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'The Last Word with Lawrence O'Donnell' for Tuesday, February 11th, 2014

Read the transcript to the Tuesday show

February 11, 2014

GuestS: Joy Reid, David Corn, Shawn Boburg, Amie Parnes, Jonathan Allen

LAWRENCE O`DONNELL, MSNBC ANCHOR: Chris Christie went to Chicago today to
tell some rich people something that all of them can relate to. That his
problems are all his staff`s fault.


GOV. CHRIS CHRISTIE (R), NEW JERSEY: The last six weeks haven`t been the
most enjoyable of my life.

UNIDENTIFIED MALE: New Jersey Governor Chris Christie is in Chicago today.

ALEX WAGNER, MSNBC HOST, "NOW": Christie is hoping that things will blow
over now that he is in the Windy City.

UNIDENTIFIED MALE: These days he can`t escape his problem.

UNIDENTIFIED MALE: Republicans are running for the hills.

UNIDENTIFIED MALE: Even when he hits the road --

WAGNER: His third out-of-state trip since bridgegate began.

UNIDENTIFIED MALE: Christie remains a very effective RGA fundraiser.

UNIDENTIFIED FEMALE: In spite of the scandal.

UNIDENTIFIED MALE: A record-setting fundraiser.

behind questions about the bridge scandal.

CHRISTIE: I`m shocked you brought that up.

UNIDENTIFIED MALE: This isn`t going away for him.

CHRISTIE: I don`t think that it will curtail for the long haul a second-
term agenda.

UNIDENTIFIED MALE: He can be optimistic that he can regain his agenda.

CHRISTIE: The public in New Jersey won`t tolerate it.

UNIDENTIFIED MALE: Some of the drivers who were stranded for hours in the
GWB demanding Christie`s resignation.

UNIDENTIFIED MALE: Fourteen thousand signatures from New Jersey residents
saying that Governor Christie must resign.

UNIDENTIFIED MALE: It`s virtually impossible to see him getting anything
done now in the near term.

WAGNER: Eighteen more subpoenas.

UNIDENTIFIED FEMALE: We have several investigations going on right now.

CHRIS MATTHEWS, MSNBC ANCHOR, "HARDBALL": This is a story that`s going to
be decided by the evidence.

UNIDENTIFIED MALE: This investigation is going to go on for a while.

WAGNER: It is no wonder Governor Chris Christie is getting out of town.

CHRISTIE: A god awful winter that I wish would end.


O`DONNELL: Chris Christie hit the road once again today for the Republican
Governors Association, this time traveling to Chicago. But unlike his
recent trips to Florida and Texas, Chris Christie did not hide from the
cameras all day.

He had a luncheon chat with the very well-heeled crowd at the Economic Club
of Chicago and got a big burst of applause for saying brave things like


CHRISTIE: We balanced our budget without raising income taxes, sale taxes,
corporate business tax or any other tax in New Jersey. And I`m proud to
say that four years later, we still haven`t raised taxes.



O`DONNELL: OK, so you get who that crowd is. As is customary at these
sort of things, every question was a softball, including the one about the
George Washington Bridge scandal, which, of course, didn`t use the word


UNIDENTIFIED MALE: Is the GW Bridge situation impact your ability to
execute on those priorities for the state?

CHRISTIE: I`m actually -- I`m shocked you brought that up.



O`DONNELL: The GW Bridge situation. Well, it`s never going to get easier
than that for Chris Christie. Now here is the relevant portion of
Christie`s very wordy answer to that question in which he, of course,
blames those terrible people who were working for him. He did not mention
that those terrible people were hired by him.


CHRISTIE: Some people who worked for me made some significant mistakes in
judgment. And when you`re the leader of that organization and you`re
confronted with that, the first thing that happens to you, what happened to
me, was extraordinary disappointment. Extraordinary disappointment that
people that I had trusted had made such bad judgments and had not told the

But you only have a few minutes to wallow in that disappointment. And then
if you`re a leader, you have to try to get a handle on the story and take
decisive action, which we did by letting people go and talking to the
public about it.


O`DONNELL: Of course, if something like that happened to the companies run
by many of the leaders in that room, some of them would actually ask the
people who did the bad things why they did those bad things before they
fired them. But not Chris Christie.

Here`s Chris Christie discussing what has always been one of his favorite
subjects -- how heroic he was in the aftermath of Hurricane Sandy.


CHRISTIE: So when I was yelling and screaming about Sandy aid in January
of 2013, both at the other party and at my own, it wasn`t because, you
know, I needed a few extra bucks to balance the budget. It`s because every
dollar that we`ve been shorted will have an impact on the lives of the
people of my state. And as governor, your job is to fight for those people
as hard as you can.


