The Rachel Maddow Show, Transcript 11/29/11

RACHEL MADDOW, HOST: Good evening, Ed. Congratulations on that interview. I`m really glad you`re able to speak with him. That was amazing. ED SCHULTZ, "THE ED SHOW" HOST: He`s quite an American, isn`t he? MADDOW: Very impressive. Thanks, man. Appreciate it. And thanks to you at home for staying with us. Our guest for the interview is someone who also puts a spring in everybody`s step around here when we know he`s going to be on the show. But I got to say we feel particularly lucky to have him here tonight. (BEGIN VIDEO CLIP) REP. BARNEY FRANK (D), MASSACHUSETTS: Let me be very clear: I will neither be a lobbyist nor a historian. I promise you on both. No, I -- there is no way I would be a lobbyist. Look, I will miss this job and I`ll have some twinges of regret when the new Congress is signed up. But I will tell you this. You know, maybe you`re going to laugh, but one of the advantages to me of not running for office is I don`t even have to pretend to try to be nice to people I don`t like. Now, some of you may not think I`ve been good at it, but I`ve been trying. (END VIDEO CLIP) MADDOW: Barney Frank trying to be nice to people or fairly regularly failing to be nice to people while making his political point, that has been one of the great spectacles of American politics. One of great spectacles of American legislating for the entire time that he has been in Congress. (BEGIN VIDEO CLIPS) FRANK: Apparently, I had some secret influence over the Republican leadership that I never knew about because if I had, I would have told them not to impeach President Clinton, I would have told them not to go to war in Iraq, I would have told DeLay not to go on the dance show. I mean, there are a lot of things I would have done. REP. PAUL RYAN (R), WISCONSIN: Let`s make sure we have a fix for people with pre-existing conditions. You can do all of that without the government taking it over. You can do all of it by going after the root cause of health inflation which will help our fiscal situation. (CROSSTALK) FRANK: One question. RYAN: Yes? FRANK: When did you figure that out? Because apparently for the 12 years the Republicans were in control, eight of which had a Republican president, that didn`t occur to you. The gentleman from Texas will suspend and the gentleman from Texas, Mr. Burgess, is recognized to yield time for someone who will actually debate the bill. BILL O`REILLY, FOX NEWS: Come on you coward. Say the truth. FRANK: What do you mean coward? O`REILLY: You blame everybody else. You`re a coward. FRANK: Bill, here`s the problem with going on your show. You start ranting. The only way to respond is almost to look as boorish as you. O`REILLY: This is bull. This is why Americans don`t trust the government. FRANK: No, your stupidity gets in the way of rational discussion. The collective campaigns that were run by most Republicans were beneath the dignity of a democracy. I`ll be honest with you, I think Rick Perry is jealous of me and he`s why. He`s very jealous someone can tell people what he thinks and not have to repudiate it or go back on it. I did not think I had lived a good enough life to be rewarded by Newt Gingrich being the Republican nominee. It still is unlikely, but I have hopes. UNIDENTIFIED FEMALE: Why do you continue to support a Nazi policy, as Obama has expressly supported this policy? Why are you supporting it? FRANK: Let me -- (INAUDIBLE) UNIDENTIFIED FEMALE: -- a real solution. FRANK: When you ask me that question, I am going to revert to my ethnic heritage and answer your question with a question. On what planet do you spend most of your time? Ma`am, I`m trying to have a conversation with you, would be like trying to argue with a dining room table. I have no interest in doing it. (END VIDEO CLIPS) MADDOW: Because that is how Barney Frank talks, because that is how he gets s his work done as a politician, because that is how he gets his point across. As a legislator, everybody wants him to be on their TV show all the time because you never know what`s going to happen. I personally will say one of the things I feel grateful to Congressman Barney Frank about is he has been here on this show, not just in the ordinary course of events when we`ve called and asked and he`s been able to work it out with his schedule, but he`s made an effort to be here, to tell us what`s going on when monument things are happening in Congress. Over the summer, he joined us the night the U.S. got put on watch for having our credit rating downgraded. He joined us by phone the night the credit rating did get downgraded. In June of last year, he came on the show after he had been up since 5:00 in the morning hammering out the details on the Wall Street reform bill that bear his name. In January of last year, came on the show the day of the Citizens United ruling when the Supreme Court blocked corporate spending limits on elections forever -- forever changing the country. He joined us the night Congressman Joe Wilson shouted "you lie" at President Obama during a joint address to Congress. On the night before President Obama signed the health reform bill, a Democratic priority for not just decades but generations, on the night before that was signed, Congressman Barney Frank joined us here and was able to tell us not only what had gone on with the legislation to get to that point, but what it had been like for him personally. Specifically at this time when Democratic offices were having rocks thrown through their windows. He told us what it had been like for him in that unusually vicious environment. (BEGIN VIDEO CLIP) MADDOW: Congressman Frank, you were -- you were the subject, you were the object, I guess, of a little bit of that bullying. "Politico" reported over the weekend when you arrived at the