The Rachel Maddow Show, Transcript 07/25/12
EZRA KLEIN, GUEST HOST: Good evening, Michael, and thank you. And
our thoughts are with Ed and his family at this difficult time
Thank you to you at home, as well, for sticking around for the next
hour. Rachel has the night off.
Today on the floor of the United States Senate, the top Democrat,
Harry Reid, said something that he doesn`t normally say. He said something
that is kind of unusual, actually. He said – you know what? Why don`t I
just play it?
(BEGIN VIDEO CLIP)
SEN. HARRY REID (D-NV), MAJORITY LEADER: That is poppycock.
(END VIDEO CLIP)
KLEIN: He said poppycock. The reason that Harry Reid said the
totally awesome word poppycock on the Senate floor today was because he and
the top Republican in the Senate, Mitch McConnell, were trading jabs back
and forth about which side is to blame for nothing getting done in the
Senate this year.
And when Mitch McConnell blamed that on the Democrats, well, out came
(BEGIN VIDEO CLIP)
REID: That is poppycock.
(END VIDEO CLIP)
KLEIN: That is awesome. What happened in the Senate today aside from
the poppycock reference was something truly remarkable. In a chamber that
has been essentially paralyzed by filibuster after filibuster on nearly
everything over the last two years, there were two votes held in the Senate
today that were not filibustered, that only need a simple majority to pass
– 51 votes to pass, just like the Founders intended.
And these weren`t meaningless votes, weren`t naming postal offices.
These were votes of consequence. It was about what to do when the Bush tax
cuts expire at the end of the year.
Democrats and Republicans each got the chance to put up their own plan
for a popular vote in the Senate and to see what happened.
Republicans went first. Their bill would have extended the Bush tax
cuts for everyone including all incumbent millionaires and billionaires.
That bill failed. It was defeated by nine votes including two Republicans
who crossed party lines to vote against it.
Then it was the Democrats` turn. The plan from Senate Democrats was
to extend the Bush tax cuts for all income up to $250,000. So everybody
keeps their tax cuts on that income, but millionaires and billionaires lose
their tax cut on income over $250,000. So, they keep it on the $250,000,
they lose it above that.
Hey, look at that, the Democratic bill actually passed. It passed the
Senate by a vote of 51-48.
Vice President Joe Biden was even on hand to gavel the bill through,
marking the historic occasion of the Senate kind of working.
So this was really a remarkable turn of events. The Senate was
functional today. It went as it was supposed to go. Both sides put up
their plans and in the end, one side prevailed. In this case, it was the
The only thing, as there`s a little catch I need to tell you about,
the reason Republicans allowed that vote today, the reason they didn`t
filibuster like they usually do, is because there is a rule in the
Constitution which says if any bill relating to taxes must originate in the
House. It has to begin in the House. It cannot begin in the Senate.
And this bill did not originate in the House. And that is why
McConnell didn`t filibuster. He said, quote, `The only reason we won`t
block it today, the bill, is that we know it doesn`t pass constitutional
muster and won`t become law. What today`s votes are all about is showing
the people who sent us here where we stand.”
OK, so if you thought even for a minute that the Senate was actually
doing something today, well, poppycock. There`s McConnell to remind you it
was all just posturing. Thank you, Mitch McConnell.
Meanwhile, what was happening over in the House today?
(BEGIN VIDEO CLIP)
REP. DARRELL ISSA (R), CALIFORNIA: I would ask the gentleman from
Virginia, if he would be willing – or let me rephrase that – he would not
object to a unanimous consent in the House to make a correction to what was
clearly a typographical error made by nonpartisan professional staff at the
lead counsel`s office.
REP. GERRY CONNOLLY (D), VIRGINAI: Madam Chairman, this member will
reserve the right to object at the appropriate time.
ISSA: Reclaiming my time –
UNIDENTIFIED MALE: Gentleman from California.
ISSA: Nothing could be more insincere than to pick on professional
staff on a typographical error.
(END VIDEO CLIP)
KLEIN: Well, you just saw house Democrats and House Republicans
fighting over whether a typo, a typo in a bill could be fixed or not. I
wish I was kidding. I am not kidding.
So that was Congress today. The Senate voted on a pair of totally
meaningless bills. The house fought about a typo. If any of this comes as
a surprise to you, you probably have not been paying close attention,
because this is not just a bad congress or even a pretty bad congress. I
think the case can, should, and probably must be made that this is one of
the worst congresses we have ever had in this country.
And I know people say stuff like that all the time. It just sounds
like hyperbole, but I think I can prove it. We got the number here.
There`s convincing evidence that this particular Congress, the 112th
Congress, is one of the worst of all time.
Let us begin with just the simplest measure of how much Congress is
getting done, congressional productivity. It`s the number of laws they
have passed, public laws they have passed.
This graph shows the number of public laws passed by every Congress
dating back to the 80th Congress in 1947. That Congress, by the way, was a
Congress Harry Truman called the do-nothing Congress. As you can see, it
varies every year but it`s generally in the many hundreds.
