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updated 1/24/2013 10:21:43 AM ET 2013-01-24T15:21:43

THE ED SHOW with ED SCHULTZ
January 23, 2013

Guests: Joe Sestak, Chris Murphy, Rep. Chris Van Hollen, Sen. Bernie Sanders, David Cay Johnston

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

Any time Republicans try to beat up on a Clinton, it`s always great TV
-- especially when they get whooped like they did today.

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

(BEGIN VIDEOTAPE)

HILLARY CLINTON, SECRETARY OF STATE: For me, this is not just a
matter of policy, it`s personal.

SCHULTZ (voice-over): Secretary of State Hillary Clinton rips open
the right wing attack on Benghazi.

CLINTON: The fact is we had four dead Americans.

SCHULTZ: And knocks down hack --

CLINTON: Was it because of a protest or was it because of guys out
for a walk one night decided they would go kill some Americans.

SCHULTZ: -- after hack --

CLINTON: What difference at this point does it make? It is our job
to figure out what happened and do everything we can to prevent it from
ever happening again.

SCHULTZ: -- after hack.

Senator Chris Murphy, former Admiral Joe Sestak, and Joy Reid break
down the triumph of Clinton`s testimony.

Boehner gets a deal on the debt ceiling. Congressman Chris Van Hollen
takes us into the funny numbers he had to push.

TED NUGENT: If you want another concord bridge, I got some buddies.

SCHULTZ: Ted Nugent is assembling a moron militia. We`ll show you
what he`s going to be up against.

The transaction tax. Americans pay it every day on everything we buy.
But why doesn`t Wall Street have to pony up?

And the latest on the quest for filibuster reform. Will the Senate
actually change the rules and get something done? Senator Bernie Sanders
with us tonight.

(END VIDEOTAPE)

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

If you wanted to know why Congress has a record low approval rating,
all you had to do was watch the circus on Capitol Hill today.

Outgoing Secretary of State Hillary Clinton testified before Senate
and House committees today about the attack on the U.N. consulate in
Benghazi, Libya. The committee members already have access to the full
Accountability Review Board report on the attack, as well as classified
intelligence reports.

Secretary Clinton has repeatedly taken responsibility for State
Department failures during the attack, but Republican senators were still
obsessed with one detail -- United Nations Ambassador Susan Rice and her
description of the attack on September 16th.

Tea Party Senator Ron Johnson of Wisconsin grilled Secretary Clinton
over something she had nothing to do with.

(BEGIN VIDEO CLIP)

SEN. RON JOHNSON (R), WISCONSIN: Do you disagree with me that a
simple phone call to those evacuees to determine what happened would have
ascertained immediately that there was no protest? I mean, that was a
piece of information that could have been easily, easily obtained.

CLINTON: Well, but, Senator --

JOHNSON: Within hours, if not days.

CLINTON: Senator, I, you know, when you`re in these positions, the
last thing you want to do is interfere with any other process going on.

JOHNSON: I realize -- I realize that`s a good excuse.

CLINTON: Number two, number two -- well, no, it`s the fact.

(END VIDEO CLIP)

SCHULTZ: No answer was good enough for Senator Johnson. Eventually,
Secretary Clinton had enough.

(BEGIN VIDEO CLIP)

JOHNSON: We were misled that there was supposedly protests and then
something sprang out of that, an assault sprang out of that. And that was
easily ascertained that that was not the fact --

CLINTON: But, you know --

JOHNSON: -- and the American people could have known that within
days. And they didn`t know that.

CLINTON: With all due respect, the fact is we had four dead
Americans.

JOHNSON: I understand.

CLINTON: Was it because of a protest or was it because of guys out
for a walk one night decided they would go kill some Americans? What
difference at this point does it make? It is our job to figure out what
happened and do everything we can to prevent it from ever happening again,
Senator.

(END VIDEO CLIP)

SCHULTZ: Senator Johnson gave his condescending response to BuzzFeed
regarding Secretary Clinton`s answer. "I think she just decide she was
going to describe emotionally the four dead Americans, the heroes, and use
that as her trump card to get out of the questions. It was a good way of
getting out of really having to respond to me."

No egos on Capitol Hill there, are there, folks?

Senator John McCain is another guy who thinks the American people were
misled about Benghazi. He accused Secretary Clinton about not being honest
again today.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: There are many questions that are
unanswered. And the answers, frankly, that you have given this morning are
not satisfactory to me.

(END VIDEO CLIP)

SCHULTZ: Strong words from Senator McCain. He must have a very
detailed question for Secretary Clinton if he wants to get some answers.

(BEGIN VIDEO CLIP)

MCCAIN: The American people deserve to know answers, and they
certainly don`t deserve false answers. And the answers that were given to
the American people on September 15th by the ambassador of the United
Nations were false.

(END VIDEO CLIP)

SCHULTZ: No, same old question about Ambassador Rice.