House chamber, somebody yelled a homophobic slur at you. FRANK: More than one. Yes, my partner, Jim and I, were walking -- it was a nice day. We walked from the White House to another. There was a great deal of shouting, waving of fists and signs, and people sort of getting very close and yelling and a number of the comments were homophobic. MADDOW: Did you feel personally threatened? What was your reaction to that experience? FRANK: Really sadness that -- because, look, you know, as Jim said, we`re kind of adults and, you know, this -- I haven`t got a lot of respect for these people, to be honest, so who cares what they say to me. But you do have to think about it. I`m serious. The bullying in junior high and high school is a big problem. Again, every Democrat, every Republican in the Massachusetts legislature voted for an anti-bullying bill. What discouraging to me is there are kids all over the country watching this, not as a game, but as real life and watching sort of a spectacle of so-called politicians cheering them on. And that was just discouraging that at this point we couldn`t have a rational debate about this kind of thug tactics were being used. (END VIDEO CLIP) MADDOW: Barney Frank spent 45 years in public life. He spent 30 years in Congress. And as he retires, he will be remembered at the Frank in Dodd/Frank, in Wall Street reform. He will be remembered as the finance committee chairman when Wall Street blew up. He will be remembered as the member of Congress you would most like to see argue with whoever it is you most dislike in the world, because he has a sense of humor that he wields like a wrecking ball. There`s one other thing that I think now that he`s announced he`s retiring, I think he should be remembered for -- a critical and underappreciated part of his legacy. And that is that over a 30-year period in Congress, when it became almost impossible to name it, let alone oppose it, when it became bipartisan orthodoxy to ignore this huge, growing thing in American policy that nobody would stand against, Barney Frank made the case over and over and over again that when we count what dollars we spend in this country, a dollar is a dollar is a dollar. And just because it`s the pentagon that spends a dollar, that doesn`t mean we shouldn`t argue over that one, if we`re going to argue over every other dollar that we spend. (BEGIN VIDEO CLIPS) FRANK: As I look at the American budget, we continue to spend excessively in the areas of the military far beyond any other place. Look, America after World War II took on the role of being the protector of the world against communism, the guarantor of stability. We`re essentially continuing a role today of being the overwhelming military power and the subsidizer of many of our allies who are now wealthy, who don`t have to spend anything on their own budgets to the point where we can`t afford it. We can be the strongest nation in the world for $400 billion a year instead of $700 billion a year -- $450 billion instead of $700 billion. That alone -- we could easily save $200 billion a year without in any way endangering our security. We continue to defend Western Europe against nonexistent threats. I want America to be very strong and able to defend itself. I don`t want us to take on the job of policing every political dispute everywhere in the world. We could reduce our military spending by $250 billion a year, $140 billion from the Iraq and Afghanistan wars. And over $100 billion in Western Europe and Japan and other wealthy nations and bring that money home. We can use half of it to bring down the deficit and half of it to produce jobs. You know, there are today 600,000 fewer local employees, public works employees, people who shovel the snow, collect the garbage, firefighters, teachers, police officers, because we`ve sent that money overseas. Don`t tell me to tell a 78-year-old woman living on $19,000 a year that she gets no cost of living but you`re going to continue to pour money into Karzai`s coffers. Let`s bring a couple hundred billion dollars home that is spent overseas in unconstructive ways and that`s what we need to do to get jobs. (END VIDEO CLIPS) MADDOW: Joining us tonight for the interview is Congressman Barney Frank. Congressman Frank, it is great to have you here today. Thanks for being with us. FRANK: Thank you, Rachel. That was very moving and very generous of you. MADDOW: Well, I am invested in your legacy because I feel like it`s a big part of the legacy of what liberal Americans think is possible in Congress. When you think about ending 30 years in Congress, what are you - - what do you want to be appreciated about what you do? FRANK: Well, there are a couple of things. The -- I had the opportunity, it will be 25 years ago this coming May, to be the first member of Congress to volunteer that I`m gay. And, you know, that was an easy one, because when you have prejudice which is based on ignorance, there`s an easy way to combat it. You just be real. You just be who you are. And you just let the contrast between who you are and how you live and the vicious myths that are being used against people, and they erode. I`m proud of the role I played in helping derail the impeachment of Bill Clinton, being led by that exemplar of conventional morality and defender of the family, Newt Gingrich, who was impeaching Bill Clinton. I am proud of the financial reform bill. Interestingly, today, Standard & Poor`s, the rating agency which often gets things wrong, but this time they got it right. They had been rating the big banks in this country as safer than other banks because of the view that the government would bail them out, that they were too big to fail. Today, Standard & Poor`s downgraded 37 of the large banks in America because they finally read our bill and