The Rachel Maddow Show, Transcript 08/04/11

Guests:
Ezra Klein, David Corn, Michael Isikoff, Robert Frank
Transcript:

RACHEL MADDOW, HOST: Lawrence, I got to tell you, your standing
ovation for Chris Christie`s comments in your “Rewrite” tonight itself
earned a standing ovation. That was so perfectly done.

O`DONNELL: Hey, the guy deserves it. I`m not expecting him to get
another one any time soon, but this was the night.

MADDOW: I could not agree more. It was just perfectly done. Well
done, my friend. Thank you.

O`DONNELL: Thanks, Rachel.

MADDOW: And thanks to you at home for joining us this hour.

Today was one of those days when even people who do not pay attention
to business news and economics news were forced to pay attention to those
things. Today was a day that every TV network became a business news
network.

(BEGIN VIDEO CLIPS)

UNIDENTIFIED FEMALE: Take a look now, down 407 – 407. Massive
plunge.

UNIDENTIFIED MALE: Red across the board. The Dow Jones Industrial
Average down more than 400 points.

UNIDENTIFIED FEMALE: The Dow Jones Industrial Average down more than
450 points. The NASDAQ composite down right now 117 points.

UNIDENTIFIED MALE: Down nine of 10 days for the Dow.

UNIDENTIFIED FEMALE: We have the S&P 500 down more than 4 percent,
our biggest loss since 2009.

UNIDENTIFIED FEMALE: We`re hearing words like alarming, panic,
devastating.

UNIDENTIFIED MALE: Rather panic-stricken selloff continues. Look at
that, 476.54 down, and going further down.

UNIDENTIFIED MALE: Now, the Dow is down more than 500 points on this
session alone. The S&P 500 and the NASDAQ down similar percentage points.
Wow.

UNIDENTIFIED MALE: We`re down now more than 500.

UNIDENTIFIED MALE: The market is now down 503.

UNIDENTIFIED FEMALE: What a day. And you will see the headlines
tomorrow. There is no positive way of spinning this. The Dow Jones
Industrial is down 512 points.

UNIDENTIFIED MALE: Stocks dropping 4 percent on the day, concluding
their worst nine-day decline in two years` time.

UNIDENTIFIED MALE: Since December 1st of 2008 was the last time we
were down more than 400 points.

UNIDENTIFIED MALE: Blue chip suffering the 10th biggest drop on
record today, down 513 points at 11,384.

UNIDENTIFIED MALE: You can`t say you can`t be worried. That`s a big
number, 4.3 percent, to lose in a day, more than 10 percent in the last 10
days or so. That`s worrisome.

UNIDENTIFIED FEMALE: And it is 4:00 on Wall Street. Do you know
where your money is?

(END VIDEO CLIPS)

MADDOW: The Dow fell nearly 513 points today – 155 of those points
in the final very dramatic hour of trading, some of which you saw there.
That`s a drop of 4.3 percent in one day, the market`s worst day since
December 2008. And yes, December 2008 is when we were still in end of the
world territory.

The NASDAQ and the S&P 500 did even worse than the Dow did today.

Why is this happening? Why is the stock market doing this again?

It`s not because of one policy fight or some vote in Washington. This
is not even mostly a United States story. The markets here are global.

Italy now said to be in danger of defaulting on its debt and taking
out the Euro with it.

In the Spanish capital of Madrid, people are protesting austerity
measures by the government there, much like they have been doing in Greece,
which is still in trouble and still at risk of default.

Look what happened to the European stock market today, all of them
hitting their lowest levels in over a year, down an average of 3.4 percent.

Even in an environment of global markets, why couldn`t the United
States be more insulated from this if this was not primarily an American
problem? After all, we decided not to default on our debt on purpose this
week. Even if Greece or Italy might be forced to.

It`s starting to look like there are two American messages here. One
of them is just that our economy is bad. The United States may be about to
head into a double dip recession. Our economy, which has been coming back
from the horrible Wall Street disaster since early 2009, may be now
starting to crater again. Ek!

The other message here, the other warning sign that this Dow disaster
may have been for us today is not just that the United States isn`t an
exception to bad economic news around the world, that we`re in bad shape,
too. It`s that we`re not likely to get out of our bad shape anytime soon -
- at least not if action in Washington is part of what we need to do to get
out of our bad shape.

In a global economy, when all of the industrialized economies are
really linked, the world frankly needs a leader. The world needs a big
economy to have a big strong recovery to help buoy markets in other
countries right now.

And that apparently is not going to be us. At least that is the
judgment of us right now. And part of the reason why is that if there were
any big policy solutions need to turn the American economy around, to bring
down unemployment, nobody can really imagine Washington today as capable of
enacting those needed policies.

Joining us now is MSNBC policy analyst Ezra Klein, columnist for “The
Washington Post” and also for Bloomberg.

Hello, Ezra, of many new titles. Congratulations on all of that.

EZRA KLEIN, MSNBC POLICY ANALYST: Good evening.

MADDOW: How strong of a connection is there between the American
economy, American economic policy, and what we saw in the market today? Is
this mostly international news that is driving this sort of thing?