Ready for this Congress? Yes, that`s it. That tiny little bar over
there on the right, the one with the arrow.
Now, to be fair, there are still five months left in this session, but
at this rate, they`re on track to be by far the least productive Congress
in modern times. It`s the do less than the do nothing Congress.
That sort of legislative ineptitude has also led the 112th Congress to
become the single most despised Congress of all time in the eyes of the
Democratic Senator Michael Bennet of Colorado put together this handy
graph that shows this particular Congress is less popular than the IRS, the
airline industry, lawyers, less popular than Richard Nixon during
Watergate, than the banks in the oil and gas industry, than BP during the
Gulf oil spill, than Paris Hilton. This Congress is less popular than
communism and Hugo Chavez.
The only thing less popular than Congress, Fidel Castro, and he`s not
even much less popular.
On top of being historically inept and unpopular, there`s also the
matter of this Congress doing real measurable damage to the country. Do
you remember the debt ceiling debacle last year when Republicans took the
country to the brink of default for the first time? That wasn`t just an
ugly political fight. That had real world consequences.
This is what monthly job growth looked like last year. Looked a
little uneven there in the middle, it drops very far. After starting the
year off pretty strong, job growth essentially fell off a cliff beginning
in May, which is right around the time speaking John Boehner kicked off the
debt ceiling fight, as Congress debated whether America is going to pay its
bills or not, hiring slowed. Then look at that, once that fight was over,
the next month, hiring picked up again immediately.
Here`s how the debt ceiling fight affected consumer confidence. You
see that big drop in the middle of 2011? That right there is the debt
ceiling fight and it is a huge drop.
So, by having this useless petulant fight over the debt ceiling, they
tanked consumer confidence, they effectively slowed down job growth, and we
as a country lost our AAA credit rating for the first time in our history.
We just learned this week, by the way, that the debt ceiling fight has
so far cost U.S. taxpayers $1.three billion in extra borrowing costs also.
So, thank you 112th Congress for that, too.
This Congress has been so incompetent it can barely even keep the
lights on in its own building. And I mean that literally. Every year,
Congress has to pass 12 annual appropriation bills to keep the government
funded. That has to happen by October 1st.
As you can see, some sessions of Congress are a lot more successful of
doing that than others. They get three bills passed on time. I said this
Congress was bad, I didn`t say others were good.
Could we show how the 112th Congress did last year? Huh, that`s not a
graphics mistake. That is a zero. This Congress passed exactly zero
appropriations bills on time last year.
Great, one particular department of the government got it the worst,
after Democrats and Republicans failed to reach a compromise last year, the
Federal Aviation Administration shut down. In the middle of a weak
economy, 4,000 FAA workers and 70,000 airport construction workers were
furloughed from their jobs. They were out of pay and out of work until
Congress finally managed to get its act together.
This is not normal. This is not how it`s supposed to work. This
Congress has not only been historically unproductive, it has taken steps
that have directly harmed the country, that have directly harmed our
And it`s not just people like me who think this. It is the most
credentialed experts on the manner. Thomas Mann and Norm Ornstein are
perhaps the most respected scholars of Congress in Washington, period. They
have been studying, and defending and explaining and advocating for the
institution for more than four decades, and earlier this year, they came to
this joint conclusion.
Quote, “We have been studying Washington politics and congress for
more than 40 years and never have we seen them this dysfunctional.”
Joining me now, the aforementioned most credentialed experts on the
matter, Norm Ornstein, residential scholar at the American Enterprise
Institute, and Tom Mann, senior fellow in government studies at the
Brookings Institution, also the co-authors of “It`s Even Worse Than It
Looks: How the American Constitutional System Collided with the New
Politics of Extremism.”
Thank you, guys, both for being here.
JONATHAN MANN, BROOKINGS INSTITUTION: Happy to be with you, Ezra.
KLEIN: Norm, the book does something that I think is fairly
courageous given you guys have built up a lot of bipartisan credibility
over the years. And you say that what has gone wrong in this Congress is
large part is one of the two parties has become extreme. The Republicans
have simply dropped off the cliff and come to see the basic values of
governing like compromise as an anathema. Is that what`s going on here?
Is that a correct analysis of our thesis?
NORMAN ORNSTEIN, AMERICAN ENTEPRISE INSTITUTE: It is, Ezra, and
you`re right. It would have been easier to say everybody does it, a plague
on both their houses. But that`s not the reality now. We know it not just
because we kind of see it or we have some anecdotes that would express it.
In many ways, some of the Republican leaders have provided the
evidence directly for us. In particular, Mitch McConnell, who often has
strange bursts of damaging candor.
KLEIN: Mitch McConnell the Senate minority leader.
ORNSTEIN: Mitch McConnell, the Senate minority leader. And, of
course, not only said the famous my number one goal is to make Barack Obama
a one-term president, but basically made it clear after the midterm
elections that, of course, we were not going to cooperate with the
Democrats. If these things looked bipartisan at all, they would have
benefited from them.
