The Rachel Maddow Show, Transcript 05/16/13

RACHEL MADDOW, HOST: We should start doing like the BBC, where you hit chime at the top of the hour. Set your watch. Look, now I blew it. Thanks to you at home for joining us this hour. Today, our nation got a new secretary of energy. It was a unanimous vote in the Senate, 97-0 for Dr. Ernest Moniz. The extra bonus we get with him is that he will also be available to the nation if we ever find ourselves in need after secretary of amazing hair. Amazing hairdo that looks jus like the French novelist George Sand. Dr. Moniz could also fill in in a pinch (ph) there, if we ever need that. Two more cabinet secretaries for -- two more cabinet nominees, secretary of labor, EPA administrator also made it to the full Senate today. They haven`t been voted on in the full Senate and there is a possibility that Republicans will filibuster those on the Senate floor but those at least made it to the Senate floor. Today, in Idaho, authorities arrested a man from Uzbekistan on terrorism charges. He`ll be in federal court tomorrow and so, we`ll learn more then. But the indictment alleges he possessed an unregistered explosive device, that he was distributing information about explosives, bombs and weapons of mass destruction. Again, we will have more on that when we know more but the arrest happened in Idaho today and the court hearing is due in federal court in Idaho tomorrow. There was a major bomb attack on American forces in Kabul, in Afghanistan today. Two U.S. military vehicles were blown up by a roadside bomb. Sixteen people were killed, including six Americans. On Capitol Hill today, there were hearings on whether the authorization to use military force that we enacted as a nation right after 9/11 and is still in force now, there were hearings today about whether that should stay in force forever -- essentially given whoever the American president is the ability to wage war on his own without Congress indefinitely into the future. What could possibly go wrong? In Maryland today, 2016 presidential hopeful and current Democratic Maryland Governor Martin O`Malley signed into law new gun reforms for his state, including an assault weapons ban and ban on high-capacity ammunition magazines. The antireform side in his state says that they will try to sue to block that new law but he signed it today. And there is a lot more that happened. This is kind after very granular nitty-gritty day of news today. There were also some new and provocative details on the West, Texas, fertilizer plant explosion. Also, new details on the Russian spy arrest. We`re going to have all of that stuff coming up this hour. NBC`s Richard Engel is here live as well. So, that is all to come. But we are starting tonight in Sichuan province in China. This is a map of China. Sichuan province is here. In 2008, you might remember there was an absolutely massive catastrophic earthquake in Sichuan province, whole villages just flattened. The final death toll from that quake was in order of 70,000 people killed in a single quake. That was five years ago this week. It happened not far outside the capital city of Sichuan province, which was a city called Chengdu. That earthquake was about 50 miles northwest of the capital city. That quake was 2008. But then last month, it happened again. Same fault line. At least we think it was the same fault line. Right there in the same region. In this case, the quake was within 100 miles of Chengdu, sort of in the other direction from the city, as you see mark here on the map. And while this most recent quake was not as devastating as the mega one that killed tens of thousands of people five years ago, it was still big quake. It killed something like 170 people. So, this is not only an active earthquake region in Sichuan province, but it`s a place where even very recent quakes have not just large but deadly. And if you live there, if you live in Chengdu, having just lived through those big quakes where lots of people died, having seen what quakes in that region could do, how would you feel about the news that the state run petro China company was planning to build on that same fault line, a massive mega petro chemical plant producing 10 million tons of oil and more than 800,000 tons of ethylene per year. People who survived the Sichuan province earthquakes over the past five years are understandably a little bit unnerved by this prospect. They`re going to build on fault line. We know at least some people in Sichuan province are disturbed by this prospect because at least some of them have tried to protest this planned petrochemical plant. They tried online to organize a protest for last Saturday in Chengdu, but the security services kept censoring everything that people had posted about it online. And then when the protest date rolled around, May 4th, the police called a surprise earthquake drill for Chengdu. According to a report from "The Associated Press", police flooded the streets of the cap it will. Thousands of police for the earthquake drill. Exactly where and when that protest was supposed to take place. Then, three days after that, last Tuesday, somebody -- we do not know who but we know that it`s a woman. We know she lives in Chengdu. We know that she`s in her late 20s. An anonymous person with the initials B.Y., we did find that s found a place to safely post online her