KLEIN: This is everything. And this is really the problem with it.
I mean, you heard in your intro there that we didn`t just lose 5 percent or
4 percent today. We have lost about 10 percent over the last 10 days.

And the reason is that the market cannot find anything to tell a story
of hope, of recovery.

It isn`t going to be Europe. Europe is in worse shape than we are.

It isn`t necessarily going to be China and the emerging markets, which
there had been some hope for, because it looks like China is slowing down.
And now, there`s a question of how well the Chinese government can actually
manage a slowdown in growth, which they now have to deal with in sometime.

And as we`ve seen in the last couple of weeks here, it isn`t going to
be us either, because not only is our economy in much worse shape than we
realized it was even three or four weeks ago when we got the new Commerce
Department numbers showing that our cratering in GDP over the last couple
of years have been massively understated, even as bad as we thought it was.
But our political system is deeply, deeply, deeply broken.

And even though that we in Washington all patting ourselves on the
back because we decided not to put a gun to our head and pull the trigger,
the markets are sort of wondering how we`re going to get out of this hole
after we finish playing our games.

MADDOW: Is there anything that Washington could do, if Washington was
a more functional place, that might be reassuring to the markets, that
might offer the kind of hope that would make America seem like a way out of
this mess and not just somebody else who was in the mire?

KLEIN: I think there are things we can do that would be reassuring.
I don`t know that there`s a lot we can do that would show we are the way
out. For instance, reassuring would be that we don`t continue having
unnecessary arguments about whether or not we will pay back our bills.
That would be a good thing to do. Reassuring would be to show that we
understand the severity of the global crisis and that we`re going to do the
clear things we need to do as a country to begin recovering.

So, on the one hand, we do have a deficit problem that. That is true.
We need a long-term deficit reduction. It`s good that we are getting
started on that. Although it`s bad that one side of the argument refuses
to admit that revenues might be part of the solution.

On the other hand, though, we have a huge short-term growth problem.
We have no growth, very, very high unemployment.

And we have all of these things we can do. There was a “Bloomberg”
story, one of my employers, who said – and this was fascinating. Our
yields on the Treasury, which is how much the market charges us to borrow,
are lower than they have been at any point since Eisenhower`s
administration.

And what that means is that the market cannot borrow from us quickly
enough. That we are still the safest thing to do out there, and they want
more of our debt. And so, as they beg us to give them more of our debt,
beg us to borrow, and we could use that money to rebuild our crumbling
infrastructure, to pass a large payroll tax cut, to pass a hiring tax
credit, we are saying no. We are saying that no matter how good of a deal
you give us, we refuse to take the money you`re offering and try to speed a
recovery in this country.

And no matter whether or not that would make us the hope for the
world, it would certainly make our economy better off.

MADDOW: Ezra, you know as well as anybody, that Washington is not a
unilateral thing. It`s not a monolithic thing. And when people look at
there being stasis in Washington right now, really, what`s happening is
that nothing can get through Congress.

We see also a White House, seemingly, at least saying that they are
reinvigorated in terms of focusing on unemployment, focusing on jobs.

Are there things that the White House can do, without having to go
through Congress, that would have a meaningful effect in terms of the kind
of reassurance that you`re talking about and a meaningful effect on jobs?

KLEIN: There isn`t an enormous amount they can do. They have some
money in the funds they were using to do a housing recovery. They could do
more with that. They could obviously push harder on jobs. It is obviously
not the case they have a ton of control over this Congress.

The actual actor who could do something in Washington who is
necessarily part of this gridlock is the Federal Reserve. There are a
number of extraordinary measures they can take up from price level
targeting in which the basically forces to move into a type of a catch up
growth on inflation, to a much larger version of the quantitative easing,
maybe a quantitative easing that goes further into real assets as opposed
to simply buying treasuries.

And many respected economic conservatives began pushing for this type
of thing, like Christina Roamer, the former chair of the Council of
Economic Advisers. But they appeared to be pulling back somewhat. They
appear to be trying to exit the building.

The Federal Reserve has been under a lot of criticism particularly in
the Republican Party lately, and it has clearly shocked them a little bit.
And they don`t want to necessarily lose their political independence. So,
they are not doing nearly as much as they could be or frankly should be
doing. And that`s a problem because when Congress gridlocks, they become
our only hope.

MADDOW: Ezra Klein, columnist for “The Washington Post” and for
“Bloomberg,” and MSNBC policy analyst – and tomorrow, the host of “THE
MARTIN BASHIR SHOW” here at MSNBC at 3:00 Eastern – Ezra, thanks very much
for helping us with this. I appreciate it.

KLEIN: Thank you.

MADDOW: For a second perspective, we turn now to Robert Frank,
professor of economics at Cornell University`s Johnson School of
Management.

Professor Frank, thanks for coming in. I really appreciate it.

ROBERT FRANK, CORNELL UNIVERSITY: My pleasure, Rachel.

MADDOW: Let me ask you if you agree with Ezra`s assessment there that
while this may not be an American problem that the markets were responding
to in total, there are things that the U.S. government could do to make
America more reassuring place right now in the markets.

