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The Last Word with Lawrence O'Donnell, Transcript 2/2/2016

Guests: Robert Costa, Stuart Stevens, Frank Rich, Jonathan Allen

Show: THE LAST WORD WITH LAWRENCE O`DONNELL Date: February 2, 2016 Guest: Robert Costa, Stuart Stevens, Frank Rich, Jonathan Allen

RACHEL MADDOW, MSNBC HOST: The ginormous field -- Jim Gilmore got 12 votes in the state of Iowa. So, yes, he`s not getting puffed off our list any time soon.

Currently, he`s exceeding expectations and he`s in it for the long haul. The ginormous field on the Republican side is a strange and historic thing, especially its persistence this far into the race, but it persists.

They all persist. Eleven of these people are still running. It`s never going to end. This is our life now forever.

That does it for us tonight, we`ll see you again tomorrow from New Hampshire, now it`s time for THE LAST WORD with Lawrence O`Donnell. Good evening Lawrence.

LAWRENCE O`DONNELL, MSNBC HOST: Rachel, the problem is that this week is going to be maybe the cheapest week in the campaign.

And New Hampshire is so small, they can --

MADDOW: Yes --

O`DONNELL: Walk from one event to another in New Hampshire. It doesn`t cost them much to stay alive in New Hampshire.

MADDOW: Snow tires, maybe you know --

O`DONNELL: It`s all --

MADDOW: I get Dunkin` donuts, but other than that, you`re right.


MADDOW: You`re right --

O`DONNELL: That`s it --

MADDOW: Thanks Lawrence --

O`DONNELL: Thank you Rachel. Well, tonight, we will award THE LAST WORD medal of honor for political bravery in Iowa.

And I`m telling you right now, take your time, think about it. And I don`t care how long you think about it, you will never guess who is getting that award tonight.

And Hillary Clinton won the coin tosses maybe, but no one`s sure who really won the Democratic Iowa caucuses.

On the Republican side, everyone is absolutely sure who was the biggest loser.


DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: Our country is going to hell. It`s going to hell.

UNIDENTIFIED FEMALE: Donald Trump left Iowa last night with a title that he is not used to holding, loser.

TRUMP: We finished number two.

UNIDENTIFIED MALE: And a former GOP chair in that state told me, Trump was selling the sizzle, not the steak.

TRUMP: When it comes to great stakes, I`ve just raised the stakes.

UNIDENTIFIED FEMALE: And Florida Senator Marco Rubio surprising a lot of people with a late surge, he came in a close third.

SEN. MARCO RUBIO (R-FL), PRESIDENTIAL CANDIDATE: They told me that we have no chance because my hair wasn`t grey enough and my boots were too high --

UNIDENTIFIED MALE: He`s coming into New Hampshire now with a huge target on his back.

UNIDENTIFIED MALE: When Senator Rubio gets here, when the boy in the bubble gets here --

UNIDENTIFIED FEMALE: What`s a bubble boy?

UNIDENTIFIED MALE: He lives in a bubble.



UNIDENTIFIED MALE: I hope you guys ask me some questions.



HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I am so thrilled that I`m coming to New Hampshire after winning Iowa!

UNIDENTIFIED FEMALE: Do you worry that this could be a repeat of history the way Obama upset her?

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: No, I don`t, but Barack Obama is not Bernie Sanders.

SANDERS: Now in New Hampshire, we`re going to stun(ph) the world again.



O`DONNELL: Donald Trump has not mastered the expectations game. Here he is in Iowa on Saturday.


TRUMP: Unless I win, I would consider it, a big, fat beautiful and by the way very expensive waste of time.


O`DONNELL: The big, fat, beautiful and by the way very expensive waste of time left Donald Trump four points behind Ted Cruz in Iowa last night with Marco Rubio just one point behind Donald Trump.

Tonight, Donald Trump simply lied about coming closer to first place than third place.


TRUMP: I came in second. I came in a strong second. Third was quite a bit away. I think 2,500 or something, close to 3,000 votes away.

That was a big -- there`s a big difference between second and third.


O`DONNELL: The big, fat, beautiful very expensive waste of time was actually most expensive for Jeb Bush whose campaign and Super PAC spent $2,884 per vote in Iowa, a record high for Iowa, a record high for planet earth in any election for any vote.

Jeb Bush finished at 3 percent. But today, Jeb Bush is headed into New Hampshire in a statistical tie for third place with Marco Rubio and John Kasich in the latest University of Massachusetts poll of New Hampshire voters.

That has Donald Trump at 38 and Ted Cruz at 14. In New Hampshire tonight, Donald Trump offered this explanation for some of Ted Cruz`s campaign tactics in Iowa.


TRUMP: What kind of people do we have running for office? No, it`s honestly really dishonest and I think I know why.

You know why? Because he was born in Canada!