protest, her worries, her complaint about this chemical plant and her request that, please, given the environmental risk of this plant, please, couldn`t this decision be subject to some sort of environmental monitoring or evaluation? And you can see her protest here, her complaint, her worry is posted here in English but it is kind of broken English. Like at the end it says thank -- instead of saying thank you. But the one safe place this one young woman found to post this grievance, this call for protest, this plea for help, the one place she found online that she felt safe to post it was the Web site of the White House. It`s on the petitions part of the White House site, the "we, the people" thing, that the White House started in 2011, where anybody can post on any petition you want to, at any subject, and if it gets enough signatures, the White House will respond. I mean, it`s strange but it is also kind of moving, right, that somebody -- even in another country looks to our government, looks to our government, as a place where they can be safe airing grievances, where they can safely protest even if they can`t protest safely at home. What ends up being scary about this is that the young woman who posted this petition at the White House last Tuesday she never posted her name. She never posted any identifying information on herself. She just did it under her initials, anonymously. But by the end of the week in China, the internal security police were knocking on her door. Imagine how scary that must be. How did they find me, right? When the police knock on her door she posted on the Chinese version of Twitter, which is called Weibo, she posted on Weibo, "I will be out to have some tea. If I should not return in two hours, please report me as missing." "Associated Press" article about her noting today that -- saying "I`m going to have some tea is a widely understood euphemism in China for I am going to be talking to the police." And, obviously, by saying "if I`m not home in two hours report me missing," she was afraid that she was never going to come home. Well, she did come home. She is safe and she`s brave enough to have done an interview with "The A.P." by instant message, about what just happened to her, what happened to her after she posted that thing on the White House Web site. And that`s brave if you think about it, right? Because she knows that the police know who she is. They already found her in person and questioned her. And she is still willing to talk to the press about what happened. The White House didn`t turn her in to the Chinese police. Maybe you believe there is some great conspiracy here, but the White House says we don`t collect any information on who posts things on the White House Web site. They said they certainly did not hand over that information to anybody, most especially the Chinese government. But the Chinese police were able to follow the trail from her to the White House petition and figure it out. And when "The A.P." reporter called the Chinese police to get a comment about what they did, hey, wouldn`t you know it? It turns out that part of the police has an unlisted phone number. That part of the police they do not talk to the press. This is not the first grievance from China that`s ended up getting posted at our White House Web site. There`s a petition that has a ton of signatures on it about an unsolved crime in which a Chinese student was murdered about 18 years ago. There`s another petition now about another petrochemical plant being built in another city under similar circumstances in another province. There was actually a street demonstration about that today in China. But whatever you think about the individual grievances that Chinese people are airing through our government, through our White House Web site, through what we take as almost an online gimmick, it is kind of a bracing reminder that this is a really important part of what we have to offer the world as a nation. I mean, yes, we are a big and rich and powerful country, but we are not the only big country or rich country or powerful country. I mean, China`s way bigger than us. We may have the biggest economy in the world but China has the fastest growing big economy in the world. If our brute strength is the kind of thing that we think is always going to set us apart, hey, it`s not always going to set us apart. And for the way we like to think of ourselves, the real and best things we have to offer the world, you know, it`s the stupid name for that online gimmick at the White House Web site. It`s not brute strength. It`s we, the people. It`s our open government. It`s about having a government, having a whole structure in this big powerful country of ours where we get to air our grievances and seek redress of our grievances. That really is the best thing that we have to offer. That is the best thing about us, is the defining thing of us. And the reason that no other big enduring country has that in exactly the same way that we do is because it`s really hard to keep, especially over time. I mean, there is every incentive in the world, there`s every pressure in the world for whoever hold power to try to stop other people who have less power from bugging about them, from complaining about them and exposing what they are doing wrong and demonstrating them against and making counter-arguments against their arguments, making