Here is a reminder to Senator McCain. Every senator, including John
McCain, knows the answer to the question about Susan Rice. Ambassador Rice
went on the Sunday shows with talking points approved by the CIA. The CIA
informed members of Congress about it two months ago.

Democratic Senator Dick Durbin of Illinois wanted to make clear what
happens when intelligence information is still evolving.

(BEGIN VIDEO CLIP)

SEN. DICK DURBIN (D), ILLINOIS: And I`d like to refer to five words
for them to reflect on -- Iraqi weapons of mass destruction.

We were told by every level of government here, there were Iraqi
weapons of mass destruction that justified a war, the invasion by the
United States. We are still searching for those weapons. They didn`t
exist.

(END VIDEO CLIP)

SCHULTZ: Clearly, the strangest behavior of the day came from Senator
Rand Paul of Kentucky, the Tea Party darling. The leader of the Tea Party
used the hearing to grandstand and advance his political positions.

(BEGIN VIDEO CLIP)

SEN. RAND PAUL (R), KENTUCKY: Had I been president at the time and I
found that you did not read the cables from Benghazi, you did not read the
cables from Ambassador Stevens, I would have relieved you of your post. I
think it`s inexcusable.

(END VIDEO CLIP)

SCHULTZ: Tough talk from President Paul. His question to Secretary
Clinton should help get to the bottom of things, don`t you think?

(BEGIN VIDEO CLIP)

PAUL: Now, my question is the U.S. involved with any procuring of
weapons, transfer of weapons, buying, selling, anyhow, transferring weapons
to Turkey out of Libya?

CLINTON: To Turkey?

(END VIDEO CLIP)

SCHULTZ: It just gets weirder from there.

(BEGIN VIDEO CLIP)

CLINTON: I will have to take that question for the record. Nobody`s
ever raised that with me.

PAUL: It`s been in news reports that ships have been leaving from
Libya, and that they may have weapons.

(END VIDEO CLIP)

SCHULTZ: Ah, I bet you can figure out where those news reports came
from. FOX News and other conservative outlets are pushing a conspiracy
theory about gun running from Libya to Turkey in order to arm the rebels in
Syria.

It`s pretty crazy stuff, but it doesn`t stop there.

(BEGIN VIDEO CLIP)

REP. DANA ROHRABACHER (R), CALIFORNIA: At any time did you see the
initial attack on a monitor? Or the president?

CLINTON: Congressman, there was no monitor, there was no real time.
We got the surveillance videos some weeks later. That was the first time
we saw any video of the attack.

(END VIDEO CLIP)

SCHULTZ: Take a guess where this crackpot theory came from.

(BEGIN VIDEO CLIP)

SEAN HANNITY, FOX NEWS: Oh, and did I mention the State Department
was watching this unfold in real time.

(END VIDEO CLIP)

SCHULTZ: Really? Hannity`s got intel that there was a direct line of
video feed of the attack. Places like Breitbart.com also pushed the video
conspiracy theory.

This was not a useful hearing at all. No new useful information was
obtained today. This was political hackery at its worst, or should I say
at its best for the Republicans.

Republicans used this hearing for everything but getting to the truth.
Now they can go on FOX News and tell their side of the story. They can use
their comments maybe in fundraising videos. They went after Hillary
Clinton.

You can see it tonight, that all of the local newscasts from where
these House members are -- Joe Smith really got after Hillary Clinton
today. He`s our kind of guy.

I mean, it is red meat to the Tea Partiers.

But these Republicans, they are doing nothing for those who died in
attacks. Secretary Clinton continues to cooperate with the investigation
because it is important for the families and the American people to have
all the details.

Republicans were performing basically for the cameras today. Maybe
next time they can actually serve the people who rely on them.

Get your cell phones out. I want to know what you think.

Tonight`s question: did Republicans who questioned Hillary Clinton
embarrass themselves today? Text A for yes, text B for no to 622639. You
can always go to our blog at Ed.MSNBC.com and leave a comment there. We
encourage you to do that. We`ll bring results later on in the show.

Joining me tonight: Joy Reid, managing editor of TheGrio.com.

And former Admiral Joe Sestak, former congressman from Pennsylvania
and the United States Navy for 30 years, also worked in naval intelligence.

Great to have both of you with us tonight.

JOE SESTAK (D-PA), FORMER U.S. CONGRESSMAN: Good to be with you, Ed.

SCHULTZ: Joy, you first.

Did this -- did we gain any ground today, any new information?

JOY REID, THEGRIO.COM: You know what, Ed? That spectacle that you
just showed, I need to get my cell phone out. That was embarrassing.
These guys got up there and absolutely embarrassed themselves.

Think about this for a second. We had a breach of a compound of a
U.S. consulate office -- a consulate in Libya where we had four Americans
die.

And the only thing that they want to know is whether or not it started
with a protest? That`s the most important piece of information? That`s
what the American people have got to know in order to get to the bottom of
this?