understood and said correctly the government is now not willing to bail out these banks. That`s in the law. And it took people some time to get it. I`m pleased with that. And I am pleased that we have finally got on the table your most recent set of quotes, about reducing military spending. You know, Rachel, if our intervention in the world, if we really could bring the Kurds and the Arabs together, if we could bring people in Afghanistan together, if we could resolve these longstanding ethnic and religious disputes by sending heavily armed, well trained young Americans, I guess I feel we`d have to do it. But the point is that we waste tens and tens of billions of dollars in these disputes and we make things worse. Here`s a deal -- we have a fine, superb military. They`re great people and are very well-trained. They can`t keep bad things from happening. A military can make good things happen. I`m proud I`m frankly one of the ones who helped put that on the table. MADDOW: Right now, at this moment in American politics -- I wonder if you see any movement toward that position. You`re one of the only people articulating that position on a national stage for a long time, but now with these automatic cuts in defense maybe triggered by the supercommittee, the anti-spending mantra on the right, are people moving toward that position? FRANK: They are. Actually, Ron Paul and I were working on that. Although at some point, I got word Ron had to be careful because I was hurting him in Iowa. So -- but, yes, the answer is exactly as you said it. In fact, we got ourselves -- those of us who think the government should play a constructive role in improving the quality of life. The government is just a word for what happens when we fool our pool our resources to do things together we can`t do individually. You know, in 45 years, I`ve never seen a tax cut put out a fire or repair a bridge. So, we need these revenues. But here`s the situation. They, the right wing, which has dominated the Congress since the election in 2010, dominated the House and had a lot of influence in the Senate, they`ve been successful because they can keep things from happening. Inertia has been on their side. So, people said, well, why were you guys outmaneuvered? Because the people willing to cut the baby in half beat the people who don`t want to cut the baby in half. But now, by a train of events that was probably, I give the president credit for, probably maybe serendipitous, here`s where we are: if nothing happens in the next year, that the next year of Congress is no more productive than this past year two things were happen. All the Bush tax cuts will expire and military tax spending will be seriously cut. In other words, inertia has switched sides. It`s now our ally. I don`t want to see all the Bush tax cuts expire. I don`t think people in the middle income ought to have taxes raised right now. I don`t want to cut as much necessarily as a sequester would to the military. But they have to deal with us now and I hope the president will stay firm. I think he is taking this position. He will not sign a bill that re-extends all the Bush tax cuts and he won`t sign a bill that alters the sequester to cut Medicare and Social Security instead of the full hit on the military. That means they`ve got to negotiate with us. By the way, we can raise taxes on the military -- on the rich. We can see taxes raised on the rich without anybody having to vote for it. All we need to do is vote for a bill that continues the tax cuts for everybody but the top 2 percent. And we`ll have hundreds of billions of dollars and a fairer tax system. Similarly, we can put a bill through that these right wingers can vote for on the grounds that they are reducing to the hit to the military and wind up with very serious military reductions. We have this argument, oh, we just -- we`ve got to keep spending because we`re going to hallow out the military. Rachel, I just want to -- this is one last point. We are told by Leon Panetta, who`s done a good job elsewhere. By the way, the chief of staff of the Marines today admitted that he was wrong in predicting that the repeal of "don`t ask, don`t tell" would be a problem. He`s acknowledged that it worked very well. But Panetta has done a good job, I`ve been pointing that. But he`s made this incredible statement that if we cut anymore from the military than has already been cut, we`re somehow going to hollow out the military. And he said we made the mistake of hollowing out the military after all these wars and after the Cold War. The problem is after the Cold War, Bill Clinton was the president and Leon Panetta was his budget director. So, we have the most extraordinary confession in American history of Leon Panetta who used to take credit of balancing the budget now saying, oh, we hollowed out the military. We did no such thing. It was a very active military. And as I said, we`re in the good position, as you said, if nothing happens, taxes go up and the military gets cut. We can now negotiate with them and say, if you`re willing to be reasonable, we`ll modify those things and I think that`s going to be a good thing. MADDOW: You have always felt free to speak your mind. That`s one of the things people appreciate you. You are even freer than ever now. When you`re looking ahead at the year of policy, like you were describing and all this things that are going to have to be decided and fought over, of course, the other thing happening in politics is that the 2012 race is going on. You have expressed some delight about the prospects of Newt Gingrich being the Republican nominee. But I wonder if from your position right now, having announced your retirement, if you have advice for your fellow Democrats in how to get stuff done in this year ahead, particularly