it was great to do this with you guys. thanks for being here. that does it for this part of our state of the union coverage. we really appreciate you watching it here on msnbc. our coverage continues now with special live edition of "the ed show." good evening, ed. good evening, rachel. and good evening, americans. welcome to "the ed show" live from washington, d.c., tonight. the president has just delivered his third state of the union address. i was in the room for the speech. we are live for the next hour to analyze all of it. this is "the ed show." let's get to work. >> with anyone in this chamber to build on this momentum. i intend to fight obstruction with action, and i will oppose any effort to return to the very same policies that brought on this economic crisis in the first place. [ cheers and applause ] >> president obama drew a hardline in the sand tonight. he defined the final year of his first term by saying he will fight the republicans who plan to stop his agenda.

i spoke with democrats in washington today who were charged up tonight's speech. they wanted the president to speak about income inequality, did he that tonight. president obama hit the issue really hard. >> i will not settle for a country where a small number of americans are doing well. we need to restore the economy where everyone gets a fair shot, everyone gets their fair share and everyone plays by the same set of rules. >> that moment tonight in the speech was probably one of the biggest applause that the president got. i've been to a number of these speeches, and i've been there when there have been absolutely thunderous applause for both president bush, when he was saying there were going to be tax cuts and also for president obama when he talked about the future. i actually felt the building shake at times, and just reverberates through the chamber. tonight it was a little bit different.

the president came out tonight and basically laid out a road map for the future. what was disheartening to me is that american citizens -- there were politicians who sat on their hands tonight and gave no response when the president was talking about industries that were actually saved like the automobile industry. maybe because they didn't have a part of it, they weren't willing to share in the glory of jobs being saved and jobs being added 22 months of private sector jobs added to our economy. at one point in the speech, i thought there was no news out is there that the republicans were actually going to say okay, we're headed in the right direction. but i thought tonight, one of the most powerful moments, and lawrence mentioned it a moment ago, to be in the room and to feel the president call for time work, using the rate on bin ladin and the flag in his office with the signatures of the seals i thought was a very powerful moment. it was very important, i think most of all, the country needed that tonight.

we have seen a record number of filibust filibusters, we have seen this town unable to come to some conclusion on big issues because of the political divide in the country. tonight the president took arguably the biggest story in the world in the last year, and talked about the people who were involved in the mission, and talked about their sacrifice. they didn't care if they were republican or democrat. they didn't care about ideology, they cared about not i, but we and team. and i think the congress needed to hear that tonight. and the president called out the congress tonight on a couple different occasions, saying you're pretty much out of step with the rest of the country. they agree on things across america, you guys can't agree on anything as i paraphrase, but that's the feeling that was in the room, and then the way the president ended it, i thought was absolutely outstanding. we need some team effort to move this economy forward and get millions of people back to work in this country.

i thought he really hit it out of the park in a powerful message. all of us as americans can relate -- we can relate to the success of that mission, and fighting terrorism is an american thing. it's all about freedom and liberty. everybody should get behind that, and basically tonight the president was saying, why can't we do that? why do we let political divide get in the way? we know how good we are as a country and we know how good we are as a people. this is the moment that i thought the president was so strong tonight. >> which brings me back to where i began, those of us who have been sent here to serve can learn a thing or two from the service of our troops. when you put on that uniform it doesn't matter if you're black or white, asian latino, native american, conservative, liberal, rich, poor, gay, straight, when

you're marching into battle, you look out for the person next to you or the mission fails. when you're in the thick of the fight, you rise or fall as one unit, serving one nation, leaving no one behind. >> the president tonight talking directly to the congressional members about coming together, using that raid on bin ladin to get it done. he talked about uniform, when you put that uniform on -- i took that, when these congressional members put that pin on, they have an obligation to represent their constituents and not an ideology, i think that's what the message -- that's the message the president was sending tonight. it was a very powerful moment. let's turn now to msnbc, my colleagues, so great to work with all of them, rachel maddow,