fun of them. People in power inexorably want to use the power that they have to stop other people from bugging them -- universally, across time, across personality, across geography, across culture. That`s why it`s so important that our protections against that, our constitutional protections that keep our government open, that keep our system free, that keep our press free. Our constitutional protections that protect those things are so blunt and so obvious and so inarguable. It`s the clearest thing about us, right? I mean, representative democracy and free speech. That`s pretty much what it boils down to. President Obama said today that that is the whole reason he got involved in politics in the first place. (BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We also live in a democracy where a free press, free expression, and the open flow of information helps hold me accountable, helps hold our government accountable and helps our democracy function. And, you know, the whole reason I got involved in politics is because I believe so deeply in that democracy and that process. (END VIDEO CLIP) MADDOW: President Obama speaking today, and he`s right about his own articulated history. He has been making the case about the importance of our open government from the very beginning. It was certainly a big part of why he ran for president. (BEGIN VIDEO CLIP) OBAMA: I`ll make our government open and transparent so that anyone can ensure that our business is the people`s business. And Justice Louis Brandeis once said, "Sunlight is the greatest disinfectant." So that`s part of why we`ve had so much trouble is we haven`t invited the American people to participate in the process. That`s why I always focus on accountability and transparency in our government. (END VIDEO CLIP) MADDOW: That is how he ran for president. President Obama harkens back to that today when he got asked at this press conference today about the fact that his Justice Department, on its own volition, without ever going to a court monitored all the phone records for two months from "The Associated Press" D.C. bureau, New York City bureau, Hartford bureau, congressional bureau and work phones and personal phones and cell phones of "A.P." reporters and editors. So, anybody who is trying to air their grievances and hold their government accountable by talking to that part of the press in April or May of last year, if any reporter called you as a source from any of those places over that two-month period, the government has your number and knows you`ve been talking to the press anonymously. "The A.P." may have told you that they could protect your anonymity. They could get your story out without you ever being known to the government. It turns out they could not make that promise because the government secretly stepped in of its own volition without ever even asking a judge and they took a knife to the ability of "The Associated Press" to do its work, now and in the future, indefinitely. They took a knife to "The A.P.`s" ability to do journalism. Any "A.P." reporters who work in those bureaus can now write down any official story of what if he official tells them is the approved truth to know about what the government is doing but if anybody wants to speak anonymously about what the government is unofficially doing because they think that`s important that that be known in our free society, that in a really important way now is gone for that part of our press. And the president today in talking about how much he loves open government and transparency and how important that is to him an always has been, he said it in the context of calling for a new media shield law, to protect reporters from this kind of reach from the government. A, some of the harm`s already done. B, who knows if we`re going to get a shield law? It`s good I think that he`s calling for it. It is important to note though that President Obama is not apologizing for what the Justice Department did to "The A.P." For reasons that he feels very comfortable with, this president has been very aggressive in dealing with leaks, people inside the government talking to the media and in going after those leakers, he has been willing to ride roughshod over what the media does. We`re going to be talking with Richard Engel about the president`s concerns and the leak in question later on in the show tonight. You know, maybe this shield law, if we get one, will offer real protections against this kind of thing that`s just happened to "The Associated Press." But the other way to protect this important thing about ourselves as a country and who we consider ourselves to be as a country, the other way to protect our gold standard free press is to not just depend on the government to do it -- to do it ourselves, to take care of it ourselves, to protect the freedom of the press ourselves. That`s now happening in a way that`s edgy and DIY and live as of yesterday. The basic idea here is what if there was a way for sources to talk to the press without there being any possibility of their being found out for doing that. From the government`s perspective, the dangerous side of that is that it makes leakers really hard to catch. The beneficial side of that is that, while investigating leakers, the government will not be able to trample all over press freedom. It protects leakers but it also protects the power of