FRANK: Absolutely we could. I think Ezra is right that the political
prospects for that happening are dim, but I think it`s very important to
keep explaining to people that the problem we face is not really a very
complicated one. We don`t have enough demand to put people to work.

Businesses aren`t spending. Why should they spend? They have already
got enough capacity to produce more than consumers want to buy.

Consumers are worried they are about to lose their jobs, if they
haven`t already. They are worried too that the price of goods and services
may rise at some point, although there`s no evidence of that. They are
holding back. They have got debt to service.

Consumers won`t lead the way. Businesses won`t. That leaves
government.

And we`ve known for over 60 years that in a situation that we`re in
now, where there`s persistent shortfall of demand, government can invest in
public works projects and other things that will get the economy back on
its feet.

It could be done. It`s quite easy to do. The workers are there who
know how to do the jobs.

The market`s happy to lend us the money, as Ezra said. They are eager
to loan us more money at very low interest rates.

The cost of debt compared to the cost of unemployment is incredibly
low. A $1 trillion deficit costs us $25 billion a year to pay the interest
on that.

If we have an extra 10 million unemployed, that`s $250 million lost
forever each year. And so, it`s a 10-1 tradeoff.

We`re focusing on deficit reduction when we really ought to be focused
on job creation. And we know how to do it.

MADDOW: Even if we all we care about is the deficit, still the
solution is to focus on jobs creation.

FRANK: Focusing on the deficit, cutting spending, that`s going to
make the deficit bigger. What we`re doing now is just unimaginably stupid.

MADDOW: Right now, it seems to me like – well, I`ll just say it this
way. We are not a show that very often leads with, what happened on the
stock market today? That is not generally the way I at least look at the
landscape of American news and think that. I very rarely think that`s the
most important thing.

I also spend a lot of time talking about what`s politically realistic
in America. So, now, we`ve got this combination where I`ve got a 500-point
drop of the Dow at the top of the show, and we`re talking about the things
that America needs to do to deal with our economy not being politically
realistic.

At what point does the economy become shocking enough, a 500-point
drop on the Dow, becomes shocking enough that it changes what`s politically
realistic? How do we understand the magnitude of a day like today on the
Dow?

FRANK: Yes. Maybe there`s a ray of hope there. If it were going to
lose 500 points, better to lose them in an afternoon than over the course
of two months. People I think are jolted into recognizing that there is a
problem.

It`s time to discuss these issues, because, again, there really are
simple solutions. A payroll tax holiday – that would put extra money into
workers` pockets. The problem is not enough demand. They`ll have more
money, they`ll spend more.

Give the employers a break for the next year on the payroll tax for
newly hired workers. That would make it cheaper to hire new people.

There are thousands of projects, bridges that are collapsing that need
to be fixed. People available to fix them.

People are happy to lend us money to finance the jobs. Materials
cheapen world markets. Machines sitting idle in the yards.

This is all quite doable, and politically, that`s the road block, as
you point out. But people shouldn`t get a free pass just by being the road
block. People should continue to point out that we could be doing
something about this, and the road blocks had better get out of the way.

MADDOW: And a sharp shock like we saw today may be the sort of thing
that gets those road blocks out of the way.

FRANK: We can hope.

MADDOW: Robert Frank, professor of Economics at Cornell University`s
Johnson School of Management, we called you on short notice today, and I
know you cancelled other plans to be here. I`m really grateful. Thank
you.

FRANK: Always a pleasure.

MADDOW: Thanks.

For his 50th birthday, I`m sure that President Obama did not ask for
the stock market to fall like Wile E. Coyote going off a cliff. That said,
when President Obama turned 47, I bet he didn`t ask for conservatives to
spend three solid years demanding to see other random forms of his birth
certificate. Please stay with us.

(COMMERCIAL BREAK)

MADDOW: The biggest story in the presidential politics of the day,
Mitt Romney and the magical million-dollar donation to him that nobody is
owning up to. That story is coming up.

(COMMERCIAL BREAK)

MADDOW: OK. It was February 1961. An 18-year-old girl from Kansas
named Ann Dunham got married against her parent`s wishes. She got married
to a Kenyan man five years older than she was. Their marriage took place
on the island of Maui in Hawaii, and was three months pregnant at the time
of the wedding.

Sometime between the wedding and when her child was actually born, in
that six-month window, Anne Dunham, while quite pregnant and only 18 years
old, decided to fly halfway around the world to Kenya to give birth to the
couple`s son there. The plan this young couple was hatching at the time
was that their baby, this terror baby, if you will, would become the
president of the United States in about 50 years.

Why give birth to him then in Kenya instead of just staying in Hawaii?
I don`t know. And you don`t either.

But they had to know in advance that he was going to run for president
50 years later, because within days of giving birth to him in Kenya, the
18-year-old Ann Dunham, or perhaps one of her co-conspirators, paid a
newspaper in Hawaii, “The Honolulu Advertiser,” to run this false birth
announcement saying that Dunham`s son was not born in Kenya, which, of
course, he was, but rather that he was bon in Honolulu.

