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The Rachel Maddow Show, Transcript 02/13/12

Guests: E.J. Dionne, Peter Orszag, Jan Schakowsky, Brian Beutler

EZRA KLEIN, GUEST HOST: And thank to you for sticking around at home with us tonight. Rachel is on assignment. But we begin with a big day on the annual political calendar. In fact, a very big day for me personally. Today is budget day. It`s the day the White House releases its proposed budget for the next year. It turned out President Obama introduced his 2013 budget today at a speech in northern Virginia. (BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Today, we`re releasing the details of that blue print in the form of next year`s budget. And don`t worry, I will not read it to you. It`s long and a lot of numbers. But the main idea in the budget is this: at a time when our economy is growing and create be jobs at a faster clip, we`ve got to do everything in our power to keep this recovery on track. (END VIDEO CLIP) KLEIN: I will also not read you the budget, even though I would kind of like to, because I`m super excited. I love budget day. I love budget day because I love budgets. Love `em. And not just because I have an unusual and what some may say is an unhealthy fixation on charts and tables and graphs, although, but to be clear I sort of do. I love budgets they force to run the numbers, to make trade-offs, to decide what`s really important, and to be honest what we are willing to sacrifice to get it. The annual budget is frankly as honest as the government ever is with itself and with the American people. I mean, just ask the most basic question. What is a federal government? What does it do? Ask a politician, and get some rambling answer about freedom and personal responsibility and Ronald Reagan and Thomas Jefferson and World War II and flags. But ask the budget and you`ll get the right answer. Look at what we spent in 2011. We`re just looking at what the government is actually buying. So, we`re not looking at interest on the debt here -- 43 percent of our spending went to Medicare, Medicaid and Social Security. Another 25 percent went to the military, went to defense. So, 68 percent, almost three-quarters, either went to insurance or defense. That is what the federal government is now. It is an insurance conglomerate with a large standing military. The also budget can do for us. It can cut through the rhetoric, and tell us what politicians are doing or trying to do. That is what this budget will do, it may not pass the House, it may not pass the Senate, but it will tell us what President Obama plans to do in the country, his vision. And then we can compare it with Mitt Romney`s budget, to see what he wants to do. And, in fact, we can particularly do that on taxes because at CPAC on Friday, Romney said this. (BEGIN VIDEO CLIP) MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I will finally balance the American budget. (END VIDEO CLIP) KLEIN: Yay! That sounds just like rhetoric to you, right? That is another line. But that`s an important line from Romney. That`s like a Rosetta stone to his whole platform, because we`ve seen Romney`s tax plan, we know how much money it will probably raise. And we can see what will have to happen to the rest of the budget to make it balance. Here`s a hint. It`s not pretty. But before we get in that and I do apologize for this, we`re going to have to dive in the numbers a little bit more. Taxes are usually measured as a percentage of gross domestic product, GDP. That is to say they`re measured as a percentage of the size of our economy. So, if your economy produces 10 bucks worth of stuff and services every year, and you tax $5, taxes are 50 percent of GDP. Right now, taxes are way, way, way low. In 2011, tax revenues were 15.4 percent of GDP. To give you an idea of how low that is, before the financial crisis, you had to go back to 1950 -- 1950 -- to find a year when taxes were that low. In 1950, there was no Medicare, there was no Medicaid, there wasn`t even a Hawaii as one of the 50 states of the United States. For comparison sake, taxes under Reagan were 18.2 percent of GDP. So, think about that next time you hear about Obama is taxing the economy to death. Taxes under Obama are lower, at least they have been so far, than they were under Reagan. It`s not even close. Now, taxes are so low right now Obama the Bush tax cuts brought them there, and because of the recession. But as the economy recovers, takes will come back a bit, too. Budget experts say they`ll get back to 17.9 percent of GDP. That`s if we just keep the Bush tax cuts and let the economy come back. But if that happens our deficits will be huge -- huge. So we have to do something. But Mitt Romney and President Obama have very, very, very different ideas as to what to do and who should pay for it. Obama`s budget wants to raise taxes on the rich by $1.5 trillion. That means taxes rise to 19.2 percent of GDP. Romney meanwhile wants to cut taxes further. His plan would extend all of the Bush tax cuts and then further reduce taxes on the rich. Taxes would fall to about 17 percent of GDP. But what`s really interesting in these two plans is who would pay. The Tax Policy Center is this great group of non-partisan wonks who look at all these policies in way more detail than I even can stand. But every so often, they emerge from their caves and they sort of blink because they haven`t seen the sunlight forever, and they give us great estimates how much different groups of people would pay under the different plans. And they`ve looked at Obama and Romney`s plans. Turns out very different groups of people would pay. If you are eye in the bottom 20 percent of the income distribution, in Obama`s plan you`ll pay federal tax rate of 1.8 percent. Under Romney`s plan, you`ll pay almost double that, 3.4 percent. That`s the poorest group. If you`re in the middle, it`s a lot closer, 15.2 percent under Obama`s plan, 15.6 percent under Romney`s plan. But if you`re in that top 1 percent, as both Romney