What about the question of whether Congress provided adequate funding
for security at that compound for security at that compound for our people
there? What about potential intelligence might have been removed from
there? Because we do know that the Marines there to guard, those
consulates are there to guard intelligence.

Aren`t there more substantive questions? They`re obsessed with this
idea of what Susan Rice said on the Sunday shows. And it`s absurd.

And by the way, the most ridiculous, almost comical line that was used
at the hearings today was Rand Paul saying "had I been president." Give me
a break. Is he getting his info from Info Wars, Breitbart? That`s their
sources of news and intelligence and that`s what they`re using to question
our secretary of state? It`s absurd.

SCHULTZ: Admiral, what was your takeaway today from the entire ordeal
on Capitol Hill? How did Secretary Clinton do in her testimony?

SESTAK: I think Secretary Clinton was exactly as she was a few days
after the incident occurred. She stood up and said, "I am responsible."
She stood up and said today, look, the state department isn`t perfect and I
am responsible for that.

But she also rightly turned the mirror towards Congress and said,
look, when you start finger-pointing, look in the mirror yourself. As Joy
just said, since 2010, they cut the infrastructure funding to defend our
consulates and our embassies overseas by $300 million.

Look, I think accountability and having investigations is absolutely
needed as you said, Ed, to get to transparency and find out the facts so it
doesn`t happen again.

SCHULTZ: What about --

SESTAK: But this shouldn`t be about partisanship.

SCHULTZ: Admiral, what about this constantly going back to Susan
Rice, constantly not being satisfied with the first answers that came out,
and constantly harping on talking points which the CIA said that they
provided? You were in intel. How does this unfold?

SESTAK: Well, when I worked at the White House, and intelligence
would come up to the president. It was always taken there never seemed to
be a one-armed intelligence officer. They always seemed to say on the one
hand, but on the other hand.

Look, intelligence, getting it quickly from out there back here is
very tough. And usually as Admiral Crowe, chairman of the Joint Chiefs of
Staff, once said, the first word is always wrong. And what we don`t want
to have come out of this is that in the next incident, our intelligence
community doesn`t give its best first assessment because it`s even too
cautious because it`s turned into a partisan football like has happened on
this.

Get the facts. Deal with them once you know the facts, and then, fix
it for next time.

SCHULTZ: And, Admiral, what was your response -- your reaction when
you saw Rand Paul say what he said?

SESTAK: So out of line.

Secretary Clinton, who I happen to have the honor of knowing when I am
working a little bit within the White House, and a little bit when I was in
Congress, I have to tell you, her stewardship of the State Department has
been impressive. I think for him to sit back like that and make such a
claim when he has no concept about what rolls into the State Department is
out of line.

SCHULTZ: Joy, this was an example of reaction on FOX News. I want to
play this. Here it is.

(BEGIN VIDEO CLIP)

ERIC BOLLING, FOX NEWS: I was waiting for one of those senators -- in
fact, I put it up on Facebook, fail. Corker, fail. Rubio, fail. Down the
line.

They had her -- they had her with her own word, and they for some
reason went back to the ARB.

(END VIDEO CLIP)

SCHULTZ: What is the blood lust for Hillary Clinton?

REID: I think what you`re seeing, Ed, these are the first shots being
fired in the 2016 campaign. And I think a lot of Republicans thought this
was their opportunity to publicly take down Hillary Clinton ahead of a run
that she hasn`t even announced.

And I think the idea is that Hillary Clinton is a politically
potentially potent force coming from the Democratic Party. And this was an
opportunity, frankly, for a lot of back benchers whose names are not known
like Ron Johnson, people who are not stars on the Senate stage, to get out
there, be on television and make a name for themselves.

I think clearly that`s what Rand Paul was doing. I think Ron Johnson
and others were trying to raise their profile at her expense.

SCHULTZ: And, Admiral, we may never know the motivation for the
attack. Is that a fair statement?

SESTAK: We may never know exactly what it was. Look, we`ve gotten
much closer to exactly what occurred. And Secretary Clinton said what is
most important of all. We`ll take these lessons and try to ensure it
doesn`t happen again. And second, we will get those who we identify who
did this crime.

SCHULTZ: All right. Joy Reid, Joe Sestak, great to have both of you
with us tonight. Thank you so much.

Remember, to answer your questions at the bottom of the screen. Share
your thoughts with us on Twitter @EdShow and on Facebook. We want to know
what you think.

Next, the secretary of state addresses the problems we face, and
offers a blueprint moving forward. The question is, is Congress going to
fund it? Are they going to act?

Senator Chris Murphy will join me when we come back. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, Paul Ryan`s budget I thought was rejected by
Americans last November. Now he is trying it again. He just doesn`t
learn.

Congressman Chris Van Hollen on why Paul Ryan`s math just doesn`t add
up in the latest debt ceiling deal.

