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updated 2/9/2012 1:29:18 PM ET 2012-02-09T18:29:18

Guests: Steve Schmidt, Richard Wolffe, Ari Melber, Robert Reich, Bernard Sanders

ED SCHULTZ, HOST: Good evening, Americans. Welcome to THE ED SHOW
from New York.

The Republican race for president -- gosh, it`s getting fun. Kind of
going to the dogs. Rick Santorum rolled over Mitt Romney and he might have
a real good path to the Republican nomination.

Now, liberals, we got to root for Santorum. I`ll tell you why.

This is THE ED SHOW -- let`s get to work.

(BEGIN VIDEOTAPE)

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: The gift of being under
estimated is a wonderful gift. And I think we might have seen a little bit
of that last night.

SCHULTZ (voice-over): The Santorum sweep has Democrats dancing and
Romney scrambling.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Rick Santorum, he raised --
voted to raise the debt ceiling I believe five different times.

SCHULTZ: Tonight, Santorum surge and how it affects the race with
Steve Schmidt and Richard Wolffe.

Ari Melber of "The Nation" and former Labor Secretary Robert Reich are
on opposite sides of the decision to use super PACs. They are here to
debate it.

ELLEN DEGENERES, TALK SHOW HOST: If they have a problem with
spokespeople, what about the Pillsbury doughboy? I mean, he runs around
without any pants on.

SCHULTZ: Ellen DeGeneres is putting right wing bigotry in its place.

Republicans are waging another secret war on workers. Senator Bernie
Sanders is standing up and doing something about it.

And Koch brother money is officially pouring into Wisconsin.

UNIDENTIFIED MALE: Wisconsin put an end to abuses of collective
bargaining, putting taxpayers back in control.

SCHULTZ: Tonight, one of the Wisconsin 14 is here with a major
announcement.

(END VIDEOTAPE)

SCHULTZ: Good to have you with us tonight, folks. Thanks for
watching.

Last night`s election results told us two things about the
Republicans, Mitt Romney has some serious issues and trouble in the middle
of the country and Rick Santorum is taking advantage of it.

Here is the scoreboard: Romney has won three states, Newt Gingrich has
won South Carolina and Rick Santorum has the lead, has won four states --
all in the middle of the country, which is interesting. I`ll explain.

Now, Rick Santorum is covering some pretty big territory, and Mitt
Romney is performing worse in those states than he did in 2008. So, how is
he moving forward? He did four points worse in Missouri and didn`t win a
single county. For instance in Minnesota, he came in third and lost 24
points than he did last time.

In Colorado, he lost 25 points from 2008.

If you want to look at one county as an example of Mitt Romney`s
problems in middle class America, middle of the country, look at Norman
County in Minnesota. This is a county of 7,000 people in the Red River
Valley. The median income is about $32,000. More than 10 percent of the
population lives in poverty. Mitt Romney got zero percent of the vote in
Norman County.

Romney spent very little time or money in any of these states before
last night. When Mitt Romney doesn`t carpet bomb the air waves with
attacks on his opponents, well, he loses.

Today, Romney, well, he became -- started his new assault on Rick
Santorum.

(BEGIN VIDEO CLIP)

ROMNEY: Rick Santorum was a major earmarker, continues to defend
earmarks. Under Rick Santorum, he raised -- voted to raise the debt
ceiling I believe five different times, to a tune of about an additional
$3.5 trillion.

(END VIDEO CLIP)

SCHULTZ: The electability issue is going away for Mitt Romney. He
needs to attack Rick Santorum because Santorum is a credible conservative.

Until now, Santorum hasn`t had the big money to support him but that
might be changing. Last night, he was shadowed by millionaire conservative
Forest Friess who is bank rolling the pro-Santorum super PAC.

Santorum will appear at CPAC this weekend, the annual gathering for
conservatives. He`s been a big hit there in the past. And this is a
chance for him to really bring in more big money donors.

Santorum is also stepping up in one very important area. He`s getting
much more aggressive against President Obama.

(BEGIN VIDEO CLIP)

SANTORUM: There`s probably another person who maybe -- maybe is
listening to your cheers here tonight, also. And that might be at 1600
Pennsylvania Avenue, you better start listening to the voice of the people.

But then again I wouldn`t be surprised if he isn`t listening. Why
would you think he would be listening now? Has he ever listened to the
voice of America before?

No, he -- why? Because he thinks he knows better. He thinks he`s
smarter than you. He thinks he`s someone who is a privileged person who
should be able to rule over all of you.

(END VIDEO CLIP)

SCHULTZ: Man, I`ll tell you, that is raw meat, I don`t know why the
conservatives don`t jump all over Rick Santorum. He`s your guy, isn`t he?
He`s the whole package.

Really, there are generally four categories of conservatives these
days. You got your social conservatives, your national defense
conservatives, that`s what they`re really concerned about, also the
economic conservatives and the Tea Party conservatives. The four legs of
the conservative movement basically.

Most conservatives are a combination of these. But Rick Santorum
seems to be able to deliver in all four of these categories, and I think
the country is starting to get it. He`s getting conservatives to vote for
him in states that Barack Obama won in 2008.