O`DONNELL: Now, of course, Christie knows that he`s talking to an audience
that knows nothing about what he`s talking about. That is his specialty as
a public speaker. That is how he became known as a good public speaker
because he works best to audiences who do not know what he`s talking about.

He was talking to an audience that did not know that he helped funnel $6
million in federal Hurricane Sandy money to a senior center in Bellville,
New Jersey, a place that suffered no damage.

There`s Chris Christie, talking to the rich people of Chicago about
Hurricane Sandy and saying every dollar we`ve been shorted will have an
impact on the lives of people of my state. Every dollar we`ve been
shorted. Real New Jersey language. And that audience doesn`t know that he
personally shorted $6 million from the people in his state who deserve
Hurricane Sandy money, and directed it to a place that suffered no damage.

Now only one of the four Republican candidates running for governor in
Illinois attended any of Chris Christie`s events there today, and Politico
reports that another gubernatorial candidate requested a private meeting
with Christie, the no-cameras kind.

Democrat Ted Strickland, the former governor of Ohio said this about the
Christie tour.


TED STRICKLAND (D), FORMER OHIO GOVERNOR: He`s continuing to travel around
the country as the RGA chair to raise money for candidates who seem to
refuse to be seen or photographed with him.

Will Governor Christie listen? Will he realize that with every state he
visits, Republicans are running for the hills. Who knows? But what we do
know, what we do know is that there was a culture in Christie`s office
where a type of petty and dangerous political retribution was acceptable.


O`DONNELL: Joy Reid, Chris Christie went semi public today.


O`DONNELL: As a Republican Governors Association leader. But that event
that was public was not a Republican Governors Association event, just to
be clear.

REID: Right. And it`s interesting but you -- the way you were describing
it. It kind of -- it sounded a little bit like the Mitt Romney event down
in Boca Raton where he made the 47 percent. He was sort of with likeminded

And it is interesting that Chris Christie is really sticking to the old
Chris Christie narrative pre-bridgegate and selling that outside of New
Jersey. And just one other interesting note for the people who were seen
with him today, who were not ashamed nor embarrassed to be around Chris
Christie today, Bill Brady who actually attended the event is a state
senator who -- he`s hoping to, should he get the nomination, get the
support of the RGA. He`s sitting at about 20 percent of the polls.

The other guy, Bruce Rauner, is a hedge fund guy or venture capitalist, I
should say. A very wealthy, sort of well-heeled guy, who`s sitting about
40 percent of the polls. He`s way ahead. So he did a private meeting with
Christie. He`s really got nothing to lose by letting it known he was with
Christie. But he`s also way ahead. So it`s actually safe for him to do

So the -- only one who kind of took a risk is the state senator who
actually showed up at the event.

O`DONNELL: David Corn, in the land of Rob Blagojevich, these politicians
are not all -- they don`t feel publicly safe in the company of Chris

DAVID CORN, MSNBC POLITICAL ANALYST: Right. In Chicago they`re used to
hanging with people who are --

O`DONNELL: Exactly.


CORN: A short bike ride from --

O`DONNELL: What could be the problem?

CORN: You know, but the thing is -- I wasn`t surprised that Christie
finally seems in public to get back to the Christie personal we`ve all come
to know and -- well, not loved but accept. Because I think it dawns on him
that this is going to be a long drawn-out affair. This won`t be resolved
in the next two weeks. Maybe not even in the next few months.

The -- you know, in addition to the legislative committee that`s looking I
think very narrowly at the bridge lane closings, you have the U.S. attorney
Paul Fishman who`s a very serious guy who actually succeeded Christie in
the job -- conducting a criminal investigation and we do know that when
U.S. attorneys start snooping around, where they end is not always where
they start.

You start asking about a bridge, and then also you`re looking at how Sandy
funds may or may not have been used, as you noted, improperly maybe to get
some political leverage and something. I still think that`s where Christie
may be most vulnerable. These stories that have come out today about him
or his lieutenants trying to leverage Sandy funds which is his big
accomplishment, right, for petty political purposes.

So I think the RGA, all those people who want to see him run are going to
have to hold their breaths for six months to a year. Remember the Scooter
Libby case and Patrick Fitzgerald? That went on for a long time. These
federal prosecutors are nothing if not slow and diligent. Christie will
not be able to get this behind him for a while.

O`DONNELL: And, Joy, to that point, when Christie this week Thursday,
whether permitting going to have some sort of town hall meeting in New
Jersey, when he tries some of those same lines in New Jersey, about all,
you know, these people who worked for me, they did something terrible.
That room is going to know who hired those people. And that room also is
well versed enough now to know this guy specifically declined to speak to
them before firing them to find out what they actually know.

REID: Right. And it`ll be interesting to see how much they vet that
audience. Right? Town halls are not always town halls.