given that it`s election season. And given you can really say anything even if you haven`t in the past. FRANK: Yes, I think it is along the lines that I just spoke about. I -- look, there is cultural lag among some of my political colleagues. There are a number of issues where my colleagues just lag the public. I mean, one is where you throw in the (INAUDIBLE) -- the legalization of marijuana. Most people don`t think you`re going to lock people up for smoking marijuana. My colleagues in Congress and other places are afraid to say so and they`re wrong. You have this view that, oh, a Democratic president must always appear to be tough and can`t cut back on the military. And that`s Mike Dukakis, a great man, who would have been a great president, wound up on a tank, his political disadvantage, because they thought, oh, you got to show how tough you can be. The public is over that. The American public understands there`s no more Stalinist threat to Germany. They understand we do not have to deploy large amounts of American ships to keep open the shipping lanes between us and China and to prevent China from shutting down shipping lanes over which China makes an enormous amount of money. And so, what the Democrats need to do is say, look, we`re going to spend wisely here. We`re going reduce the deficit by some restrictions on excessive spending domestically, by raising taxes on wealthy people and by cutting the military. By the way, the last time the budget was balanced was under Bill Clinton. And that was the three-legged stool that did it. And what we can say is, you know what, we can increase the fairness in this system, at the same time reduce the deficit -- reduce the deficit by cutting the military so we have more money to spend on the quality of life and then finally take them head-on on financial reform. This notion that the Republicans are putting forward that the Independent Consumer Bureau is a bad idea, that what we really need is a return to unregulated derivatives -- those issues, consumer financial reform, consumer protection of financial reform, taking military spending from Western Europe and putting some in the deficit and some in the production of good things at home, and raising taxes on the very wealthy, I think that`s a very winning combination. There`s one final thing we have. You saw this in the referenda that occurred last election day. Look, I think there are probably a lot of people in Ohio who thought the unions had gone too far. But when Kasich put through this extreme bill to wipe them out altogether, he lost. There are people in Mississippi who don`t like abortion, but when they put through this extreme amendment about personhood, it lost. I think what we have to say to people is, yes, we understand there are problems, we regret the fact that we haven`t been able to make more progress. But they`re nuts. And I think that is so patently obvious given the Republican presidential circus that you win on that. MADDOW: Congressman Barney Frank of Massachusetts, ranking member of the House Financial Services Committee, congratulations on your retirement announcement. I hope we`ll still see a lot of you particularly this next year. FRANK: Even more, Rachel. I thank you for your generosity tonight. MADDOW: Thank you. That`s really kind. Thanks. All right. OK, 2012. Still to come. Rick Perry apparently thinks 18-year-olds can`t vote in America. Ha! That`s coming up. (COMMERCIAL BREAK) MADDOW: It has been a very busy 24 hours in the news. Stories we have been following for months all of a sudden decided to develop all at once in unison. Surprising development number one today? Last night, we reported on President Barack Obama and congressional Democrats finding a fight they wanted to pick with Republicans. A policy fight they thought they would win. The Democrats in this case want a tax cut for working people and the Republicans do not want that tax cut. (BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This payroll tax is set to expire at the end of next month. End of next month. End of the year this tax cut ends. If we allow that to happen, if Congress refuses to act, the middle class families are going to get hit with a tax increase at the worst possible time. For the average family, your taxes will go up $1,000 if Congress does not act by the end of the month. The Republicans in the Senate voted no on my jobs bill and those tax cuts. But in the spirit of Thanksgiving, we are going to give them another chance. (END VIDEO CLIP) MADDOW: Senate Republicans did vote against this payroll tax cut once. This week, Democrats decided to make them do it again. They smartly decided to force the Republicans to vote again against tax cuts. Well, now as of this afternoon, it looks like the Senate Republicans are crying uncle. (BEGIN VIDEO CLIP) SEN. MITCH MCCONNELL (R-KY), MAJORITY LEADER: In all likelihood, we will agree to continue the current payroll tax relief for another year. I think at the end of the day, there`s a lot of sentiment in our conference. Clearly, a majority of sentiment for continuing the payroll tax relief that we enacted a year ago in these tough times. (END VIDEO CLIP) MADDOW: They already voted against it, but now they are changing their minds. So that was surprising development number one today. Surprising development number two relates to the former number two. According to Politico.com, the special guest star at the senate Republicans` weekly and otherwise un-notable caucus lunch today was former Vice President Dick Cheney. As with many stories about Mr. Cheney, the details are murky. As "Politico" put it today "It`s not clear why Cheney`s there this week or what he plans to talk about. To several senators, Mr. Cheney`s visit was a complete surprise." Consider also, it was surprising to