Now, this is basically Mitt Romney`s problem. He just can`t connect
with the voters across the board.

I think Santorum really put himself on the ticket last night. He is a
more than relevant player. He might have secured his spot on the ticket.
How can you deny him he`s winning in the middle of the country where
President Obama won in 2008?

But the person you should be really should be celebrating, I think the
most is President Obama. You see, the conservative supporting Rick
Santorum pretty much are out of touch if you look at the polls all
throughout the country.

Now, the big social conservatives, their issue is, of course, the
administration, birth control right now. They`re really uptight about
that.

Now, the public sides with President Obama on that. The national
defense conservatives, what do they want? They want us to go face-to-face
with Iran at any cost. I mean, you listen to Santorum on the stump, that`s
all he can talk about is going after the Iranians.

I think Americans have had enough of that. Americans are
overwhelmingly against another war of choice. Economic conservatives, what
do they say? Well, they say -- well, they say you can`t raise taxes on the
job creators. The public says you can and you should to the tune of some
70 percent.

And, then, of course, there`s the Tea Party movement. They want to
cut government spending across the board.

Well, guess what? President Obama says he can trim the deficit by
cutting spending and raising taxes on the wealthiest Americans and the
public agrees with him.

I mean, if Mitt Romney loses to Rick Santorum, the happiest person in
the race has got to be President Obama. It will be too ideologues and one
who can find the center a little bit better than another, it would seem to
me President Obama would be headed right back to 1600 Pennsylvania Avenue.

Get your cell phones out. I want to know what you think. Tonight`s
question, who is the big winner last night? Rick Santorum or President
Obama?

Text A for Rick Santorum, text B for President Obama, to 622639. You
can go to our blog at Ed.MSNBC.com. We`ll bring you results later in the
show.

I`m joined tonight by MSNBC contributor and Republican strategist
Steve Schmidt, who served as a senior advisor to Senator John McCain`s
presidential campaign, and MSNBC political analyst Richard Wolffe with us
tonight.

Gentlemen, great to have you with us.

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Thanks, Ed.

SCHULTZ: Steve, does Rick Santorum have a realistic path to the
nomination right now? How big was last night?

STEVE SCHMIDT, MSNBC POLITICAL ANALYST: I think it was a huge night
for him, and it starts to collapse the inevitability story line around Mitt
Romney. If you look at the contest right now, there`s been eight, Rick
Santorum has won four, Mitt Romney has won three.

Now, Rick Santorum needs Newt Gingrich to either get out of the race
or he needs those Gingrich voters to collapse Newt Gingrich`s support and
come over to him pretty decisively, because if there are two candidates
splitting the conservative vote, looking ahead at the remaining contest and
going on to Super Tuesday, I still think it means that it`s big trouble for
those candidates.

SCHULTZ: What do you make of Santorum winning where President Obama
won? Minnesota, Iowa, Missouri, Colorado? I mean, I went to this Newt
Gingrich event the other night and they weren`t sold on Newt in
Bloomington, Minnesota. But you could really sense they were looking for
something.

They were looking - they were trying -- they were, you know, wavering,
what do I do? Where do we go? We got to find someone to beat Obama.

And what`s happening, it seems to me, is that Santorum is igniting the
conservative base. It`s a little bit late, but where President Obama won
is where he seems to be strong.

SCHMIDT: I think that Rick Santorum had a compelling message to blue
collar Republican voters. You`ve seen him hit it out of the park with that
message on primary nights.

And I think one of the things that may have been under-estimated on
the Republican side is the impact of Governor Romney`s comments when you
talk about that he`s not focused on the poor. I think that that impacts
with evangelical voters who in fact are focused on the poor, and it also
impacted with conservatives who don`t believe in the social safety net in
the way that Governor Romney described it.

So I think all of this after a number of missteps that this campaign
right now is a long way from being over, it`s getting very exciting in the
next one.

SCHULTZ: Game changer last night, I think. I mean, this is wide open
now.

Let`s go to Richard Wolffe.

Richard, you know, how does Romney recover from this? How -- what
would you advise him to do? How does he turn this thing around and get the
mojo back?

WOLFFE: Well, you know, we all see him -- I think they did in Boston
as well, that February will be a good month for them. First of all, he`s
got to stop February from being a complete bloodbath.

And you got to look at two states in particular coming up, Maine and
Michigan, where the polls have him in the lead but they`re not that
comfortable a lead when you consider what happened in Colorado. So, he`s
really got to win and win impressively at least in Michigan. Otherwise,
he`s going to find the media really turning on this story of inevitability.

And then you head into Super Tuesday which may not be all that super
because there aren`t many big states in it, but still, Super Tuesday is
going to get a lot of attention.

So, if you`re going to be the momentum candidate, you`ve really got to
deliver. And so, that`s the first thing -- start winning again.