and Obama are, the difference becomes huge. Under Obama`s plan, you pay 36.3 percent. Under Romney`s plan, 25.9 percent. To get that out of percents and into dollars, if you`re in the top 1 percent, under Romney, your taxes will be $160,000 lower than it will be under Obama, $160,000. Tax cuts of that size cost a lot of money, trillions of dollars. And Romney`s promised he won`t pay for that by cutting defense. He`s promised he won`t pay for it by raising taxes elsewhere and his promise to balance the budget. So, you can actually run the numbers. To make those numbers work, to make the taxes and spending balance out, he will have to cut almost twice as deep in spending as Paul Ryan`s budget does. It means he will have to cut every single domestic program, including Social Security, Medicare and Medicaid, all of them by 36 percent -- 36 percent. And you know who relies on domestic programs like those? Senior citizens and the poor. Think all of the seniors voting Republican want a 36 percent cut to Social Security and Medicare in order to pay for Romney`s tax cuts for the wealthy? I sort of doubt it. But the budget doesn`t show us where the two parties disagree; it also shows us where they sort of do agree. Taxes are lower under both Obama and Romney than they would be if we simply let the Bush tax cuts expire and returned to Clinton era rates. Then taxes would be near to 20.4 percent of GDP. You wouldn`t know that from the admiration which Democrats use when they talk about Clinton`s economic policies or the horror with which Republicans talk about Obama`s tax ideas, but both parties are in some ways closer to Bush than they are to Clinton. Taxes are also lower in both plans than they were under the bipartisan Simpson-Bowles proposal, which call for revenues at 20.3 percent of GDP, and lower than they were in the bipartisan Senate "gang of six" proposal, which envisions revenues of 19.9 percent of GDP. Taxes in both these plans, including Obama`s, are frankly historically pretty low. But then that`s why budgets are useful. They help us keep the two parties honest. Joining us is Peter Orszag, former director of the Office of Management and Budget under President Obama. He`s currently vice chairman of global banking at Citigroup. Peter, it`s good to have you here. PETER ORSZAG, FORMER OBAMA BUDGET DIRECTOR: Great to be here. KLEIN: You`ve actually this work of cutting a budget. You`ve been in the room. You sat in the Oval Office. There are pictures. There`s photographic evidence. If you sat down there and the president said, we need to get spending down to 17 percent of GDP, how you do it? Could you do it? ORSZAG: Virtually impossible. So, in 2020 or so, spending is projected to be 25 percent of the economy, to get it down to 17 percent of the economy, is beyond -- I mean, you can make the numbers work arithmetically, but it would require such massive reductions, especially if you`re leaving defense completely untouched, then it becomes implausible. KLEIN: And then on the other side, you`ve actually called for all of the Bush tax cuts to expire in a Bloomberg column, about a year or two ago. And the Obama administration has not gone that far. So, even under their proposal where the revenue numbers are relatively higher, than they are to Romney`s, do you think in the long run, you can actually fund the government at that level? Is that a plausible revenue base? ORSZAG: I think unfortunately not. I think both sides are locking into revenue bases that are inadequate for what the government needs to run on. At least though, the administration`s budget is proposing a revenue increase of about a percent of GDP, Romney, as you mentioned going in another direction. I don`t -- I really don`t see how the numbers work under the Romney budget. KLEIN: And then we have still -- one of the interesting things about this budget it`s a first budget after the debt ceiling deal. So, one of the big things we`re doing is we`re figuring out how to make discretionary spending work with all the big sort of new discretionary spending caps that got passed in August. Now, you were looking, you were telling me earlier about a table that made you sort of worried because you think we might hit the debt ceiling possibly even before the election. You want to explain a bit about that? ORSZAG: Sure. Well, by about this time next year, we`re going to be back into a quite dramatic period because table 62 in the analytical perspective -- (CROSSTALK) ORSZAG: Exactly, for anyone who maybes it through that volume, shows at the end of September, even assuming relatively good growth under the administration`s projections, the debt that would be subject to that limit would stand at $16.3 trillion dollars, which only relative to $16.4 trillion for the limited self. So, we`d be bumping up against that constraint. By January, we`re going to be back in the soup at exactly the same time that the tax cuts are expiring and those large sequestered cuts are coming online. This is going to be drama, much larger than what happened last summer. KLEIN: The largest budget drama. ORSZAG: If you were excited by the budget, just wait until January. You`re going to have a great time. KLEIN: But one of the things I worry about with that because you, again, you sort of called for the Bush tax cuts to expire, we have the other things hitting, the president in the comments here earlier said the key element of this budget is protecting the recovery, the key element is not doing anything that could be contractionary, well, we get back on our feet -- if the Bush tax cuts expire all at ones, if the trigger hits all at once, if we certainly we a debt ceiling problem, shaky deep ceiling program, that would be a really big drag on the economy in 2013 -- enough possibly to derail the recovery. So, how do you play those against each other? Because that seems to me to be the other side of the Republican leverage against the Democrats. ORSZAG: First, I agree it would be far too large, and we don`t want that kind of fiscal austerity too