Now, you don`t have to be born in the United States to be a governor
or a senator or any other thing, it`s just president.

So, Ann Dunham, 18 years old, or her co-conspirators, they knew in
1961 that this baby would specifically be president one day, which is why
they had to pay for the fraudulent birth announcement in 1961. Knowing he
would be president is also presumably why they named him Barack Hussein
Obama, so as to arouse no suspicion whatsoever of his maybe foreign-born
nature.

So, now, we have a foreign-born, innocuously-named president-to-be
terror baby, presumably indoctrinated for his eventual covert ascendance to
secret, illegitimate leader of the world – leading to one of the few
unanswered questions in this very clear story, which is over and above the
fake birth announcement in the newspaper, who arranged for the fake birth
certificate? The fake birth certificate? The fake birth certificate to be
put on file in the Department of Health in Hawaii?

Was it Barack Obama`s 18-year-old mother? His 23-year-old father?
Was it some of their unnamed co-conspirators? Could it have been the
terror baby himself?

The governor of Hawaii at the time was this man, William Francis
Quinn. I`m just saying. Where was he at the time?

As part of their plan to make young Barack look like he was American,
which, of course, he was not, they brought him from Kenya to Hawaii, where
they made sure he gained a little weight, sort of becomes a husky boy for a
little while. That looks more American.

And then he gets put through American-seeming education at places like
Occidental College, although that still sounds a little foreign – also,
Columbia University and Harvard Law School.

And with only the fake birth announcement and the forged birth
certificate to go by, the American public eventually stumbles into allowing
a secret foreign-born Kenyan terror baby to run for president of the United
States. And now, 50 years later exactly, maybe, the plan has worked.

I think there are a few different varieties of that story. But
broadly speaking, that is the story. That is the theory to which 13
members of Congress, 13 elected members of Congress have signed onto, the
co-signors of the birther bill to demand birth certificates and not like
that probably forged one from anyone running for president, like, say, a
certain someone who will have to run for re-election next year, so we as a
country don`t get duped again.

(BEGIN VIDEO CLIPS)

RADIO HOST: So, you believe the president is a U.S. citizen?

REP. RANDY NEUGEBAUER (R), TEXAS: You know, I don`t know. I have
never seen him produce documents that would say one way or the other.

RADIO HOST: You think he is an American citizen and a Christian? You
know what I`m saying.

REP. PAUL BROUN (R), GEORGIA: I`m not going to get involved in that.
What – I`m talking about –

RADIO HOST: You can`t say that he`s an American citizen?

BROUN: Well –

RADIO HOST: You can`t say the president is an American citizen?

BROUN: I don`t know.

UNIDENTIFIED FEMALE: What is your position on Barack Obama if he is
in fact a Kenyan born, Indonesian Muslim?

REP. STEVE PEARCE (R), NEW MEXICO: He himself raises the greatest
questions. I think that those questions need to be answered.

CALLER: My question is, do you believe that this president was born
in America? Because I have not seen enough evidence to say that he is an
American citizen. And do you believe he is a Muslim?

REP. TIM WALBERG (R), MICHIGAN: You know, I don`t know. I really
don`t know.

(END VIDEO CLIPS)

MADDOW: Is he a citizen? I don`t know. There`s this other theory
which seems so plausible.

It`s that theory, the whole like flying to Kenya to give birth to the
baby and the fake announcement – yes. It`s that theory that led
Republican lawmakers in at least 10 states across the country to introduce
birther bills, requiring more birth certificate proof before anybody allows
another terror baby on the ballot in any of those great states.

Republicans in Arizona went so far as to actually pass their bill. It
was later vote owed by Arizona`s governor, Jan Brewer. You know, come to
think of it, where was Jan Brewer in 1961?

Even Republicans laying the groundwork for presidential election run
for 2012 ran with the birther certificate conspiracy theory right from the
get-go.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: Look, this is
the easiest problem to solve. All the president has to do is show it. And
all I`m saying is there`s only one person who can attest to the
authenticity, and that`s the clerk of court in the country where he was
born.

(END VIDEO CLIP)

MADDOW: Let`s all line up to go to talk to the clerk of court.

One presidential run this year actually seemed to be based entirely on
the Kenya conspiracy theory as its whole platform.

(BEGIN VIDEO CLIPS)

DONALD TRUMP, BUSINESSMAN: Why doesn`t he show his birth certificate?
And you know what? I wish he would, because I think it`s a terrible pall
that`s hanging over him. He should show his birth certificate.

If you are going to be the president of the United States, you have to
be born in this country. And there is a doubt as to whether or not he was
born.

UNIDENTIFIED MALE: Come on.

TRUMP: Why doesn`t he show his birth certificate? Why has he spent
over $2 million in legal fees to keep this quiet and to keep this silent?