reverend al sharpton and chris matthews host of "hardball." chris, the emotion tonight inside the rotunda was not as great as it was in other speeches, but the ending was very, very powerful. what did you take, and the president, of course, covered a lot of ground tonight. what were some of the things that really hit you tonight? >> there were so many points to this speech, i think you're right about the optimism and call to duty and patriotic call to attention. there were very interesting shots in it, i thought. one of them was, this thing that came out of nowhere, to me, having worked up there for all those years and covered it, insider trading by members of congress. i mean, they must have -- the wind must have come out of them when they heard that. here's an attack, it's an attack, institutionally against them that there is some sort of insider trading going on up there where they're benefiting from their knowledge of what's going on in committee work, and

going off and investing quickly in some sort of day trading or whatever in stocks. i have never heard any reference to it before in my life, anything can go on as far as i know, but to make that kind of direct shot on national television with this huge audience, suggesting he knows where they live, he's got something on them, he's about to use against them. i thought it was basically a preparation for a harry truman style campaign this fall, he's going to run against congress as an inning sti tugs, not just a filibuster, not just the foot dragging and scorched earth, but the institution itself, the morality, insider trading, that was tough stuff. and i wonder what he's up to, if he has something that he'sgoing to work on here. but i tell you, the members of congress, their wives and spouses must have heard that. when they go home, they're going to say, what is this the president is talking about, insider trading on capitol hill. do you know something about it, dear. it was a wild statement, i want to know what's behind it.

>> rachel, your thoughts on that? >> when the president talked about the corrupting influence of money and politics, and, of course, we all look to the supreme court justices and say, is this going to be the second annual response on citizens united. instead he went to that insider trading piece, that comes out of an investigative piece on "60 minutes" not that long ago, that made some steaming allegations against members of congress on both sides of the aisle, saying they were benefiting from things they would only know because they were members of congress. the immediate response to that "60 minutes" piece is that there was bipartisan legislation that they would crack down on this problem in the height of that piece it's going to move very fast, and then it's petered out and died. i do think the president's calling them out, but it's

another one of those things where, it's a sort of perceived, common sense reform to restore faith in government, republicans and democrats don't substantively disagree, there's no reason congress shouldn't work well enough to get that passed. >> he also talked about bunglers and others in terms of setting a whole new standard. the powerful parts of the speech, clearly -- rachel said during the speech he channelled some reagan, and kennedy-esque, i would guess, chris would say in some parts. i also think he was obama-like, when he got into these people that are fighting in the military, we're not looking at their color or their party, that was obama 2004. that's the obama america met that was calling for people to grow behind their differences and be on a common mission. i think that the more he is obama like, the better he is,

and the more potent he is politically. >> we knew going into the speech that the president was going to hit the job issue. he was also doing it with the backdrop of a lot of conversation about taxes in this country. and a conversation about income inequality. here's the president talking about income inequality. >> you can call this class warfare all you want. but asking a billionaire to pay at least as much as a second in taxes, most americans would call that common sense. when americans talk about folks like me paying my fair share of taxes it's not because they envy the rich. it's because they understand when i get a tax break i don't need and the country can't afford, it either adds to the deficit or somebody else has to make up the difference, like a senior on a fixed income. >> i tell you what, where the republicans were sitting, you could have heard a pin drop on that one. chris matthews -- >> yeah, i thought he was --

>> is the president disarming the class warfare attack that he seems to be getting a lot? >> i thought he was watching our tv ads on msnbc, common sense is our punch line, the spike lee ads we've all done. he says he doesn't watch tv, somehow he's talking like our ads, you know, so -- >> well, he talked about rachel's ad and the hoover dam. >> it's all about the hoover dam. >> that's right -- >> maybe it's like they're sending the scripts over, he seemed to know the wording, geez. >> i have to tell all of you, i ran into a gentleman tonight, he grabbed my arm, he said, ed, how are you? i said great so. he said, i'm john favreau's dad. he's a speech writer, he said this is the first time i've been able to be up in the gallery. he said, what did you think. i said, wait a minute i want to know what you thought. he said my son hasn't slept for