soon. In fact, what we want is much more stimulus now coupled with deficit reduction that takes effect over time. But what I think would make a lot of sense is to be tying that upfront stimulus like a much-expanded payroll tax holiday to unemployment rate or to the share of the population working, so it`s in effect as long as the economy is weak, and then you don`t have to worry about things going away when the economy is weak. KLEIN: What happens if Romney gets elected right about then, or frankly any of the Republicans? One of the things that is odd about the moment that all of these are expiring, is they all expire in the lame duck. They are expiring when they may actually -- you could actually imagine everything happening when the Senate is going to change hands in three weeks, when the House is going to change hands and White House changes hands. So, every single branch of sort of the government that have to deal with this could be in turmoil at that exact moment. I almost don`t know how you handle that in those terms, you just kick the can down the road? ORSZAG: Oh, I think in that scenario, it`s extremely likely that you don`t actually legislate during the lame duck, that it gets kicked to early next year and then the circumstances that you were suggesting, that new administration is going to have a huge mess on its hands right during the honeymoon period when you`re trying -- you know, right at the beginning of the administration when you want to be proactive along whatever you`re trying to get done, you`re going to have to clean up this mess of those three things that are being left behind. It`s not going to be pleasant. KLEIN: So, that would be if Obama is reelected the second time, the beginning of the term is the biggest mess he`ll face in the entire term, right? ORSZAG: Yes, whoever is president at this time next year is going to face an intricate dance to navigate through those three things that are happening at the same time. KLEIN: Peter Orszag, thank you so much. ORSZAG: Good to be with you. KLEIN: So, comparing President Obama`s proposed budget and Mitt Romney`s expected budget is extremely useful, extremely interesting, and if you`re me, even extremely fun to do. But it also sort of assumes Mitt Romney is going to be the Republican presidential nominee, right? What if he`s not? The likelihood of that possibility, the whole brokered convention thing, plus the inexplicable politics of birth control and the stealthy ninja politics of tax cut -- all of it making news, all of it coming up. (COMMERCIAL BREAK) KLEIN: Still ahead, historian Newt Gingrich tells the inspiring true story of Newt Gingrich on Facebook. If this appeals to you, click "like" now. (COMMERCIAL BREAK) KLEIN: OK, this right here, this is a county by county map of the state of Michigan. Michigan is made up of 83 counties in total, which is a lot of counties. And this one right here down in southeast Michigan is called Oakland County. Oakland County is home to the city of Troy, Michigan, it`s home to the Chrysler Museum. It`s known as Automation Alley because of the growing technology sector there. And when it comes to presidential politics, Oakland County is doing what Republicans across the state of Michigan were expected to be doing right now. Oakland County is supporting Mitt Romney for president. Mitt Romney is from Michigan. His dad was the governor there. Oakland County is for him. That should be good news for Mitt Romney, right? The bad news? Oakland County appears to be the only county in the entire state of Michigan that`s for Romney. The polling from Public Policy Polling released their latest poll out of Michigan and it finds that not only is Mitt Romney now losing his home state to Rick Santorum by 15 points, 15 points, but, quote, "Rick Santorum is ahead of Mitt Romney every where in Michigan except Oakland County." That`s it. Oakland County, home of the Chrysler Museum, the place where Mitt Romney was raised as the child -- they are the only ones behind him right now in Michigan. The rest of Mr. Romney`s home state is going for Rick Santorum. I am on record over and over and over and over and over again saying Mitt Romney has this race locked down, saying there`s no way anybody but Romney had even the slightest chance and I have been steadfast. The rise of Herman Cain, I ignored it. Newt Gingrich, laughed at it. I even dismissed Rick Santorum when he won Iowa. But now, for the first time, you can really tell -- I can tell a plausible story in which Rick Santorum might actually be the Republican nominee for president in 2012. Rick Santorum has now grabbed the lead over Mitt Romney in two new polls out of Romney`s home state of Michigan. Santorum has also leap-frogged Mitt Romney in a pair of national polls that were just released today. If you look at the states that have vote sod far, Santorum has won just as many states as Mitt Romney has and Santorum`s rise in the polls perfectly coincides with the central argument of Mitt Romney`s candidacy beginning to fall apart. Mitt Romney is supposed to be the guy who can beat President Obama, right? He`s supposed to be the uber-electable Republican. That`s what makes up for his shortcomings in the eyes of conservatives. You don`t have to love the guy, but he`s the guy who can win. So, you support him, right? That`s the pitch. But look how he`s doing among those all important independents right now. A month ago, Mitt Romney was beating President Obama among independents by 10 points. Now, he`s losing that group to President Obama by 9 point margin. Mitt Romney is hemorrhaging support among independents. Today, the influential magazine "The National Review" publish an editorial calling the other non-Romney candidate, Newt Gingrich, to drop out of the race. The editors there writing, quote, "The proper course for Newt Gingrich now is to endorse Santorum and exit." When you look at the Republican race right now, there are all sorts of preconceived notions that we all bring to it. We know deep in our hearts, or I thought