me. Surprising development number three today, you may remember a reporter named Spencer Ackerman, who reports at the danger room site at Wired.com, Spencer reported recently on our air that a self-proclaimed terrorism expert from the conspiratorial ragged edge of the far right wing had been hired by the FBI to train FBI officers about terrorism. Using charts and graphs he argued things like this genius hypothesis. Remember this? This is the guy who told the FBI using this chart that over time since the founding of Judaism, Christianity and Islam, over time the more pious and devoted you were as a Jew or a Christian, the less prone you were to violence. But for Muslims, being pious made you stay violent all the time. He scientifically determined this, it`s on a graph. That man got paid for that, his tax dollars paid for that. Spencer Ackerman broke that story in September. Tonight, an interesting update on this. In response to this revelation about the creepy Muslims are the enemy training at the FBI, the White House has ordered a review of counterterrorism training materials. Quote, "To determine the criteria used to establish professional qualifications for teachers and lecturers providing instruction on countering violent Islamic extremism." Thank you. Late, but definitely need. And we know about this, we know about this problem that the White House is now trying to address because of good reporting by Spencer Ackerman. This is a problem that is apparently now, at least they are trying, to fix it. This has been a crazy busy news day. Even before getting to the 2012 news which was extra amazing today. Did you see what Rick Perry said today in New Hampshire? That`s still coming up. (COMMERCIAL BREAK) MADDOW: All right. Once you raise the prospect that you might be quitting your presidential campaign, can you really say thereafter that you`ve decided not to quit, you decided you`re going to stick with it? It turns out, I looked into it, I`m all good. Not quitting, vote for me. Can you do that? Herman Cain, can you? The man who ran the presidential campaign for the last Republican presidential nominee will weigh in with us on that. Next. (COMMERCIAL BREAK) MADDOW: For the record, the 2012 presidential election is to be held on the 6th of November -- November 6th, 2012. Also for the record, all American citizens over the age of 18, minus some felons, get to vote in that election. The elections on November 6th, and if you`re over 18, you pretty much can vote. That is the relevant context for understanding the true glory of Rick Perry`s appearance in New Hampshire today. (BEGIN VIDEO CLIP) GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: Those of you that are sitting in this -- in this hall who are going to inherit this country are counting on us. Those of you that are -- who will be 21 by November the 12th, I ask for your support and your vote. (END VIDEO CLIP) MADDOW: Those of you who will be -- Rick Perry apparently only looking for drinking voters maybe. I don`t know. And I got to say, if you show up to vote on November 12th, as Governor Perry suggests, you will be voting in probable knowledge of who won the presidential election since it will have been held six days earlier than November 12th. Rick Perry not knowing when the election is or how old you have to be in America, in order to vote, that happened right before he started taking questions from this New Hampshire audience that made him so happy. (BEGIN VIDEO CLIP) PERRY: With that, I think we`re going to open it up and have some Q&A from the audience. Yes, sir, with the beautiful beard, you get to go first. (END VIDEO CLIP) MADDOW: You, sir, with the beautiful beard. Turns out we don`t have footage of the beard. But what is it about Texas governors? I mean, one of the enduring and I think fascinating things about George W. Bush as president is the evidence he liked to touch men`s bald heads. There are a lot of pictures, way more pictures than you would think of George W. Bush as president touching men`s bald heads or just seeming to be in awe of men with bald heads in his presence. With Rick Perry, it`s sort of a similar vibe even though they`re very different people, right? Rick Perry calling on the man with the beautiful beard today in New Hampshire. Rick Perry delivering on David Letterman`s show this reason for his oops screw-up in that one debate. (BEGIN VIDEO CLIP) PERRY: Hey, listen, you try concentrating with Mitt Romney smiling at you. That is one handsome dude. (END VIDEO CLIP) MADDOW: "The New York Times" also this weekend writing about the relationships between the various candidates on the campaign trail. "The Times" noting that during a commercial break at one of the recent debates, quote, "Mr. Perry walked over to Mr. Huntsman and patted his stomach." He patted his stomach. Rick Perry may not be running a very effective presidential campaign at this point, but I admire the fact he seems to be having a really great time doing whatever it is he`s doing. Particularly when he`s in New Hampshire. I don`t know why New Hampshire makes him so giddy. But it patently does. But Iowa comes before New Hampshire. Today marks five weeks until the Iowa caucuses and with rumblings today that Herman Cain might be considering quitting the race, that he is reassessing the viability of his campaign, given the latest sex scandal allegations about him, the two most recent polls out of Iowa show a pretty clear trend. Herman Cain`s loss in the polls is Newt Gingrich`s gain. Since the last insider advantage Iowa poll three weeks ago today, Herman Cain dropped 13 points and Newt Gingrich gained 13 points. That poll has Newt Gingrich way out ahead of the field in Iowa. Similarly in the latest Rasmussen poll in Iowa, again, three weeks ago, to last week, Herman Cain dropped 15 