a month, he's been up every night doing this for the last month, it's a speech that they really had to get right. when you look back after hearing that, a dad talking about a son as a speech writer, seeing what the president did tonight he covered a lot of ground. he gave labor a good word, he talked about manufacturing. chris, let me ask you, there's more manufacturing in this speech than what we've seen in more than a decade, don't you think? >> he's listing the need to bring back job opportunities for kids coming out of high school. john favreau, when i gave my commencement speech at holy cross, he was graduating he gave a great speech, john favreau. i'm proud of how far he's come. i think manufacturing is it, i talk about the neighborhoods i grew up in in the city. a lot of african-american kids don't have the job opportunities when they turn 18 that our

parents and grandparents did. same neighborhoods, no jobs. >> we have to wrap it up. thanks for joining me. i appreciate it so much. share your thoughts on twitter @theedshow. we want to know what you think. sarah ferguson was on our show last week to talk about her governor's radical plan to defund her school. she was sitting with the first lady.

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how easy breezy beautiful is that? trublend...from covergirl. in the six months before i took office, we lost nearly four million jobs. and we lost another four million before our policies were in full effect. those are the facts. but so are these. in the last 22 months, businesses have created more than three million jobs. >> that was president obama

talking about his record on jobs. senator bernie sanders joins me tonight. senator, thanks for your time. thanks for coming over at this hour. the president -- i want to talk about some of the hits that he has taken from the right wing. obama care is what they call it. they all talk about repealing it. tonight the president made it very clear he doesn't want to go back. how important was that, to make sure, look, we've come this far? we're not turning around. >> we've had a dysfunctional health care system, 50 million americans no health insurance, millions more that are underinsured. 45,000 people dying every single year because they don't get to a doctor on time. what do the republicans say about health care, cut medicare, medicaid, repeal the health care reform bill. that's insane. i think the health care reform bill is a step forward. we have to defend it. we're the only country in the industrialized world that

doesn't have a health care program yet we spend almost twice as much on health care per capita. >> the president talked about the payroll tax cut, the tax code and taxes have been in the news a lot in the last 48 hours, did he go far enough? making the case, you you know, that graph i show on tv, the vulture chart, the red line and the blue line, did he address it tonight? >> in my view, he probably could have addressed it more. the american people are beginning to catch on, there's something fundamentally wrong in our society when so few have so much and so many have so little. to be talking about asking finally the richest people in this country to be paying their fair share, it's an important step forward. >> he's not going to get any help on that, is he? this was as much about wing the minds and hearts of the american

people to send us in the right direction as it was getting any legislation done. >> well, clearly in their hearts and souls, the republicans are there to defend the wealthiest people in this country. i'm not sure that if we can't -- if we can create the kind of grass movement and public consciousness that it is insane to be talking about more tax breaks for the rich when we have an increased number of people living in poverty when we need to invest in job creation. >> the president said, we can't have it both ways, he's talking about the tax code, he's talking about the tax rates, he's talking about the spending. >> right. >> he asked tonight for us to take half the money we spend on military, and turn it into nation building here. how does that play? >> i think that's exactly right. i think what he's saying on one hand, we have got to pay off our debt, that's right. on the other hand, we have got so invest in rebuilding our infra structure, creating millions of jobs, transforming

our energy system. i think it was exactly right on that issue. >> where was he weak tonight? >> well, i'll tell you where he was weak. i get nervous when the president talks about working with republicans about reforming entitlement programs. you know what that really means? let's be frank, that means cuts in social security, medicare and medicaid. >> are they come something. >> if he proposes that, i will be leading the opposition against that. social security has not contributed one nickel to the deficit because it's funded by the payroll tax, has a $2.5 trillion surplus, i will defend to -- >> he didn't say that tonight? >> he didn't say it, but it's code language out there. when you work with republicans to reform entitlement programs, that's the code word. >> was he not strong enough on the big three tonight? >> of course he was not strong enough. he should have gotten up there and said, you know what, in the midst of a terrible recession, i promise you we are not going to cut one nickel of social security, medicare and medicaid. we are going to move toward deficit reduction, we are going

to do it in a way that is fair and responsible. ask the wealthy to pay their fair share of taxes and end these absurd corporate loopholes. >> thanks for joining us tonight. next an exclusive interview with white house domestic policy council director cecilia munoz. taxes were a big part of the president's speech tonight. mitt romney released his tax returns today. richard wolffe and ezra klein will help us take a look at what it all means.