the press to do its work. This new way for sources to talk to the press was created, in part, by this guy, Aaron Swartz. He was sort after prolific computer programmer and online activist. He developed some of the most basic ways we use the Internet today, and some of the most amazing. He helped develop a Web site you probably heard of called Reddit. Aaron Swartz`s mission I guess was essentially to give the general public as much information for free, as humanely possible. His pursuit of that mission eventually ended in tragedy. In 2011, he was arrested at MIT for mass downloading academic journals off the school`s server, with the intent to make those journals available to everybody who wanted them. The federal government decided to throw the book at him. He was facing the possibility 35 years in prison. But before he could be brought to trial on those charges, Aaron Swartz killed himself. This past January, he was found dead inside his Brooklyn apartment. But a couple of years before all of that, Aaron Swartz started coding a system for sources to send information to the press with anonymity. Not even the reporters on the other side can know where information came from. That means if the government leans on those reporters, reporters can`t tell how their sources are because they don`t know. He work on it at the request of an editor from "Wired" who had grown frustrated by other failed attempts to set up that kind of information system. The system Mr. Swartz came up with allows anyone in complete secret -- apparently in complete secret -- to upload data like files or photos or documents to somebody on the other end. You get a secret account so the receiver on the other side can try to write you back under your top-secret name. If you choose to log back in with your top-secret name, you can get that return message. You reveal more that way about what you have sent or if you don`t feel safe to do that, you just go away, don`t ever open the return message. Nobody will ever know your identity. That`s the idea at least. Anybody can get the system themselves. It is open source. It`s do it yourself. And as of yesterday, this kind of amazing thing built by Aaron Swartz in the last years of his life, it is now live and operating at the Web site of "The New Yorker" magazine. Joining us now is the editor of the "New Yorker Magazine`s" Web site, Nicholas Thompson. Nick, it`s good to have you here tonight. Thank you. NICHOLAS THOMPSON, NEW YORKER MAGAZINE: Pleasure to be here. MADDOW: I am a user of the online machine but not an expert. And I bet that I didn`t explain that exactly right. How does the Strongbox idea work exactly and did I screw any of that up? THOMPSON: You have it absolutely right. You can set it up perfectly. So, the way it works is that it begins with a system called Tor. Tor is a way of keeping your computer address safe. It`s like if you hand you a package, in between, I also break up the package and give it to 100 people in between. So, you once you log in into Tor, no one can identify the computer it initially comes from. So, the person starts by logging into Tor. And then the file they want to upload is encrypted. The encrypted file is passed through Tor, passed through our servers, to us. It`s still encrypted. We that take it off the machine on to a little flash drive. Then we take it to another computer that`s not on the hard drive and there, we decrypt it. So, the whole time from when it passes from you to me, there`s no way to trace where it came from, it`s encrypted the entire time. By the time somebody at "The New Yorker" looks at the file, they`re looking at the computer that`s not connected to the Internet and it doesn`t have a hard drive. So, there`s kind of an air break between the machine and between you. MADDOW: In reading the fine print on what`s posted online right now, it`s marketed as an as-is market. There are no guarantees and you can`t be absolutely sure anonymity can`t be protected. Other people have sort of tried to build things like this in the past but they`ve essentially been hackable. Haven`t they? There`s been ways to get around the anonymity protections in previous iterations? THOMPSON: Right. There has been. One of the things that we did is to start with Tor, which gives you a lot of extra protection. It makes a lot harder to use. It`s relatively difficult to use the system. But we think that the people who are going to give us stuff will make for great investigative "New Yorker" stories are people who are going to be able to do it. So, maybe somebody will end up cracking it. I sure hope not. Aaron Swartz was a fantastic coder, who built in lots of protections. We tested it. We had various more people try to break it. So, we feel very confident in it. So, we`ll see. MADDOW: One of the things that I think in a slightly bigger picture about leaks and I thought about this around WikiLeaks and some of the scandal, or at least the controversy there, is that when you get an anonymously leaked information, as a reporter, as somebody who`s trying to decide the news value of that, it`s important to know where it came from, in part because if somebody has an ax to grind, if they`re the person who is capable, either by circumstance or by experience, of faking that information to you. It`s hard to verify leaked information. With no ability to trace back even confidentially, are you