But secondly, if you think you`re going to be the general election
candidate and you got to take down Rick Santorum, the temptation is going
to be to go to the right of him or at least equal him on some of the social
conservative issues. That`s very difficult with Rick Santorum, you cannot
do what you did to Newt Gingrich, going after Freddie Mac there. You`ve
got to find another channel to say Santorum is just not going to win
without having to try and destroy him on credibility or conservativism
because I don`t think it works in the same ways it did with Gingrich.

SCHULTZ: Today, Mitt Romney likened his campaign to Senator McCain.
Here it is.

(BEGIN VIDEO CLIP)

ROMNEY: Senator McCain, you know, after I think winning Florida, he
went on to lose, I don`t know, 17 or 18 contests after that, but was able
to put the delegates together by focusing on the process of gathering
delegates, as we will.

(END VIDEO CLIP)

SCHULTZ: Steve, is this the right comparison?

SCHMIDT: I don`t think it is the right comparison. The day that John
McCain became the de facto nominee of the party, there were a total of 35
people who worked in the headquarters, campaign was $2 million in the red,
and the campaign stipulated that it wasn`t going to compete in the caucus
states because we didn`t, A, have money, and we didn`t, B, have
organization to be able to do it. We needed to compete in the primary
state where we could take advantage of the momentum.

Governor Romney doesn`t have that excuse. He has the money, he has
the organization. The problem that he`s running into is a message problem,
is that Republican voters are rejecting his candidacy in these states for a
reason that is different than money and different than organization.

He won`t win every state, but when you look at the problems that are
spelled out with the results last night, he does have some real structural
problems in the race.

Now, I still believe that he is likely to be the Republican nominee at
the end of the process for a lot of different reasons. But if he loses
Michigan, for example, you would see a narrative that starts to take hold
that shows the campaign in the state of collapse. That would be very bad
for him.

SCHULTZ: Almost six in 10 Democrats now say that they are very
excited about voting in November. That`s up from 48 percent six months
ago. Republican enthusiasm hasn`t changed.

Richard, how is the Obama campaign reacting to all this. They got to
be high-fiving one another behind closed doors.

WOLFFE: That`s the most important, that and the turn around in
independent voters are the two biggest numbers to come out of this whole
year or more of campaigning certainly since the midterms. That enthusiasm
advantage really changed the shape of the electorate in 2010.

If Barack Obama goes in to 2012 with the kind of electorate he went
in, that we saw going into the midterms in 2010, two years ago, he`s going
to lose.

So, he has to try and shift the electorate back to something
approaching 2008. Enthusiasm translates into turnout. That`s extremely
important. So, yes, that is a very important measure moving forward.

And, by the way, poor Michael Steele, part of the MSNBC family, his
idea as head of the RNC was that this would build enthusiasm and turnout,
this whole primary process we`ve seen. And that`s not bearing out in the
numbers.

SCHULTZ: I think that Rick Santorum has worked himself into a
position where he has to be reckoned with, with the party. I mean, you
can`t have a guy draw that many conservatives out even though the
enthusiasm gap and the turnout isn`t as great. But if he can to draw out
conservatives where President Obama won, he is going to have to be on the
ticket it would seem to me.

Steve, what do you think about that?

SCHMIDT: I don`t know that he necessarily if he comes in second place
has a claim to the vice presidency. But in the Republican Party, coming in
second place at the end of this process, usually is an indicator that
you`re going to be the next nominee of the party, right?

(LAUGHTER)

SCHMIDT: So any Republican who goes through this process and winds up
in second place -- it`s different than the Democratic Party, right?

SCHULTZ: Yes.

SCHMIDT: The signal in the Democratic Party that you`re washed up.
In the Republican Party, it`s a signal you got to really bright days ahead.

SCHULTZ: Steve Schmidt, Richard Wolffe, always a pleasure. Great to
have you with us tonight. Thanks so much.

WOLFFE: Thanks, Ed.

SCHULTZ: Remember to answer the question there at the bottom of the
screen, and share your thoughts on Twitter @EdShow. We want to know what
you think.

There`s going to be a super PAC slugfest when the GOP nominee faces
President Obama. Robert Reich and Ari Melber join me on the Obama
campaign`s decision to help a Democratic super PAC. The Republicans are
waging war on workers, one of the men standing in their way, Bernie
Sanders. He`s coming up. He will join me to talk about his plan to save
the post office.

Lots more coming up. Stay with us. We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: Coming up: The Obama campaign`s decision to promote donating
to super PACs has the left divided in this country. I`ll talk to Ari
Melber who support the decision and Robert Reich, former labor secretary,
who has some serious reservations.

Ellen DeGeneres responds to the conservative group that threatened to
boycott JCPenney for hiring her as a spokesperson, and thanks the company
for standing with her.

And Scott Walker raises money in the Sunshine State. While the Koch
brothers do his dirty work buying up Wisconsin ads touting his record.
State Senator Kathleen Vinehout is taking on the governor and she`s here to
explain it all.

Share your thoughts on Twitter with us tonight using the #EdShow.
We`ll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: With all due deference
to separation of powers, last week, the Supreme Court reversed a century of
law that I believe will open the floodgates for special interest, including
foreign corporations to spend without limit in our election.