I knew deep in my heart that Mitt Romney was inevitable. Thought I knew the Republican Party would never in a million years nominate Rick Santorum, a guy who lost his Senate race in Pennsylvania by like 7,000 percent. Those are things I thought were clearly true. There was no chance, I`d be proven wrong. And yet, if you come at this with fresh eyes, forget everything you know about this campaign, what you see is that Rick Santorum looks like the guy right now with the best chance of winning. Am I willing to say he is the guy with the best chance of winning? Not yet. But the numbers show what the numbers show. Can`t deny `em. Joining us now is E.J. Dionne, "Washington Post" columnist and MSNBC contributor, and a good friend. E.J., thank you for being here. E.J. DIONNE, MSNBC CONTRIBUTOR: And happy budget day, Ezra. It`s good to see you so cheerful. KLEIN: Happy budget day. DIONNE: Thank you. KLEIN: It`s not been as happy a budget day for Mitt Romney. So here`s my question for you, is what we`re seeing here, is it Rick Santorum doing something right or is it Mitt Romney doing something wrong or both? DIONNE: Both I think is the answer. I think the worst number to come out today for Mitt Romney was in that Pew poll. Mitt Romney`s argument as you said in the intro is that he`s electable. And a lot of conservatives weren`t sure what Mitt Romney believes. Many of them would be willing to take a flyer on him if they thought he was the only guy who could beat President Obama. But in the Pew poll, Obama has an 8-point lead over Romney and a 10- point lead over Santorum. Not even the margin of error, when you compare to Gingrich and Gingrich was the main competitor, Romney could make a strong case that he was stronger than Gingrich. And I think what`s happened is on each side, the Romney side, Santorum side, Romney has been very awkward to the point where when he uses a phrase like he governed in a severely conservative way, that`s a story for days. We`re talking about the word "severely" and he just does not seem comfortable. Rick Santorum knows what he believes and looks comfortable saying it. And I think it`s that contrast that is really helping Rick Santorum right now. KLEIN: What I thought amazing about severely conservative, was Mitt Romney`s only deviation from the script. He went off his script for one comment, and it was a gaffe. There was -- there was a joke in a "New York Times" magazine profile of Mitt Romney`s campaign or Mitt Romney I guess, when they said some of his campaign staffers from 2008 used to say that we want to fire our speechwriter. He`s this guy on the fourth floor, and his name is Mitt. And there`s a bit of that in this campaign. Romney has not been -- he`s been a disciplined campaigner, but he`s not been a mistake-free one. He`s made a fair number of mistakes. That wasn`t expected. I mean, I thought the whole thing with Romney he would never sway from the message, that he would run this campaign like a corporate campaign. Has that been a surprise to you? DIONNE: It hasn`t been a complete surprise to me that in the spontaneous moments when you really can`t script the candidate, he has been off. You know, he was really off in the period when Bain Capital was under discussion, and he just really hates talking about money and it`s in those times when he has shown himself out of touch with ordinary people, just can`t understand or give the impression anyway that he can`t understand the way average people live. And again, I think that is key to those numbers among independents, and it`s very striking, Obama in the Pew poll is beating him in every region of the country except the South. He`s got a big lead in the Midwest, the president does. If the Republicans who made a lot of gains in the Midwest in 2010 can`t dent Obama in the Midwest, it`s very hard to see how they can win. And Romney does not seem to be making it there at all. KLEIN: And real quick, because there was a sort of hilarious "National Review" editorial calling for Gingrich to drop out. They were tweaking him a bit, because Gingrich has said this to Santorum. But it does pit Newt Gingrich`s two motivations against each other, right? Is he in there to run, or is he in there now to take revenge on Mitt Romney for all the negative ads him? What`s your prediction -- does Gingrich drop and if he does, he endorse Santorum? DIONNE: I think Gingrich is like the old song when you were a kid, this is the song that never ends just goes on and on -- I don`t think he wants -- KLEIN: My friends. DIONNE: My friend, yes. Newt doesn`t want to drop out. I think he`s going to wait until the next debate on the 22nd and try to do debate magic that left him during Florida. But beyond that, I don`t know what he`s going to do. But I just don`t see him ever dropping out. KLEIN: He will be in there come November, 2012. DIONNE: Yes, exactly. KLEIN: "Washington Post" columnist and MSNBC contributor, E.J. Dionne -- thank you so much for joining me tonight. DIONNE: Good to see you, Ezra. KLEIN: There are certain combinations that get tossed around in the news media with a lot of certainty, but not much understanding. Like digital platform or good sushi. One of such combo is brokered convention. All the rage to talk about, but few folks seem clear what it actually is. We`ll clear up the meaning and actual chances for it, next. (COMMERCIAL BREAK) (BEGIN VIDEO CLIP) SARAH PALIN (R), FORMER ALASKA GOVERNOR: I don`t think that it would be a negative for the party, a brokered convention, and people who start screaming that a brokered convention is the worst thing that could happen to the GOP, they have an agenda. They have their own personal or political reasons, their own candidate who they would like to see protected away from a brokered convention, so anybody who starts say can`t allow that to happen. That`s part of competition. That`s part of the process and it may happen. (END VIDEO CLIP) KLEIN: The words "brokered convention" strike joy in the hearts of the Beltway media pundits of which I guess I`m one. A