist for Vice President
Biden.

Ezra, look, we have the Simpson-Bowles 2.0 to deal with, and all that
stuff, but most importantly, most important thing there, I`m scheduled to
fly next Friday.

EZRA KLEIN, MSNBC POLICY ANALYST: I`m worried about you.

O`DONNELL: I`ve got a change of planes here, what does that look
like? How many air traffic controllers working? One per airport? What`s
going on?

KLEIN: I wouldn`t say the air traffic controller situation was
looking so great. I mean, I have flown out of JFK a couple of times
myself. It`s not the easiest thing in the world.

And the big thing about the sequester, I think it`s really important
people get what President Obama means when he talks about the meat cleaver.
The big thing about the sequester is not the amount of cuts that are crazy,
although they are probably too high. It`s not where the cuts are even
going in a broad way is crazy.

It`s that even within that, what we have done with the sequester is we
can`t choose where the cuts go. So, we can`t say air traffic controllers,
we actually need that. What we don`t need so much of is farm subsidies.
So, we`re going to put more cuts in farm subsidies and fewer in air traffic
controllers. Instead, we get everything except a number of sort of Social
Security and Medicaid and a couple of other low income programs.

Everything else gets the exact same percentage cut no matter how
valuable it is. So your air traffic controllers get nailed even as we
don`t touch a single tax expenditure.

O`DONNELL: And, Jared Bernstein, how do the cuts get imposed? Do
they on day one have to do the size cut they would do in order to achieve
that much savings for the whole year? Or can they great deal phase in
these cuts?

JARED BERNSTEIN, MSNBC CONTRIBUTOR: Well, it`s different across
different agencies. Some of the cuts will take place on day one, like on
that Friday you`re flying, for example, I think some of the air traffic
control cuts, some of the TSA cuts, the kinds of delays at the airport the
president was referring to. I believe those take effect early on I`m sorry
to tell you.

I fly a lot myself and agree it is already a headache. And when
people see the types of delays we`re talking about, hopefully, that will
put the pressure on Congress to actually get back to work and do their job.

I just want to remind everyone, totally obvious, we all know it. I
just want to say it. This is yet another self-inflicted wound. There`s
absolutely for reason for us to be taking $85 billion out of the 2013
economy in government spending at a time when the economy is already too
weak as far as I`m concerned. So, this is exactly the opposite of what we
ought to be doing.

O`DONNELL: Ezra, there is a new Simpson-Bowles plan out today, of
sorts. You talked to Erskine Bowles today. What`s their later approach?

KLEIN: It`s really striking. The secret of Simpson-Bowles 1 is they
had more tax increases than President Obama ever called for. If you did it
now, Jared`s organization, the Center on Budget and Policy Priorities has
done great work showing this.

If you put it into place now, we would raise taxes, not by $650
billion as we did in the fiscal cliff deal. We would raise it by $2.5
trillion, in fact, probably now more than $2.6 trillion.

The new Simpson-Bowles plan, because that is sort of off the table,
they cut the tax ask in half. They cut it down to $1.3 trillion, so it
went way, way to the far right on taxes, although to be fair that is where
President Obama is currently is.

But what`s weird when they say they split the taxes between President
Obama and John Boehner is that while they took Obama`s final ask on taxes,
they actually unilaterally increased what Boehner was asking for. So, in
the final element of the fiscal deal, Boehner asked for including savings
in interest, $1.3 trillion, the new Simpson-Bowles includes $1.7 in
spending cuts.

So, it`s $1.7 trillion in spending cuts, to about $700 billion in tax
increases. And that $1.7 in spending cuts includes a higher amount coming
out of health savings. So, it`s $600 billion from health.

So they brought there -- however you look at it, they took their plan
quite far to the right. In an effort to chase the center that they feel
has gone to the right, even though interestingly, of course President Obama
won the election on a fairly pro-tax platform.