And later, you pay a transaction tax on everything you buy. So do I.
But why do Wall Street traders get off scot-free? You know David Cay
Johnston`s got the answer. He`ll join us for the discussion tonight why
lawmakers should make Wall Street ante up.

And also, don`t forget, you can listen to my radio show on Sirius XM
radio channel 127 Monday through Friday, noon to 3:00 p.m. Share your
thoughts on Facebook and on Twitter using #EdShow.

I`m going to have to tweet out tonight because I`ve never accused
Hannity of intelligence.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. CHRIS MURPHY (D), CONNECTICUT: Some people on this committee
want to call the tragedy in Benghazi the worst since 9/11. It
misunderstands the nature of 4,000 Americans plus lost over 10 years of war
in Iraq fought under false pretenses.

(END VIDEO CLIP)

SCHULTZ: Who wouldn`t agree with that? That was Senator Chris Murphy
of Connecticut, calling out the political theater at today`s congressional
hearings on Benghazi.

Secretary of State Hillary Clinton did a masterful job sidestepping
the political attacks, telling two back-to-back panels her department is
moving forward and taking action, implementing 29 recommendations of an
independent review board focusing on high threat posts.

(BEGIN VIDEO CLIP)

CLINTON: Nobody is more committed to getting this right. I am
determined to leave the State Department and our country safer, stronger,
and more secure.

(END VIDEO CLIP)

SCHULTZ: Secretary of State Hillary Clinton put the focus on policy
and swatted away attempts to revisit talking points or discuss Susan Rice`s
television appearances addressing the broader issues at hand.

Clinton pointed out that America`s challenges in the Middle East and
the growing threat from extremists in Northern Africa.

(BEGIN VIDEO CLIP)

CLINTON: Benghazi did not happen in a vacuum. The Arab revolutions
have scrambled power dynamics and shattered security forces across the
region. Instability in Mali has created an expanding safe haven for
terrorists who look to extend their influence and plot further attacks of
the kind we saw just last week in Algeria.

(END VIDEO CLIP)

SCHULTZ: But in order to improve diplomatic efforts, Congress needs
to act.

Secretary Clinton called out the congressional holds being placed on
foreign aid and bilateral assistance.

(BEGIN VIDEO CLIP)

CLINTON: I am one who believes that we have to both walk and chew gum
at the same time. We have to deal with our own economy and our fiscal
situation. That is a given, because that is the source of our strength and
our capacity. But we also have to be smart about making the right
investments in diplomacy and development to try to solve problems and
prevent them.

(END VIDEO CLIP)

SCHULTZ: I`m joined tonight with Senator Chris Murphy of Connecticut,
who is a member of the Senate Foreign Relations Committee.

Senator, good to have you with us tonight.

Moving forward, security obviously is an issue. So getting funding
and help from Republicans shouldn`t be hard after this hearing. That`s
what I see today.

Your thoughts on it.

MURPHY: Well, listen, the Republicans have had chance after chance to
do the right thing here. The irony is just as thick as the walls of the
United States Congress, when you think that they stripped $300 million out
of the secretary`s security requests before Benghazi.

But it gets even worse, Ed. After Benghazi, the president and the
secretary of state said, listen, we`ve got to do better. So they put
before Congress a request to just move $1.3 billion of unallocated funds
for Iraq into security accounts to try to protect our embassies.

The Senate put it in the supplemental bill for Sandy. And guess what?
The House Republicans stripped it out and didn`t put it in their version of
the Sandy bill.

So even today, after we know what happened, the Republicans are still
not willing to give her the resources to protect our diplomats abroad.

SCHULTZ: Senator, what was this hearing about today? Was it about
getting and finding solutions or something else?

MURPHY: Listen, to me, this was simply about politics, right, about
two-thirds of the Republicans that asked questions asked questions about a
handful of TV appearances by Susan Rice.

The fact is if Republicans asked just a small percentage of the
questions that they`ve been asking about these television appearances about
the war in Iraq, we wouldn`t be talking about saving four lives, we would
be talking; about saving 4,000 lives.

SCHULTZ: Yes.

MURPHY: And so, listen, I`m glad she`s being as transparent as she
has been. But it`s about time to focus on something bigger than this.

SCHULTZ: Senator, you have access to these intelligence materials.
Did you learn anything today? Was there any new information that came out
today?

MURPHY: No, I don`t think there was anything new here. And I think
what is refreshing is that the secretary is spending five and a half hours
testifying before Congress, has been open about their failings, and they
want to fix things.

And again, that`s a big difference between this administration and the
last. Every administration makes mistakes. The question is: do you learn
from them and change?

And that`s what today was about. If we learned anything, we learned
that the secretary`s commitment is stronger than ever to try to make sure
this never happens again.

SCHULTZ: What was your reaction when they focused in on Susan Rice`s
television appearance when that has been all cleared up -- at least the
American public thinks it has -- because the CIA supplied those talking
points. But yet, John McCain, Rand Paul, Johnson and some others are still
fixated on those TV appearances.