brokered convention happens when no nominee has gathered enough delegates to secure the nomination. And so, delegates are free to vote as they wish at the convention, often multiple times on multiple ballots before they arrive at a nominee. If you were among us political geeks and you think brokered convention, you probably imagine 1948 and the Republicans, or 1952 and the Democrats, when Adlai Stevenson had to be convinced to join the race at the convention before he went on to win the nomination and lose to Republican Dwight Eisenhower. In those days, a brokered convention meant that party power brokers met in secrecy, presumed they chewed on big cigars, and speaking in language to pick the nominee. Then came 1968 with all this pummeled and rancor and chaos when Hubert Humphrey became a nominee after a series of vitriolic speeches directed at one candidate or another at the convention by fellow Democrats. The Democratic Party from their own convention battered and bruise, and Humphrey went on, of course, to lose to Richard Nixon. After that disaster played up before TV cameras, the Democrats decided that people`s votes at the primary process had to be the way their nominees were selected. Their party leaders weren`t going to wheel and deal behind closed doors anymore. Republican followed suit a few years later. Since then, no cigar smoke, no wise guys in back rooms, no brokered conventions. The 1976 race came close with Ronald Reagan taking the fight against then-President Gerald Ford, all the way to the convention. But then Ford squeaked by, and clinched the nomination before losing to Jimmy Carter. Today, party rules have made that much harder for delegates to throw their support behind a nominee who did win the popular vote in their district. Meaning, a brokered convention is a much more elusive animal. "Talking Points Memo" has done some great digging into how a brokered convention would actually work for the Republican this year. First, the various candidates have to fail to attract enough delegate to win outright because, quote, "many delegates are bound by state rules to vote for a specific candidate based on their showing in a primary caucus or convention." So, that has to fail first. If it did fail, if the ballot dead locked, however, these delegates could be released from those rules if the contest drags on and on at the convention. But it actually gets more complicated. Plus states have their own rules. For example, Alabama can unbind their delegates from the candidate who won the popular vote if two thirds of them agree to do that. Well, Mississippi delegates don`t have to vote for the winner of the popular vote if the candidate releases them to vote for someone else. A RNC committee member told "TPM" quote, "The truth is, our rules are set up so the delegates are all independent." So, brokered convention not impossible, but pretty improbable that Republicans could stage one. And then you have to ask -- what would it actually accomplish? When people think about a brokered convention, they usually imagine some sort of a white knight scenario, say, Chris Christie jumps in or Jeb Bush, or, dare to dream, Sarah Palin. But think about what that would mean for any of those potential saviors. Think about what they would be taking on. The existing candidates, Mitt Romney, Rick Santorum, Gingrich, Ron Paul would fight like the devil to stop them from taking the nomination. After all, they`ve been working for it. The party would be completely fractured. The American people would be watching at home would see the GOP in an apparent state of collapse. And if a new entrant nevertheless won the nomination, the GOP convention is at the end of August. This brand new candidate would have two months to raise money, get organized on the ground, run ads, hire staff, learn the issues, introduce themselves to voters, get on the ground in swing states, come up with a policy platform, and unite a fractured party -- two months to do all of that while taking on the behemoth that is the Obama campaign. That`s not a coronation. That`s a suicide mission. Look, everyone respects Adlai Stevenson, but not many politicians, especially Republicans, want to actually be him. (COMMERCIAL BREAK) (BEGIN VIDEO CLIPS) SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: The Obama administration crossed a dangerous line. UNIDENTIFIED FEMALE: This action by the Obama administration is an attack. MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Outrageous assault. RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: This is the kind of coercion we can expect. REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: And in imposing this requirement, the federal government has drifted dangerously beyond its constitutional boundaries. (END VIDEO CLIPS) KLEIN: Once upon a time, you know, meaning last week, Republicans were doing battle with the Obama administration over birth control. The scale of the fight was enormous. Perhaps you noticed all over the TV every night, every day. But the policy that was being fought over was actually sort of small. Last week, the birth control fight was about a new rule that would have required employers, including religiously affiliated employers, to include coverage for contraception in health plans for their employees. The Republicans argument was access to birth control for relatively small group of women. They were arguing that some employers like hospitals and universities associated with the Catholic Church should not be required to provide health insurance that covers birth control. It was a narrow call for a special exception for a small group of employers and it largely succeeded. The president came out on Friday and said essentially, OK, fine, if you`re a religious organization and you don`t want to provide contraceptives in your health plan, you don`t have to do for it, you don`t have to pay for it. But all your employers get access through their health insurance. But if they work for religious organization that doesn`t want to pay