(END VIDEO CLIP)

SCHULTZ: Well, guess what? I guess we could say that`s vintage tape
of Supreme Court Justice Samuel Alito reacting when President Obama dared
to challenge the wisdom of the Citizens United decision. President Obama
is obviously on record for standing up against super PACs.

But President Obama is also a realist. His campaign saw what happened
when Mitt Romney`s super PAC carpet bombed Newt Gingrich in Florida. It
was a turnaround.

The president of the United States and his aides decided they needed
to help Democratic super PAC.

Priorities USA cofounder Bill Burton said, "This is a new kind effort
for Democrats but we`re confident we have the resources we need to be
countervailing force to the right wing."

Democratic donors have been reacting. A veteran Hollywood fundraiser
said finally. The Democratic fundraiser David Rosen said, "What it means
is one person can affect the nominating process, I find it appalling." But
he said he understood the decision.

Let`s turn to Robert Reich, former secretary of labor under the
Clinton administration and professor at U.C. Berkeley. And Ari Melber is
with us tonight, correspondent of "The Nation" magazine.

I think I may be differing with both of you tonight. I think this is
a slam dunk decision. I think the president had to do this. You got to
stay in the money game whether you like it or not.

Mr. Reich, I think you`re on record saying you don`t like it. That
it`s a big mistake. Why?

ROBERT REICH, FORMER LABOR SECRETARY: Well, you know, Ed, I
understand it. And political realists will say it was necessary. I think
that it was -- I don`t think it was necessary. I think it`s a sad
commentary on where we are and where the Obama administration is.

I think if the administration and Obama had said, look, this campaign
really is going to be, as he did start to say in December, you remember
that speech out in Kansas, this campaign is going to be what I believe and
that is that wealth and income and political power in this country have
become too concentrated at the top and I`m going to make this campaign
about the people versus the power and the privilege. If he really felt
that, if he really believed it, he could take a stand against Citizens
United.

But what he`s done now essentially said to all the world, said to
everybody, including a lot of small donors, or potentially small donors, he
said, look, I`m going to play the game just the way the Republicans are,
I`m going to become dependent on a few huge donors on Wall Street --

SCHULTZ: Yes.

REICH: -- and in corporate boardrooms.

And, you know, Ed, again I understand it. I think he could have done
better with a very strong stand he would have had many, many more small
contributors, he would have had a mandate in the second term to really take
all this on and I think --

SCHULTZ: I --

REICH: You know, the decision is done. I can`t do anything about it,
but I think it`s sad.

SCHULTZ: Well, I think most liberals in this country view it as a
principle stand as what you`re talking about. But the reality of it is
that you can`t win unless you have a bunch of money to counter $500 billion
of negative ads.

(CROSSTALK)

REICH: That`s the issue.

SCHULTZ: Yes.

Ari, did the president do the right thing? What do you think?

ARI MELBER, THE NATION: I think he did what he has to do. We`re
talking about playing by the rules. He`s playing by the rules, and some of
the rules are bad, and they should change. But he`s dealing with
Republican Congress here, Ed, that, as you know, has fought to filibuster
the Disclose Act and fought to fight against the insider trading bill,
which I consider small ball reforms.

And the thing I disagree with the professor on is this isn`t how
change has to work. When you say you support higher taxes, it doesn`t mean
you start just paying out higher taxes in individual, you try to change the
laws. And in the meantime, we don`t have two sets of systems between the
reformers and people who don`t like the reformers.

SCHULTZ: Mr. Reich, what about that? What about that, Robert?

REICH: You know, I think -- I think that the president, if he had
really stuck to the principle that he believes in, I hope he believes in,
maybe he doesn`t. I mean, some people say and they`ve said to me today,
look, the president is -- was really never much of a reformer. He`s a
centrist. He`s not a populist certainly. And this is predictable.

But if he really does believe that the forces of wealth and income and
concentrated power in this country are threatening democracy as he did say
before, I think that that a principle stand could have attracted millions
of small donations, I think. But by doing what he`s doing now, he`s
actually discouraging, demoralizing some of his base.

SCHULTZ: Yes.

REICH: He`s not going to get as many small donations. He might have
had more small donations in total in terms of the amount of money than he
it gets --

MELBER: If that`s the principle argument, the principle if he could
raise more money in a different way, how that is more principle?

REICH: Oh, I think it`s enormously more principle because if it`s
small donations from average Americans, that is how, that is not --
inconsistent with democracy. What`s inconsistent is gigantic donations
from a handful of extraordinarily wealthy people and corporations, that`s
what we want to fight against.

SCHULTZ: You know, I see both sides. I mean, I think it`s a leap of
faith to think that small donors are going to be able to match the super
PAC money on the right.

But the other thing, both of you, if the Republicans win the White
House, there`s no chance of reform.

REICH: That`s right.

SCHULTZ: If President Obama wins the White House, at least we could
go back do him and say, look, you didn`t like this you said you didn`t like
it, you were under a position to do something about it. What about that,
Reich?