So, there was an obvious strategy, to block, to make any victories
look ugly. And we also know Dave Obey, former chairman of the
appropriations committee, when they started to do a stimulus bill, called
in his ranking Republican member Jerry Lewis and said, we want to work with
you. Go to your members, let us know what things you like, what things you
And Lewis laughed and said, I`ve got orders from on high. We are not
going to cooperate.
There are smoking guns all over the place.
KLEIN: Tom, I look at what`s happening here and I agree with you
guys. I think the Republican Party has become very extreme. I also see a
large historic trend towards polarization, the parties getting further
apart from each other. One thing you say is there`s a mismatch between
polarized parties, the kind of act as discipline units and the rules of in
particular the Senate but Congress more generally.
And so, when I look at this, it seems to be the first thing to do is
to get rid of what we call on this show the Tarantino, but which in the
broader world is known as the filibuster.
Is that wrong? Am I barking up the wrong tree?
MANN: Well, there`s no question we have a mismatch. Our parties are
now parliamentary style. Ideologically polarized, internally unified and
Now, listen, if Mitch McConnell or John Boehner led the opposition
party in a parliament and were as aggressive and anti-negotiation as they
have been, who cares? The majority puts its program into place and is held
But in this system, a minority party can frustrate the majority and
the key to that is the Senate filibuster, which as you have written, is an
accidental element of Senate procedure. It occurred early in the 19th
century when the motion to – on the previous question was left out of the
rules. But that filibuster which was used selectively, carefully, and in
full public view for many decades, has now become a routine 60-vote hurdle
that allows a minority that can muster 41 votes over the long haul to
frustrate any effort of that majority party.
If they were willing to deal, if the filibuster requirement set up the
incentives to find some agreement between the two parties, it would be OK,
but they decided on day one they were not going to negotiate on anything.
It would be Obama`s economy and we wouldn`t have our fingerprints on it.
KLEIN: And what worries me about that, Norm, you know, is that, you
know, we just spent a fair amount of time in this segment explaining a
weird quirk of procedure. Now, most Americans are normal being humans and
correctly do not spend their time paying attention to Congress. So, I
really worry about the breakdown of accountable in our elections when
voters blaming the majority, be they Republican or Democrats for
essentially outcomes that are dictated by minority obstruction.
I mean, if you had no filibuster, you would have much more stimulus, a
different health care bill. But instead, the broad mass of voters get
angry because Congress isn`t working and they blame the majority, but
Congress tends to work often because of the minority.
ORNSTEIN: You know, one of troubling things here, Ezra, is you could
go back to the 1994 mid-term elections when a similar process of
obstruction took place with a Newt Gingrich-led Republicans against Bill
Clinton. It worked like a charm in 1994, obstruction worked even more like
a charm in 2010.
What Republicans learned in both cases is if you get people frustrated
enough, they just vote the ins out and the outs in. And now, we`re in a
situation with divided government where people are even angrier, where you
have a Congress that is in much worse repute even than the last one. Where
are voters to turn?
Figuring out who to hold accountable is fuzzy now and it`s the biggest
one we have given the way the parties are operating. They not only
gridlock and do great damage as you say, and it really is damage to the
country, the fabric of the economy, but they leave voters with little
opportunity to figure out who genuinely to blame.
And frankly, the press corps is an unindicted co-conspirator to that.
KLEIN: I cop guilty to that.
Norm Ornstein of the American Enterprise Institute, and Tom Mann of
the Brookings Institution, co-authors of “It`s Even Worse Than It Looks”,
which I have read and is terrific. And you guys should all check out,
gentlemen, thank you very much for being here.
ORNSTEIN: Thank you, Ezra.
MANN: Thanks, Ezra.
KLEIN: Republican presidential candidate Mitt Romney has a bone to
pick with President Obama`s foreign policy. At least he says he does. In
fact, he says it all the time. It`s just not clear exactly what that bone
is. That is next.
And Kim Jong-un of North Korea has taken a bride. That`s not the best
new thing in the world today. That distinction belongs to the reporting of
Lil` Kim`s big announcement by a journalist both revered ad beloved by THE
RACHEL MADDOW SHOW. Stay tuned.
KLEIN: In one word, how do the big banks feel about President Obama?
Hint, that word would not be grateful. That story plus tonight`s bit of
television daring do, the Ezra Klein challenge is coming up.
KLEIN: Mitt Romney wanted to be the Republican presidential nominee
in the 2008 election. And he failed. He got close, but he didn`t win the
nomination. Senator John McCain won.
McCain then, of course, lost to now President Barack Obama. That was
the bad news for Mitt Romney and the Republicans.
The good news is there was a lot for Mitt Romney to learn from the `08
campaign from McCain and his own example. For example, do not pick an
untested, un-vetted shoot for the stars running mate. It will not end well
Another lesson was a little less obvious and a little more personal.