for it, it`s the insurance company that gets stuck with the bill. That is what Republicans have been demanding all week, that Catholic groups should not be forced to pay for birth control. So, instead of, say, declaring victory, they have broadened the fight. It turns out they just don`t want religiously affiliated employers to be able to deny woman access to birth control. They want all employers to be able to deny women access to birth control. (BEGIN VIDEO CLIPS) UNIDENTIFIED MALE: I think this will continue to be part of the debate unless the president totally changes his position. MCCONNELL: This issue will not go away until the administration simply backs down. ROMNEY: He did the classic Obama retreat. All right. And what I mean by that it wasn`t a retreat at all. SANTORUM: There is no compromise. REP. PAUL RYAN (R), WISCONSIN: It`s not a compromise. The president has doubled down. MCCONNELL: If we end up having to try to overcome the president`s opposition by legislation, of course, I`d be happy to support it and intend to support it. (END VIDEO CLIPS) KLEIN: Wherever Republicans thought their position last week in their argument about the Catholic Church and its affiliated organizations, their widening of this political battle appears to pit them squarely against women who want contraception covered by their health insurance. That will be received as very good news at the White House. Last week a poll from the Public Religion Research Institute found that 55 percent of all Americans think all employers should have to provide employees with health care plans to cover contraception at no cost. Only 40 percent of respondents disagree. Better yet for the Obama administration, the idea polled above 60 percent among women and young voters, two crucial groups for the president`s reelection campaign. Now, these voters will know two things, in part, thanks to this. First, the Obama administration is trying to see to it that their health plans cover contraception. And second, the Republicans are trying to make it possible for their boss, someone they may not like or agree with, or have ever even met, to decide whether they get access to birth control at all. Joining us now, Congresswoman Jan Schakowsky, Democrat from Illinois - - Congresswoman, thank you for talking with us tonight. REP. JAN SCHAKOWSKY (D), ILLINOIS: Thank you so much, Ezra. KLEIN: Were you surprised at after the president changed the rules the Catholic universities and hospitals didn`t have to pay for the coverage, you still have Republicans widen the fight on this, that they said it should be all employers should get this exception? SCHAKOWSKY: I think it is a colossal, political miscalculation on their part. You know, 57 percent of Catholic voters think that this pragmatic compromise was a really good idea, and only 29 percent of Catholic voters opposed that. And, you know, this is birth control, and I think if these Republicans, mainly Republican men because now even some of the Republican women senators are changing their mind or coming out in favor of this policy, if they want to bring that on as a political issue, I say: do, bring it on. Because virtually 100 percent of Americans not only embrace the idea of birth control but actually use birth control. And I think that this is such an incredible mistake. KLEIN: Well, your point about the Republicans and we should say Senators Susan Collins and Olympia Snowe have broken with the line is interesting because the politics of this -- the way it`s playing in the different coalitions, appears to have completely reversed in the last week. A week ago, you were seeing splits across the Democratic coalition. And now, you`re seeing splits among the Republican one. Aside from Senators Collins and Snowe, in the House -- are you seeing any movement of similar frictions? SCHAKOWSKY: Well, first of all, let me tell you that even before the compromise, the majority of Americans were in favor of organizations, you called them religious organizations, but we`re not talking about churches, houses of worship. We`re talking about hospitals, charities, universities, that are Catholic affiliated or religious affiliated. But their employers that employ janitors and orderlies and nurses and teachers, and that those individuals ought to have access to contraception was always majority view. And I have to tell you, Ezra, quite frankly, what we saw were some of the men talking about how this was about religious freedom, when in fact it is not about religious freedom. This is about access to contraception. I think the White House, the resident, came up with an absolutely brilliant compromise and it is accepted by the Catholic Hospital Association, by Catholic charities and now, there`s just the Republicans and the bishops who are saying no to it. KLEIN: And then, how do the politics of this play out going forward? There was a report a few weeks ago by the group Third Way, and what they argued that the independents who broke for the president in 2008 were overwhelmingly young female and in many way secular and this has -- this has been the third major event this year that has put but control and reproductive service, seemingly in threat. There was the original effort to defund Planned Parenthood, then there was the Komen effort, to defund Planned Parenthood, which is a huge story just a couple weeks ago, and now this. With the president and Democrats in general attempting to reactivate those voters in 2012, it sort of seems like the movement that is so skeptical of birth control has done it for them. SCHAKOWSKY: I think you`re right. And in fact, I was looking at the number on Catholic independent voters against 56 percent, so that is men and women believe that this is the right policy. I think they are treading into very politically dangerous waters, if they want to take on these issues that are so important to women and as you say, young people. The issue of contraception, any controversy about birth control is done. This is the year 2012 and I think a lot of