O`DONNELL: Jared, that`s the problem I think with Simpson-Bowles in
this kind of situation. Is that once they decide, hey, let`s see if we can
find a compromise within where the game is being played now, the game moves
so fast that --

BERNSTEIN: No --

O`DONNELL: -- it`s impossible to do it.

BERNSTEIN: No one ever asked Simpson-Bowles to find a compromise
wherein the game is being played right now. I mean, what we asked Simpson-
Bowles to do is come up with a smart plan for deficit reduction.

And by the way, there were elements of their plan that were smart.
That is a balanced revenues and spending cuts, the way Ezra just
articulated. They were very conscious protecting low income programs.

The problem with this Simpson-Bowles 2.0 is that all of that gets
thrown out of the window. You heard Ezra take you through the numbers, and
he`s exactly right. But if you think about where those spending cuts have
to fall, are the discretionary caps, that is the money we spent on non-
defense discretionary programs, things like women, infants and children,
things like Pell Grants, things like Head Start, those are already cut to
the bone with the caps that are already in place.

So, it`s impossible for Simpson-Bowles to stick to this idea of
protecting vulnerable people when they are implementing cuts of this
magnitude. I say the same thing for the health care side of their cuts.

They have taken some principles that were quite -- I think quite
useful in the first blush and really eviscerated them with the second plan.

O`DONNELL: And, Ezra, are there any murmurings in the White House or
up on the Hill that indicate where some type of solution might be by next
week? By the end of next week?

KLEIN: No, for the first time in any of these I can remember there
really is not anything. There are no negotiations seriously going on that
I know of. There`s no serious plan that appears to be coming forward. I
mean, I think that people expect if this happens I think at the outset,
they think it probably will happen.

At some point, the Office of Management and Budget will be given
discretionary authority to decide where the things go in the agency. So,
not everything gets the exact amount of cut. So when I talk to Republicans
and when I talk to Democrats, people seem to expect the sequester to go
into place at least for a while. They don`t think it will happen
necessarily for 10 years, but will it happen next week? They seem to think
so at least for now.

O`DONNELL: Let`s listen to what the president said today about where
we are in the recovery and economy and how it could affect that.

(BEGIN VIDEO CLIP)

OBAMA: The American people have worked too hard, too long rebuilding
from one crisis to see their elected officials cause yet another one. And
it seems like every three months around here, there is some manufactured
crisis. While a plan to reduce our deficit has to be part of our agenda,
we also have to remember that deficit reduction alone is not an economic
plan.

(END VIDEO CLIP)

O`DONNELL: Jared, that is the part that seems to be getting lost
here.

BERNSTEIN: Yes, it`s exactly the point I was trying to make earlier.
Let us not forget that we have an unemployment rate that`s almost 8 percent
and has been stuck there.

O`DONNELL: Yes.

BERNSTEIN: GDP in the fourth quarter of last year actually was
slightly negative. I think it will be revised up, but certainly not where
it needs to be largely because of a shortfall in government spending.
Again, I think when we get the revised numbers it won`t look that bad.

But clearly, the economy is growing too slowly. So the last thing you
would want to do is take a kind of already wobbly bicycle and flatten the
tires a little bit.

So what I just never can seem to wrap my head around and it is true,
by now I should be used to this, is a Congress that wouldn`t even take a
Hippocratic Oath, that is do no harm. But instead, it`s whacking away at
an economy that really needs these guys to just go home to these districts,
leave well enough alone and let recovery happen. There are some good
things happening at the surface but they`re messing it up.

O`DONNELL: Well, they are very good at going home to their districts.

Ezra Klein and Jared Bernstein, thank you both for joining me tonight.

KLEIN: Thank you.

BERNSTEIN: Thank you.

O`DONNELL: Coming up, crazy conservatives are calling Karl Rove a
Nazi, because he wants to find Republican candidates who can maybe sort of
actually win elections once in a while. The crazies versus the not-so
crazies in the Republican Party.