worried that "New Yorker" journalists using this material are themselves a little bit compromised? THOMPSON: Oh, absolutely. It makes the process of creating a long story more complicated if you get information you have no idea where it came from and you have no possibility of figuring out where it came from. MADDOW: Right. THOMPSON: You know, we can put a mess animal on a bulletin board and a person with a super secret password or super secret passname as you describe, will maybe go to the bulletin board and maybe see a message and maybe write back to us, but we may just have it. Then it`s a hard editorial choice, we`ll do our best to verify it. If we can`t verify it we have a whole bunch of other choices to make. But those are choices that we`ve dealt with before. People mail us stuff. People have sent us information anonymously before. So, you know, it creates different journalistic problems, but we`ll figure those out. MADDOW: Do you expect this will be used by lots of different types of journalists or even non-journalistic communication? Anybody can use it at your Web site. THOMPSON: Anybody can use it in our Web site. And maybe it`s -- when we first conceived of it I thought it would be people sending us documents. One of our editors said it would be a great way to communicate with one of my writers when they`re working in Syria, it would actually be a great way to get information back and forth. The code is open source. That`s part of Aaron Swartz`s idealism. So, other people are going to build their versions of it. If the White House wants to build a version so people in China, just as you were saying, can upload information to them in a more secure way, then great. You know, so we`ll see exactly where this goes, but I hope we`re going to get a lot of great stories out of this in the next few years. MADDOW: Nicholas Thompson, NewYorker.com editor, thank you so much for helping us understand this. THOMPSON: Thank you. MADDOW: I appreciate it. I will note that on that China story, as the Chinese press and also some of the American press followed up on that petition from that Chinese activist being posted at the White House Web site, the White House`s response was, yes. The White House, we, the people, petition is not only here, is not only something that we will not help the Chinese police find anybody through, but it`s open source and available to anybody and we are happy to provide this code, this means of communicating online to anybody who wants it. It is an open source world even if it makes a lot of us ughy. We`ll be right back. (COMMERCIAL BREAK) (BEGIN VIDEO CLIP) REP. MICHELE BACHMANN (R), MINNESOTA: The Tea Party movement has been falsely aligned from its inception because it was feared. It was feared because it was an organic, spontaneous uprising against big government. (END VIDEO CLIP) MADDOW: Oh, it makes me feel like I`m 38 again. Congresswoman Michele Bachmann still exists, it turns out. And was back front and center, leading a Tea Party rally again on the steps of the Capitol. Ooh, old times. After dissolving into the things like the Michele Bachmann for president campaign and other things that didn`t turn out to much, the Tea Party movement now wants to be back on the wings of the IRS scandal that they and other conservative groups got singled out for extra scrutiny in their applications to the IRS for tax exempt status. That`s a thing that they naturally think is terrible and not at all the kind of thing that the IRS should be doing. The awkwardness of the politics here is that everybody agrees with them on this, including their nemesis, President Obama himself. President Obama last night demanded and received the resignation of the acting commissioner of the IRS. Today, a second top IRS official was shoved into an early retirement. The second head to roll was the commissioner of the agency`s tax exemption division. President Obama has now appointed a new interim IRS commissioner around it`s likely that the new commissioner`s job will at least for a while be taken up with responding to the gazillion new investigations that the IRS is now being subjected to. The Department of Justice is investigating along with the FBI. The Senate is investigating. The House is investigating. And that all follows the initial inspector general investigation -- all looking into the improper scrutiny that the IRS allegedly gave and seems to have given to conservative groups who were applying for tax exempt status. Here is something to watch though. That`s not about that issue of extra scrutiny and therefore extra delays for these conservative group singled out on the basis of their apparent ideology. Here is the thing to watch other than that. Late last year, the same IRS office in Cincinnati handling applications from these types of groups, the same office that did the Tea Party keyword targeting, last year, that same office also released tax documents about a bunch of political groups to a news gathering operation called "ProPublica." "ProPublica," is an independent non-profit newsroom that specializes in investigative reporting. And last year, "ProPublica" was working on a series of articles on the relationship between tax exempt status and these supposed social welfare non-profits that are just political groups. In the course of that investigative work, "ProPublica" went to the source. They went to the