What was your reaction when they went down that road?

MURPHY: You know, that the Republicans have the same old tired
political talking points that they have had for the last year.

SCHULTZ: So this was nothing but a political show and theater of
hackery today, would you agree with that?

MURPHY: Well, listen, the secretary swatted away every single one of
those questions. And I think a lot of them ended up looking pretty small
compared to a secretary of state who said, listen, all the questions have
been answered, and we need to focus on much bigger things.

So I expect that, frankly, her performance may put an end to these
Susan Rice questions.

SCHULTZ: Sure.

MURPHY: I thought she was masterful.

SCHULTZ: And the State Department`s plan of action moving forward,
are you confident it`s sufficient?

MURPHY: It`s sufficient as long as we fund it. But, again, the fact
that the Republicans had a chance to do it in the House of Representatives
and still wouldn`t suggests, you know, I don`t know what their motivations
are. But clearly they`re not serious about giving her the resources she
needs.

But let`s say this last one thing is that we also have to understand
the limitations of the security that we can provide. We`re not going to go
into bunkers. Our diplomats are going to be on the front lines.

And though we`re going to do everything we can to try to protect them,
we shouldn`t expect that if 150 armed marauders show up at a security
facility, there might be no level of protection that we can afford them.
We`re going to do our best, but these are dangerous times for diplomats.
And thank God that we have those brave men and women out there serving this
country.

SCHULTZ: After all the things that Senator Clinton -- or Secretary of
State Hillary Clinton said today, it would seem to me that the Republicans
would be very concerned about some of her comments about North Africa and
what kind of a commitment we need to make there. But they`re more
interested in television appearances, I guess.

Senator Chris Murphy, great to have you with us tonight. Thanks so
much.

Coming up, he is back and he is gunning for social programs again.
Paul Ryan promises to pay off the debt and balance the budget in just what?
Ten years? He swears it won`t hurt the middle class. Do you believe that?
We`ll check the math, next.

And the deadline for the filibuster reform is approaching fast. There
are offers on the table, but so far no deal. Vermont Senator Bernie
Sanders is here to tell us what`s the latest and what can fix it.

Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Thanks for stay with us
tonight.

The most conservative members of the House got a gift from Speaker
Boehner today. Tea Party Republicans helped pass a bill extending the debt
limit until mid-May.

In return, both House and Senate have got to pass a budget or their
pay is going to be withheld.

Bottom line: the Republicans just kicked the can down the road.
They`re still playing games with the debt ceiling. That`s the bottom line
there.

In the meantime, Representative Paul Ryan is back in the picture. He
is stepping back into the political spotlight. He is now in charge of
creating a budget that will eliminate the federal deficit within 10 years?

Paul Ryan was the guy who lost the last election because most
Americans didn`t like his budget ideas in the first place. But now, Ryan
claims voters actually didn`t reject Republican principles.

Ryan told "The Wall Street Journal", "We have to do a better job of
explaining why we think our ideas are better for everybody and why they`re
better for fighting poverty."

Paul Ryan wants us to believe that he can fight poverty, pay off the
debt and balance the budget in a new number, now 10 years. Do you believe
that? I got some swampland for you down in Florida if you do.

Let`s do some quick math here. Analysts say Ryan will have to cut
about 800 billion dollars in federal spending, including defense. That`s
22 percent of the federal budget. So Ryan would have to cut spending by
one-fifth in 10 years.

Those cuts go way beyond anything Paul Ryan suggested during the
campaign. His old plan balanced the budget in 30 years. But he still
wanted to cut programs for the poor by 62 percent.

Ryan`s old budget would have slashed federal Medicaid funding by
almost a third. Paul Ryan`s new budget plan will have to be leaner and
meaner than the last one. But Ryan claims the numbers will eventually add
up.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R), WISCONSIN: This isn`t a Republican or a
Democratic thing. This is a math thing.

(END VIDEO CLIP)

SCHULTZ: A math thing. Let`s turn to Congressman Chris Van Hollen,
who is the ranking Democratic member on the House Budget Committee.
Congressman, good to have you with us tonight.

REP. CHRIS VAN HOLLEN (D), MARYLAND: Ed, it`s good to be with you.
Your analysis is spot-on.

SCHULTZ: Although I do not have the swampland, I was just kidding on
that one.

VAN HOLLEN: Right.

SCHULTZ: What happened today on the debt ceiling? I mean, are we
going to go through this again in another three, four months?

VAN HOLLEN: Well, that`s right. Look, the little bit of good news
here, Ed, was that Republicans recognized that the United States has to pay
their bills. The bad news is they said, well, we only have to pay our
bills as a country until May 19th. And so they`ve left this huge
uncertainty hanging over the economy.

We know that when they did this in 2011, it produced the month with
the lowest job growth. It meant that our credit rating got downgraded. So
while Republicans have spent the last couple of years saying we need more
certainty in the economy, what they have done is put more uncertainty in
the economy. That will hurt the economy.