And the latest on Stephen Colbert`s sister`s run for Congress against
a former Republican governor who does not regret what he did for love.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

KARL ROVE, FOX NEWS CONTRIBUTOR: The more we examine the quality of
these candidates from top to bottom, the more likely we end up with fewer
Christine O`Donnells and more Rand Paul.

(END VIDEO CLIP)

O`DONNELL: That was Karl Rove on Sunday, defending his new campaign
aimed at finding and supporting Republicans candidates who aren`t as crazy
as Christine O`Donnell, but are crazy as Rand Paul. That earned rove this
honor from a Tea Party group, who sent out a fundraising email today
against Rove, with Rove dressed as a Nazi.

In the spotlight tonight, the 10,000 dollar question for Republicans,
in response to Karl Rove`s campaign to find less crazy Republican
candidates, long-time conservative nut Richard Viguerie announced yesterday
the creation of the Liberty Prize Contest. It promises a 10,000 dollar
cash prize to any, quote, "grass roots conservative" who can come up with
the best way to get rid of establishment Republicans like Rove who aren`t
crazy enough."

Viguerie writes, "the most important political battle in American is
not between Republicans and Democrats or between conservatives and
liberals. It is the battle for the control of the Republican party between
establishment big government Republicans and limited government
constitutional conservatives.

Joining me now, Sam Stein, "Huffington Post" White House correspondent
and political editor, and an MSNBC contributor. Sam, this is a tough one,
who is crazier. The -- but this Tea Party group shows Rove as a Nazi
because he is trying to get better candidates to run in general elections
for Republicans. They -- not long after that, they apologized, said, OK,
maybe Nazi is going a little too far.

But you know, we`re going to be seeing more of this, it sounds like.

SAM STEIN, "THE HUFFINGTON POST": Well, let`s hope not. That is
despicable and awful and offensive and should never be part of the
political conversation, I don`t care what you think about Karl Rove. It is
disgusting. Let`s hope that Nazi imagery stays out of this.

You think on a substantive level, Rover is running into some real
problems. Part of it is because he`s in a Catch 22. The more he meddles
in the primary process, the more likely candidate he wants is going to
lose. People don`t like to think of candidates being anointed by
Washington insiders. That`s the whole point of why the Tea Party exists.
So the stronger his touch, the less effective it`s going to be, unless he
figures out an extremely secretive way of doing what he wants to do. I
don`t see how it is going to be effective.

O`DONNELL: But normally, Sam, losing elections teaches elections.
And -- but apparently the Tea Party side of the Republicanism is impervious
to that lesson.

STEIN: You would have thought the 2010 elections would have taught
Republicans to not nominate these types of candidate in 2012. But they
did. And same thing happened in the Senate races on the Republican side of
the aisle. I think there is a flaw in the primary process. I don`t know
if what Rove is trying to do is going to fix it.

I think it is a problem with the party itself. I think the Tea
Party`s influence has resulted in the Republican senatorial candidates
having -- some republican senatorial committees having bad candidates. But
it is going to take a lot more than just one organization dipping its
fingers and toes into the primary waters to change it. It is going to be a
change in the platform and the primary process in general.

O`DONNELL: Rush Limbaugh might be trying to straddle these groups.
He`s been friendly with Rove in the past. Let`s listen to what he said
today.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: Now, the Republicans, we all
know that they simply do not know how to speak for themselves. Whether it
is the consultant class that has advised them not to be critical of Obama
because some mythical group of voters doesn`t like it. But our consultant
class and some of our young conservatives that don`t know any better are
running around trying to -- you know, we must not raise our voices or we
must not be confrontational, and we must understand.

Meantime, they are being chewed up and spit out.

(END VIDEO CLIP)

O`DONNELL: I guess that was his Rove imitation.

STEIN: Was that it? I couldn`t tell. That was absurd. I don`t
think Rush is going to win the 10,000 dollar prize with that one, I have to
say. And the lack of self awareness is pretty awesome. His comment
calling Sandra Fluke a slut probably did more to hurt the Republican party
in 2012 than any singular comment that I can remember off the top of my
head, save Todd Akin, perhaps.