points and Newt Gingrich gained 23 points. Looking at the overall national polls is sort of interesting for the atmospherics of the race. Maybe it`s helpful for fund-raising. But, really, you have to look state by state in order to get a true sense of who might win the nomination because we choose the nominees state by state, and state by state the same principle for now seems to be holding -- when Cain drops, Gingrich gains. In New Hampshire, another Rasmussen poll, which as you should know, is a conservative leaning poll, we`ve seen over the last month, Herman Cain dropping by 12 points, Newt Gingrich rising by 16 points. Public Policy Polling which is a left-leaning firm, they took a really interesting approach to this question. They called Herman Cain`s supporters in Ohio, Mississippi, Iowa, California, Arizona and Pennsylvania, and they essentially asked Cain supporters if Herman Cain drops out, who do you like? Here`s how PPP summed up per their findings. Quote, "Cain supporters absolutely love Newt Gingrich and they absolutely hate Mitt Romney." Among Cain supporters in those states, Gingrich has a plus 52 positive favorability rating. Mitt Romney`s favorability rating among Cain supporters is negative, really negative. Minus 22 is his favorability rating among Herman Cain`s supporters. So, as Herman Cain`s numbers drop like a stone, it appears to be Newt Gingrich`s gain in the presidential race, at least for now. And that is sort of amazing when you step back from those numbers and you consider what kind of scandals exactly are causing Herman Cain`s poll numbers to drop, and when you consider who Newt Gingrich is. (BEGIN VIDEO CLIP) REPORTER: Gingrich who once campaigned as a family values candidate has been dogged for years by criticism of marital infidelity and that he left both his ex-wives when they had serious illnesses. One was in the hospital being treated for cancer. The other had been diagnosed with MS. Almost always by his side when he campaigns, his wife Callista, 22 years younger than Gingrich. Married in 2000, their relationship actually began seven years earlier, while she was a young congressional staffer and Gingrich was married to his second wife, Mary Ann. The affair with Callista continued the entire time Gingrich was speaker, including when he called for the impeachment of Bill Clinton for lying about Monica Lewinsky. (END VIDEO CLIP) MADDOW: OK. So, being the family values sanctity of marriage crusader with all the multiple wives and the cheating, and the shtooping your congressional staffer while you`re impeaching the president over shtooping thing, that was amazing enough when it happened in Newt Gingrich`s career. But for Newt Gingrich now to be repealed to the front of the Republican pack because of somebody else`s alleged infidelity scandal? He`s the beneficiary of people being weirded out by the -- that is something that requires professional Republican help for me to understand. And so joining us now is Steve Schmidt who ran the McCain/Palin campaign in 2008. He`s now an MSNBC political analyst. Mr. Schmidt, thank you very much for joining us tonight. STEVE SCHMIDT, MSNBC POLITICAL ANALYST: Hi, Rachel. Great to be with you. MADDOW: How is it possible Mr. Gingrich can be the beneficiary of voters being turned off by adultery allegations? SCHMIDT: Well, I think Republican voters have reached a conclusion that Herman Cain simply can`t win this race. That he`s not a viable candidate against President Obama. If you talk to actual Republican voters, distinct from Republican operatives, the first thing that they say about the prospect of a Gingrich nomination is, wow, we would love to see the debates between Newt Gingrich and Barack Obama. And Gingrich has risen up as Perry has fallen away, as Cain has fallen down. And he has risen on the basis of his debate performances. But now that I think as he moves into the head of the field, there`s going to be a serious vetting that takes place of Speaker Gingrich. I think that all of his past history is going to be at the forefront of the race and you have all manner of issues like the Fannie and Freddie payments of almost $2 million. And we`ll see how these voters, many of whom are very upset about the bailouts, are going to respond to somebody who made millions of dollars on the basis of their insider knowledge. MADDOW: I have to ask if what you`re saying there if you think that the Newt Gingrich surge might not be a permanent one. I mean, it`s been a little bit of Beltway common wisdom that in contrast with Perry and Bachmann and Herman Cain`s surge, those were people who were not necessarily well known quantities as politicos, and so, when they surged it was inevitable that with scrutiny they would fade, whereas Newt Gingrich doesn`t fit that model and maybe his surge is here to stay because people already know who he is But it sounds like you dissent from that. SCHMIDT: Well, I think at the end of the day a lot of this stuff is not top of mind. No one`s had an incentive to come after Newt Gingrich in this race. It`s been a fairly ecumenical presence on the stage. He`s policed the media. He`s come to the rescue of some of his other Republican contestants when they`ve gotten in a little bit of trouble in the debate. But, certainly, if Rick Perry wants to remain in the race and he fancy himself as still viable in the race, the person that he`s going to have to take down to come up is Newt Gingrich. I think in the weeks ahead, you`re going to see Rick Perry increasingly come after Newt Gingrich. I think the national media is going to go after Newt Gingrich as they should through the process of vetting him. How did he make money? What deals were he in? Where were the inconsistencies? I think Newt Gingrich is going to have problems maintaining attacks