particularly young voters are absolutely astonished that this would be controversial. And so, I think that they have actually helped us, if they want to double down on this issue, and say that this is immoral in some way. The debate in the United States of America is over, people want access to birth control. KLEIN: Illinois Congresswoman Jan Schakowsky -- thank you so much for joining us tonight. SCHAKOWSKY: Thank you, Ezra. KLEIN: Right after this, on "THE LAST WORD," Lawrence O`Donnell looks back on the remarkable legacy of Whitney Houston with his guest, the Reverend Al Sharpton. You`re not going to want to miss that. And here -- Newt Gingrich on Facebook. His current status, as always, he`s awesome! Stick around. (COMMERCIAL BREAK) KLEIN: What seems like a big win for the Democrats may actually be a tricky smart maneuver by the Republicans to box them in before the fall elections. I will explain, next. (COMMERCIAL BREAK) KLEIN: You know, the strangest thing happened in Washington today. Republicans in Congress actually gave Democrats something they wanted. House Republicans said they would get out of the way on extending the payroll tax cut for the many millions of Americans who work for a living. It has been set to expire at the end of the month. Leaders of the House majority say they will no longer insist that the money for the payroll tax cut come of someone`s hide. The two sides can`t come to a deal, they`ll drop the demand for cuts at all and allow the spending to go forward without -- allow the tax cut go forward without being offset by spending cuts elsewhere in the budget. Now, you can see this two ways. The first is Republicans are caving. Yay Democrats. Republicans are giving. Democrats made them look terrible on this issue last year, and they`re not going to go down that road again. That`s interpretation A -- Republicans caving. Interpretation B -- Democrats look out, it`s a trap! So which is it? A victory for Democrats or a plot by Republicans? The argument for interpretation B goes something like this -- the payroll tax cut negotiations are not just about the payroll tax cut. They`re also about extending unemployment insurance benefits and preventing a massive cut to Medicare, that for reasons frankly too inane and complex to get into here, will happen if Congress doesn`t take very quick action. The unemployment insurance benefits are hugely important to both the economy and unemployed. Economic forecasters say we could lose as much as half a point of growth if they are allowed to expire. Medicare fix is hugely important for seniors. And both were tied to the payroll tax cut negotiations. But neither is in the clean payroll tax bill Republicans are now offering Democrats. So, that`s interpretation B. Republicans are not caving. They`re just recognizing that they took the wrong hostage. So, they`re taking the U.I. benefits Medicare hostage instead. If Democrats take the clean payroll deal, U.I and Medicare will be left on the cold. But Democrats come back to the negotiating table, they no longer have the leverage of the payroll tax cut because Republicans are now on record saying they want to extend it. I asked Brad Dayspring, the communication director for Eric Cantor, whether the answer was A or B, he wouldn`t say. The Republican position he said is that, quote, "Unless there is a deal, we`ll move forward to insure no worker faces a tax hike." So, make of that what you will. So, on the one hand, maybe Republicans caved on the payroll tax cut. On the other hand maybe Republicans have an awesome plan or both hands. Maybe Democrats actually have a counter-strategy. Joining us is Brian Beutler, senior congressional reporter for "Talking Points Memo". Brian, we enjoined your coverage of this today, and thank you for coming on the show. BRIAN BEUTLER, TALKING POINTS MEMO: Thanks for having me on, Ezra. KLEIN: So, you reported a bit on the Democrats counter plan, that they say, sure, this might be Republicans might have negotiating strategy here, but they think they have a way to combat that. Explain that a little bit. BEUTLER: Sure. So the way this is going to have to work legislatively is if they can`t reach a deal, I think Democrats are perfectly happy to take this, you know, pay for payroll tax cuts, the House will pass. They`ll have to get ether a majority or super majority of House members to pass it and they`re going to send it off to the senate. Well, Senate Democrats think what we can do is we can take those other two items that you were talking about, the doc fix and unemployment insurance and tack those on. Those two items coast about $60 billion over ten years. They think that they have pay-fors, cuts that they can find elsewhere in the budget that Republicans will agree to, and then present it on the Senate floor as, you know, just a single legislative package that extends all three, but only pays for those latter two items. They can send right back over to the House and if John Boehner and Eric Cantor want to pick fight all over again and, you know, fight over the cuts that the Senate passes, they can do that. But then they`re asking for trouble that way. KLEIN: The idea basically is if Republicans send the payroll tax cut deal forward and the Democrats put the unemployment insurance benefits and they put the Medicare patch on, they can basically have a replay of the fight they were going to have anyway and say, look, are you guys really going to let a tax cut for all working Americans expire simply in order to stop unemployment insurance benefits and to stop grandma`s doctor from getting driven out of Medicare? Is that about right? BEUTLER: It first puts Senate Republicans of saying do we want to risk this whole thing by quibbling over how to pay for those other two items, the doc fix and unemployment insurance. Now, if they do, I suppose it could. And Democrats could pass the payroll tax cut. That`s $100 billion to get off their plate. There are still powerful constituents that want particularly the doc fix passed. So, if