in a time when other countries are doubling down on education, tight budgets force states to lay off thousands of teachers. we know a good teacher can increase the lifetime income of a classroom by over $250,000. a great teacher can offer an escape from poverty to the child who dreams beyond his circumstance. every person in this chamber can point to a teacher that changed the trajectory of their lives. most teachers work tirelessly with modest pay, sometimes digging into their own pocket for school supplies just to make a difference. teachers matter. >> one of those unselfish teachers making a difference attended the state of the union address as a guest of the first lady, michelle obama.

we introduce you to this teacher, sarah ferguson on the ed show last week. she's a teacher from chester-upland school district in pennsylvania who volunteered to work for free when the school district ran out of money and the state refused to help. sarah ferguson is with us here in studio tonight along -- i just have to tell you, it's an honor to have you here. i was so moved tonight when i saw you at the state of the union, because it's a story that really had to get out. how did you you get there tonight? how did this happen? >> thank you so much. it really was you. it was this show, it was the attention that we got from so many people all across the country who know that it won't stop with chester-upland. if we don't stop it, there will be other school districts right behind us. so you brought attention to what was going on and it got results for us. >> the president tonight, when he was talking about teachers,

about the sacrifices they make. how important is that, do you think? >> very important, the fact that i was in that box as a representative for my school district, for my students, and for the other school districts across this country who are suffering the same plight. the fact that he had me there, and the first lady had me there tonight shows their commitment, and that they know what we're going through. >> the president voiced strong support for teachers, here's more. >> teachers matter. so instead of bashing them, or defending the status quo. let's offer schools a deal. give them the resources to keep good teachers on the job, and reward the best ones. and in return, grant schools flexibility to teach with creativity and passion. to stop teaching to the test, and to replace teachers who just aren't helping kids learn.

that's a bargain worth making. >> two things struck me in that portion of the speech, sara. that was give me the resources, give the teachers the resources, that's been a problem in your district in many districts across the country. >> it sure has. we've lost 40% of our staff. we don't have music programs, there's no band. there's no library. there's no art. we need resources to be able to replace those programs, early childhood, before school programs, after school programs. have the latest technology, and just books, supplies, all of the things that the students need. >> and he also said, stop teaching to the test. did that ring with you? >> we want all students to do well. and we're all accountable for that. but the legislators have to be accountable for giving us the funds we need to put programs in

place to make our students successful. >> sarah ferguson, great to have you with us tonight. you are unselfish to work for no pay until your state and district gets its act together. next an exclusive interview with cecilia munoz. and still to come, donna edwards and keith ellison from the house progressive congress. we'll weigh-in on tonight's address.

good to have you with us tonight here on "the ed show." our special coverage of the president's state of the union address continues. tonight president obama celebrated the triumph of the american automobile industry. >> on the day i took office, our auto industry was on the verge of collapse. some even said we should let it die.

with a million jobs at stake, i refused to let that happen. today general motors is back on top as the world's number one automaker. and together the entire industry added nearly 160,000 jobs. we bet on american workers. we bet on american ingenuity. and tonight the american auto industry is back. >> i just want to tell you, folks, i was in that chamber tonight. and there were a lot of lawmakers who had absolutely no reaction whatsoever to the president talking about the automobile industry which saved millions of jobs in this country. joining me for her first cable interview since her appointment, cecilia munoz. you have a lot of work to do, it never ends. >> you bet.