(END VIDEO CLIPS)

MADDOW: As that TV celebrity/real estate developer fake presidential
run based on the presidential birth certificate conspiracy theory occluded
all other news in America earlier this year, the White House decided to
just end all of that by producing further duplicative documentation that he
wasn`t secretly moved from Kenya as an infant to obscure the true,
inexplicable conspiracy of his birth.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: No one is happier, no
one is prouder to put this birth certificate matter to rest than the
Donald. And that`s because he can finally get back to focusing on the
issues that matter, like did we fake the moon landing? What really
happened in Roswell? And where are Biggie and Tupac?

Michele Bachmann is here, though, I understand, and she is thinking
about running for president, which is weird because I hear she was born in
Canada. Yes, Michele, this is how it starts.

(END VIDEO CLIP)

MADDOW: That was the White House correspondence dinner earlier this
year. And while those jokes at Michele Bachmann and Donald Trump`s expense
were sort of devastating, what was really the most devastating thing about
that whole time in American politics was the fact that while the president
was taking the hide off of Donald Trump at the White House correspondence
dinner, at that very moment, at that moment in time, what was he also
doing? He was also killing Osama bin Laden. So, yes, this whole thing is
over. It`s really – it`s just the dead enders now.

The Web site World Net Daily, you might remember their where`s the
birth certificate merchandise page, they made a ton of money off of the
conspiracy theory, marketing it to gullible conservatives. They have now
had to revise all of their merchandise, so it now says where`s the real
birth certificate? They are still trying to eke a few bucks out of this
thing.

You may also remember Orly Taitz, the queen birther, Orly Taitz still
trying to make a go of it as well.

Dave Weigel reporting at Slate.com today that Ms. Taitz is now asking
her followers for, quote, “information about Hawaiians or leftists who, in
theory, could have aided the Obama parents in a massive conspiracy.”

So, yes, in other words, it`s over. I will say – I thought at the
time when President Obama released the second form of the birth certificate
that that would not put this thing to rest, that it wasn`t fact-based, and
giving more facts wouldn`t help, but it did put it to rest. I was wrong.
It put it to rest.

On the president`s 50th birthday today, it is now just the dead-enders
and the profiteers at this point who is plugging this thing. There is
nobody who has any pull at all in conservative politics or Republican
politics at all who has – seriously? Are you sure?

Are you sure this is not from last – this is this week? This is from
yesterday? OK. Play it.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: Tomorrow is Obama`s birthday.
Not that we`ve seen any proof of that. We haven`t seen any proof of that.
They tell us August 4th is the birthday. But we haven`t seen any proof of
it. Sorry.

(END VIDEO CLIP)

MADDOW: Sorry. Apparently, it`s not over.

Joining us now is David corn, Washington bureau chief for “Mother
Jones” and an MSNBC political analyst.

David, it`s good to see you. Thank you for being here.

DAVID CORN, MSNBC POLITICAL ANALYST: Good to be with you, Rachel.
And happy birthday, Mr. President.

MADDOW: Happy birthday, Mr. President!

Rush Limbaugh is still a birther? I mean, isn`t birtherism over now?

CORN: Well, you know, you do think that birtherism is over. I think
you put it well a few moments ago when you said it was really relegated to
this realm of dead-enders and people who just are, you know, one step away
from Area 51 Roswell conspiracy theorists. Or even maybe one step beyond.

But, you know, the interesting to me is while birtherism is dead,
otherism isn`t dead. And you see in the Republican presidential field, you
see the conservatives, they are still out there trying to promote the
notion that Obama is really not quite American, which is a more subtle
version of birtherism. And I think in some ways more insidious.

And if you want examples, I can give you some.

MADDOW: Tell me some examples, otherism. Go.

CORN: Mitt Romney when he was talking about health care a couple of
months ago, actually after the long form birth certificate came out and he
said that he didn`t question Obama`s citizenship, what did he say? He said
– I`m going to read this here – “The Obama administration fundamentally
doesn`t believe in the American experiment.” Hmm. He doesn`t believe in
the American experiment.

Sarah Palin, just this week, said that American ideals are foreign to
Barack Obama. They are foreign. He doesn`t believe in America either.

And today, you played Rush yesterday, but today what did he do? He
compared Barack Obama to Robert Mugabe, the dictator, leader, thug, corrupt
leader of Zimbabwe. And he said Mugabe is his new role model.

And why? Because Mugabe took away white people`s farms.

Now, that`s like racism, otherism, birtherism, you know, the Kenya,
Africa connection all rolled into one sound bite. I don`t know how he does
it.

MADDOW: Do you foresee a 2012 campaign in which we get more of the
“Obama is a Muslim” stuff, in which we get more of the completely unveiled
racist attacks on the president, like some of the stuff that we saw late-
breaking in the 2008 campaign? Or do you think that the death of
birtherism actually take some of that away, since so much of that stuff was
channeled into birtherism? Do you think the stuff is going to be just as
bad?

CORN: I think you`re going to see it in the Republican primary.
Because the general public, independents, moderates, people they`re going
to be playing to in the general election don`t care about this and really
don`t, you know, aren`t susceptible I think to these types of arguments.

But in the Republican field, you have voters in the electorate, the
GOP electorate, who still want to bash Obama as some sort of foreign
subversive element who is trying to turn America into a Muslim socialist
country. It`s kind of confusing to me too.