IRS` office in Cincinnati which was responsible for reviewing applications from those kinds of groups, and they asked that IRS office for the applications from a whole bunch of these group. They asked for the applications from 67 different non-profit groups. For what it`s worth, this was all after the presidential election. Thee requests came in November 15th. But a couple of weeks after they put in the request, the IRS responded. And the IRS did not give "ProPublica" the documentation for all of those 67 groups they asked for, but they did hand over files from 31 of the groups. Nine of those 31 applications had not yet been approved by the IRS. And if the application has not been approved, it`s supposed to be secret. The IRS is not supposed to release that information to anyone until the application has go tough the whole process and been approved. If it is still pending, it`s supposed to be private. But the IRS sent it out anyway -- which is bad. I mean, maybe it`s an oops, but even if it`s an oops, regardless, it`s bad. After getting those nine unapproved applications, "ProPublica" was like, hey, we`re not supposed to have these! They got in touch with the IRS and said, essentially, hey, why did you send these to us? Aren`t you not supposed to do that? These are unapproved applications. And the IRS responded, "Oh, jeez, you`re right, we shouldn`t have done that." And we know all this because "ProPublica" posted a detailed article about it that we have posted to our Web site tonight if you want to check it out at MaddowBlog.com. The IRS went on to tell "ProPublica" not only should they not have sent those applications but there is actually a law against releasing unauthorized returns. There is a law against exactly what the IRS had itself just done. They went on to sort of threateningly tell "ProPublica" this was a felony punishable by a fine of up to $5,000 and imprison of up to five years or both as if it was "ProPublica`s" fault. "ProPublica" has made no bones about this all went. They know they got the documents from the IRS that they were not supposed to have, but it was the IRS who screwed up here. The IRS sent those documents illegally to reporters. This is a problem. What we do not know yet was whether the IRS` bungled handing of private documents over to "ProPublica" is linked at all to the bigger scandal here, right, to the IRS improperly scrutinizing conservative group`s applications. But you know what? Don`t let the right wing, dance off with your pants off, naked skipping ecstatic accusatory joy over their being an IRS screw-up distract you from the fact there really was an actual screw-up here. When Michele Bachmann, it`s easy -- when Michelle Bachmann says it is easy to believe that categorically, it`s definitely not true. But in this case, unauthorized disclosures of tax information that was supposed to be private, that seems to be a real thing and that is the next part of this to watch. (COMMERCIAL BREAK) MADDOW: NBC`s chief foreign correspondent Richard Engel is here with us live tonight in just a moment. That means two things. Two good things. One, he`s not somewhere terribly dangerous worrying everyone. And two, he`s got a heck after story for us. That`s next. (COMMERCIAL BREAK) MADDOW: When U.S. forces found the head of al Qaeda in Iraq back in 2006, they reportedly found him by following the man they knew to be his spiritual advisor when his spiritual advisor paid him a visit. When U.S. forces found Osama bin Laden they reportedly found him by figuring out who was working as a courier for bin Laden, and then following the courier to bin Laden`s house. When U.S. forces found Anwar al-Awlaki in Yemen, they reportedly first tried to find him by putting a tracking device on the luggage of his new wife. Story`s kind of amazing. It`s detailed in Jeremy Scahill`s new book, "Dirty Wars." Ultimately, the luggage idea did not work and they found him by some other means. As U.S. intelligence and military forces and various kinds of roam the earth this past decade, hunting down al Qaeda, the means by which they have found their most wanted al Qaeda targets are varied. They all differ case by case. But as far as we know, as far as we have been allowed to know, the process of finding these senior al Qaeda guys and tracking them down has almost never been by use of double agents. After all these years, after all these famous cases, you don`t really hear very much about the U.S., about the West sneaking somebody inside al Qaeda so that al Qaeda thinks the guy is a fellow terrorist but really he`s a spy. That has not been the way this war on al Qaeda has worked in terms of the top level killings. Mostly that`s not the way it`s worked -- except it did work that way apparently with this guy. He`s from the al Qaeda group in Yemen. This time last year, he was killed by a drone strike in Yemen after stepping out of his vehicle. That drone reportedly knew where to find him because of a double agent, because there had been somebody on the inside of al Qaeda in the Arabian Peninsula in Yemen who al Qaeda thought was one of them but who was actually a spy working for the West. Not apparently for the CIA, but for another Western intelligence service. The reason that we know that is why the records from 20 phone lines and "Associated Press" bureaus in D.C. and New York and Hartford and Congress and all these reporters` personal phones and everything all ended up in the hands of the Justice Department, even though we supposedly have a free press in this country and reporters are supposed to be able to talk to people without the government spying on them while they work. When it was reported a year ago that a plot to blow up a U.S.