Rush Limbaugh doesn`t help the party. I think he is an entertainer
whose show actually does drag down Republican and conservative candidates,
I believe.

O`DONNELL: And yesterday, the American Conservative Union announced
that Sarah Palin will speak at CPAC. So they`re keeping the dream alive at
CPAC.

STEIN: The dream will never die.

O`DONNELL: Right, but at least Sarah Palin doesn`t go out there and
actually run and lose for Republicans. She at least has that grace not to
run.

STEIN: She bows out before she can lose again, right?

O`DONNELL: I think she knows how that would play out.

So Sam, this struggle is something that -- is extra difficult for
Rove, now, because he is also coming off a losing season in politics.

STEIN: Yeah. And whenever you have a losing season -- Rove`s
lifeline is basically the big money republicans in the party. And the
natural question for them is why would you keep funding somebody who had a
huge collapse in the last election cycle?

The only explanation for why they would do that is because there is no
one else to fund. And there is just so much money to throw around, that
why not? Again, I don`t think money is the problem here. I think it is
more -- it is deeper than that. And you`re starting to see some of the
conservative intellectual thinkers talking about how the party has to
actually reform itself, how it has to be less associated with tax cuts for
the wealthy, and more about income inequality, how is has to get off this
fascination with the gold standard, things like that, as a way to appeal to
people.

I think the real struggle is not going to be whether moneyed interest
will partake in the primary process, but to what extent social conservatism
will dominate the primary process. I think that is where you are going to
see a real difference in the Republican party in the future.

O`DONNELL: Sam Stein, thanks for joining us tonight.

STEIN: Thanks, Lawrence. Good luck with your flights.

O`DONNELL: Yes. We`ll see what happens with that.

Coming up, Mark Sanford thinks what he did for love should not stop
him from being elected to Congress. But Stephen Colbert`s sister may stop
him. She will be running for that same congressional seat in South
Carolina. She will join me tomorrow and we`ll have the latest on that race
later tonight.

And in the Rewrite, why Democrats are the enablers of Republicans, and
what could make Republicans Rewrite their philosophy on taxes. That`s
coming up.

(COMMERCIAL BREAK)

O`DONNELL: As the standoff over the looming sequester shows once
again, the enablers of Republican tax policies are Democrats. Without
Democrats, Republicans could not maintain their rabidly anti-tax position.
The way it works now is Republicans get to oppose every tax increase of
every kind, all the time, not because they think the government should have
no tax revenue but because they think it is not their job to provide tax
revenue for the government.

Republicans believe that is why God created Democrats, to raise taxes.
And Democrats readily fall into the trap of providing tax revenue for the
government, not because Democrats are weak but because Democrats are
responsible when it comes to taxation. And republicans know they can rely
on Democrats being responsible.

Republicans know they never have to raise money to pay their bills.
They know Democrats will do that. George W. Bush and his Republican
Congress knew they could enact huge tax cuts. They knew they could
completely wipe out the budget surplus that Bill Clinton created by raising
taxes eight years earlier.

Republicans knew they could then rack up massive deficits and never
even consider paying for the two wars that George W. Bush started.
Republicans knew they could do all of that because they knew eventually the
responsible party would come back into power and raise taxes.

But how would Republicanism work if the Democrats never came back into
power? If funding the government was actually up to Republicans and only
Republicans? According to their theory, since all taxes are bad, a
Republican Congress and the Republican president should cut taxes down to
zero.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: It is a very simple equation,
tax increases destroy jobs.

(END VIDEO CLIP)

O`DONNELL: Since taxes destroy jobs, the only logical tax rate for
the Republican party in Washington to support would be zero on everything,
personal income, capital gains, gasoline, every single federal tax rate
should be zero. That is the logic of the Republican position in the world
in which this guy is considered the leading intellectual of the anti-tax
movement.