One Mitt Romney needed to learn the hard way. Even if the election doesn`t
seem like it`s all about foreign policy, you have to at least appear like
you know what the heck you are talking about. You`re asking to be the
commander in chief, not the haircut in chief. So, do not confuse all of
the bad guys, all of the people that don`t like America, but don`t like
each other and roll them into one ball of evil.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: This is about Hezbollah,
Hamas and al Qaeda and the Muslim Brotherhood. This is a worldwide
jihadist effort to try to cause the collapse of all moderate Islamic
governments and replace them with a caliphate.
(END VIDEO CLIP)
KLEIN: It is not that. Half of those people hate the other half.
Sounds scary what Romney said, but it`s not true.
A couple days after revealing that rather broad misunderstanding of
geopolitics, Mitt Romney single-handedly manufactured an even bigger
embarrassment. What is the one thing you know about the war in Iraq? What
is the one thing every single reputable every foreign policy, national
security and defense expert agrees on, no matter what party affiliation?
What is the big agreed upon fact?
When the United States invaded in 2003, Saddam Hussein did not, no,
not, not, not have weapon of mass destruction.
(BEGIN VIDEO CLIP)
SEAN HANNITY, FOX NEWS: Am I the only one thinking in all of the
build-up to the war, those weapons of mass destruction got moved?
ROMNEY: It`s possible.
HANNITY: It`s possible, right?
ROMNEY: It`s entirely possible.
(END VIDEO CLIP)
KLEIN: What Sean Hannity said there was that the WMDs got moved to
Syria, and no, they did not. It`s not even remotely possible that Saddam
had WMDs at the time. Even Bush agreed it wasn`t remotely possible. It`s
just a little embarrassing.
So, now, it`s 2012 and Mitt Romney has a shot at the presidency all
over again and he basically gets a do-over. Few people remember that he
didn`t know the difference between bad guys and thought, maybe Iraq had
WMDs. Romney has a chance to prove himself a serious foreign policy guy
who should be elected president of a country that is still at war even
Now, we may not act like a country at war, but we are at war and Mitt
Romney wants to be the guy in charge of that war.
Now, for my entire lifetime, there has been a singular Republican
playbook that has been incredibly successful against Democrats and it goes
like this. Republicans are hawkish and tough and uncompromising on
security. They will protect you. Whereas Democrats are weak and they
enjoy funny kinds of sailing and all of the flip-flopping.
It would be foolish for any Republican to see the foreign policy
national security advantage to Democrats. So this year, Romney in a close
election needed to get it right. Run on the economy, sure, but don`t give
up the whole national security thing.
The problem is Mitt Romney is running against the president who
finally killed Osama bin Laden and ended the really, really unpopular war
in Iraq and who amped up the drone war like it or not, that has killed
almost every guy to hold the title al Qaeda`s number three.
So, what does Romney say about al Qaeda to differentiate himself from
the president, how does he come across tougher than President Obama? Well,
yesterday, Romney spoke to the Veterans of Foreign Wars, VFW. The topics
are the military and national security and external threats, et cetera.
Not once in his speech did Mitt Romney mention the phrase al Qaeda.
Not once. Go ahead, we have linked the transcript on our blog. You can go
there, you can hit control F, and type in al Qaeda. You will get nothing.
In anticipation of that speech, Romney campaign put out this fact
sheet telling the candidate`s foreign policy. There were lots and lots of
bullet points but again, not any mentions of al Qaeda. Control F al Qaeda,
As we speak, Mitt Romney is on a foreign tour. His own campaign is
pushing it as a big deal and a chance for the candidate to display his
foreign policy global bona fides.
Yes, there is something missing from the map, though. It makes sense
why he would go to London for the Olympics. It`s key part of his
biography, and Israel, which is a key ally, and Poland, is on the trip,
which is fine. In the words of George W. Bush, you don`t forget Poland.
But how do you go on your big presidential trip as a presidential candidate
and not going to Afghanistan? How do you not go to where we`re still at
In an interview today with NBC News Brian Williams, Mitt Romney turned
down the opportunity to criticize the president on foreign policy while
being on foreign soil and whatnot.
But if you actually compare Mitt Romney`s foreign policy and Obama`s
foreign policy, you see that while Mitt is good at using the tough sounding
words that have worked so well for Republicans for a generation, he`s less
good at actually differentiating himself from the president.
Joining us now is Spencer Ackerman, national security writer for
Wired.com`s “Danger Room”, a friend of mine, and somebody who has actually
dug deep into Romney`s foreign policy.
Spencer, it`s very good to see you.
SPENCER ACKERMAN, DANGER ROOM SENIOR REPORTER: Good to see you as
KLEIN: So, you wrote a great piece today, and the title of it was the
five things we`ve learned about how Mitt would run the world.
Number one was that he seems to run the world when it comes to
Afghanistan, Egypt, and maybe even Iran, a lot like Obama is running the
ACKERMAN: A lot like if Romney hired Obama`s aides but they had
nothing but bad things to say about themselves. That`s what you get. You
get a lot of rhetoric about how this is failed policy, this is an overly
politicized foreign policy, but I`m going to do the same thing.