-bound plane had been thwarted in Yemen, one of the details that "The A.P." reported at the time was that the actual bomb from that plot not only hadn`t been detonated on that plane, but the actual bomb had ended up in American hand. It was at the FBI bomb lab at Quantico, being analyzed. Juicy detail, right? Hey, wait a minute, how did we get the bomb? It was that detail that led to the ultimate story that this bomb plot had not just been caught at the gate by an extra good pat-down or something. The bomb plot had been foiled by a double agent, by somebody on the inside of that al Qaeda group who al Qaeda thought was one of them but who was a Western spy who got a hold of the bomb and turned it over in such a way that it ultimately ended up at the FBI`s lab and whose intel reportedly led to the drone strike that killed this al Qaeda heavy just a couple of days later. The Obama administration taking the phone records of all those phone lines at "The A.P." is not to get at "The A.P." The wrecking ball that the seizure of those records takes to "The A.P." as a news agency in this case is collateral damage. What the Justice Department is actually trying to find is not anything interesting about the reporters themselves. What the Justice Department is trying to find is who in government told the press that that bomb was sitting at the FBI bomb lab in Quantico. That`s what this whole thing is about. Joining us to tell me if I have`s got that right and what this means is Richard Engel, NBC chief foreign correspondent. Richard, thank you. RICHARD ENGEL, NBC NEWS CHIEF FOREIGN CORRESPONDENT: It is good to be here. It is a very complicated story but you did you get it right, and it goes back to have investigation. If I`ll peel it back a little bit. You talked about the foreign government getting an informant inside of al Qaeda. That is very rare. Al Qaeda generally doesn`t trust outsiders. It doesn`t -- it is not the kind of organization you can just show up and join. They know each other. A lot of al Qaeda members are related. The U.K. in this case, British intelligence, gets an informant inside an al Qaeda cell in Yemen. That`s a great accomplishment for them, and an accomplishment, by the way, which should remain secret. We`ll get to that in a second. They get the informant inside. The informant gets in contact with a bomb and is told that this bomb is going to be used on a flight from the U.K. to the United States. The informant, like a good informant, informs his handlers. The handlers, since the U.S. involved, inform the United States. That`s all being carried out in secret, as you would expect it. The United States, learning that there is this threat of a bomb going to be put on a plane from the U.K. to the United States, alerts security officials -- air marshals, TSA, people who would be concerned about transportation in the air. MADDOW: We try to harden ourselves as a target, oh, jeez, an attack is coming. ENGEL: We do that, and that you can`t hide. And when increased security measures are taken and orders are given out publicly, not classified orders, to increase surveillance of air marshals and things like that, that`s when reporters start digging. What`s going on, why are there suddenly all these extra alerts. "The A.P." started digging. We started digging. Lots of people started digging. People got different parts of this story. Was there a bomb plot? Did it go back to Yemen? Yes, it did. "The A.P." got this piece that not only was there a bomb plot but the bomb was already in U.S. hand. It was at the lab in Quantico. And "A.P." ran with that story. And when it did people started freaking out in the administration. How did they get this? What did they know? There was a briefing given by Brennan and he told -- MADDOW: John Brennan, who`s now head of the CIA. ENGEL: Exactly. Who was -- someone who knows about Yemen, counterterrorism, and went out to try and also calm some public opinion. He said, look, yes, this bomb -- there was this plot but the bomb has always been in our possession. It was always under our control was the specific word, which means that there was never a threat that this bomb that was being made in Yemen was going to blow up an aircraft. That the U.S. or U.S. friends -- because what was under our control, it wasn`t under our control. It was under the U.K.