REID: We know in modern politics. They may carefully seat that audience
for, like, loyal people they can get in the room because what Chris
Christie doesn`t want is to get booed in that room or berated in that room
in a way the thing goes viral because his whole sort of persona is also
built on the idea that he`s beloved as the governor of New Jersey, that
he`s beloved across party lines.

That, you know, a Democrat who stands up at a meeting would thank him for
getting Sandy aid. But to the other problem with the narrative now is that
when you`re talking about every dollar of Sandy aid helping the people of
New Jersey --


REID: -- you also have -- forgetting just the scandal, what about the
commercials? So did the -- you know, did those television commercials
featuring the Christie family --


REID: How did that help the people of New Jersey?


REID: On top of the bridgegate stuff. But for the purposes of his being
the Republican Governors Association head, what David said is actually
quite either frightening or hopeful for Christie because we still have a
number of Republican governors races coming up for which the RGA, and he`s
still raising lots of money, lots of big ticket races. You think about
those guys in Illinois, they`re competing with Wisconsin and Michigan and

Some big races. They still want the RGA money. So you sort of have to
hold him at arm`s length, but if he stays in place and the investigation
drags on until November, you still need him to raise money for you.

CORN: You know, the interesting thing about the town hall meeting if it
comes to pass is that --

O`DONNELL: And the only thing that could derail is it a big snowstorm
that`s coming this way.

CORN: Yes.


CORN: Is -- you know, or it could be derailed also by Chris Christie.


Because, you know, his, you know, weapon of choice in these sorts of
situations in the past when he`s been challenged is to call people idiots.

REID: Right.


CORN: And to drown them out and to be dismissive and really to -- in
public to really try to shame and shun. And he can`t do that anymore. You
know, so he has to find a way to get back to that sort of bold straight
talking guy while saying things that don`t make sense while also playing
the victim card, which we saw there. You know, it was about his feeling.
He felt disappointed. But, oh, I`m not going to wallow.

REID: Right.

CORN: Not old Chris Christie, I don`t do wallow. But it`s still about how
he felt betrayed. Not how he did not get to the bottom of this or the
obvious question which the executive from Motorola did not get to which is
why did these people think they could do this. And why did the -- why does
the e-mail chain read as if it`s not just coming from nowhere but that the
guy who gets the message knows this is what is to be done?

Obviously there were other conversations. Have you asked anyone about

REID: Or anything. Have you asked anyone anything before they resigned.

O`DONNELL: Yes. Why didn`t you ask Bridget Kelly a single question.

Joy Reid, when does your 2:00 p.m. start?

REID: The 24th of this very month.


REID: 24th of February.

O`DONNELL: Any minute now.

REID: 2:00 p.m. Yes.

O`DONNELL: Joy Reid, David Corn, thank you both very much.

CORN: Thank you.

REID: Thank you.

O`DONNELL: Coming up, a little more on the Christie investigation with one
of the reporters who broke the story wide open last month.

And once again, President Obama crushes John Boehner. This time on the
debt ceiling.

And later, Karl Rove tells Rand Paul that his new attacks on Bill and
Hillary Clinton are a very bad idea.

That`s coming up.


O`DONNELL: We have more about what Rachel reported in the last hour about
the New Jersey legislature`s subpoenas being targeted at some very specific
information. That`s next.



CHRISTIE: We`re in the midst of an internal review now. And whatever that
internal review discloses we`re going to release to the public and if
there`s more action that needs to be taken I`ll take it. But I don`t think
that it will curtail for the long haul a second-term agenda because I think
the public in New Jersey won`t tolerate it.


O`DONNELL: That was Chris Christie today in Chicago talking about the
lawyer run investigation he has launched in his office about what happened
at the George Washington Bridge. Christie hired a team of very expensive
lawyers to do this at taxpayer expense after himself refusing to ask people
who he knows were involved in the scandal a single question about it.

Christie famously fired Bridget Anne Kelly without speaking to her. She is
of course the first person Christie should have spoken to after reading her
e-mail time for some traffic problems in Ft. Lee but he didn`t. And his
deliberate choice not to speak to Bridget Kelly lost him that opportunity
of solving all or most of the mystery at the George Washington Bridge

In his press conference on the subject, Chris Christie gave this reason for
not speaking to her.


CHRISTIE: Well, I certainly wouldn`t tamper with the witness, but I could
be accused of tampering with the witness.


O`DONNELL: Chris Christie is no longer concerned about being accused of
tampering with witnesses or giving the appearance of tampering with
witnesses by conducting his own investigation. An investigation that thus
far we know to be targeted not at anyone who has been fired by Chris
Christie in this scandal or is still working for Chris Christie, but we do
know that the investigation is aimed at Dawn Zimmer, the mayor of Hoboken
who has made what the "Star Ledger" newspaper has calls a credible charge
of extortion against the Christie administration.