>> how does president obama extend the kind of success that we have seen in the automobile industry, the loan that's getting paid back, and, of course, great news in the past week that general motors is the number one producer in the world. >> well, you're talking to a child of detroit. this is something personal to me, those are real jobs that got saved in the auto industry. you heard the president talking today before how we're going to expand manufacturing, this is part of the greatness of our country and our past. but it's also part of our future. not just in the auto industry, but in industries all across this country. we are a country that builds things, this blueprint the president put forward today is to ensure we are building things in the future. >> the president talked about manufacturing, in fact, i haven't heard so much manufacturing talk in any state of the union speech. talked about energy and education. what are his absolute priorities over the next year? >> well, i mean, you really saw them articulated in this blueprint.

this is a make or break time for the middle class in this country and people trying to get into the middle class. you really heard him articulate a vision that makes sure everybody gets a fair shot, everybody contributes. we also make sure everybody's playing bied same rules. those are the big picture priorities. and the outline that he gave about job training, education, manufacturing, energy, all of that fits within that framework, but it's really about realizing the vision that he articulated in kansas several weeks ago, about really becoming the kind of society that we want to become. >> what is the domestic policy council growing to do in the white house. what will be your function in trying to get jobs moving in this country in. >> we're driving a lot of the policy agenda you heard the president articulate in this blueprint to make sure this economy comes roaring back that will sustain us in the future. we'll work on education, on really elevating the profession

of teaching in this country and make sure that we are engaging community colleges and businesses to train two million workers. all of that falls within the per view of the domestic policy counsel. the work on industry is something that the domestic policy shares with our future. it's vital to our future, our health and economic stability. >> what are the hopes of the white house getting anything done on the backdrop of a record number of filibusters and obstruction, and a congressional approval level that is in the teens. it's as low as it's been for years. the president mentioned it tonight, he he basically told the congress, you're out of step with the rest of the country. there's people across the country that are for bipartisan things, and there's bipartisan feeling on some issues, yet in washington, it's a different story. so what are the hopes of getting a jobs bill passed this year? >> well, you heard from a president who's a realist, but whose door is also open. he articulated a number of priorities everyone the american jobs act is one of them that

have had bipartisan support in the past, they are things that should be able to pass tomorrow, if there's cops on the hill. you heard him articulate a vision for the country where we follow the example of the men and women in the armed forces and work together to achieve a common goal. this is a president that's going to insist on keeping the door open for that kind of participation. and he's not going to stop, he's going to make sure he's doing everything he can with the executive authority he has to move the ball forward. he made it clear, we'll be able to move it further if we work with congress, and his door is open to continue doing that. >> thank you for your time. keith ellison is here with reaction to the president's speech. and later, the politics and policy of the president's address with richard wolffe and ezra klein, especially when it comes to taxes. stay with us.

still to come on "the ed show" mitt romney released his

2010 tax returns, and 500 pages of them. richard wolffe and ezra klein will join me next to discuss them. and how much less he pays if his tax plan were enacted. and next, congressman keith ellison is here to tell us what he thought of the president's address. stay tuned. [ gargling ] oo-ay-ow. savings. savings. savings? progressive was the first to offer online quoting. you can do better.

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welcome back to "the ed show" our coverage of the president's state of the union address. president obama talked about the steady turnaround of the economy. >> in the last 22 months, businesses have created more than three million jobs. [ applause ] >> last year they created the most jobs since 2005. american manufacturers are hiring again. creating jobs for the first time since the late 1990s. >> let's turn to congressman

keith ellison of minnesota, co chair of the congressional progressive caucus. great to have you with us. a lot of newscasts -- >> always. >> a lot of newscasts are not led with the numbers that the president just talked about. he came out and laid out what he called the facts tonight. how important was it for him to do that? >> it was essential. americans need to know what he really has been doing. but he hit three critical points for me, ed. one, he got up there and said he's ready to fight for the american middle class, the working class. you may say class warfare, but i'm here to fight for the working class, talked about tax fairness, and saying the most wealthy and privileged among us have to pony up and do their fair share, and then he said he was going to fight for financial reform, and made a point of saying that richard core day's appointment was something he was proud of. to me, if you can make a little money and keep a little money, and, you know, we can get some manufacturing jobs going, that's really what we need. >> you were in the chamber, obviously. i was too, i was up in the gallery.

there was a lot of good news the president was talking about tonight that got no reaction from republicans. it was economic news, the number of jobs that have been created and saved. and then the automobile industry. i looked over the edge, i was absolutely stunned. i was looking at republicans and they sat there like, well, that's just not really that important. >> he did make a comment some people thought he shouldn't save the american auto industry. they were wrong. just ask anyone in michigan how they feel about gm returning to success. >> was the president visionary enough for this year? do we know where we're going in -- i will say that, i didn't feel like it was an election year, if i didn't know it. i mean, i didn't see -- there was not a lot of lines out there. there was a lot of talk about we as a country, as a team, as a people, we can do a lot.