against Governor Romney`s authenticity, when, for example, just a few years ago he was appearing in global warming videos with Nancy Pelosi paid for by Vice President Gore`s climate change group. So, I think there`s a lot of things that Newt Gingrich has done that are going to be ventilated in the weeks ahead. I do think it`s highly likely that he`s going to be the chief alternative to Romney. That there could be a scenario where Gingrich wins Iowa, Romney wins New Hampshire and no Republican candidate has ever won both Iowa and New Hampshire. You go to South Carolina, you have a close outcome. And you have a long primary contest because the roles have changed on the Republican side and now, those races are going to be proportional from the awarding of delegates based on the percentage you get. MADDOW: In terms of the deflation of Herman Cain right now and him not really being seen, as you said, as a viable candidate anymore, as sort of a technical matter almost, can you put the genie back in the bottle after you raise the prospect that your campaign might end? The Cain campaign has tweeted out something tonight to the effect of when we said reassessing, that didn`t mean quitting, that didn`t mean dropping out, it means reassessing. Everybody interpreted that today as the possibility that that campaign might end. Once you floated that possibility or perceived to float it, can you ever not quit? Doesn`t that mean the campaign ends? SCHMIDT: Well, I think the reality is, who knows what he`s going to do. I think that, you know, he has a -- look, I think there`s an 85 percent chance he`s going to be on "Dancing with the Stars" next season. You know, he`s not a serious candidate for the presidency. And I think increasingly, you know, his presence in the race is something of a bad joke. MADDOW: Steve, let me ask you about one other Herman Cain thing. I think you`re probably right and this may be the last time we ever get to talk about him. SCHMIDT: Yes. MADDOW: One thing sort of confuses me. And it`s in terms of the way Republican voters are assessing his candidacy. Previous allegations against him, before the ones yesterday, have been about alleged sexual harassment and in one case a borderline maybe sexual abuse -- a woman describing an unwanted somewhat forceful sexual groping by Herman Cain. This latest allegation, though, is about a long term seemingly happy adulterous consensual affair. But I got a clip I want you to watch here. This is how this new allegation is being described on the right. (BEGIN VIDEO CLIP) MIKE HUCKABEE, HOST OF "HUCKABEE": It`s a serious charge, the allegation is one that could upend his presidential campaign. I think this is the most damaging allegation that has been made to date. No question about it (END VIDEO CLIP) MADDOW: Mike Huckabee there saying the allegation of a consensual affair is worse than allegations of sexual harassment and sexual abuse. Is that -- how should I understand that? SCHMIDT: I don`t understand it. So it`s hard for me to explain it to you. Other than, you know, the hypocrisy that -- you know, abounds around this issue. I think it`s not contained to just Republicans. I think you see it on the Democratic Party side, I think it`s part of the reason you`ve seen such a collapse in trust in institutions of government by the American people, because of all the hypocrisy around issues like that that takes place in both parties. It`s really unfortunate. MADDOW: Steve Schmidt, senior campaign strategist for McCain/Palin campaign, MSNBC political analyst and someone I always really appreciate talking to about this stuff. Steve, thank you. SCHMIDT: You bet, Rachel. MADDOW: All right. After the show, on "THE LAST WORD" with Lawrence O`Donnell -- Lawrence has the story of how Bill O`Reilly from the FOX News Channel has tried to help Newt Gingrich rewrite his relatively liberal record on climate change. Coming up at the end of our show, THE RACHEL MADDOW SHOW department of corrections is open for business. (COMMERCIAL BREAK) MADDOW: Take a look at this footage from today. This is kind of incredible stuff. These are protesters of some kind storming Britain`s embassy in Iran today. We don`t know for sure how many people were involved in this. The Britain`s foreign office says it was several hundred people. The official Iranian government news agencies say it was 1,000 people. But, of course, for us Americans watching things like this, it`s hard to think images like these without thinking immediately of this. (BEGIN VIDEO CLIPS) ANNOUNCER: This is "NBC Nightly News" with Jessica Savitch and Dick Shepp (ph) with sports. JESSICA SAVITCH, NBC ANCHOR: Good evening. The American embassy in the Tehran is in the hands of Muslim students tonight. Spurred on by an anti-American speech by the Ayatollah Khomeini, they stormed the embassy and fought the marine guards for three hours, overpowered them, and took dozens of American hostages. The students want the deposed shah to return to Iran for trial. We have two reports beginning with Steve Mallory. STEVE MALLORY, NBC REPORTER: The United States Marine Corps guards who are tear-gassed who try to disperse the mob of Islamic students, but that wasn`t enough. Hundreds of Iranians finally overran the embassy compound, seizing about 90 people, mostly Americans. (END VIDEO CLIPS) MADDOW: That crisis that started with the U.S. embassy in Tehran being overrun ended up lasting from 1979 all the way into 1981 with the Iranians holding dozens of Americans hostage for more than 14 months. Our country has not had diplomatic relations with Iran ever since. This is what the U.S. embassy in Tehran looks like right now. It`s a wall outside that embassy there. At the protest today at the British embassy, nobody was taken hostage, although there was some confusion on that