This morning, one of "The New York Times" reporters working on the story
said this about team Christie`s investigation.


KATE ZERNIKE, NEW YORK TIMES: I think he wants a private meeting with Dawn
Zimmer. I think what their message is, you know, they`re trying to sort of
threaten people. And you know, not explicitly, but saying, you know, we`re
going to go back after you if you come after us. And so, you know, look, I
think this is their strategy. I think we knew about Randy Mastro coming in
that he was going to try to block people who are going to come after Chris
Christie. That`s probably why Chris Christie hired him. And I think this
is part of that strategy.


O`DONNELL: Team Christie then, of course, sent out an e-mail attacking
"The New York Times" and that reporter. And as we learned on the "RACHEL
MADDOW SHOW" tonight, there is a common thread with the 18 new subpoenas
that were issued yesterday by the New Jersey Special Committee.

According to a document obtained by MSNBC, the committee is looking for
information on who helped draft the story for the former deputy executive
director of the Port Authority Bill Baroni when he said this during his
November 25th testimony before the New Jersey state legislature.


UNIDENTIFIED MALE: Who told them to put the cones out?

Wildstein requested a one-week study be conducted. And then that began --
it was conducted the following week and that began that Monday morning.
And the bridge folks and the port authority police department began putting
the cones out. And as opposed to creating a three-lane special lane for
Ft. Lee, it was a one-lane special lane.


O`DONNELL: Joining me now from "The Bergen Record" is Shawn Boburg, the
reporter who broke the story that there was messages linking the Christie
administration and the Port Authority`s closure of the lanes at the George
Washington Bridge.

Shawn, it is amazing to see where this story has traveled since you first
revealed those e-mails, it`s time for traffic problems in Ft. Lee. The
Chris Christie administration investigation, here he was in the big press
conference saying, don`t want to do any investigation inside the office.
People will think that`s witness tampering.

Now he`s hired a team to do what he said he didn`t want to do, apparently
not worried about people thinking this might be trying to intimidate
witnesses as "The New York Times" reporter suggested.

SHAWN BOBURG, THE BERGEN RECORD: Yes, and so the question is what`s the
real intent of running those investigation? Is it to get to the bottom of
this? Now this was initially described as an internal review. The first
sign that we -- first indication that this is going beyond and outside of
Christie`s office was a request by Randy Mastro to talk to Hoboken --
Hoboken`s mayor.

Now is than an attempt to intimidate? Christie would say no. He would say
this is an attempt to get --

O`DONNELL: And -- and to demand -- request all of the communication
between that mayor and "The New York Times" of all things.

BOBURG: Right. Well, I think it`s fair -- I think it`s fair to ask
whether Randy Mastro and the governor really believed that Dawn Zimmer
would turn over the documents that they gave to federal authorities while
accusing Christie of what amounts to potentially wrongdoing.

That`s a reasonable question to ask. And I think most people would say,
it`s likely that they knew she was going to turn us over. So what`s the
true intent of this letter?

O`DONNELL: Yes. And -- now here`s this internal investigation, they`ve
got a lieutenant governor who is accused by this mayor of having basically
participated in an extortion move, and there`s no indication whatsoever, is
there, from inside Christie`s own investigation that they`re questioning
the lieutenant governor about that?

BOBURG: No, I`ve asked Randy Mastro this myself repeatedly. And his
response has been we`re not going to talk about the internal review that
we`re conducting.

Now there`s an interesting distinction to be drawn here about what we know
about the legislative investigation and the one that`s being conducted by
Christie`s office. You see that we have an idea of who`s subpoenaed and
we`re getting, you know, some news about what is being sought, what kind of
information is sought. We don`t have that same level of information with
the internal review.

O`DONNELL: Now I was really struck by that set of subpoenas. When it went
to the lawyer at the Port Authority, Phil Kwon, who assisted Bill Baroni in
that testimony that we just saw, talking about the traffic study that did
not exist. When I saw that one going out I said on this program last
night, that may be one of the most if not the most important new subpoenas
that`s out there.

BOBURG: Right. And here the intent is to find out whether Phil Kwon knew
the true motive behind these lane closures. It`s not disputed that he
coached Bill Baroni before he went before the legislature and gave
questionable testimony about this being a traffic study. To what extent
did he know the political motivations? And I think that that`s going to be
a line of inquire that`s pursued in the future.

And if they can get Phil Kwon before the legislature to answer some
questions in person, I think you`re going to see a lot of interest in those

O`DONNELL: Yes. And I mean, that`s the -- one of the real centers of how
this story managed to go off in the direction it went off and with Chris
Christie to this day still clinging to the traffic study that no one can

BOBURG: Yes. And remember, it`s not just Phil Kwon. There are also
questions about whether Bill Baroni had any interaction, David Wildstein
had any interaction with people within Christie`s inner circle before they
went before the joint legislation -- legislative committee. And furthered
this theory of a traffic study.