and i thought that was an important message throughout, a good theme, especially the way he ended it. what do you think. >> i think he has to be who he is, that's who he is. he's a consensus builder, he wants to bring us together. what he said about manufacturing, really really thrilled me. i was excited to hear about it, i'm from detroit, michigan, i represent minnesota now. both manufacturing states, and, you know, we want -- we make stuff, we build stuff, and we're good at it. we cannot give companies that want to offshore unfair advantage, and he was taing about rewarding patriotic corporations. what about time for that? >> here's what the president said about bringing more jobs back to our shores. here it is. >> so we have a huge opportunity at this moment to bring manufacturing back. but we have to seize it. tonight my message to business leaders is simple. ask yourselves what you can do

to bring jobs back to your country, and your country will do everything we can to help you succeed. >> what does that mean? going to do everything it can -- are we going to have all kinds of tax breaks and tax credits out there? what. >> i hope it means that our government is going to help manufacturing companies that are willing to help americans, and that we're not going to help people who want to offshore jobs. now, the devil's in the details, but the sentiment, i like. >> he's talking about patriotism, isn't he? >> right, i think so. >> and in an industry that is driven by profits. people do what they do in business, it's all about labor, taking the labor overseas because it's a heck of a lot cheaper, and so -- how do we get to that point where -- what would you be willing to give businesses to bring their jobs back? >> first of all, i wouldn't incentivize offshoring american jobs, i'll tell you, ed, i have had the opportunity to travel a little bit. and people do really like american goods. when i was in saudi arabia or turkey or other parts of the world.

people like american made products, they're the best. people know you can get it cheaper in china, but can you get it better? you need to fix stuff every now and again. that's the first thing, the other thing, if you only go price on some of these country that is are paying people nothing and abusing their rights to do so, you can't beat them on that. if you're making good quality, reliable american products at a competitive price, we can compete with the world. >> did he say enough about the tax code tonight? >> i think he made the key points about, the richest have to pay their fair share, the bucket rule. no more of this, like mitt romney paying 13.9% on his gazillon dollars when secretaries are paying 35%. >> let's talk about the campaign for a second. >> all right. >> season the this the biggest golden goose the republicans have put on the table for the democrats to carve up. you have a posterboy in the name of mitt romney who is showing america what tax fairness is all about.

>> on one hand -- >> how can you lose that issue? >> well, on the one hand we got the guy who wants to call the president the food stamp president. and on the other hand we got the guy who thinks corporations are people, and has proven that he's all about the 1%. i think this is taylor made for us, we need to sleep on that, get active, get busy and play alike we're ten points behind. >> thanks so much. appreciate your time. the term fair share was a big theme in the president's speech tonight. he talked about the buffet rule. how does mitt romney's tax rate fit in all of that? we'll talk about the policy of politics and taxes with richard wolffe and ezra klein next. ♪ he was a 21st century global nomad ♪

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coming up, the president talks about income inequality on the very day mitt romney releases his tax returns. ref

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we need to change our tax codes so people like me, and an awful lot of members of congress pay our fair share of taxes. tax reform should follow the buffet rule. if you make more than a million dollars a year, you should not pay less than 30% in taxes. now, you can call this class

warfare all you want. but asking a billionaire to pay at least as much as a secretary in taxes, most americans would call that common sense. >> and finally tonight we talk about shared sacrifice, that was president obama earlier this evening talking about income inequality. meanwhile, on the campaign trail -- >> mitt romney wasn't talking about his taxes today, but the numbers tell the story. for 2010, the romneys paid $3 million in tac in taxes on an adjusted gross income of $21.6 million. >> let's bring in richard wolffe with us this evening, and also ezra klein. gentlemen, i was up on capitol hill today before the speech. and the democrats were on the edge of their seat, pretty excited they knew the president was going to cover a lot of real estate tonight and talk a lot about core issues that were important to the democrats and moving the country forward.