KLEIN: Right. And – right, so that`s key, right? They don`t have
functional disagreements, and yet they have sort of big rhetorical
agreements. Romney said Obama has been around apologizing for America, and
a broad point he makes is that the difference between him and Obama is
resolve, it is will. That he will have the resolve in America, and there`s
nothing we can`t do if we sort of put our backs into it.
That reminds me quite a bit of early term George W. Bush. It was
about how much America wanted it. I mean, the realists in Romney`s camp,
the people who are chastened by the Bush administration, they have to be
reeling a bit from that.
ACKERMAN: And what`s even stranger about it is that if you want to
look towards the guy whose words and actions match up and have been more
consistent, that`s Obama. It`s not Romney. It`s Obama who in 2007 said he
was doing to have an all-out effort to kill Osama bin Laden with or without
Pakistan. It was Obama who said he was going to increase troop levels in
Pakistan. It was Obama who said that he was going to end the Iraq war.
Whereas, if you look at Romney then, sometimes now, sometimes last
Tuesday, sometimes next Wednesday, it`s a little different. You`ve got an
actually more hawkish Romney on Iran than you do this time around. All of
a sudden now, Russia is the biggest geopolitical foe until this new speech
at the VFW in which Iran poses the bigger danger.
It`s a little bit more difficult to get a sense of where that resolve
actually plays out. And I tell you, Ezra, I wanted to walk out on this
speech so badly. And Romney denied me the facts, figures, numbers.
KLEIN: Didn`t give you the details.
KLEIN: – a graph, it`s hard to do it.
On Iran, because he did, he said now Iran is the single biggest
threat. Obama has done a major virus attack on Iran to bring down some of
the nuclear reactors. He has been a participant in multiple rounds of
How different was what Romney proposed to do in Iran than what Obama
has proposed to do on Iran?
ACKERMAN: On the level of rhetoric, it`s very different. It`s a lot
more bellicose than Obama`s rhetoric. It`s very contemptuous of what Obama
did in terms of saying at the beginning of his presidency, that he was
going to talk to Iran without preconditions.
On the level of substance, very different. Romney didn`t rule out
negotiating with Iran. He just simply said that zero enrichment of uranium
was the goal. Didn`t really clarify whether that was the beginning of
talks or the end point to them, but didn`t immediately say the bombs are
going to drop in five minutes.
Similarly, he`s really against Russia. He`s against Obama moving
closer to Russia. However, if he backs away from that position, Russia has
every incentive as it did before the Obama administration`s drift toward
Russia to go back to helping Iran and frustrating international consensus
It`s hard to see how that knits together for Romney and his advisers,
kind of, play that away rather than deal with it head on.
KLEIN: Spencer Ackerman, national security writer for Wired.com`s
“Danger Room” and I`m sorry you were denied the opportunity to walk out
ACKERMAN: One day.
KLEIN: Maximum information, minimum lapsed time. The wonkiest two
minutes in television are coming up next.
KLEIN: You`ve probably heard the name Sanford Weill or maybe you
heard Sandy Weill to his friends. Sandy Weill is to Wall Street bankers
say to what Jerry Seinfeld is to sitcoms or Tony Bennett is to Connors.
Even if you don`t pay much attention, he`s the one you have probably
heard of. Sandy Weill used to run Citibank. He got real really, really,
really rich doing it.
And today on CNBC, Sandy Weill said that the United States government
should break up the big banks. You know, the big banks like Citi which he
Imagine Jerry Seinfeld saying there should be no more primetime
sitcoms or Tony Bennett saying no more crooning. That`s what Sandy Weill
suggested today, which leads us right into the Ezra Klein challenge where I
try to explain complicated stuff especially in the economy that seems at
first chance a little mystifying.
Tonight, what the heck they`re talking about when they talk about
breaking up the big banks. Everyone says it, Weill says it, everyone hears
it, but it doesn`t often get explained.
So, what is breaking up the big banks? How would they do it, and why
would we want to? May I have my two minutes please?
OK, there it is. Ready, set.
You have heard of all of the big banks – JPMorgan Chase, Goldman
Sachs, Citigroup, Wells Fargo, these names are big. And it means they have
as assets a really big percentage of our gross domestic product, trillions
and trillions of dolls. But what we`re worried about here isn`t just that
they`re big. It`s that they`re too big, that they are too big to fail, to
When say a bank is too big to fail, we mean it`s got so much money and
so many debts to other banks and investors that its failure could bring
down other parts of the financial system as well. That is what happened
when Lehman and AIG began to go down. When they went down, they owed so
much money to everyone else, and the very fact of their failure made other
banks fine. Banks that were fine the day were not fine the day after.
And here`s the thing, the banks are even bigger today than they were
then, before the crisis. This graph from “Bloomberg Businessweek” tells a
In `06, the five biggest banks had $6 trillion in assets. Today, they
have $8.5 trillion. That`s more than half what the entire U.S. economy
produces in a single year.