We have some indication in e-mails, internal e-mails that there was
communication. To what extent did the governor`s office know the true
reasons behind this.

O`DONNELL: Now, by the way, the state police were saying the helicopter
did not fly over the bridge during the traffic jam, the governor`s
helicopter, but again, there`s an indication that the interest there is not
so much in the route of flight, but who was on the helicopter, who might he
have been talking to while on the helicopter. All that is still being

Shawn Boburg, thank you very much for joining us tonight. Really
appreciate you coming across the river for this. Thank you very much.

BOBURG: Thank you. OK.

O`DONNELL: Coming up next, House Speaker John Boehner has become Ted
Cruz`s worst nightmare. So Ted Cruz says. But of course, this is much
better for the country. Ezra Klein will join me.

And later Karl Rove thinks that Rand Paul`s attacks on the Clintons, not a
good idea?



SEN. HARRY REID (D), MAJORITY LEADER: I commend Speaker Boehner for doing
the right thing. I hope this commonsense approach will continue throughout
the year so we can actually get some things done.


O`DONNELL: In the spotlight tonight, John Boehner does the right thing.
After President Obama crushed him on the debt ceiling.

A few hours ago, the House of Representatives passed a clean, no-strings-
attached, old-fashioned kind of increase to the debt ceiling by a vote of
221-201. Republicans abandoned several plans to attach other items to the
debt ceiling, and only 28 Republicans voted for this bill.

"The Washington Post`s" Robert Costa peeled the curtain back on how this
all came together at a private Republican breakfast this morning at the
Capitol Hill Club. Boehner`s delivery was crisp, his decision was final,
there were no outcries or boos.

A few members whispered to each other that Boehner was right. That due to
conservative opposition to any hike, he was -- he was cornered. But they
didn`t speak up or clap. Boehner shook his head then turned to the nearly
mute crowd and wondered aloud why he wasn`t getting applause.

"I`m getting this monkey off your back and you`re not going to even clap?"
Boehner asked. Scowling playfully at some Tea Party favorites.

Later, Speaker Boehner admitted that President Obama won this round because
Boehner and the House Republicans had nothing. That`s his word. Nothing.
They didn`t have a strategy and they didn`t have the votes.


UNIDENTIFIED MALE REPORTER: Is this a recognition that post government
shutdown, you don`t have this political leverage to fight the president on?

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: No, it`s the fact that we
didn`t have 218 votes. And if we don`t have 218 votes, you have nothing.
We`ve seen that before. We`ll see it again.


O`DONNELL: Joining me now is MSNBC policy analyst Ezra Klein. He`s also
building a new news site at VOX media.

Ezra, so John Boehner did the right thing. Let`s give the guy credit.

saying how far we have fallen as a politics. We`re doing nothing for the
unemployed. We`re doing nothing about climate change. We`re celebrating
that the majority party in the House of Representatives put forward no
votes but did not actually block the debt ceiling increase that would have
mutt the global economy into a global tail spin.

All right, that said, as you say, John Boehner not only did the right
thing, he`s also right about the politics. Something you`re seeing here is
the weakening of the conservative wing of the Republican Party in the House
and a strengthening of John Boehner after the disastrous shutdown earlier
in the year, earlier last year.

And the other thing I think you`re seeing here, which is actually kind of
interesting is the degree to which Boehner is now using sort of the
conservatives in the house as sort of a vehicle to get his way. His
argument is because they won`t let him pass anything that makes
conservatives happy, he`ll just pass whatever he wants instead. That`s
actually kind of interesting bit of political jiu-jitsu there.

O`DONNELL: Yes. And you know, I for one, thinks Boehner has handled this
thing exactly right all the way through. He is faking it all along. He
always thought he was going to end up here. He pretends to the
conservative, OK, let`s try to attach this. Let`s try to attach that. And
then, they can`t even get on a consensus in their closed-door meetings. He
shows them that they can`t. I mean, this has been done in much less bumpy
ways by speakers, you know, for ages. There`s nothing new in that process.

Now, in the Senate, we have word from Ted Cruz tonight, Ezra about how he`s
going to greet this. He says under no circumstances will I consent to the
debt ceiling being raised with only a 50-vote threshold. I think Senate
Republicans should stand united and insist upon a 60-vote threshold and
that is my intention. That has wrongly been reported by some people as a
filibuster threat. That is just a kind of standard procedure threat.