O`DONNELL: Explains everything. Joining us now, Alex Wagner, Msnbc analyst, also with us Robert Costa; national political reporter for "The Washington Post" and an Msnbc political analyst.

And Stuart Stevens, columnist for the "Daily Beast" and a former chief strategist for Mitt Romney`s presidential campaign.

Alex Wagner, Donald Trump certainly has Ted Cruz figured out. All that dirty campaigning, that`s a Canadian thing.

ALEX WAGNER, MSNBC HOST: Yes, he`s got it all figured out, Lawrence. Can I just say, I think it would behoove the media not to sound the death bell(ph) for Donald Trump`s campaign as yet.

I mean, keep in mind that people voted for Donald Trump and people have been enamored of Donald Trump not just because he`s a winner.

But because he voices a certain -- he is the voice, he is a mouthpiece for a certain nativist conservative for whom he remains a very potent and viable candidate.

I mean, he is leading by 20 points in New Hampshire. He is leading by double digits in other -- in other polls and other early primary states.

And collectively, he and Ted Cruz, who are at extreme ends of the Republican Party got over 50 percent of the vote in Iowa.

I mean, this strain of conservatism is not going anywhere as yet.

O`DONNELL: Robert Costa, I`m fascinated about how muted Trump was tonight in New Hampshire about Canada.

That was his only reference to Ted Cruz being Canadian born. And of course, there`s a lot of French Canadians, people of French Canadian descent in New Hampshire talking about Canada up in New Hampshire is a different thing perhaps than talking about it in Iowa.

Do you detect on the Trump side that they`re going to keep the Canadian references muted or eliminate them as long as they`re in New Hampshire?

ROBERT COSTA, NATIONAL POLITICAL REPORTER, WASHINGTON POST: I think your analysis is spot on based on my reporting. Trump will be a little more muted when it comes to Canada and Cruz.

Because Cruz and his attacks on him were all about Iowa. He saw Cruz as his threat in Iowa. Here in New Hampshire, he has many main stream Republican rivals.

It`s a different kind of race mirrored to different kind of attack based on my conversations with Trump`s advisors.

O`DONNELL: Stuart Stevens, your reaction to what happened last night in Iowa.

You were -- been predicting for a long time that you didn`t think Trump was actually going to be able to win when people had to actually cast votes.

STUART STEVENS, COLUMNIST, DAILY BEAST: Yes, well, when you think about it, that was a pretty conservative estimate because Donald Trump is a very unlikely guy to win an Iowa caucus.

It turns out he didn`t win. I think New Hampshire is very perplexing. When you look at the "Des Moines Register" poll in Iowa, it didn`t have the numbers exactly right, but you could see where this was headed because of Donald Trump`s high unfavorable.

He had a one-to-one unfavorable within the Republican Party. That`s very unusual. It`s like a general election number.

So, I`m going to be very curious to see where he is with his fave, unfave after Iowa. And of course where it is in the horse race.

But the internal numbers are what I would really look at to see how people are reacting to him now, and I think we just don`t know.

O`DONNELL: He`s very angry now at Ted Cruz for saying that Donald Trump is anything but an opponent of Obamacare.

Let`s listen to what Donald Trump said about this.


TRUMP: I have been opposed to Obamacare from the day they conceived it, and Ted Cruz comes out with an ad that I`m in favor of Obamacare.

Can you believe this? Just like he did with Carson, where Carson he said left Iowa. He`s out of the race!

These guys said he quit the race, he`s gone! He`s out! Send your votes to him. What kind of people are we dealing with, with these politicians and made up liar honestly, and made up stories.


O`DONNELL: Let`s just take a look at where the made-up story comes from. This is Donald Trump on "60 Minutes" just a couple of months ago.


SCOTT PELLEY, CBS NEWS: Universal healthcare.

TRUMP: I am going to take care of everybody. I don`t care if it costs me votes or not. Everybody is going to be taken care of, much better than they`re taken care of now.

PELLEY: The uninsured person(ph) --

TRUMP: Right --

PELLEY: Is going to be taken care of how? --

TRUMP: They`re going to be taken care of.


TRUMP: I would make a deal with existing hospitals to take care of people. And you know what? This is probably --

PELLEY: Make a deal, who pays for it?

TRUMP: The government is going to pay for it.



O`DONNELL: Alex, when you finish laughing, he said in there, I don`t care if it costs me votes or not.

WAGNER: Yes --

O`DONNELL: Apparently, he does care --

WAGNER: Yes --

O`DONNELL: If it costs him votes.

WAGNER: Well --

O`DONNELL: He`s fighting for those votes now.

WAGNER: He leaves -- if you`re talking about actual policy, he leaves the door so wide open, he could be in support of anything.

I mean, that`s the problem with Donald Trump. Is that if you`ve actually pressed him for details, he might end up being more liberal than Bernie Sanders on some issues, right? Or as liberal.