but they were also talking about the release of mitt romney's taxes and how this in a sense is a golden goose, and an opportunity to get the country focused on income inequality. richard, you sensed that in this town as well? >> what i saw here was a bigger play going on. we saw our president trying to talk to his base, play the politics, also be very presidential. democrats have never done this. not since the '90s, really. they've always backed away from saying we can campaign on higher taxes. we can separate out taxes from the more wealthy for fairness, and they've been afraid of doing that. this president has gone after it year after year, we'll have to wait and see how it plays out in the election. for now, the polls, 7 in 10 independent voters he lost are with him on raising taxes on the wealthy. >> the majority of americans don't believe the rich pay their fair share. doesn't romney's tax return speak to obama's talk on reform?

>> there's a contrast between what president obama and mitt romney are asking of themselves. president obama when he ran for office, his tax return in '06, which was two years before he had become president, his tax rate was 24, 25%. it was almost double what mitt romney's was, barack obama is saying, i pay almost double what mitt romney does, and i think to close the deficit i should pay more. mitt romney is saying, i pay half of what president obama pays and i should pay less. if romney had the same tax return but thought he should raise taxes on capital gains rates, wouldn't be an issue at all. john kerry thought you should let these tax cutting for the

rich expire and john kerry should pay more in taxes. >> how do the republicans turn the tide on this? if they've got the majority of the country now playing right into the democratic hands and argument of fairness and shared sacrifice, isn't this going to be making doubly tough for both newt gingrich and mitt romney on the campaign trail? >> you would think so, republicans play a lot of scare tactics. >> that's the truth, though. >> they do. but what they're doing is playing the same old trick here. they're saying this is socialism, this is unamerican from a president who doesn't look like the other presidents, you know. and they're saying this is an alien concept, and you heard mitch daniels speak to that. the american way is to let people keep their money and get the government out of the way. that's why it's interesting the president tried to preempt that, in quoting lincoln, he was saying, perhaps in a more elegant, more historic way.

the small government era is here, but it has to be a smarter government and not one that takes fringes away from community colleges. >> the democrats passed kerry interest that would counter the alternative minimum tax. they tried to fix, but, of course, it died on capitol hill just like anything else. is this an opportunity for them to bring it back, you think? >> absolutely, although it should be said it failed in the senate, house democrats passed it a number of times, it failed in senate in part with the cooperation of some conservative democrats, certainly, mitt romney's tax is going to open us up. it's why i thought it was the most fascinating tax proposal in obama's speech, was to take away tax deductions and exemptions for people making more than a million dollars, you would not be able to have things like the mortgage interest deduction, the health care exclusion from your employer, if you're making a

million dollars, under the theory, you don't need that. under the kerry rule, it would go along with that. what was fascinating, is that mitch daniels basically made the same proposal. whether or not he would say that, whether or not he would actually put it on specifically the way obama did remains to be seen. daniels in his words in the speech, said the same thing, we need to take tax subsidy as way from the rich. if that's a real place of agreement between the two parties, that's a lot of new money to close the deficit or spend on new priorities, and it's a very large increase in what the rich will be paying in taxes. >> the other thing is that this money that's over in the cayman islands and a swiss bank account told him, you better close that one, because it could be trouble for you. don't you think americans are going to be out there thinking, what's that all about? i don't have a swiss account, i don't have money in the caymans, it seems a little underhanded.

>> you could say that. most people would think that and have some justification for it. the campaign is still trying to stick to the line and say, this was not for tax avoidance, i don't know why mitt romney would have money in switzerland, it's not for chocolate. it probably was for tax reasons. tax and secrecy is why switzerland has a strong banking industry. yes, they are good at managing funds, but you can do that anywhere else in the world. they have too get their story straight week three on this thing. >> when he was in florida, he was 262 miles from his money which was offshore. i don't know if he could get there fast enough to get a withdraw out of the whole deal or not. ezra klein we're going to have you back, we want to know the political fallout of all of this, but also to break this down with both of you on another show to talk about, okay, where is the gain for the wealthy on all of this, and how does it play out? ezra klein, richard wolffe great to have you with us toni