KLEIN: I expect we`ll see many of those press releases from Ted Cruz going
forward. But it is worth saying, this is exactly the situation Ted Cruz
wants to be in, right? He wants to be in a situation where he can stand as
a lone sort of conservative holdout against the sellout Republicans in
Washington. But he does not ever want to be in the position that he got
put in during the shutdown of anybody actually taking his advice and
executing on that strategic plan that makes the American people hate the
Republican party then makes the Republicans blame him for it. This
position where he can just say no but there`s no consequence to him saying
no is an ideal situation for him as he builds towards 2016.

O`DONNELL: Ezra Klein, thanks very much for joining us tonight.

KLEIN: Thank you.

O`DONNELL: Coming up, who can blame Bill O`Reilly for not understanding
that there was no scandal at the IRS? I don`t know, I might. That`s next
in "the rewrite."


O`DONNELL: In breaking bipartisan news tonight from the United States
Senate, this happened.


UNIDENTIFIED FEMALE: Ayes are 90, the nays are eight and the nomination is


O`DONNELL: Tonight, Senate majority leader Harry Reid working with
minority leader Mitch McConnell, yes, working together, got more than 90
votes for three more of President Obama`s nominations. The Senate voted
92-6 to confirm Charles Hammerman Rivkin as the assistant secretary of
state. The Senate voted 97-1 to confirm Sarah Sewall as undersecretary of
state. And the Senate voted 90-8 to confirm Richard Stengel as
undersecretary of state for public diplomacy. Before being nominated, Rick
Stengel spent seven years as managing editor of "Time" magazine. You have
probably seen him as a familiar guest on this network. Rick Stengel will
be in charge of cultural affairs efforts, educational exchange programs and
confronting the ideological support for terrorism overseas.

Eight Republican senators, including John McCain voted against Rick
Stengel`s nomination without saying a word about it. So we don`t know
tonight why those eight Republican senators don`t want someone at the state
department who is trying to undermine the ideological support for terrorism
around the world.

"The rewrite" is next.



BILL O`REILLY, FOX NEWS ANCHOR: What some people are saying is that the
IRS was used at a local level in Cincinnati, maybe other places --


O`REILLY: How do you know that because we still don`t know what happened

OBAMA: We do -- that`s not what happened. Folks again have had multiple
hearings on this. I mean, these kinds of things keep on surfacing in part
because you and your TV station will promote them. But --

O`REILLY: Aren`t there unanswered questions?

OBAMA: Bill, when you actually look at the stuff, there`s been multiple
hearings on it. What happened here was that you have a 501-c4 law that
people think is confusing that folks did not know how to implement.


O`DONNELL: Poor Bill O`Reilly. Could not understand a word of what
President Obama was saying. And like everyone else at FOX News and most
people in the political news media, Bill O`Reilly has never read the 501-c4

As many of you know, this is a program where we actually read the 501-c4
law when we discuss it. So bear with me for one more reading which defines
eligible tax exempt organizations in that category as civic leagues or
organizations not organized for profit, but operated exclusively for the
promotion of social welfare. The language of that law is 100 years old,
but in 1959 in what was a completely undetected scandal at the IRS, the
Republican president Dwight Eisenhower`s IRS chief council decided to
simply change the word exclusively to primarily. And he did this through a
new instruction for IRS agents and tax filers on 501-c4 that suddenly said
that organizations filing under 501-c4 had to be primarily operated for the
promotion of social welfare, not exclusively, just primarily.

The Obama administration may have learned of this change for the first time
from this program on May 13 of last year. Because as of that time, no one
in the White House or the IRS or Congress had noticed or mentioned the
words of the law and how the words of the 1913 law conflict with the words
of the 1959 IRS guideline. The law is, of course, the law written by
Congress and signed by the president. And the guideline, the regulation,
is just a guideline.

The Obama administration now recognized the huge conflict between the law
and the regulation and so they have suggested changes to make the
regulation more understandable. Under the Obama version of the guideline,
they would still mistakenly allow the word primarily to define how much
social welfare activity a 501-c4 would have to engage in. But the
regulation would go on to try to define the kinds of political activity
that would prevent an organization from getting 501-c4 status. And to
define what kinds of political activity a 501-c4, exactly how much of it
they could engage in.

Republicans fear any change in the regulation, since the regulation has
allowed Republicans and other political operators to wildly abuse 501-c4
law. And so in the House ways and means committee, the Republican chairman
introduced a bill today that would, quote, "prohibit the internal revenue
service from modifying the standard for determining whether that -- whether
an organization that has operated exclusively for the promotion of social
welfare for purposes of section 501-c4 of the internal revenue code."

The funny thing about this Republican bill is that it does not want 501-c4s
to be operated according to the law and that word exclusively. The
Republican bill is an attempt to preserve the scandalous change in the
regulation that occurred in 1959, which was made in the political dark of
night when no one knew about it. Today, the chairman of the ways and means
committee said this --


IRS and treasury is that the rules that have been in place for more than 50
years created confusion.