REICH: Ed, you`re right. I think what the president really needs to
do now is say, look, if I am reelected I am going to fight like mad for
campaign finance reform, for public financing of elections, for full
disclosure and that Disclose Act. I`m going to have an executive order
that every major federal contractor is going to disclose all contributions
that that contractor makes.

SCHULTZ: Yes.

REICH: I`m going to ban major big contractors, military contractors
that get more than their money from the federal government from making any
political contributions at all.

I think the president needs to be out there in the second term on all
this issue of money and politics, big money and politics, get rid of it.

SCHULTZ: Yes, he`s got elected. That is the big thing.

This is this just, Ari, just a flat out admission the president can`t
win playing on a different field as the Republicans?

MELBER: He might be able to win, but it`s an admission that this is a
huge problem, everyone knows it`s a problem, and the way you deal with
problems is you fight them head-on. He`s got to fight to get reelected and
I don`t think -- I support the Fair Elections Now bill by Senator Durbin
and other efforts to curb this. But it`s got to be done uniformly.

The idea that liberals should use reform to only themselves makes no
sense to me.

SCHULTZ: Robert Reich, Ari Melber --

REICH: Look, this is not unilateral disarmament. I`m saying the
president now has an opportunity if he`s reelected, to really say to the
public I am going to fight for and I`m committed to genuine finance reform.
I`m going to appoint Supreme Court justices that aren`t committed to
repealing Citizens United, reversing it, and I`m also going to seek
constitutional amendment to overturn Citizens United.

SCHULTZ: Well, we all want the same thing, it`s just how we get there
is a little different direction. It`s good that liberals can have a
discussion like this. Over on the right, it`s just get in the line and do
it.

Robert Reich, Ari Melber, great to have you with us tonight. Thanks
so much.

Next up, the right wing haters at One Million Moms are still attacking
Ellen DeGeneres. Today, the talk show host responds. We`ve got the tape
you won`t want to miss.

And I`ve got a bone to pick with Sean Hannity across the street. He
made some pretty ludicrous claims about the Obama administration and the
death of Osama bin Laden. I`ll share the details coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ELLEN DEGENERES, "ELLEN": Normally I try not to pay attention to my
haters. But this time, I`d like to talk about it because my haters are my
motivators.

(END VIDEO CLIP)

SCHULTZ: Talk show Ellen Degeneres addressing the controversy brought
on by right wing group One Million Moms. As we reported on this broadcast
last week, One Million Moms took issue with Ellen`s new role as
spokesperson for JCPenney.

(BEGIN VIDEO CLIP)

DEGENERES: This organization doesn`t think that I should be the
spokesperson because I`m gay. So for those of you who are just tuning in
for the first time, it`s true I`m gay. I hope you were sitting down. I
hate to break it to you this way. But anyway --

(END VIDEO CLIP)

SCHULTZ: JCPenney stuck by their decision and by Ellen, end of story.
Right? Wrong. One Million Mom`s followed up with this hate filled
statement. "By jumping on the pro-gay bandwagon, JCPenney is attempting to
gain a new target market, and in the process will lose customers with
traditional values that have been faithful to them over all these years."

Here`s Ellen`s response.

(BEGIN VIDEO CLIP)

DEGENERES: First of all, being gay or pro-gay is not a bandwagon.
You don`t get a free ride anywhere. There is no music. And occasionally
we will sing "We Are Family." But that is about it.

Secondly, they said a majority of the JCPenney shoppers will be
offended and not shop there anymore. I would like to read just a few
comments from the Million Mom`s Facebook page. This is on their page. Not
that there is anyone counting, but for a group that calls themselves a
Million Moms, they have 40,000 members on their page.

So they are rounding to the nearest million and I get that. Here is
another one, "way to go JCPenney for not giving in to bullies. Stand your
ground."

And then finally, I`m a Christian and part of a traditional family.
And I support Ellen and now JCPenney.

(END VIDEO CLIP)

SCHULTZ: As for the traditional values, the intolerant few at One
Million Moms claimed to uphold, Ellen had something to say about that too.

(BEGIN VIDEO CLIP)

DEGENERES: I usually don`t talk about stuff like this on my show, but
I really want to thank everyone who is supporting me. And if you don`t
know me very well, if you`re just watching maybe for the first time or
you`re just getting to know me, I want to be clear, and here are the values
that I stand for.

I stand for honesty, equality, kindness, compassion, treating people
the way you want to be treated and helping those in need. To me, those are
traditional values. That is what I stand for.

(END VIDEO CLIP)

SCHULTZ: Bravo Ellen, well said.

(BEGIN VIDEO CLIP)

SEAN HANNITY, FOX NEWS ANCHOR: The president will say, well, we got
bin Laden. Putting that aside.

UNIDENTIFIED MALE: The public gives him credit for that.

HANNITY: They do. The public does give him credit for it. But it
wouldn`t have happened if he had his way.

(END VIDEO CLIP)

SCHULTZ: Sean Hannity has gone off the deep end once again. Coming
up, I will deconstruct Hannity`s deranged version of history with the
facts.

Republicans in Congress are trying to squash an American institution.
Bernie Sanders to the rescue.