And you know, now that he has some real competition and he`s feeling some sort of breathing down his neck, you know, you`re going to be forced to explain prior positions if that`s what you can call what he just said on "60 Minutes".

O`DONNELL: Robert, political reporters are the only people who hate policy questions more than candidates, and so Donald Trump gets very few of them.

But what we see there with Scott Pelley is, the policy question is the most dangerous thing that Donald Trump can face.

What do you expect Ted Cruz and the others to be trying to exploit in terms of policy positions in the next week in New Hampshire where they`ve got Donald Trump on tape as in the "60 Minutes" situation?

COSTA: The strategy on policy for Cruz is really -- it`s fundamental level strategy about ideology.

Cruz is coming out of Iowa, making the case that he`s the lone true conservative in the race who has ideological roots in the conservative movement.

And by highlighting these past comments Trump`s made about the President`s healthcare law, you have the sense that Cruz is trying to say he`s not a conservative at his core.

He may be populist on trade, he may have a hard line view on immigration, he may be conservative in how he critiques the Obama administration.

But he doesn`t have a driving ideology, that`s what Cruz thinks, long term he wins the nomination.

Because the party will lean in that direction to the hard right rather than someone who is a little more mushy when it comes to coherent ideology.

O`DONNELL: Stuart Stevens, are policy points going to matter in the next seven days in New Hampshire?

STEVENS: I think less in temperament and tone and just a sense of gravitas. I think New Hampshire has had a chance to look at these candidates and I think that`s why some of the more experienced candidates are doing well.

To me, the greatest weakness Donald Trump has is the essence of Donald Trump. As a political figure, he`s ridiculous and he hasn`t gotten less ridiculous.

He`s lazy. He hasn`t studied policy and he`s not taking this process seriously. I mean that was what stiffing "Fox" was really about.

It was that I don`t have to do this, I`m above this. And in New Hampshire, I just don`t think that works any better than it does in Iowa.

People want someone who respects not only the office they`re running for, but the process you have to go through to get that office.

And he hasn`t done any town halls. He only has three events scheduled this week so far.

You have to assume he`s going to get more, but still, I just think it`s right there at that essence.

I wouldn`t take him seriously enough to even try to debate policy with him.

O`DONNELL: Robert Costa, quickly, before the break here, you`ve been around the Trump campaign today.

How much do they regret skipping that debate in Iowa?

COSTA: They don`t regret it. They stick with their boss. But it was fascinating to watch Trump up close for three hours, followed from the tarmac here to the rally.

He stopped by a campaign office, I think he`s listening to criticisms like those from Stuart about his commitment to the race, to retail politics.

That was a big one in Iowa, a concern he didn`t have the ground game. So, today he went to an unannounced stop to his campaign office, trying to buck up his volunteers, saying, we got to win in on the ground.

That`s a new Trump, a new kind of Trump we`re seeing right now unfold in New Hampshire.

O`DONNELL: Robert Costa and Stuart Stevens, thank you both for joining us tonight, really appreciate it.

Coming up, Frank Rich joins me with his unique take on Iowa and New Hampshire. And later who was -- think about this, who was the bravest political candidate in Iowa?


O`DONNELL: On this very day in history, exactly 26 years ago this happened.


UNIDENTIFIED MALE: I wish to put it plainly that the government has taken a firm decision to release Mr. Mandela unconditionally.

The government will take a decision soon on the date of his release.


O`DONNELL: Nelson Mandela was released nine days later after 27 years in prison. He spent 18 of those 27 years at the infamous Robben Island prison off of Cape Town.

Coming up, Frank Rich has been a theater critic, he is a political analyst, he`s an executive producer of "Veep".

It will take all of his skills to analyze what we saw in Iowa last night, what we`re going to see in New Hampshire this week. Frank Rich is next.



TRUMP: On June 16th, when we started this journey, there were 17 candidates. I was told by everybody, do not go to Iowa, you could never finish even in the top ten.

And I said but I have friends in Iowa, I know a lot of people in Iowa.

I think they`ll really like me, let`s give it a shot. They said don`t do it. I said I have to do it.

And we finished second, and I want to tell you something, I`m just honored. I`m really honored.

And I want to congratulate Ted and I want to congratulate all of the incredible candidates including Mike Huckabee who has become a really good friend of mine.

So congratulations to everybody.


O`DONNELL: Joining us now, Frank Rich, writer-at-large for "New York Magazine" and an executive producer on "Hbo`s" "Veep".

Frank, first of all, the theater critic in you. A poignant performance by Donald Trump last night.

The concession speech, a very interesting take on it. In his case, the shortest speech he`s ever given.




RICH: You know, watching it just now, I thought of speaking of a show, one, many people know the music man.

It`s sort of like Harold Hill(ph) when he came to sell a bill of goods to Iowa and got his you-know-what handed to him.