And in order to get their right wing Tea Party folks to even do that,
to even extend the debt court of appealing to May 19th, they had to promise
them that they were going to slash spending. And the only way to make the
math work -- I mean, Paul Ryan wants to talk about the math. The only way
to make the math work in the way they approached the budget is to rescind
and violate all the promises we made to our seniors, devastate Medicaid,
transfer rising health care costs on to seniors in Medicare, cut
investments in education that are important for our kids, all, by the way -
- all while protecting the tax breaks and loopholes for folks at the high
end of the income scale.

SCHULTZ: You know, my question for Ryan would be, and of course to
you, the Republicans aren`t going to go along with these kinds of cuts in
defense. I mean, I think the Democrats would certainly pare back on
defense spending. But the Republicans -- so isn`t this somewhat of a
phantom budget that he is just trying to throw out right now?

VAN HOLLEN: Well, that`s exactly right. Look, Republicans have said
for the last couple of months that the across-the-board cuts to defense
spending are reckless. And Democrats have said the way they do it and the
arbitrary way doesn`t make sense. And the cuts across the board to non-
defense spending like NIH and air traffic control and all of that, that
doesn`t make sense.

Now all of the sudden within the Republican caucus, apparently the Tea
Party wing has gotten them to reverse their position. Now the cuts they
said were reckless and across the board, they say, no problem, we`re going
to make that happen, even though the Congressional Budget Office has said
that will hurt our economy.

So on top of keeping this debt ceiling cloud over the economy, they`re
talking about these across-the-board meat ax cuts that will also hurt the
economy, when we should be focused on jobs and economic growth.

SCHULTZ: Congressman Chris Van Hollen, good to have you with us
tonight on THE ED SHOW.

VAN HOLLEN: Good to be with you. Thank you.

SCHULTZ: There is a lot more coming up in the next half hour of THE
ED SHOW. Stay with us.

Ted Nugent goes off the deep end.

(BEGIN VIDEO CLIP)

TED NUGENT, SINGER: The Barack Obama gang attempting to reimplement
the tyranny of King George.

(END VIDEO CLIP)

SCHULTZ: We`ll show you what he and his buddies will be up against.

We all pay a transaction tax every day, but not the fat cats on Wall
Street. David Cay Johnston tells us how it could make a big difference.

And next, Vermont Senator Bernie Sanders will tell us if the Senate
filibuster rules are about to change.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. At this hour, there is still
no finalized deal between Democrats and Republicans on filibuster reform in
the Senate. But new details are coming out. No matter what happens, it
looks like the all important talking filibuster is off the table.

Senator Dick Durbin of Illinois told reporters today, quote, "I would
say the talking filibuster at this point does not have 51 votes." On
Tuesday, Majority Leader Harry Reid offered Mitch McConnell a proposal on
filibuster reform without the talking filibuster. Reid says he has the 51
votes needed to move forward with the Constitutional option on his offer,
if Republicans don`t play ball.

Now the Republicans in the 112th Congress abused the filibuster over
and over. In fact, 380 times they did it to obstruct President Obama`s
agenda. And Senate Democrats I think are sick of this. Senator Tom Harkin
of Iowa said on my radio show today, without meaningful filibuster reform,
it could be a rough second term for President Obama.

(BEGIN VIDEO CLIP)

SEN. TOM HARKIN (D), IOWA: I said to Obama, one time we were in Iowa
-- the night before the election, he was in Iowa, the night before the
election. I said to him -- I said, look, I want some of your time after
the election. He said sure, what about? Filibuster. I said you get
reelected -- if you get reelected and we don`t change the filibuster rules
in the Senate, you might as well take a four-year vacation, because you
won`t get anything done.

(END VIDEO CLIP)

SCHULTZ: Senator Harkin also told me about the so-called 41 rule that
would require 41 Republicans to vote in order to maintain a filibuster,
instead of requiring the majority party to find 60 votes to break one.
Folks, 60 votes, it isn`t going to happen in the Senate. Not in this
political climate. Senator Reid had included the 41 rule in his proposal,
but "Politico" reported late tonight he dropped the rule after talks with
McConnell.

Now this is just coming to me right now. My head is about to explode
on live television. How many elections, Harry, do the Democrats have to
win? How many mandates from the people have to be sent to Washington that
we need to move forward on this? Why is the minority party running this
country? That`s my first reaction on this.

For more, let`s turn to Senator Bernie Sanders of Vermont for his
reaction. Senator, good to have you with us tonight. I`ve got to ask you,
if the talking filibuster isn`t in it, if the 41 rule isn`t in it, where is
the teeth in this filibuster reform that might happen? Your thoughts, sir.