And Koch Brothers money is now flooding the airwaves in Wisconsin to
try to help save Scott Walker. One of the Wisconsin 14 isn`t having it.
State Senator Kathleen Vinehout is here with a major announcement.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. The Republican war on workers,
it just continues. As we reported once before, one of the latest targets
is, of all things, the Post Office, an American institution. The Post
Office is in a little bit of trouble, but they can get out of it.

Republicans say the decline in traditional mail has been a big reason
why the Post Office is losing money. Ah. But it`s more than that. During
a 2006 lame duck session of Congress, Republicans passed a law requiring
the Postal Service to pre-fund -- pre-fund, that means ahead of schedule --
health care benefits for future retirees, 75 years worth of pensions over a
10 year span.

Now what kind of business would sign up for a plan like that? If you
run a small business, can you ask yourself the honest question tonight,
would you do that? Probably not. Republicans have one goal in mind when
it comes to the Post Office: privatization.

Here are the facts. The Post Office costs taxpayers nothing. That`s
right, zip, zero, nada, nothing. It doesn`t add to the deficit. But
because it`s considering a -- it`s basically considered a quasi-government
agency, the GOP, well, they just want to take the ax to it. They don`t
want any obligation.

Senator Bernie Sanders has come up with a plan to not only save the
American institution, but he`s got some creative ideas. He thought of a
few creative solutions to expand the Postal Service`s existing services,
like this: under Senator Sanders plan, you can get a few cool ones
delivered right to your doorstep.

Right now, you have to go through the private sector to do that. But
why can`t the Post Office do this? Sounds pretty good to me.

Joining me now is Senator Sanders of Vermont. Senator, good to have
you with us. I`m sorry I didn`t pick the Vermont beer that`s up there.
But at least I have the Good Union stuff here, Miller Lite. OK.

Is the beer delivery and some other things a way that could really
turn around the Postal Service? What are you proposing?

SEN. BERNIE SANDERS (I), VERMONT: Ed, absolutely. The Post Office
today is extraordinarily restricted in the kind of services and products
that it can provide. If you go into a Post Office and you say to the
clerk, can you notarize this letter for me, Post Office clerk says it`s
against the law; can`t do it.

Can I get ten copies of my letter? Sorry, can`t do that. Can I get a
fishing license, Hunting license? Can`t do that.

If I want at Christmas time, can you wrap my package, put some
Christmas wrapping on it, can`t do that. All over Europe what Post Offices
are doing is significantly diversifying. They are getting involved in e-
telecommunications and they`re beginning to make some revenue.

So we`ve got to do a couple things. Short term, as you indicated, we
have to relieve the Post Office of this horrendously onerous responsibility
of coming up with 5.5 billion dollars every single year. No other
institution in government, local, state, federal or private agency, private
corporation, has to do that.

Second of all, the Postal Service, everybody agrees, has overpaid
about 13 billion dollars into various retirement programs. That will give
us short term breathing space in order to get a new business model out
there, which allows the Post Office to get involved in a much more
entrepreneurial effort, and begin to raise the revenue it needs to be self-
sufficient.

SCHULTZ: Now all of the things that have been brought up about e-mail
and the way society changes, goods and services and what not, I understand
all that. But had the Republicans not done this pre-funding of 75 years in
a 10 year window, they wouldn`t have anywhere near the financial problems
they have right now, correct?

SANDERS: Absolutely. And here`s the point, Ed. That fund now has 44
billion dollars. What the inspector general of the Post Office has just
told us the other day, if the Post Office does not put another nickel into
that fund, it accumulates four percent interest. In 21 years, that fund is
fully funded, stronger than any similar fund in the United States of
America.

So we should use that 5.5 billion in order to stabilize the Post
Office today.

SCHULTZ: How are you going to get the private sector to go to rural
America? How are you going to get the private sector to go help small
businesses? I mean, in the long run, this is really a real thorn in the
side of American business, I think.

SANDERS: You`re absolutely right, Ed. Look, this is what we`re
talking about: you`re talking about 230,000 jobs being lost in the Postal
Service in the middle of recession. Postal Service is responsible for
millions of other jobs, in the private sector, businesses who use the mail,
have to use the mail, packages every single day.

We`re talking about losing 3,700 Post Offices, many of them rural.
We`re talking about, if these guys get their way, of slowing down mail
delivery, so that instead of one day delivery, it may be two, it may be
three. Instead of three, it may be five.

If you do that, in my view, and the view of many experts, you`re
talking about a death spiral, the end of the Postal Service as we know it.

(CROSS TALK)

SCHULTZ: What I find so amazing about this politically is that there
are a lot of Republican legislators from rural America. When they go home,
aren`t they going to get an earful? What happened to my Post Office? Did
you really have to do that? Then they say well, the union people and
they`re just making too much money and they can`t make any money. Wrong.

The Republicans in the lame duck session of the Congress passed a law
and put them in an untenable position financially that has caused all of
this. You`re coming back with a business plan that wants to diversify the
services of the Post Office to make them more competitive. That is what
they`re doing in other countries.