O`DONNELL: Yes, it was really something. And so voters for the first time have spoken about Donald Trump and it wasn`t favorable.

And you know, there`s Ted Cruz who had the governor of the state campaigning against him, Donald Trump throwing everything at him he could possibly throw at him.

What does it tell us about the state of the Republican race now?

RICH: I don`t think a lot. I think that, you know, as we know and people were constantly saying today -- people who have won in Iowa on the Republican side have not gone on to be president in recent years.

To me the most interesting thing about it is, if you take Cruz`s vote total, Trump`s vote total, Ben Carson who some may recall still in the race and for that matter Carly Fiorina.

Who got an (INAUDIBLE) return, but you add them up, it`s more than like 62 percent of Republicans who voted in Iowa.

And that`s the far right in my view outsider vote. You take Rubio and the other so-called establishment candidates, they mustered like 23 percent of the vote.

And so you still -- you have a party that`s very conservative and it seems to me still it`s between Cruz and Trump no matter how good Rubio`s showing was yesterday.

O`DONNELL: Let`s isolate on Rubio for a minute. Isn`t he the most conservative person who is associated with that so-called establishment lane?

And is that the best place to be if that lane has any hope?

RICH: Yes, I think -- it probably is because he`s positioned himself, you know, quite far to the right.

I mean, he`s, you know, against abortion in the cases of incest and rape. He`s sort of -- he`s anti-gay marriage.

He has a very truculent neo-con foreign policy, so -- and he`s backed away from any kind of immigration reform.

So, it`s really -- he`s not that far away in views from either Cruz or Trump or Sarah Palin or the rest of them.

But he`s still not the genuine article, I think, to those on the right who prefer Cruz and Trump.

O`DONNELL: And it seems like maybe that Ted Cruz has really found the way to drive Donald Trump crazy, which we just saw in the previous segment.

Which is to actually in effect quote Trump against Trump. Trump on "60 Minutes" saying he`s absolutely for universal healthcare for everyone.

The government will take care of people, "the government will pay for it." Trump says obviously back then in September, he had no idea what those -- what that meant in terms of Republican policy orthodoxy when he was saying it.

And now in New Hampshire, he is trying to deny that he is in any way in favor of the government helping people out with healthcare.

RICH: Yes, well, I think Stuart Stevens earlier had it right. You know, it`s a lazy --


RICH: Campaign on Trump`s part. He`s completely improvised --


RICH: (INAUDIBLE), so there`s no -- there`s no there, there, and so he`s like -- he has a great instincts, some sort of animal instincts to know when he`s cornered and so he`s going to run to the other corner.

But there`s no -- there`s no intellectual foundation, and I don`t mean that in a snotty sense of being an intellectual.

I mean, just the sense of coherent thought or coherent position from one minute to the next.

O`DONNELL: Things are getting clearer, but possibly more tense on the Democratic side.

Martin O`Malley has gone on his way and so now, we have the one-on-one that everyone knew it was going to come down to.

You still can`t figure out who won last night in Iowa. What do you see happening as they move into New Hampshire?

RICH: Well, obviously, New Hampshire is almost full proof for Bernie Sanders. It`d be -- it`d be shocking if he lost it.

It would be a huge jolt to his campaign, but I don`t think that`s going to happen. It`s neighboring state and everything else about New Hampshire is sort of -- says Bernie Sanders.

When we get to South Carolina and Nevada and places like that, it will be interesting, but I -- and I suspect that Hillary Clinton will do a lot better than in these first two contests.

But the fact remains in my view, she`s a dull candidate, not terribly inspiring and I think the Democrats have a problem.

Because I think they have two leading candidates who are problematic in the national election, even though they may be running against a very Goldwater-like Republican whom they should be able to easily trounce.

O`DONNELL: And does -- do you anticipate the Democrats witnessing possibly a version of the phenomenon that George H.W. Bush suffered when Pat Buchanan run against him and lost.

But softened him up in ways that people hadn`t anticipated maybe for the general election in which Bill Clinton eventually won.

RICH: Yes, I think there is some of that. I also would argue though that Hillary Clinton softens herself up in a way because she just -- it`s not clear what her message is.

She`s not transparent about the various controversies some of which Republicans call scandals, and they`re not.

But they are controversies and things that should be straightened out.

You feel still that the whole quid pro quo were not a fund -- you know, a fundraising for the Clinton foundation of hugely-paid speaking engagements.

There`s a reason why polls say that people don`t trust her and she`s got to clear that up.

And I really feel she`s her own worst enemy, much more than either the Republicans or Bernie Sanders is.

O`DONNELL: Frank Rich, we`re going to have to leave it there for tonight. Frank, thank you very much for joining us again --

RICH: Thank you --

O`DONNELL: I really appreciate it, thanks.