O`DONNELL: Notice that the chairman doesn`t say that the -- refers only to
the rule that`s been in place for 50 years, the rule, the guideline. He
didn`t say law. The law has been in place for 100 years. Why don`t we
just enforce the law word for word? There is not one Republican on waits
and means committee who wants to enforce the law word for word. What their
bill does is simply prevent the Obama administration from changing the
regulation on 501-c4`s in any way for the next year.

This bill passed the ways and means committee today. It can easily pass in
the House of Representatives but it has virtually no chance of passing in
the United States Senate or being signed by the president.

And so the Obama administration will probably proceed in rewriting the IRS
regulation for 501-c4`s and that will only very slightly improve the
government`s ability to clean up the political abuse that occurs within
501-c4 organizations. But the only change that is actually needed in the
IRS regulation is the complete erasure of that regulation. Even the Obama
version of the IRS regulation will remain in stark conflict with the law as

The Obama administration should simply be proposing the 501-c4 law be
enforce following the precise written intent of the Congress. Not the
written intent of President Eisenhower`s forgotten IRS chief counsel who
completely changed the meaning of the law without legal authority. And the
Republicans in the House of Representatives who began this Congress with
their phony readings from the constitution on the House floor to
demonstrate their fidelity to every word of the constitution as written
should demonstrate their fidelity to every word of 501-c4 law as written by
Congress 100 years ago and their position should simply be enforce the law.
At least one Democrat gets this, Congressman Lloyd Doggett of Texas.


REP. LLOYD DOGGETT (D), TEXAS: I believe that where the internal revenue
service got off was a long time ago when it defined exclusively social
welfare organizations under the statute to be primarily. And it changed
the original intent of the statute. I think the IRS should treat social
welfare organizations as just that, social welfare and not engaged in


O`DONNELL: It is possible that not a single Republican on the ways and
means committee understood what Lloyd Doggett said today when he said that.
And it is absolutely certain that Bill O`Reilly didn`t understand because
Bill O`Reilly didn`t even hear it because listening to congressional
hearings on 501-c4`s, that isn`t the way Bill O`Reilly spends his day.

The Obama administration is still taking comments from the public and any
interested parties about how to change the administration regulation
covering 501-c4`s. They have received 23,000 comments and suggestions so
far. You can join the comment party by going to

Here is what I`m going to do at I`m going to tell the
government something you wouldn`t think you would have to tell them the
government to do, enforce the law as written. Words have meaning,
exclusively does not mean primarily. Exclusively is what the law passed by
the Congress and signed by President Woodrow Wilson says. Everyone who
voted on that law and President Wilson understood what the word exclusively

The law they passed was a good law, a clear law, not even slightly
confusing. And it was supremely easy to enforce for 50 years until an
unelected bureaucrat changed it without legal authority. It is time to
simply enforce the law.


O`DONNELL: Oh, sorry, just looking for my name here on the Clinton`s enemy
list in the new bio about Hillary Clinton. Let`s see, Obama, O`Malley.
Great, I`m not even on the index. I must not be on the list. We will be
right back with the author of this book.


O`DONNELL: We know how Rand Paul will run against Hillary Clinton if the
Republicans make the mistake of nominating him for president.


UNIDENTIFIED MALE: Rand Paul is out there. He`s bang on the Clintons
every day. Now what`s his strategy?

KARL ROVE, FOX NEWS CONTRIBUTOR: Well, I`m not sure that he has a
strategy. I was intrigue the other day. Somebody said why are you doing
this? And he said because people keep asking me about it. And frankly,
Rand Paul spending a lot of time talking about the mistakes of bill Clinton
does not look like a big agenda for the future of the country. It is going
to be a big complex thing and they`ve got to strengthen their skills to get
ready for it. I`m not sure beating up on Bill Clinton and Monica Lewinsky
is a particularly good thing to strengthen your skills for 2016.


O`DONNELL: And we now know even more about how Hillary Clinton will run
her presidential campaign, thanks to this new biography "HRC: state secrets
and the rebirth of Hillary Clinton."

Joining me now, the authors of that book, Jonathan Allen and Amie Parnes.

Jonathan, I saw you on TV the other day saying something that I`ve been
saying for, I don`t know, a long time. Hillary Clinton is running for
president. Let`s stop this talk about if she runs for president and if she
makes the big decision. There`s a presidential campaign that`s under way
that she is running brilliantly at this point.

JONATHAN ALLEN, AUTHOR, HRC: Yes. I stole that line from you.

O`DONNELL: I mean, there`s just no mystery here.

ALLEN: No, of course, as you know with politicians, they are always
running for the next thing. They might decide at some point not to.