But, of course, we have to do the American way. We have to cut jobs
and move forward. Are you going to get any bipartisan support on this?

SANDERS: I believe we will. We`re picking up a whole lot of
Democratic support. There`s a bill out there, Lieberman/Carper bill, has
some good aspects to it. We have to strengthen it. I have at least 20, 25
senators, Democrats who want to see it strengthened. I think there a
number of Republicans, just for the reason that you gave.

When senators go home and they go to rural areas, people understand
that a Post Office is not just a Post Office. It`s an integral part of
what a small community is. They don`t want to lose those Post Offices.

SCHULTZ: Yes. Senator Bernie Sanders, great to have you with us.
Thank you for sticking up for what is right in this country, no doubt about
it.

Sean Hannity has some pretty wild claims about the death of Osama bin
Laden, the number one terrorist in the world. I`ll explain the truth to
Sean with my tape, next. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: I recently read that Bill O`Reilly says MSNBC doesn`t deal
in facts. Well, he should check out his own network before he starts
throwing around accusations.

Bill, tell your buddy Sean Hannity to explain his attack on the Obama
administration.

(BEGIN VIDEO CLIP)

HANNITY: They have a bad economy. They`ve got five trillion dollars
in debt. I think they have foreign policy that has shown a lot of
weakness. I know the president will say we got bin Laden. Putting that
aside.

UNIDENTIFIED MALE: And the public gives him credit for that.

HANNITY: They do. The public does give him credit for it. But it
wouldn`t have happened if he had his way. And I think that can be proven
as well on tape.

(END VIDEO CLIP)

SCHULTZ: Tapes? Want tapes? Sean Hannity thinks that there are
tapes showing President Obama saying that he didn`t want to get the world`s
number one terrorist, Osama bin Laden? Well, THE ED SHOW gave Hannity a
chance to respond today on Twitter.

Having a little fun, we wrote @SeanHannity "needs to show his tape
proving the president didn`t want bin Laden dead."

Hannity replied saying, "Ed, even you can figure this out. He did not
support Gitmo, enhanced interrogation techniques, rendition, without which
no bin Laden." Whatever that means.

Sean, look, stop with the distractions. Hannity claims torture helped
find bin Laden, but he`s wrong, very wrong. I have my own tape to prove
it. White House Deputy National Security Advisor John Brennan was asked
about it point blank on this network.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: There is word out today that water boarding
played a very big role or a role in actually getting the information that
was integral in finding bin Laden. Is that the case?

JOHN BRENNAN, WHITE HOUSE DEPUTY NATIONAL SECURITY ADVISER: Not to my
knowledge.

(END VIDEO CLIP)

SCHULTZ: Now, I have more tape for you, Sean. Barack Obama was clear
about his intention when he was on the campaign trail, that he was going to
track down bin Laden. He said this before he was elected back in 2008.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If we have Osama bin
Laden in our sights, and the Pakistani government is unable or unwilling to
take them out, then I think that we have to act and we will take them out.
We will kill bin Laden. We will crush al Qaeda. That has to be our
biggest national security priority.

(END VIDEO CLIP)

SCHULTZ: He wasn`t kidding, was he? Shortly after taking office,
President Obama ordered then CIA Director Leon Panetta to expand every
effort, coming up with a detailed operational plan to find Osama bin Laden.

The president, well, he got his way. In March of 2011, when Obama was
presented with several strategies to get bin Laden, he got his way, again.
In fact, he pushed forward over the objections of his then secretary of
defense, Robert Gates, the vice chairman of the Joints Chief of Staff and
his own vice president.

The president got his way and got Osama bin Laden. Hannity spent
eight years propping up a president who admitted he didn`t care about
getting bin Laden. President Bush lost interest six months after 9-11.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: So I don`t
know where he is. Nor do I -- you know, I just don`t spend that much time
on him, to be honest with you.

I repeat what I said, I truly am not that concerned about him.

(END VIDEO CLIP)

SCHULTZ: Bush was so unconcerned about him that he outsourced the
attempt to get bin Laden at Tora Bora in 2002. Then disband the bin Laden
unit in the CIA in 2006. So Hannity can keep misleading his viewers on
Fox, if he wants to, about Osama bin Laden, and attacking this
administration`s foreign policy.

But we all know how President Obama will respond to that.

(BEGIN VIDEO CLIP)

OBAMA: Ask Osama bin Laden and the 22 out of 30 top al Qaeda leaders
who have been taken off the field whether I engage in appeasement. Or
whoever is left out there. Ask them about that.

(END VIDEO CLIP)

SCHULTZ: OK, Sean, I`ve shown you our tapes. Now it`s your turn.
Show us the tapes proving President Obama didn`t want to kill the number
one terrorist in the world, Osama bin Laden, responsible for 9-11. Your
move, Mr. Intellectual Honesty.

Great news for Democrats in Wisconsin. We`ve got the details. Plus,
State Senator Kathleen Vinehout is here to share some news of her own. You
won`t want to miss it. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: ED SHOW survey tonight, I asked who was the big winner last
night, Rick Santorum or President Barack Obama? Seven percent of you say
Rick Santorum; 93 percent of you say President Obama.