But – and so candidates who want to get those votes, Republican
candidates, are going to have to play to those fears and paranoid
sentiments. And that`s what I think you have seen with Mitt Romney,
Michele Bachmann, and others. And they are going to find other ways of
doing that in the months ahead to get that nomination.

MADDOW: David Corn, MSNBC political analyst and Washington bureau
chief for “Mother Jones” – David, thank you for dipping into the madness
with me. I appreciate it.

CORN: Thank you, Rachel.

MADDOW: As Michele Bachmann gets mainstreamed from the really far
wing nut edge of Republican politics into a supposedly credible
presidential candidate, I think it will be fascinating to see whether or
not her past embrace of birtherism will actually be held against her being
taken seriously. It`s going to be a potpourri of things to choose from.

All right. Biggest political scoop in American news today was thanks
to some dogged following the money reporting by NBC`s Michael Isikoff. Mr.
Isikoff joins us next.

(COMMERCIAL BREAK)

MADDOW: Another day, another deal – another day, another deal, over
something that was not a crisis until congressional Republicans made it
one. Congratulations, America, we once again have a Federal Aviation
Administration. Hurray!

The FAA has been partially shut down for almost two weeks ago, 4,000
workers furloughed, hundreds of construction projects on hold, tens of
thousands of construction workers out of work, safety inspectors working
without pay and travelling on their own dime – all because House
Republicans held up reauthorization of the FAA to try to force Democrats
into letting them strip union rights from people who work for airlines and
railroads. The Democrats did not cave on that.

The deal reached today provides for no change in union rights. But
it`s only a very, very short-term deal. The Senate will approve it
tomorrow. President Obama says he`ll sign it immediately.

But then we get to have this fight all over again when this short-term
authorization runs out in just over a month.

Meanwhile, though, those 4,000 furloughed FAA workers will be back at
work as of the stroke of pen tomorrow. As for the construction projects
and those tens of thousands of construction workers, they will take a bit
longer to fire up again. A lot of those workers took other jobs if they
could find them, while the agency shut down, so it`s now a matter of
waiting to get all of those crews back together again.

Before the shutdown, they were working on improvement projects at more
than 250 American airports, things like upgrading air-traffic control
towers to make them more earthquake resistant, working on runway lighting
systems and airport surface radar systems to prevent collisions at
airports. Restarting those projects after they were stopped by Congress
will cost a ton of money, a ton of money that would not otherwise have had
to be spent.

The partial shutdown itself has been costing the government $30
million a day in lost tax revenue we`d otherwise be getting. Had it remain
unresolved until Congress returned from recess, the total cost would have
been well over $1 billion.

Local communities, too, have been trying to calculate what the FAA
shutdown means for them and their local economies. Local press reports on
this show – local press reports on this issue show worries over 1,200 jobs
on the line in Minnesota and millions of dollars worth of projects at the
Wilmington, North Carolina airport; $1 million of grant money in Maryland;
$16 million worth of projects at the Memphis airport; an aviation school in
Fort Wayne, Indiana; $8 million to extend a runway at the Detroit
Metropolitan Airport; two projects at the Peoria, Illinois airport put in
jeopardy. Those will, theoretically at least, all restart now.

After about $400 million was lost directly, plus the cost of
restarting all those projects that were stopped, plus the cost to the
economy of all of those furloughed workers and construction workers being
idled and therefore not getting paid and therefore not spending money on
things they`d otherwise spend on and thereby having – thereby having a
magnified effect on the economies around them. That is the cost incurred,
already in this particular hostage standoff over Republican efforts to
strip union rights.

After the debt ceiling deal was agreed to, finally, Senate Republican
leader Mitch McConnell told “The Washington Post,” “I think some of our
members may have thought the default issue was a hostage you might take a
chance at shooting. Most of us didn`t think that. What we did learn is
this – it`s a hostage that`s worth ransoming. And it focuses the Congress
on something that must be done.”

So, it`s the full faith and credit of the United States of America
that makes for a hostage worth ransoming or it`s the Federal Aviation
Administration. That apparently makes for a hostage worth ransoming.

This is how Republicans plan to work apparently from here on out –
hostages. They`re not saying don`t call us hostage takers. They are
saying, yes, we`re taking hostages, causing real harm to the country,
particularly to the economy, to try to get by force what they do not have
the votes for. That is how Republicans say they are going to handle the
responsibility of governing from here on out. Flotation devices are
beneath your seat.

(COMMERCIAL BREAK)

MADDOW: “The Best New Thing in the World Today,” I`m very happy to
say, is a piece of really good news for American soldiers and for their
families. Tomorrow, we`re hearing there`s also due to be some very good
news for Iraq and Afghanistan veterans. Today`s soldiers and today`s
veteran are groups about whom frankly we do not often get to say, hey,
there`s a bunch of good news to report.

But tonight, good news for them – big good news for them. I swear.
That`s coming up right at the end of the show tonight.