So when folks say they want to break up the big banks, it`s because
they believe a series of smaller banks would be able to fail without
threatening everyone else.
Now, there are a couple ways we could go about doing that. The
government could, for instance, tax the hell out of any bank that is bigger
than we want it to be. No bank would want to pay such a tax, so no bank
could profitably allow itself to be so big.
But then we would have a bunch of smaller banks. The problem there is
that even smaller banks can still be too interconnected to fail. They
could have so many trading partners and so many bets and so much leverage,
financial system can`t handle their fall.
And then, of course, there`s a problem of global banks which can be
huge and can go down. In other words, breaking up the banks that are
called too big too fail may or may not solve the problem because the
problem isn`t so much too big part, it`s the fail part. The challenge is
how to keep any of them from failing at all, at least in a way that hurts
us. Three seconds left. Ta-da.
And coming up next on the show, the man in charge of overseeing the
money in the banks in `08 has a lot to say about how we`re trying to
prevent fail. How we`re failing at preventing fail, and I`ll ask him to
explain Wall Street, which loved Barack Obama in `08 doesn`t seem to like
him too much this time around, even though the president has basically left
them alone to get incredibly rich all again.
The Neil Barofsky challenge is coming next.
KLEIN: All right, pop quiz.
What do gun enthusiasts and Wall Street executives have in common?
Well, for starters, there`s not anything intrinsically or fundamentally
wrong with what they do. Quite the opposite in fact. America is based on
the freedom to be a super rich banker guy, if that`s what you want to do,
or to collect firearms if that`s what you`re into.
But in both cases, what Wall Street guys and gun lovers, the rest of
the about country would really appreciate it if they would avoid being too
risky with their hobby. Because they can both do terrible, horrible damage
if they`re not careful.
Also in terms of their relationship with the government, they would
both rather not be bothered. Like at all. Ask them how`s it going and
you`re likely to get a big, what`s it to you?
There may not be a pair of groups more certain that everybody is out
to get them.
But probably their most significant commonality this election year is
that gun owners and Wall Streeters are both in super duper, unadulterated
hate with Barack Obama. Why? It`s a good question, actually.
Gun lovers hated Barack Obama back in 2008, too. They were totally
sure he is going to take away their guns as soon as he took office. But if
you look at his record of actually restricting gun ownership, Barack Obama
as president has done negative one thing to rollback gun rights. He
actually signed a law allowing people to bring guns into national parks and
wildlife refuges. But the gun lobby still hates and fears him and then
hates him some more.
As for Wall Street, they did not hate Barack Obama back in 2008. In
fact, once upon a time, a long time ago, Wall Street loved Barack Obama.
Goldman Sachs was Obama`s second largest contributor in 2008. JPMorgan
Chase was his sixth largest contradictor and Citigroup was his seventh
Not so this time around. This year, Wall Street is totally bailing on
Obama. This year, Goldman Sachs is Mitt Romney`s biggest contributor.
JPMorgan Chase is his second largest contributor. And Citigroup is his
sixth largest contributor.
So it seems something has changed between 2008 and today. The bankers
aren`t just hating the president out of some reflexive paranoia like the
gun lobby. These guys used to like Obama. They gave him tons of money in
the last election.
But if you think there`s an easy explanation, that there`s just
agreement that the Obama administration has been viciously tough on Wall
Street, you`d be wrong. Not only is there not a consensus that President
Obama has been an enemy of Wall Street, there`s an argument made in some
corners he`s been much too friendly to the finance industry.
Joining us to give voice to that argument is Neil Barofsky, who served
as a special inspector general for TARP, is a former federal prosecutor for
the southern district of New York, and is author of a new book, “Bailout:
An Inside Account About Washington Abandoned Main Street while Rescuing
Wall Street.” Mr. Barofsky is now a senior fellow at NYU School of Law.
Thank you for being here.
NEIL BAROFSKY, AUTHOR, “BAILOUT”: Thanks for having me.
KLEIN: So, Neil, please tell me if I have this wrong. You don`t seem
to have been super happy with how the bailout was conducted. I`m reading
your book, you don`t seem like a huge fan of it.
BAROFSKY: Well, no, Ezra. I mean, in almost every critical juncture
when it came to really meaningful choices in conducting the bailout, this
administration and the prior administration, there was no real material
difference between the two, consistently chose the interests of the Wall
Street banks over that of homeowners, over that of the broader economy, and
you know, we saw that time and time again, really from the day I got there.
KLEIN: And so the broad critique you make in your book when you bring
up here is that there were a bunch of moments when there was a choice of
what to do with the TARP funds. They could have gone in a direction that
was either more punitive to the banks or put much more strict regulations
on them, asked more of them, and they didn`t.
And you could argue it was because their top contributors were bankers
if you want to be cynical about it, but the bankers hate him now. They
don`t at all feel they got a sweet deal out of the administration. They
feel Dodd-Frank was intensely punitive to them. They feel that the
administration has been very aggressive in demeaning the role of the
financial industry in American life in the president`s rhetoric.