RICH: Thank you --

O`DONNELL: Coming up, Hillary Clinton versus Bernie Sanders. Who really won Iowa?

Will we ever actually be able to find that out? Is there an actual answer to that question?

And there`s -- what is the -- what is the bravest thing -- the bravest thing that we witnessed in the Iowa campaign?


O`DONNELL: Who won the Iowa Democratic caucuses? Answer, we will never know. We have no idea how many people actually showed up to caucus for Bernie Sanders and we have no idea exactly how many people showed up to caucus for Hillary Clinton.

The Democratic side of the Iowa caucus is the most preposterous, most anti- Democratic exercise that occurs in American politics.

It violates the first principle of fair and free elections worldwide, which is the secret ballot, and it gets worse from there.

It is not a one person, one vote exercise. It is simply a crude method for Iowa to begin a long process of selecting delegates for the Democratic National Convention.

A process that will not actually be complete until June. We will not know for certain until June who has the most delegates from Iowa at the Democratic National Convention.

The statistical separation between Hillary Clinton and Bernie Sanders stands at two-tenths of a percent.

And that two-tenths of a percent might not represent the difference of even a single person showing up at the Iowa caucuses.

So, the results don`t currently support a claim of victory by either candidate, which leaves us with political analysts favorite way of analyzing such outcomes, the expectation game.


UNIDENTIFIED MALE: When this campaign started, Bernie Sanders was 40 points behind in Iowa, a 50/50 split for Sanders sure looks like a win from here.

E.J. DIONNE, COLUMNIST, WASHINGTON POST: If she`d gotten this outcome three, four months ago, this, you know, would have been seen as a sign of weakness.

The fact that it got so close that people realize as Robbie(ph) (INAUDIBLE) at the beginning, that Bernie is a formable candidate, she can still count this as a victory.


O`DONNELL: Joining us now, Jonathan Allen, head of community and content for Sidewire and co-author of "HRC: State Secrets and the Rebirth of Hillary Clinton".

Also joining us, David Corn; a Washington Bureau Chief for "Mother Jones" and an Msnbc political analyst.

And Alex Wagner is back with us. And during the break, I discovered something I should have realized.

Here`s what I knew when I said on TV last night, "the Iowa caucuses were dragged into national prominence by George McGovern in 1972 when he discovered he could use them as a way of demonstrating his candidacy had support.

And, who it turns out was the mad genius behind that move by George McGovern.

WAGNER: Listen. I am not going to -- I am not one for nepotism, Lawrence. My dad is from Iowa. He is very involved --

O`DONNELL: Mr. Karl Wagner.

WAGNER: Karl Wagner. And, he has a lot of Iowa pride and Iowa helped McGovern in this sort -- a lot -- McGovern needed more help.

O`DONNELL: So, Karl knew there was a strange little process there.


O`DONNELL: That could you go out that at that time no one else knew about.

WAGNER: Exactly.

O`DONNELL: And, we could show, "Hey, look, George McGovern has all this support."

WAGNER: Exactly.

DAVID CORN, MSNBC POLITICAL ANALYST: Can we blame Alex for this? Can we blame Alex?

O`DONNELL: You know what? I think we should blame Karl. You do not visit the sins of the father.

WAGNER: Yes. I was not born until decades later.


O`DONNELL: You are clean. You are clean. David Corn, this is as messy as it gets.

CORN: Yes.

O`DONNELL: I have more than once had the honor of being an election`s observer for fair and free elections in former -- this is true. And, former Soviet dominated countries and nothing that happened in Iowa on the democratic side last night would we ever have authorized. We never would have said, "Oh, yes, that is a perfectly fair and clean election."

CORN: Well, there is so much that is wrong with us that we could use the rest of the show.


CORN: The Iowa is not very representative. In the republican, it does not tend to pick winners. And, I was explaining the process to my teen-age daughter a couple of nights ago. I guess she was very bored and I got a few seconds into it. And, she said, "Wait a second. This is not fair to single parents and poor people who cannot take the night off. At least when you vote on election day you have the whole day to get to the polls."

You do not have to spend three hours sitting around and then make a declaration in front of your neighbors when you want to have a secret vote. So, there is a lot that is wrong with this. But, at the end of the day, I would like to propose a deal. I would like the Hillary people to stop calling this a glorious win for Hillary Clinton. I like the Bernie people to stop saying this proves he can become president.

O`DONNELL: Yes. That is right.

WAGNER: Good luck in that, David. Good luck in that.

O`DONNELL: Jonathan Allen, what one waiter or waitress who had dinner -- the dinner shift last night was able to vote in this. We could go on and about that. But, what is true about this is true about really all of our election apparatus everywhere. They are not really stress tested for extremely close results as we saw in Florida.

Barack Obama won this thing by 8 points over John Edwards; 9 points over Hillary Clinton. And, so there was not any real argument the next day about who really gets to say they won. Once you get these things down into these tight ranges -- especially the Iowa democratic caucuses, you do not have someone you can call a winner.