If Washington had no government, taxes would never go up. They could
only go down. And they would eventually go t zero, or just low enough to
pay for the Defense Department and nothing else. Right? I mean, that is
21st century Republicanism. Or is it?

If you want to see a world with no Democrats, there is no better place
to go than Wyoming. The state`s entire Congressional delegation is
Republican. That is two senators and only one congressman. The governor
of Wyoming is Republican. The state senate has 26 Republicans and only
four Democrats. The state House of Representatives has 52 Republicans and
only eight Democrats.

The state legislature is 85 percent Republican in both bodies.
Governing in Wyoming never requires the slightest consultation with or even
the acknowledgment of the existence of Democrats. Wyoming is Republican
country. And in Wyoming, the Republican Senate voted last week to increase
the state gasoline tax after the Republican House already voted to do it.

And the state`s Republican governor signed that tax increase into law
on Friday. All four Senate Democrats voted for the tax increase, but
Republicans didn`t need them. The bill passed 18 to 12, with a majority of
Republicans voting for it.

The federal gasoline tax, which began in 1932 at one penny a gallon,
went up about a half penny or a penny at a time every few years, over the
next 30 years. Our biggest increases in the federal gasoline tax actually
occurred after that period, and were signed into law by Republican
Presidents Ronald Reagan, and his successor, George H.W. Bush, both of whom
approved five cent increases in the gasoline tax.

The last time the federal gasoline tax was raised was 20 years ago,
with no Republican support. It was a 4.3 cents increase, an increase I
will always remember because I personally negotiated that number with the
Montana Senator Max Baucus, who was briefly the lone holdout on the Senate
Finance Committee on increasing the gas tax, and who is now the chairman of
that committee.

The 4.3 cent increase was signed into law by President Clinton,
raising the federal gasoline tax to a total of 18.4 cents a gallon, where
it has remained for 20 years.

So how much are they raising the gas tax in Republican world? What
did Wyoming Republicans think was a reasonable increase in their gas tax?
More than Washington Republicans would ever dream of. The Wyoming
Republican legislature and Wyoming Republican governor raised the gas tax
10 cents, more than double the Bill Clinton increase in the federal
gasoline tax. The Wyoming state gasoline tax is now higher than the
federal gasoline tax.

Wyoming`s gasoline tax is 24 cents a gallon. As I said, the federal
gasoline tax is only 18.4 percent.

Why then -- why did Republicans raise taxes? For the same reason
Democrats vote to raise taxes. Because the government needs the money, in
this case the state of Wyoming.

According to this guy`s theory, there won`t be a job left in Wyoming
by the 4th of July. But Wyoming Republicans know that Washington
Republicans are lying about taxes. And so they are confident that a 10
cent increase in their gasoline tax will not close down their state.

But when Wyoming survives its 10 cent increase in the gasoline tax,
don`t expect Washington Republicans to follow Wyoming Republicans and
Rewrite their tax policy to include the principle of responsibly raising
taxes when needed.

Washington Republicans will never, ever, ever have to do that, thanks
to their enablers, the responsible Democrats.

(COMMERCIAL BREAK)

O`DONNELL: Stephen Colbert`s sister, Democratic candidate for
Congress Elizabeth Colbert Busch, will appear right here on this program
tomorrow night for her first national television interview as a candidate
to represent South Carolina`s first congressional district. Her possible
Republican rival, the most love-sick governor of our time, Mark Sanford,
took his "please forgive me for having an affair while being governor,
divorcing my wife and planning to marry my mistress while running for
Congress" to "the Today Show" this morning.

(BEGIN VIDEO CLIP)

MARK SANFORD, FORMER GOVERNOR OF SOUTH CAROLINA: The reality of our
lives is, if we live long enough, we`re going to fail at something. And I
absolutely failed in my personal life and my marriage. But one place I
didn`t ever fail was with the tax payer. If you were look at my 20 years
in politics, what you`d see is a fairly remarkable consistency in trying to
watch out for the taxpayer.