SEN. BERNIE SANDERS (D), VERMONT: There won`t be much in the way of
teeth. What you`ll see is some improved efficiencies. The Senate will
move a little bit faster. But, in essence, what Tom Harkin said is
absolutely right. What we have seen is an unparalleled level of
obstructionism, time after time, when we`re trying to create jobs, trying
to deal with global warming, trying to deal with income inequality.

They throw 60 vote, 60 votes, 60 votes. If we don`t have the talking
filibuster, if we don`t have 41 votes having to maintain the filibuster,
then we`re simply not going to be able to address the serious problems
facing the American people.

SCHULTZ: So does this mean, in your opinion, that the 113th could be
a lot like the 112th, if the minority party decides to act like that?

SANDERS: It won`t be as bad. I think there will be some improvements
in the ability to move things along in an expeditious manner. We have two
more votes. But at the end of the day, Ed, on any serious issue facing
working families, facing global warming, we do not have 60 votes. So the
will of the American people will not be carried out.

This country has enormous problems. And it distresses me every single
day that while we may have the majority, over 50 votes -- we have 55 votes.
We still can`t do what the American people want us to do.

SCHULTZ: Well, I`ve quoted you often, Senator Sanders. Another quote
from Tom Harkin today on my radio show, he said he`s tired of the Senate
being held hostage by the dead hand of the past. There are just some
senators in the Democratic caucus that simply don`t want to change this
rule.

And the dead hand of the past was rules set up by previous Senate
chambers. How frustrating is this going to be? Doesn`t the country
deserve to move forward on legislation? Because we all know what the
Republicans would do if they were in this position.

SANDERS: Ed, I think you`re absolutely right. Look, in politics,
sometimes you win and sometimes you lose. We all know that. But right
now, one senator could have a staff member call up the cloakroom and say
hey, put a hold on that bill. We`re not going to go forward to even debate
that legislation unless we get 60 votes.

So what ends up happening is not only can`t we pass the legislation we
want, we can`t even have the debate for the American people to understand
who is on which side. So to me, yeah, I share Harkin`s views. I am tired
of it. I don`t mind losing. Sometimes you`re not going to get 50 votes.
But I am damn tired of seeing us not even being able to go forward on a
debate on issues of enormous concern to this country.

SCHULTZ: What is Harry Reid afraid of, if your opinion? What is it?

SANDERS: I can`t speak -- I really can`t speak for Reid. And I don`t
know. I think the bottom line is I suspect that he believes that we do not
have the 51 votes that we`ll need for the Constitutional option. What many
of us believe on the first day, and we`ve extended that -- it is still the
first day -- that we can write new rules, that with 51 votes, we can say
that we can have a talking filibuster. If you want to oppose a bill, if
you want 60 votes, you get on the floor and you keep talking.

But when you stop talking, we`re going to go to 51 votes and we`re
going to pass it.

SCHULTZ: Senator Bernie Sanders with us tonight. Thanks so much for
joining us, senator. I would like to know who those senators are that
don`t want to go along with it. We`ll do that story tomorrow.

Ted Nugent says he is ready for an armed revolt. I remind him,
really, what he is up against, next.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Well, Ted Nugent, he`s back at
it again. The failed rock star turned pro-gun mascot was interviewed by
Guns.com at a shooting, hunting, and outdoor trade show, and suggested he
is ready for an armed revolt against President Obama. Nugent received a
visit from the United States Secret Service agents last year after speaking
at the NRA`s annual convention.

So at least they know where to find this guy.

(BEGIN VIDEO CLIP)

NUGENT: I`m part of a very great experiment in self-government where
we the people determine our own pursuit of happiness and our own individual
freedom and liberty, not to be confused with the Barack Obama gang who
believes in we the sheeple and actually is attempting to reimplement the
tyranny of King George that we escaped from in 1776.

And if you want another Concord Bridge, I got some buddies.

(END VIDEO CLIP)

SCHULTZ: Oh, Nugent is referring to the start of the American
Revolutionary War when colonial and British troops assembled at Concord,
Massachusetts, and an unidentified soldier opened fire, better known as the
shot heard around the world. So Ted Nugent, a self-admitted draft dodger,
is advocating armed revolution against President Obama, commander in chief
of our nation`s military forces, all because Obama has proposed sensible
gun safety legislation in the wake of the Newtown massacre that took the
lives of 20 children and six adults?

This is what the extreme right calls proper discourse, as we continue
to experience daily tragedies related to gun violence. And this type of
paranoid and dangerous rhetoric is being adopted by mainstream Republican
lawmakers? Just read Mitch McConnell`s e-mail to his supporters warning
them about gun grabbers in the United States Senate.

Go ahead and gather your buddies, Nugent. But you should know the
United States military uses few horses and bayonets these days.

(COMMERCIAL BREAK)

SCHULTZ: And in the Big Finish tonight, every time you buy your
morning coffee or fill up your gas tank, you`re paying a transaction fee.
Every time you buy a new car or a new house or close on that, you`re also
paying a transaction fee. When big banks and investment companies use
computers to make automated high speed trades or shady derivatives or
default swaps, they get off Scott-free, don`t pay anything.