(COMMERCIAL BREAK)

MADDOW: One of the stranger half secret little twists this year`s
presidential politics is that the presumed Republican front-runner, the
candidate who says he is the one to beat, whomever everyone seems willing
to agree is the one to beat, actually has a lot of people on his own side
who do not like him.

In South Carolina, one group of Republicans responded to news of Mitt
Romney the front-runner by trying to draft New Jersey Governor Chris
Christie to run against him.

The Tea Party FreedomWorks says it will fund an effort to block Mr.
Romney from becoming the nominee.

Another Tea Party group, the Western Representation PAC, has a stop
Romney campaign.

Also, the Club for Growth, a heavyweight these days in Republican
fiscal policy, calls Mr. Romney a flip flopper.

And those are just the folks on the right, his own side, who do not
like Mitt Romney for his politics or the way he combs his hair or wears his
khakis or whatever.

This guy, Fred Karger, is actually completing against Mitt Romney for
the Republican nomination. Mr. Karger is a little known candidate, which
is a polite way of saying he doesn`t really have a chance.

But Mr. Karger has made what seems to be a substantive legal complaint
about Mitt Romney. In June, he wrote to state officials in Massachusetts
saying he thinks Mr. Romney may have violated Massachusetts voting laws in
2009 and 2010 when he voted in the special election for Ted Kennedy`s old
Senate seat won by Republican Senator Scott Brown. Mr. Romney voted once
in the primary and once in the general election in Massachusetts.

At the time that he cast those ballots, he claimed he was living in
his son`s basement in Belmont, Massachusetts, having sold his own
multimillion dollar estate there in April 2009. His son`s basement at the
time was an unfinished space – meaning that Mitt Romney, a
multimillionaire, was claiming himself to be the legal resident of his
son`s unfinished basement. He is claiming under Massachusetts law that his
son`s unfinished basement was the center of his domestic, social, and civic
life.

Massachusetts officials told us when we asked there would be no
investigation into these claims against Romney made by Mr. Karger. But
despite having a number of people on his own side who really ostentatiously
do not like him and are willing to say so out loud, Mitt Romney, of course,
also has his fans – people who do like him and write rather large checks
to further his political career. He has powerful and wealthy people who
really like him, want him to run and want him to win.

We`re just not necessarily allowed to know who those people are.

In March of this year, “The Wall Street Journal” reported that the
Romney campaign had begun a 15-city tour to shake the trees for big
donations, as in $50,000 big donations. The campaign set a goal of $50
million to be raised by early summer, saying they thought that would be
enough to scare off anybody thinking of wondering into Mitt Romney`s race.

We know now from campaign records that some of Mitt Romney`s very rich
friends got out their fancy checkbooks and their Montblanc pens and started
inking zeros, even though they didn`t make their $50 million goal.

One of the big donations he got was from W Spann LLC. Now, W Spann
LLC is a little mysterious. It is listed – its headquarters are listed as
being on Madison Avenue in New York City. But this group, this Spann
Company, was only created when it was registered with the state of
Delaware, land of mysterious corporations, back in March.

The incorporation papers were filed by this young Boston lawyer. We
don`t know who her client was or what this new corporation planned to do as
a business. We do know that this particular lawyer specializes in
something called wealth transfer strategies.

And the very next month, after she filed the incorporation papers for
W Spann LLC, W Spann LLC did, in fact, transfer a whole bunch of wealth.
In April, W Spann transferred $1 million – not to Mr. Romney`s campaign
directly, but to a PAC that`s being run for his benefit.

Despite seemingly to exist as a single page with three stock photos
and a giant “contribute” button and some boilerplate talked about
candidates, plural, that PAC Restore Our Future, is really all about Mitt
Romney. Restore Our Future is run by Mitt Romney`s backers. They say they
are raising money for Mitt Romney. They have had Mitt Romney solicit
donations for their pro-Mitt Romney PAC at the PAC`s events. It`s a Mitt
Romney gig.

They raised more than 12 million bucks in the first half of the year.
And 1/3 of what they raised came in million dollar chunks from four
sources, including the aforementioned mysterious W Spann LLC, a company
that seems to have done pretty much nothing besides give $1 million on
April 28th for the betterment of Mitt Romney`s political career.

On July 11th, two weeks before this Mitt Romney PAC had to file its
report with federal elections officials, two weeks before that PAC was to
reveal its donors, this company, W Spann LLC, shut down. Its wealth
transfer specialist lawyer filed this certificate of cancellation with the
state of Delaware.

So, whatever this company was supposed to be, whatever it was, after
founding itself, submitting a single $1 million check on Mitt Romney`s
behalf, the mysterious W Spann LLC was then officially dissolved. That`s
all it did as a company. That`s what the company was for, apparently – to
deliver 1 million bucks for Mitt Romney`s political benefit via a source
that soon disappeared, a source that could not be traced.

So, where did that million dollars come from? Who gave that money?

Mr. Romney`s old investment firm, Bain Capital, says W Spann was not
affiliated with them or anybody that works for them.

Next guess, anyone? Was it a Girl Scout troop maybe? You know,
cookie sales this year, I hear, were great.