JONATHAN ALLEN, CO-AUTHOR, NRC: Yes, there are wide streams of people flipping coins when someone wins by eight points.

O`DONNELL: Yes. The coin flip came as a surprise to all of us. That was something I had not seen before and suddenly there is Steve Kornacki in our studio last night explaining to us and showing us video, Jonathan of the most recent coin flip in Iowa at that point, which Hillary Clinton won. But, where is -- Jonathan, where do you see this in the dynamics of New Hampshire? What does this poise each candidate for in New Hampshire?

ALLEN: Look, I think Bernie Sanders obviously has to win New Hampshire to get some energy behind this campaign. I think he is leading in the polls, obviously, there. It is an absolute must win for him to continue at this point. He had momentum in Iowa.

I think the Clinton people stopped the momentum. You can say it is a tie. You can say it is a virtual tie. We do not know what the delegates are going to be later. But, the AP called it for Hillary Clinton. That is usually the gold standard in terms of how the media treats things and ultimately how we will look at it until that Iowa caucus later in the year in June or July.

So, I think, you know, Bernie Sanders really has to get a win under his belt. And, there really are not states built for him to win as well as Iowa and New Hampshire are for quite a while on the map after that. I mean Vermont, obviously, is better built for him to win, but there are not that many as well both in Iowa and --

O`DONNELL: So, Alex, if we had flipped 2/10th of a percent would we be saying right now, Bernie Sanders big charge to this campaign.

WAGNER: I think on the surface it is good that Sanders gave Hillary a run for her money, but demographically if you dig in to these numbers, I mean the fact Hillary -- that it was even this close is actually a boon to Clinton`s ground game.

And, a lot of people are not saying that, but it is actually true. 43 percent of Iowa caucus goers identify as socialists. OK. Given those numbers and those head wins, it is actually kind of impressive that she made the inroads that she did. The rest of the map is going to be a lot more favorable except in New Hampshire and Vermont.

O`DONNELL: All right --

CORN: I take a little bit of a different perspective here. She has been around. She has been established and here comes a guy --

WAGNER: But, David, you know who votes in caucuses?

CORN: I know -- I still know who votes in the caucus. But three days ago, he was not a democrat. Three months --

ALLEN: George McGovern won the caucus.

CORN: But, Bernie Sanders is a Jewish socialist who calls himself that. And, I think that if Hillary Clinton could not sort of hold him back further at bay than she did by 0.2 percent and particularly with the young people, she just so, so, so lost with young people then I think -- you know, I know the demographics and she should win other states and it should not pose a threat down the road.

But I think it does show some weaknesses with her own campaign and her ability to connect with democratic voters and progressive voters, which you still have to do to win down the road primaries and to win a general.

O`DONNELL: All right. Hold your attacks on David for the next segment.


CORN: We are all friends.

O`DONNELL: Up next, can Hillary Clinton pull off an upset once again in New Hampshire?




CLINTON: I come tonight with a very, very full heart. I want especially to thank New Hampshire over the last week. I listened to you and in the process, I found my own voice.



O`DONNELL: And, that was Hillary Clinton eight years ago after her come from behind win over Barack Obama in the New Hampshire primary. Can she do it again? A University of Massachusetts -- New Hampshire Poll out today likely democratic primary voters shows Bernie Sanders at 63 percent. Hillary Clinton at 30 percent. We are back with Jonathan Allen, David Corn and Alex Wagner. So, she just has to make up 30 points now.

WAGNER: No big deal.

O`DONNELL: What do you think? She got seven days.

WAGNER: To found her voice again.

O`DONNELL: She got seven days.

WAGNER: The best thing the Clinton campaign can do at this point right now is lower expectations dramatically. So, that when she loses by 15 points, it is seen as some kind of boon. I mean I think to that piece of sound that you just played, Lawrence, this is the fundamental problem with the Hillary Clinton candidacy is that she cannot ever seem to find her voice. And, in this particular moment when there are a lot of really loud voices, it makes her inability to do so that much more pronounced.

O`DONNELL: Now, let us just set for perspective here. Eight years ago, coming out of Iowa, the New Hampshire poll coming out of Iowa showed Barack Obama at 34. Hillary Clinton at 31. John Edwards at 20. So, Hillary Clinton just had to make up three points. That is all she had to do. She did it.

She finished in New Hampshire at 39.6 percent of the vote. Barack Obama at 36.5 percent of the votes. So, she got three points ahead of Barack Obama with maybe a total movement of six points in a week, maybe something like that. So, David Corn, this is an entirely different gap.

CORN: Yes. Making up three points versus 30 points is about a ten-fold difference if my math is OK. But, the interesting thing here is that the Clinton`s have always had what they considered to be a pretty good relationship with New Hampshire.