Coming up, Scott Walker skips town to raise money in Florida, while
the Koch Brothers -- well, they are just buying ads like crazy in
Wisconsin. State Senator Kathleen Vinehout joins me on how the Democrats
can fight the Koch Brother influence in the Badger State. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: In the Big Finish tonight, the latest development in the
effort to recall Government Scott Walker in Wisconsin is great news for
Democrats. The "Milwaukee Journal Sentinel" estimates about 85 percent of
the more than one million recalled signatures can be verified, which means
Democrats have collected more than enough valid signatures to force a
recall election.

"The Nation`s" John Nichols tells us tonight that if the number holds,
it would be one of the highest validation rates ever for a petition of this
scale.

Meanwhile, the man at the center of it all, Scott Walker, is out of
the state again, soaking up sun and sucking up to conservatives down in
Florida, looking for cash. Today, he gave a speech at a luncheon in
Naples, Florida, sponsored by the James Madison Institute, a conservative
organization funded by -- who else, other than the Koch Brothers.

It`s important for Walker to keep the Kochs happy because they are
bank rolling his recall campaign. The Koch funded group Americans for
Prosperity recently spent just 700 grand on a couple ad buys running in
Wisconsin. Here is a sample.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Thanks to recent reforms, Wisconsin`s government
is working more effectively and efficiently.

UNIDENTIFIED MALE: Wisconsin put an end to abuses of collective
bargaining, putting taxpayers back in control.

UNIDENTIFIED FEMALE: Wisconsin`s government is working smarter.

UNIDENTIFIED FEMALE: There`s more to do. But the facts show reforms
are working.

(END VIDEO CLIP)

SCHULTZ: The facts don`t actually show reforms are working.
Wisconsin has been losing jobs for six straight months, ever since Walker`s
budget went into effect. Ask yourself the question, is that a good thing
or a bad thing?

Here is another one: the state has the worst jobs record in the
country, in the United States of America. Democrats seem to be in a strong
position for recall. They just need to pick a candidate.

One of the Democratic candidates in the running to challenge Governor
Walker joins me now, Wisconsin State Senator Kathleen Vinehout. Senator,
good to have you with us tonight. You`re throwing your name in the ring to
get the Democratic nomination.

Why are you doing that?

STATE SENATOR KATHLEEN VINEHOUT (D), CANDIDATE FOR GOVERNOR OF
WISCONSIN: Well, Ed, Wisconsin needs a beginning -- a new beginning to
politics and government. We need a fresh start. And I`ve had people all
over the state urge me to run, saying Kathleen, you`re a fresh face; you`ve
got the personal experience; you`ve got the temperament to be governor;
please, won`t you run?

When you think about this race, Ed, this is about the people. This is
about the million people that signed those petitions. And what we have to
do is come together like never before around a candidate that knows how to
run a grass roots campaign, that came from a background as a worker.

I`ve been a dairy farmer. I`ve been a worker as a nurse`s aide. I
have taught at the university level. I have a background that is nothing
like the world that Scott Walker lives in right now when he`s down in
Florida.

That is the kind of candidate we need, a candidate that is going to
bring Wisconsin together. We have to stop pitting business against
workers. We have to stop pitting the private sector against the public
sector.

SCHULTZ: Senator, I`ve got to ask you --.

VINEHOUT: This is all about bringing us together.

SCHULTZ: One of the big issues is collective bargaining. If you were
governor, can you make the commitment that you would veto any bill that has
an attack on collective bargaining?

VINEHOUT: I went to Illinois over collective bargaining, didn`t I?
You bet.

SCHULTZ: That is an absolute 100 percent, you won`t change it?

VINEHOUT: No, no, no, no. I stuck my neck out on this long ago.

SCHULTZ: Here is another one. How are you going to counter the
money, the Koch Brother money that`s coming in, the super PAC money that`s
dropping in almost to the tune of a million dollars? And there`s probably
a heck of a lot more. How are the Democrats or any candidate going to
fight against that?

VINEHOUT: Well, there is no way we`re ever going to match his money.
It`s just not going to happen. And I don`t mind being known as the
candidate who is running on a shoe string budget.

But we have something that is proving to be far more powerful than
money. And that is the efforts of voters all across the state. We have
seen people get involved in the recall election that have never been
involved in politics before. And they are saying we want to take our
government back. We want a governor who knows --.

SCHULTZ: I have to ask you quickly --.

VINEHOUT: -- serve the people.

SCHULTZ: Sure. What do you make of Scott Walker going all over the
country raising money?

VINEHOUT: Well, it`s what he`s got. He doesn`t have the people
behind him in Wisconsin. He`s advanced policies that are not consistent
with our values in Wisconsin.

SCHULTZ: That tells it like it is. Kathleen Vinehout, state senator
great, great to have you with us tonight. Thanks so much.

That is THE ED SHOW. I`m Ed Schultz. "THE RACHEL MADDOW SHOW" starts
right now. Good evening, Rachel.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

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