Republicans want to see we`ll pass this if you agree to partisan budget cuts, they`re going to get an earful from doctors and from who really want to make sure that those physician reimbursement rates don`t go down. And, you know, no legislator with 8.5 percent unemployment wants to see -- wants to be held to account for letting these extended benefits lapse. So, I think the Democrats have a strong hand. I think they win out here and the Democrats did sort of score a big victory today. KLEIN: So, you have a good sense of the pulse on the Hill. So, if you take the other interpretation, they look at this and say it`s an election year, we can`t be held responsible, it`s better compromise and get something done -- there`s this dream people in the White House have they call the `96 scenario in which Mitt Romney isn`t doing that well, and Eric Cantor and John Boehner become worried that they`re going to lose their House majority because, you know, President Obama is doing well and Congress`s approval ratings are in the toilet. And they begin to come to the table on big things and begin to say, look, we`re better off making deals like the Republicans did in 1996 when Clinton was on his way to winning then we continue a strategy of relentless obstructionism. So, do you see the germ of that here? Do you think this is possibly extendable to other issues? Or this is really a one offer related sort of to the unique resonance of payroll tax or the poor job the Republicans did framing their position back in December? BEUTLER: You know, I guess it remains to be seen. We`ll see how things look in March and April. This is the last really big issue where there`s a deadline where something about to expire if they don`t act now, something bad will happen to a lot of voters. That won`t happen again. So, anything -- this `96 scenario that the White House envisions that you`re talking about would require the Republicans to volunteer to come to the table to basically -- to reverse the last year of their legislating and say, all right, we`ll find pay-fors, maybe even tax increases that the Democrats want in order to accomplish these goals that President Obama has that only make it more likely he`s going to win. I really don`t see them embracing that dynamic. I rather imagine them trying to find much more modest areas of agreement that don`t require them to compromise any of the principles they laid out when they came to power. But nothing near the scale of $100 billion payroll tax cut is going to happen. And all the big stuff that really is on the horizon is going to be determined by the outcome of the election. Republicans won`t make that election margin bigger for Barack Obama. KLEIN: Brian Beutler, senior congressional reporter for "Talking Points Memo" -- thank you for coming on the show. It`s good to see you. BEUTLER: Thanks, Ezra. KLEIN: Next up, Newt Gingrich`s fabulous career now on Facebook. P.S., we`re not sending a friend request. (COMMERCIAL BREAK) KLEIN: This afternoon, Newt Gingrich posted an astounding status update on his Facebook page because, you know, he`s super digital and down with the kids. It said, "Today, I`m proud to become the first major presidential candidate to utilize Facebook`s Timeline to showcase important events in my life and the history of promoting the conservative cause." That`s a great idea. People can really get to know Newt and to see how he became the man he is and take a look at this actually. Let`s see. Now, starting in 2012, here`s his CPAC speech from last week, an endorsement from Chuck Norris, one from Herman Cain. There`s the day he won the South Carolina primary. There`s more endorsements moving to 2011. There`s Newt`s daughters talking about their dad, talking about the importance of music education. Lots of debate clips. There`s an announcement last May that he`s running for president. OK. Back to 2000, he got married to Callista in 1999, left the House of Representatives. In `98, left his job as speaker of the House. There`s a Contract of America `94. OK. I`ve seen enough of this. You know, it`s funny, he seems to have left some stuff out, some stuff are missing. He`s such a busy guy. Maybe I can help. Let`s see here. Let`s go back to 2009 and stick this in. Newt Gingrich on a health reform conference call talking up the individual mandate. We believe there should be -- we actually have a clip, I think. (BEGIN VIDEO CLIP) NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: We believe that there should be must carry, that is everybody should have health insurance. Or if you`re an absolute libertarian, we would allow you to post a bond, but we would not allow people to be free riders failing to insure themselves and showing up at the emergency room with no means of payment. (END VIDEO CLIP) KLEIN: All right. Enter, let`s get that in. OK, another thing to stick in 2009. Gingrich`s political action committee revokes its entrepreneur of the year awards for two adult entertainment companies after receiving $5,000 from them. OK. We`ll put that on. Let`s go actually here to `08. Let`s ad Newt Gingrich sitting on a couch with Nancy Pelosi to demand action on climate change. That should definitely be in there. Why isn`t that in there? OK, back in 2000 he got married. But something is easy. Oh, right, he -- let`s add the wife number two in 2000, and also add in the beginning of his affair with his current wife. That`s all the way back to 1993. I`ll just scroll over there here. Oh, wait, in `97, he left out he was the first speaker of the House to be disciplined for wrongdoing. That`s a record. You definitely can`t have that in. And we`re going to need to do some work. You know, this is going to take me all night. I have a whole other marriage to add in, and we`re running out of time. I`m Ezra Klein. Thank you for watching tonight. Rachel will be back tomorrow. You can find links to tonight`s stories on Now, stay tuned for "THE LAST WORD" with Lawrence. OK, so, marriage number one. THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. END