So, why – what is the reason for this gap between what you see as a
substance of the choices made on the bailout and how the bankers feel about
the bailout and the financial regulations and the Obama administration?
BAROFSKY: Well, first of all, there`s no question that the president
and his treasury secretary defended the status quo of too big to fail.
There were opportunities in regulatory reform that compelled breaking up
the banks, to try to break up this almost cartel of powerful financial
institutions that helped drive us into the financial crisis and they beat
that back at every opportunity.
But you ask a fair question. So why are they not supporting him now?
And I think that the premise here is based on looking at it and trying
to find a degree of humanity that just doesn`t exist within these
institutions, suggesting that they should be grateful for what they
You know, President Obama famously said, I`m the one thing standing
between you and the pitch forks is what he said to the 13 of the top
But look, time and time again, the banks had proven that the faith
that this administration and prior administration put in them was not
justified. You know, during TARP, again, that level of deference the
program was supposed to restore lending and put some lifeblood into the
economy, so they didn`t put in conditions. They told me repeatedly, we
don`t need fraud protections bought the banks wouldn`t embarrass
themselves. They would never risk their reputations.
Then, again, when forming the housing policies under TARP, there was
this trusting the banks by giving them control over the program and not
getting rid of conflicts of interest which they used to shake down
homeowners, squeeze out savings and throw them on the foreclosure scrap
And now, now we`re saying, well, gee, isn`t it surprising that they`re
not grateful. Of course they`re not grateful. What they`re interested in
two things. One, they want to back a winner. And they look at the economy
of the United States and they think, right or wrong, that Romney is the
horse to back.
But more importantly, Romney is offering them a better deal
potentially from their perspective than Obama is. Even Dodd-Frank, even
though it protected them and put them in a situation where they continue to
have this incredible advantage and their size being too big to fail, did
have good restrictions in it. I mean, the Consumer Protection Bureau is a
very positive thing. And they hate anything that could possibly eat into
their profits and their ability to exploit their size and power.
And Mitt Romney is offering a repeal of Dodd-Frank.
So Dodd-Frank was actually very helpful in preserving the status quo
for the banks, but better to have nothing, better to go back to the go-go
days of 2006 and 2007 where they could print money off the backs of
American homeowners. But I don`t think it`s not – and also, I think it`s
really hard to underestimate how thin-skinned bankers are. It`s something
KLEIN: Yes, (INAUDIBLE) amazed by within. But we will have to
continue, I fear, this conversation another time. I`m being told we got to
run to a commercial.
Neil Barofsky, former special inspector general for TARP and author of
the new book “Bailout” – thank you so much for being here tonight.
BAROFSKY: My pleasure. Thanks for having me.
KLEIN: You know how this is called the great recession, not the
depression, not quite yet? Well, now, we`re really getting ready to relive
another defining event of the 1930s, Tom Jones style. I`ll explain next.
KLEIN: You know that old joke, and I`m not saying it`s a good joke,
about how Greenland and Iceland should switch names because Iceland is
actually green and Greenland is actually frozen or at least Greenland is
mostly frozen a lot.
Tonight, I must give you the unsettling news that now in our scary hot
summer, Greenland is suddenly not so reliably frozen. NASA took this
picture of Greenland`s ice sheet from space recently. The ice sheet
typically melts some in the warmer months. The white part is what remained
frozen when the NASA satellite went by on July 8th. It`s about 40 percent
of the typical whole.
Four days later, another NASA image has the ice sheet all but gone.
Almost all of it had melted. It had all melted in four days. Scientists
think the ice sheet has already begun icing again. They say it has
happened before in the 1800s.
Maybe it`s OK that Greenland melted this month or maybe we`re heading
for some very weird times and this is all just a frightening preview. Your
hot world is coming up next.
KLEIN: I don`t know where you live, but there is a good chance it`s
really hot outside right now and it`s been hot for a long time.
Now, you can look at this as a local phenomenon. The city of St. Louis
just confirmed that a 24th person has been killed by the heat this summer.
The temperature was 107 today, the 16th straight day of triple digits, but
that just St. Louis. It is their problem, their weather.
Or you could see the conditions on a national scale. Across the
country, we have broken more than 40,000 records for daily highs this year,
and it`s only July.
So far, this has been the hottest year on record. It comes after a
string of very hot years, after last year`s heat, NASA reported that nine
of the 10 hottest years on record have occurred since 2000. Along with the
heat this summer, we have witnessed a really quite frightening drought.
This comes from the National Climactic Data Center.
Everywhere you see the dark purple, that`s extreme drought. Red is
severe, which is not as bad but is bad. Gold stands for moderate drought.
A third of all American counties have now been declared disaster
areas. The rain will come back shortly, but right now, our nation is
drying up. America`s farmers have not faced this kind of drought for half
a century or even more.