In 1992, Clinton was the comeback kid there, not because he came in first. He came in second. The senator from Massachusetts next door Paul Tsongas won, but Clinton went through the Jennifer Flowers scandal. And, by placing second, he remained alive in the race. So, they celebrated New Hampshire.

And, then in 2008, when Barack Obama was the bandit kid out of Iowa, they gave Hillary an injection of oxygen to keep her campaign alive. And, now this year, even though Bernie is from next door, I still find it really interesting that he is just trouncing her in these polls.

And, I think, you know, it is going to be very hard for her to come back. And, she does not have a very, very long stretch. The longest stretch maybe of her lifetime between New Hampshire and Nevada and South Carolina. It is going to be a difficult two weeks for her.

O`DONNELL: You know, the advantage to next door is that people in New Hampshire already knew who John Kerry was because of media being in the senate for 20 years, all that. That is the advantage. It is just name recognition for the most part.

CORN: Right.

O`DONNELL: People in New Hampshire know who Bernie Sanders is. They knew who he was back in June. Let us take a look at where these candidates were in June of 2015. New Hampshire voters knew exactly who Hillary Clinton was. They gave her 56 percent of their support.

CORN: Yes. Wow.

O`DONNELL: In June of 2015, they gave Bernie Sanders less than half that, 24 percent. They knew exactly who both of those people are. Jonathan Allen, they changed their minds about Hillary Clinton and they changed their minds about Bernie Sanders.

ALLEN: Yes, I think they see Bernie Sanders as more legitimate as he was rising up in Iowa. I think they, obviously, do not like Hillary Clinton as much as they did before, do not think that she is better. But, I think Hillary Clinton`s New Hampshire strategy can be summed in two words. South Carolina.


She released an ad today with Eric Holder, who is about as close to President Obama as anybody, who does not currently work in the White House. Bill Clinton is going down to South Carolina later this week to meet with the state democratic legislators.

And, I think what you are going to see is Hillary Clinton campaign in New Hampshire for the next week, trying to have the gap be as small as possible with Bernie Sanders and then try to crush him in South Carolina where you have got a very high percentage of the electorate as African-American.

O`DONNELL: Alex Wagner, so how much further does the sanders campaign get after New Hampshire?

WAGNER: I mean that is a huge question, Lawrence. These were the two give me`s. We will see. I mean he is talking a lot about criminal justice reform. He is trying to make a bid with minority voters. I feel like at some point if Hillary Clinton really feels like her campaign is in trouble, President Obama is going to have to get on the campaign trail with her.

It is not just going to be Eric Holder. I mean she is literally just going to have to carry the Obama banner through the country and say, "If for nothing else vote for me because I will continue his policies."

O`DONNELL: David, Corn, do you want to make a bet as to whether President Obama would insert himself in this primary?

CORN: Wow! That would be a nuclear civil war on the party. If it would happen, it probably would not happen until March and that would mean that Hillary`s campaign has imploded. And, that point, I am not sure Barack Obama would want to identify with it.

O`DONNELL: All right. We are going to leave it there for tonight. Jonathan Allen, David Corn and Alex Wagner, the daughter of the father of the Iowa democratic caucuses.


WAGNER: The dark guards. That daughter of the dark guards.

CORN: Never forget.

O`DONNELL: Thank you all very much for joining us tonight.

Coming up in tonight`s last word, the bravest thing we have seen in the Iowa campaign.



O`DONNELL: Boko Haram terrorists killed at least 86 people on Eastern Nigeria on Saturday. The Associated Press reports that several children were among those killed. Boko Haram attacked a village and two nearby refugee camps. A survivor who says he watched some of the attackers from a nearby tree as they burned huts.

He says that he heard screams from children inside those huts as they were burned alive. The violence continued as three female suicide bombers blew themselves up among people who fled to a neighboring village according to a soldier who spoke to the Associated Press.

That same soldier says the troops, who were arrived were overcome by the Boko Haram attackers, who were better armed than the soldiers. Boko Haram attacks have killed around 20,000 people over the past six years.


O`DONNELL: Liz Cheney is trying to get back into Wyoming politics from Virginia. In 2014, she tried to oust the states popular Republican Senator Mike Enzi. Liz Cheney withdrew from that race before the primary citing health issues in her family. But, during her sixth month campaign, she was often labeled a carpet bagger.

In a Facebook post yesterday, Liz Cheney announced she is running for Wyoming`s one only house seat currently held by Congresswoman Cynthia Lummis, who has announced that she is retiring. What you are seeing here is an updated version of the post. The earlier version included the location where the post was made, Alexandria, Virginia.

That was spotted by Cody, Wyoming resident Deb Simpson who sent us this screenshot. The campaign told the local paper it was a glitch. OK. Well, today, we spoke to Deb Simpson, who is the daughter-in-law of former Wyoming Republican Senator Alan Simpson. And, she said, quote, "It goes back to character and integrity. And, I think that in the end it is the integrity issue that voters fear care about."