UNIDENTIFIED FEMALE: You did pay a fine, ethics charges related to
misusing taxpayer funds. We don`t need to get in all to the nitty gritty
of that. But doesn`t that go against your argument of being faithful to
the taxpayers?

SANFORD: If we were to get into the nitty gritty, what you would find
is there was no admission of guilt with any of that. In the same way that
a business will settle a case -- you`re a lawyer by training. You could
say OK, this happened, but, in other words, by no means do we agree with
what happened.

Even the House, which were by no means fans, absolved us of all of
that. So, yes, I did use business class on legitimate business trips. It
is a much longer story.

(END VIDEO CLIP)

O`DONNELL: Yes, it is a much longer story. And joining me now for
some of that story is Dick Harpootlian, chairman of South Carolina`s
Democratic party. Dick, there is a new poll out that`s worrying me a great
deal about this race. It indicates that Mark Sanford may not win the
Republican nomination. He is apparently running second at 19 percent,
against somebody named John Kuhn, former state senator, who is running at
35 percent.

So how worried should we be that Mark Sanford might not get the
nomination?

DICK HARPOOTLIAN, SC DEMOCRATIC PARTY CHAIRMAN: Well, I`m counting on
the Republican party to do what they have done in this state for the last
12 years since they elected him governor, and Nikki Haley governor. And
remember now, in this Republican administration, his state treasurer was
indicted for distributing cocaine. We`ve had a lieutenant governor here
indicted for using campaign funds for personal use, which by the way is
what Mark Sanford -- he just said he didn`t admit any guilt, but he paid
back the campaign funds and the taxpayer funds that he used to pay for
trips to see his Argentinean mistress, allegedly on a business development
trip to Argentina.

We know now what kind of business he was developing.

O`DONNELL: Now, I -- I have said this before. I loved his press
conference where he kind of came off the Appalachian Trail, where he really
wasn`t, and just kind of said look, this is just crazy love. I`m just out
of my head with love. And he just kind of admitted the whole thing right
out there in that first press conference.

How did that play with the romantics of South Carolina?

HARPOOTLIAN: Well, you know, it didn`t play very well. And in the
polls I have seen give him huge negatives, especially with women in South
Carolina. And look, this guy is a fake. He just said he -- you know, 20
years in the Congress and governor and all of these things he has done,
never got a bill passed. Couldn`t get along with the Republican
legislature. They censured him, by the way, and said he was an
embarrassment to the state of South Carolina.

So look, we in South Carolina know he is a grade A liar, a guy, by the
way, that voted to impeach President Clinton for his sexual peccadillo, now
wants to be forgiven. And he`s on the redemption tour. He wants the state
-- the district to elect him to the Congress as a redemption measure to
show that he is in God`s good grace again.

O`DONNELL: And Dick, how lucky is the state and the Democratic party
to have a member of the Colbert family, the renowned Colbert family of
South Carolina running for this seat?

HARPOOTLIAN: Well, look, Elizabeth or Lulu, as her friends call her,
is an extraordinary candidate. You are going to see tomorrow night that
she is bright. She is articulate. She is raising money. And she does --
you know, she does have the ability to raise some money because her brother
has been helping her a little bit. But also she`s lived her entire life in
this district, had six brothers and sisters.

As you know, her father and two of those brothers were killed in a
tragic plane crash 25 years ago. But she is beloved in Charleston. And I
think as they get to know her in the rest of the district, they are going
to love her too.

O`DONNELL: Well, we`re going to get to know her tomorrow night. Dick
Harpootlian, chairman of the South Carolina Democratic party, gets
tonight`s LAST WORD. Thanks, Dick.

HARPOOTLIAN: Thank you.

O`DONNELL: Elizabeth Colbert Busch will be my guest for a LAST WORD
exclusive, her first national television interview tomorrow night. "THE ED
SHOW" is next.

END

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