point in early reporting today. The details behind today`s event all in all are a little murky. The Iranian government`s official line that these were spontaneous protests: we had no idea. They said it was students angry at Britain for new British sanctions against Iran. They said police did everything they could to try to stop this. One reason to be skeptical about that line is the breathless coverage of these protests on several government sanctioned news outlets including this one, Press TV. Frankly, if the Iranian government was really not in favor of this embassy siege and these protests, they wouldn`t have allowed coverage of it at all. The protest would not exist as far as the official news agencies are concerned in Iran. So, safe to say when the British embassy was stormed and taken over today and looted with things like an oil painting of Queen Elizabeth and randomly this "Pulp Fiction" poster -- what was that doing there in the first place? When it all happened today, the Iranian government wanted the world to know this happened. "The New York Times" going further than that today, saying it was clear the event had been ordained by the authorities who in the past have orchestrated attacks on embassies. Even if the government of Iran didn`t arrange this today, even if they didn`t arrange it, if they were so inclined, they certainly could have put a stop to it. Again, quoting "The Times," Iran security forces and its militia have maintained strict control over mass protests in Iran since the disputed election of 2009. But this one somehow got away from them. Yes, right. Here`s the thing, in 1941, Britain and Russia deposed this guy, the shah, and they decided that they put his son on the throne in Iran instead. Iranians hated the son and overthrew him in a popular uprising a little more than a decade later. Britain again intervened, this time with the us, with the CIA, and they stopped that popular uprising. They put the son back on the throne, even though the Iranians hated him. The CIA and the British staged a coup in that country in Iran and put this guy in power even though the Iranians hated him mostly because his oil policies were good for England. And the Iranians never really forgot about that. That was in 1953. It took until 1979, remember the hostages at the embassy in 1979, I took until them for them to finally overthrow that guy again in the Iranian revolution. So, yes, when we see things like this happening today, it is in part because Britain and Iran are fighting about sanctions about nuclear weapons. But there`s a long and fraught history between Iran and Britain. The Iranian government can really be manipulative about this history. They blame Britain and the U.S. for everything that goes wrong in Iran. But thanks to an actual conspiracy 60 years ago, a real one, that ended a popular uprising in that country and restored a much despised king to power, it`s sort of easy for the Iranian government to get away with blaming everything on Britain. Sort of easy to get away with making a fake conspiracy theories about today`s politics in order to fuel the fire of animosity between their country and the West. (COMMERCIAL BREAK) MADDOW: We have a correction to make. Last night on the show, I made this point about the newsworthiness of the latest Herman Cain sex allegation. This latest one from a woman who says she had a long, consensual affair with Mr. Cain outside his marriage. (BEGIN VIDEO CLIP) MADDOW: To be fair I think the reason this latest allegation about Mr. Cain is news is not because this allegation is that he`s done something illegal or even because it`s anybody`s business what any two adults do inside or outside the bounds of their own marriage. Private life is private life, even for public figures -- unless those public figures chose to build their political careers on criticizing other people`s private lives and proclaiming the superiority of their own private life. In the case of Mr. Cain, he has campaigned for office by saying that he will defend the sacred institution of marriage against liberals who want to destroy it. Because of that, Mr. Cain has a sacred institution glasshouse problem. (END VIDEO CLIP) MADDOW: Today, in the "Washington Post," Mr. Cain`s lawyer, I don`t really believe that thing I just said, even though I just said it. Mr. Cain`s lawyer told "The Washington Post," quote, "She`s reaching a conclusion she wants it to reach, and she can find whatever excuse she wants to find to reach that conclusion. Rachel Maddow, I`m sure, believes that the media has the right to discuss the private lives and marriages of any candidate." As a point of fact, I checked with Rachel Maddow today personally, and she does not believe that. She -- I believe that you only earn the right to have the details your marriage scrutinized publicly if you have built your career on disparaging other people`s marriages and proclaiming the superiority of your own. Mr. Cain has run for office by claiming that he can save the sacredness of the institution of marriage from the liberals who want to destroy that institution. His marriage was no one`s business until he decided to impugn other people`s marriages for his own in contrast for political gain. Live by the sword, die by the sword. It`s not the morality of the issue here that makes this news, it`s the hypocrisy. So, when Herman Cain`s lawyer says I don`t believe that, he`s wrong. I`m sure he regrets the error. As must "The Washington Post," which I think has my number if they ever want to check with me in the future before printing what someone else says I believe. Call me. That does it for us tonight. We`ll see you again tomorrow night. Now, it`s time for "THE LAST WORD" with Lawrence O`Donnell. THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. END