Up next, the bravest candidate in the Iowa caucuses, you are never ever, ever going to guess who that was.


O`DONNELL: So, who was the bravest candidate in the Iowa caucuses? The answer is in tonight`s last word. Ethanol. It is the most important in Iowa caucus campaigns. It is the one thing that all the candidates, democrats, republicans, socialists and the ones who do not admit that they are socialist agree on.

Ethanol. They all agree that we should preserve the Federal Government socialistic subsidy for corn growers and ethanol processors in Iowa. All of the Ethanol processing plants in Iowa are owned and operated by very rich people and corporations. Many of the corn growers in Iowa are very rich people and very rich corporations. They are all living on a government handout.

Ethanol is used as an additive in gasoline. Ethanol is the least efficient energy source on the planet. It takes more than a gallon of gasoline to produce a gallon of it. It does not reduce our consumption of fossil fuels. It increases the consumption. You cannot be a good environmentalist or a good capitalist and be in favor of it.

Hillary Clinton would not oppose it because she wanted to win the Iowa caucuses. And, good socialist and good environmentalist Bernie Sanders supports this very piece of very bad socialism and bad environmental policy, because he wanted to win the Iowa caucuses.

Republican presidential candidates do not pretend to be good environmentalist, but they do pretend to be capitalist. And, they support ethanol socialism, all in hope of winning the Iowa caucuses. But, last night, history was made in Iowa when for the first time ever an opponent of ethanol socialism won the Iowa caucus.


TRUMP: I am totally pro ethanol, which frankly Ted Cruz is not. And, you have thousands of jobs -- you have thousands of jobs in Iowa that a very ethanol based and very important between the bio fuels and everything else.

But, these are -- We never want to be in the grasp of OPEC again and what we can do and anything we can do to create a lot of fuel, because eventually, you know, right now you see low prices. They will be going up again. They will be going up again. But, I am very pro ethanol and Ted Cruz is not. He is anti totally.


O`DONNELL: That is right Ted Cruz not only humiliated Donald Trump by beating him, but more importantly Ted Cruz beat ethanol, which in Iowa was much harder to beat than Donald Trump. The republican governor attacked Ted Cruz on ethanol relentlessly.


GOV. TERRY BRANSTAD, (R) IOWA: We are trying to educate the people of Iowa. He has the biggest opponent of renewable fuels and he actually introduced a bill in 2013 to immediately eliminate the renewable fuel standard. I believe it would be a big mistake for Iowa to support him.


O`DONNELL: Bravery is rare in politics. The bravest thing you can do in politics is say something your audience does not want to hear. Hillary Clinton and Bernie Sanders are both in favor of raising taxes, but that is not something that their audience in democratic primaries are opposed to.

Now, advocating higher taxes is brave. No doubt about that, but it is not as brave as opposing the ethanol subsidy in Iowa. John McCain opposed the ethanol subsidy in his first run for the republican presidential nomination, which he lost.

And, then, eight years later John McCain flipped and supported the ethanol subsidy on his way to winning the republican presidential nomination. That is what is at stake when the presidential candidate is confronted with ethanol socialism.

It can mean the difference between winning and losing the nomination and the White House. So, the ethanol subsidy bends otherwise strong politicians into contorted versions of themselves. Prior to now running successfully against ethanol in Iowa was the stuff of fiction.


SEN. ARNOLD VINICK, (R) CALIFORNIA: As many of you are aware in the past I have not been a big supporter of ethanol subsidies.


I know what you want to hear. Telling people what they want to hear is the easiest thing you can do in politics, but that is not why I am here. That is not why I am running for president. Now, I know that the ethanol subsidies have been good for some of you, but mostly it is a windfall for huge conglomerates. I am embarrassed by it and I think you should be too.


O`DONNELL: I could go on and on criticizing every one of Ted Cruz`s policy positions except his position on ethanol. You can disagree with Ted Cruz on virtually everything and still recognize that standing up to the most powerful lobby in Iowa was the politically bravest thing that any candidate did in Iowa this year.

It was certainly Ted Cruz`s first contribution to good government and sadly in his case it may very well be his last. But, what Ted Cruz did last night in Iowa means that four years from now candidates for president in both parties might not decide that they have to surrender their consciousness to the ethanol lobby.

They might they do not have to support a policy that is harmful for the environment. They might decide they do not have to support a policy that makes rich agribusinesses much richer. They might actually decide that they can and should do the right thing. If we ever do the right thing and get rid of the ethanol subsidy,it might be, because last night Ted Cruz showed presidential candidates you can win in Iowa without genuflecting to King Corn.


ALAN ALDA, AS SENATOR VINICK, IN KING CORN FILM: You are not an ethanol fan?