Last night, 11 members of the European Union voted to level the
playing field by putting a transaction tax on their markets. That`s right.
BBC reports the tax is expected to be charged at a rate of 0.1 percent of
the value of any trade in shares or bonds, and 0.01 percent of any
financial derivative contract.

Now the 11 European countries feel this tax will discourage risky
trading and add billions of dollars to the struggling economies. Senator
Tom Harkin of Iowa and Congressman Peter Defazio of Oregon have been trying
to get a similar transaction tax passed in America for years. The proposal
would put three cent tax on every 100 dollars of stock, bond or derivatives
transactions.

Those three pennies add up . Harkin says a transaction tax would
generate 352 billion dollars in 10 years. Not chump change. Think about
it for a second. Here is 520s. There is 100 bucks. Visualize this.
There is 100. OK? Every time there is 100, there is three cents. I
better get my piggy bank out here. Just like that. That`s it. That`s it.
One hundred bucks, three cents, there you have it.

What could we do with 352 billion dollars? Do you think maybe we
could pay for at least one of the wars? Or do you think maybe we could
insure maybe another 30 million people? Do the math. That would pay for
about half of Obamacare. That would really make the righties happy.

Think about it. Why is it that, number one, Wall Street doesn`t get
prosecuted? Number two, they get off Scott-free on these transactions?
This is an easy thing, and nobody is going to feel it. Everything is going
to be fine.

Joining me tonight, David Cay Johnston, Pulitzer Prize winning
journalist and author of "The Fine Print." David Cay, great to have you
with us.

DAVID CAY JOHNSTON, AUTHOR, "THE FINE PRINT": Good to be here.

SCHULTZ: Explain what a high speed trade is, for those who are in the
fast lane.

JOHNSTON: Almost all the trading done today is done with computers
that spot prices, changes in the market and execute trades, 2.9 billion
trades a day just on the New York Stock Exchange. There were 40 million a
day roughly 30 years ago.

SCHULTZ: What would we do with 352 billion dollars over 10 years?

JOHNSTON: Well, let`s see, if you`re worried about the deficit -- you
know, the Republicans keep worrying about that. It would help bring it
down. It would help us finance, as you pointed out, the Affordable Care
Act. There are a lot of things we could do with it that would benefit
society in the ways that these high speed trades do not.

SCHULTZ: A study by the CFTC shows the average aggressive high-speed
trader made a daily profit of 45,267 dollars in a month in 2010. That`s
some serious coin. How would this tax hurt them?

JOHNSTON: Well, the trading that they`re talking about is
speculation. We have a Wall Street market to marshal capital and make for
efficient use of that capital to invest in factories and research and
create jobs. But the investors who do that are being pushed out and made
irrelevant by the speculators, using borrowed money, who account for almost
all the trades.

So what would happen is speculators like that would see their costs go
up a little bit. They would be less likely to trade. We would have a more
efficient market and fewer distortions for people who are investors rather
than speculators.

SCHULTZ: Do you think it would discourage the risky trading? Because
this is what they`re saying in the European Union, that this is one of the
reasons why they passed it.

JOHNSTON: You know, there is an old saying. If you tax something,
you`ll get less of it. That is exactly what this is designed to do. It is
intended to discourage these high-speed speculative trades that are
distorting the markets, making the markets less economically efficient.
Wall Street will come back and say, there are studies showing this will
make the market worse. Those studies are based on more than 20 years ago,
before we had these high speed computer trades.

SCHULTZ: Is there any downside to a transaction tax?

JOHNSTON: Yeah, if you`re a hedge fund manager or one of these high-
speed traders, you`re going to actually have to pay some tax and it`s going
to discourage you from making bets that distort the market. For the rest
of us, I don`t see a downside, Ed.

SCHULTZ: How would we make a determination? Because you know that
they would come back and say oh, this is really going to hurt the economy.
How would this hurt the economy?

JOHNSTON: I don`t see how discouraging speculation, which is almost
all done with borrowed money -- they effectively borrow money at a rate of
30 to one. So you put three percent down and borrow the rest of the money.
I don`t see how this hurts the economy. And if we reduce this volatility
and reduce market distortion, we can get back to having a market focused on
investments that create production in the future and wealth in the future,
not creaming the market today through speculation.

SCHULTZ: Quickly, you think this is something Congress could embrace?

JOHNSTON: Not probably in this Congress in the House. But I think
this is an idea. It`s been around for 80 years. We may well see come
about, Ed. And hopefully we will. We need speculators, but we don`t want
them to be overwhelming the market.

SCHULTZ: All right, David Cay Johnston, thanks for your time tonight
on THE ED SHOW. Appreciate it so much.

And that is THE ED SHOW. I`m Ed Schultz. Thanks for joining us
tonight. "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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