Could it have been the government of China maybe? How about a Mexican
drug cartel? How about Mitt Romney himself? We do not know. We just do
not know.

Joining us now is the investigative reporter who got everybody asking
these questions today by putting these dots together – Michael Isikoff,
NBC News national investigative correspondent.

Michael, congratulations on breaking this story. Appreciate having
you here.

MICHAEL ISIKOFF, NBC NEWS NATIONAL INVESTIGATIVE CORRESPONDENT: Well,
thank you, Rachel. Good to be with you.

MADDOW: Do we know whose money this is? Is there any way to find
out? Could it be foreign money? Could it be Romney`s own money? Is there
any way to know?

ISIKOFF: It certainly could be anything. It`s actually a rather
intriguing Washington mystery. You know, you certainly laid out a – one
scenario that people have speculated about, the Bain Capital connection.

Ropes & Gray, the law firm that Cameron Casey works for, has long
represented Bain Capital, the firm that Mitt Romney once headed. Bain
Capital does have an office in that 590 Madison Avenue skyscraper that W
Spann listed its address as. But Bain Capital`s spokesman in a rather
emphatic denial to me said nobody at the firm is part of this entity.

Now, that does raise the question, could it be clients of the firm or
could it be somebody else in 590 Madison Avenue? There`s UBS. There`s
Bank of America. There`s CEMEX. There`s a lot of other blue chip firms
that have this address.

What we do know is I spoke to the management company at 590 Madison
Avenue. They say they never heard of W Spann and have no such tenant.

MADDOW: Why did you figure this out? Why did you start chasing the W
Spann connection in the first place? What about it stood out to you?

ISIKOFF: Well, first of all, the million dollars. You don`t see that
every day. And when you see a huge check like that, it does kind of raise
your eyebrows.

And I saw caught – this was filed in the Restore Our Future filings
with the FEC late on Friday. There were a couple stories over the weekend
that said people couldn`t explain where this was. And that got my juices
going. We did a full LexisNexis search, database search on Monday, and
found the Delaware court papers.

I called the Delaware secretary of state`s office. I ordered the
court incorporation and dissolution papers, saw the dates, saw the name
Cameron Casey, and was able to sort of piece what we`ve gotten so far
together.

MADDOW: Is there any evidence that this company ever did anything
other than form, give a million dollars to Mitt Romney, and disband? Is
there any evidence they did anything else?

ISIKOFF: Not in the public record. And that`s precisely the
question. And that`s why there`s going to be calls tomorrow from some
campaign finance reform groups for a Justice Department and Federal
Election Commission investigation into this.

Look, it is a federal crime to give money in the name of another.
That`s called a straw donation. The Justice Department has made vigorous
prosecutions of this over the years.

This is sort of can be a form of this. If W Spann had no other
purpose but was only set up for – to funnel money to restore our future,
the PAC, then it is arguably a straw donation. Somebody is trying to
conceal their identity by using this arguably sham company to make this
donation.

MADDOW: Michael Isikoff, NBC news national investigative
correspondent – Michael, I love the way you think. I love this work. And
the way you do it on this. Thank you for following this trailing and
thanks for joining us.

ISIKOFF: Thanks, Rachel.

MADDOW: The big recall election day in Wisconsin is Tuesday. I have
big news about that. Ed Schultz is going to be doing his show in Madison
starting on Monday.

Tonight, all the latest in the big money fight over Governor Scott
Walker`s union-busting play in Wisconsin. That`s coming up on “THE ED
SHOW.”

And here, “The Best New Thing in the World Today” is great news for
American soldiers. And American soldiers have had a best new thing coming
to them for a really, really long time, frankly. News I`m really happy to
report, coming up.

(COMMERCIAL BREAK)

MADDOW: In the decade since 9/11, about 2 million Americans have
fought in our wars in Iraq and Afghanistan – 2 million Americans is a lot
of people. It is also, however, less than 1 percent of the U.S.
population.

Our Iraq and Afghanistan veterans have borne a hugely disproportionate
burden as the 1 percent that`s them have done deployment after deployment
after deployment in the name of the 99 percent of the rest of us who have
not done these things.

In 2007, having that tiny proportion of our population fighting two of
the longest wars in our history simultaneously meant that combat
deployments were lengthened to 15 months – 15 months at a stretch in the
war zone. And the Bush administration shortened the troops` minimum
guarantee of how much time they would have at home before being deployed at
home.

Today, NBC News has learned that, finally, that is about to change in
the United States Army. Tomorrow, the Army is expected to announce that
most combat deployments will decrease to nine months total time on the
ground in the war zone. The announcement is also expected to include an
increase in dwell time, which is the time troops have at home between their
deployments.

MADDOW: To have been a soldier this decade for the United States of
America has meant two, three, six, eight deployments to war. We have never
before as a country asked this much of our men and women in uniform for
this long – shortening these deployments, increasing their guaranteed time
at home, frankly, it is “The Best New Thing in the World Today.” It`s due
to be announced tomorrow. It`s not everything, but it is a very, very
welcome start.

That does it for us tonight. Now, it`s time for “THE ED SHOW.” Have
a good night.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

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