O`DONNELL: Yes. Like in the case of Chris Christie, it might end up that
he stops his presidential campaign, but he had a presidential campaign

ALLEN: And she`s no different. You know, since 2008, she`s been thinking
about what`s the next move, how do you get back into the game? And look,
if you look at the things she did at the state department, she continued to
court donors and businesses. She tried to turn the state department`s role
in commerce overseas into something that could get her involved in
businesses. She had businesses donating to various charitable things the
state department was trying to do. She built a tech team at state. She
got beat by Obama in technology. Now she understands it`s a fundraising
tool, messaging tool and organizing tool to use social media. She did a
lot of that at state, hired scores of people to do that kind of people.
She has been building and building and building her operation, whether it
was something in the cam `08, the state department or the `16 campaign for,
you know, since 2006 I believe, really since the end of the Clinton

O`DONNELL: Amie, the Clintons have always been running the next campaign.
I mean, even immediately after inauguration as governor, inauguration as
president the first time, there`s always been the next campaign.

AMIE PARNES, AUTHOR, HRC: Yes. And you talked about the hit list before
that. You know, they`re all looking back to look ahead and I think that`s
the key with them. So, I think, you know, we talk about the hit list and
people say why is that relevant for 2016? Well, it is. Because, you know,
they`re always constantly looking and planning and saying who was with us,
who was against us. And I think that plays out in 2016.

O`DONNELL: What does Karl Rove know about Hillary Clinton that Rand Paul
doesn`t seem to know?

ALLEN: I think he remembers the midterm elections of 1998 after
impeachment and Democrats picking up ground.

PARNES: There`s that.

ALLEN: In the House of Representatives. And he looks at bill Clinton`s
approval ratings right now after the Monica Lewinsky scandals and he
realizes that Hillary Clinton certainly wasn`t the one to blame for the
Bill Clinton affair. And he thinks man, that`s a really bad strategy for
attacking somebody you could attack for any number of things.

O`DONNELL: Is Hillary Clinton ready for what we know are the attack
points? Apparently Rand Paul is going to do attack points on the scandal
stuff. But obviously, they`re all going to do attack points on Benghazi.

PARNES: Right. And also health care. And we point that out in the book.
You know, you`re seeing Republicans kind of seize that as an issue. They
want her fingerprints all over it. And they are saying look, she was
actually involved. We have a scene in the book where we talked about how
she was supporting the president on health care. And now you`re seeing
Republicans and all these groups around them saying look, she was. She was
involved. So that`s an argument that you`re going to see in the future in
the coming months.

ALLEN: And Benghazi, Republican are promising, we talked to Shaun Spice
through the communication director for the RN c. He said Benghazi ads, get
used to them.


Now, let`s go back to healthcare, Amie, because if you want to talk about
old news, there`s nothing as a policy that the first lady is more attached
to for a longer period for her public career than health care. This is --
I mean, wouldn`t you think this is built into the polling that already
exists on her? That people know she was the original, you know, person
pre-Obama trying to push this kind of plan.

PARNES: Yes. And I think that`s why she didn`t want her fingerprints on
it publicly. You know, she did this kind of behind the scenes in meetings.
She told the president you have my support, how`s it going? She was
talking to Ram Emanuel a lot about it. And she was talking to other aids
about it along the way. And she was even convincing lawmakers to go along
with it.

O`DONNELL: But from the state department, what should she have possibly
done or said about health care? That would have been quite odd hearing
something about the secretary of state from it.

ALLEN: Absolutely. Amore, she remember obviously, the early `90s, you`re
the expert on this stuff, on health care reform back then. Given what she
had done back then, anything she had done publicly on Obamacare had the
ability to really toxic on Capitol Hill among Democrats, you know, well let
alone Republicans. As secretary of state, she has no role in domestic
policy. She tried to stay above the fray for her own political good and
for the good of doing that job.

But I think there were a few small areas. We go into this in the book in
detail, effects I believe you guys have an extra (INAUDIBLE) for folks to
get you later about this, there were a few point where is she was able to
involve herself. And as Amie said, talking to some of the president`s
aides about her experiences back in 1993 and 1998 for. There was a pivotal
cabinet meeting in September of 2009 where a lot of cabinet members were
starting to get angry about what was going on with health care. And she
said look, we`ve got to do this now.

O`DONNELL: Jonathan Allen and Amie Parnes.

So we have an excerpt on our Web site about the -- it`s from the book.
It`s about what part of the book?

ALLEN: It`s about health care, the cabinet meeting and about some of the
things she did in terms of talking to other lawmakers.

O`DONNELL: That`s great. Thank you very much for joining us tonight.

Uh up next, Steve Kornacki is in tonight for Chris Hayes.


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