Farmers are pulling their corn early since it is growing well enough
to sell for dinner tables. Ranchers are rushing cattle to market because
there is nothing for the cattle to eat. In the short run, the extra beef
means hamburgers cost less, but that`s temporary. Beef, corn, soybeans,
the stuff we make out of beef, corn, and soybeans, all of it should become
more expensive. So will milk, eggs, and chicken.
Food inflation is particularly hard on folks who haven`t got much to
spend and is hard on the entire economy. In the short run, the Agriculture
Department is pledging to help farmers, but the Ag secretary says he cannot
do enough, not really.
And right in the middle of this crazy heat and the nationwide drop and
the crops that will grow and the food inflation we don`t need, our do-
nothing, do-less-than-nothing Congress cannot pass a farm bill, one of the
most routine chores of being in Congress.
“Politico” looked back through 50 years of farm bills and could not
find a farm bill that was stymied the way this one is. More evidence, I
guess, that this is one of the worst Congresses ever. I was not lying
Unless Congress acts, the current farm bill expires on September 30th,
just in time for all these small-town harvest fairs. As difficult as the
drought is for farmers and people who eat, however, it is worse for another
sector of the economy, energy.
Depending on your politics, you might find it good news that the
drought has put pressure on companies that do fracking. You need a ton of
water to blast the natural gas out of rock. I`m guessing you would not
find it such good news if the drought led to a blackout. The power plants
that keep the lights on in much of the country need water to function.
There`s no water, no light.
Also, less corn equals more expensive ethanol, which means more
expensive gasoline, maybe a nickel or so a gallon.
And maybe this is just one historic drought in the year of hot years.
We can`t know yet whether what`s happening around is weather or climate
change. A lot of it we think has to do with La Nina, a cyclical cooling of
the ocean that maxes (ph) weather patterns.
What we do know is that our climate has been getting warmer. That is
why this NASA map starts with a lot of blue in the 1800s and ends up
covered in yellow and red. Yellow and red stands for the places where the
average temperature that be higher than average, and these days that`s just
about everywhere. And we also notice as our planet gets warmer, we can
confidently predict more extreme weather events like drought.
So this drought, this is a preview. It`s what will happen a lot if
temperatures don`t come back down. My colleague on Wonk Blog, Brad Plumer,
posted this map the other day. It shows a forecast of drought conditions
at mid-century if we have moderate emission of greenhouse gases.
Purple and red and orange and yellow, you see all that, all those
colors? That`s a drought. It is projected drought. It is worse than what
we`re seeing now. It is worse than what we saw during the depression-era
So here`s what we know: climate change does not just mean that the
earth gets hotter, it means the climate gets weirder, it means more
droughts and more fires, it means for famines and more floods.
And here`s something else we know. Human beings are contributing to
climate change and Americans are contributing most of all. But human
beings and Americans can also give putting the brakes on climate change,
but to do so would require governmental action. And right now, our
terrible Congress cannot even pass a farm bill.
KLEIN: The new thing in the world today arises out of an
international mystery that has been solved. Specifically, the mystery of
who this woman, seen with North Korea`s new dear leader, Kim Jong-un is.
She was first spotted in photographs released by the North Korean
government earlier this month at Kim Jong-un`s side, watching a concert
featuring costumed Disney characters, presumably unlicensed Disney
Today, she was outed as Kim Jong-un`s wife. It happened during a
state television broadcast. We found out that her name is Ri Sol-ju, but
that`s about all the state-run media revealed.
However, South Korean media says there`s a North Korean singer named
Ri Sol-ju, so maybe the same person. I don`t know. Do you think that is
the same person?
But the solution of who is the lady, the mystery is not the best new
thing in the world today. Neither is the fact that the mystery lady is not
the one people thought she might be, a different singer whom I mention
because she is known for singing a song called “Excellent Horse-Like Lady,”
which is the most excellent song title in the world – though even that is
not the best new thing in the world today.
No, the best new thing in the world today comes from Andrea Mitchell,
who is, of course, the chief foreign affairs correspondent for NBC News and
the host of her own show on MSNBC every day at 1:00 p.m. Eastern Time.
This is how MSNBC`s Andrea Mitchell reported the news at the top of
our show this afternoon.
(BEGIN VIDEO CLIP)
ANDREA MITCHELL, MSNBC ANCHOR: Sorry, ladies, he`s off the market.
North Korea`s most eligible bachelor, Kim Jong-un has gotten hitched.
(END VIDEO CLIP)
KLEIN: Andrea Mitchell is a hard news kind of lady. She has covered
every important, world leader and world news there is. She has heads of
state on speed dial. She can boil things down to their essence and
communicate the most important truth about them instantly, and she is
And when Andrea Mitchell cuts to the case, let`s agree – sorry,
ladies, he is off the market is the best new thing in the world today.
That does it for us tonight. Don`t forget, you can check out my work
at wonkblog.com at “The Washington Post”, or follow me on Twitter at
Twitter.com/EzraKlein, and on Facebook, Facebook.com/EzraKlein.
Now it is time for “THE LAST WORD” with Lawrence O`Donnell.
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