`s control but since we`re all friend in this, the U.S. and U.K., it was under friendly control. MADDOW: And so, him saying -- I think inside control, too. ENGEL: Yes. MADDOW: Inside control, our control, putting that together with the detail that we`ve got the bomb in our possession, it`s not a big leap to come up and there`s got to be a mole. ENGEL: Well, because -- OK, the bomb was made. The bomb didn`t get on to any plane. It ended up in a Quantico lab and you have a senior official saying it was always under our control. Lots of people at that stage started reporting that -- well, the CIA has someone inside al Qaeda in the Arabian Peninsula and that was yet another blow and I think why this became such a big deal. And there is a big deal here. MADDOW: Yes, talk about the -- exposing something like this and why that is so dangerous. ENGEL: And I don`t think "The A.P." -- "The A.P." is reporting, it reported something that`s kind of two steps removed. It reported that there was this bomb that was found and it is at a lab in Quantico. That`s not exposing the name of the informant or that there is an informant. It led to a sequence of events that did reveal that information. But revealing the name of an informant in al Qaeda is a death sentence for him, for his family. It has dangers for Americans because -- for anyone really, because let`s say al Qaeda learns that it has an informant among them. The group could harden its security. You can lose information. It could decide to change the timing of an attack. MADDOW: Speed up an attack. ENGEL: Speed up an attack. If you think someone is watching you and someone is on to you, you`ve got a bomb, do it now before the authorities have a chance to catch up. So, there is real consequences -- MADDOW: And "The A.P." didn`t disclose that, but they disclosed something that led to that. ENGEL: Something that led to that. MADDOW: There can`t be that many people in government who knew that bomb was sitting in Quantico, but whoever it was who knew that, who talked about it to the press, that`s what they`re trying to find. ENGEL: It`s not "The A.P." they`re looking at. They want to know who told. MADDOW: They want to know who told -- ENGEL: So, they started -- investigators started looking at Quantico, did someone there pass this information on? And as far as I know, it wasn`t somebody there. They started looking at airport, TSA, and air marshal officials. Did they have information since that was in the -- part of the chronology? And as far as I understand, the investigation is still going on and they want to know who told "A.P." that initial piece of information that ultimately exposed a very valuable -- the fact that a very valuable source was planted in al Qaeda. MADDOW: And the investigation ultimately, because it ends up tapping all those -- getting the records from all those "A.P." and phone lines ends up doing huge damage to "The A.P." as an organization, as just one of the many consequences of this. It`s very dramatic story. Richard Engel, NBC`s chief foreign correspondent. Thank you for being both physically here. ENGEL: Won`t be for long. I`m on my way out of the country soon. MADDOW: Of course. I`m going to put a tracker on you myself. (LAUGHTER) ENGEL: Good to see you. MADDOW: We`ll be right back. (COMMERCIAL BREAK) MADDOW: It`s been kind of a busy week, right? Last Friday, amidst a lot of other news, we reported an update about the West, Texas, fertilizer plant explosion. That was such an enormous disaster. It killed 15 people, injured hundreds of people last month, that more than 90-foot crater after that giant explosion in Texas. Texas law enforcement officials, we reported, as of Friday, had launched a criminal investigation into what caused that explosion. And then, dramatically, within a couple of hours of them launching that criminal investigation, we also learned that there had been an arrest. Volunteer paramedic was one of the first responders on-scene at the explosion had been arrested. He was ultimately charged with possession of a destructive device, specifically, materials that could be used to construct a pipe bomb. And, obviously, the confluence of these two stories happening within a couple hours of each other is a very provocative thing. Law enforcement raising the possibility of a criminal act being responsible for setting off that explosion, and law enforcement argue somebody who had responded to that explosion, arresting them on charges related to an explosive device. That confluence is a very provocative dyad. Obviously, we do not know if there is more of a relationship between those two stories than the fact that they both have to do with West, Texas. But now, we do have some more information and it`s really interesting. Law enforcement officials have told NBC News, that thus far, the ATF has not found any evidence that it was a bomb that set off last month`s deadly explosion in Texas. Today, state and federal investigators said that they would not even speculate about whether the paramedic charged with possession of a pipe bomb, whether that has any connection with the plant explosion. They would not answer any question about the paramedics` case. But officials did make some really specific announcement. They did say they have completed their investigation at the site of the explosion, even as the broader investigation continues. And the Texas fire marshal, Chris Connealy announced today that the cause of the explosion is considered right now to be undetermined. And here is the interesting specific details part of it. State fire marshals office and the ATF say that they have eliminated these following causes of what might have set off the explosion. They say it was not a rekindling of an earlier fire. They say it was not spontaneous ignition. They say it was not anything related to the plant`s 480-volt electrical system, which is one of the two electrical systems in the plant. They say the explosion was not set off by anhydrous ammonia or by ammonium nitrate. They say it was not set off by somebody smoking or by something related to weather. But officials they have not ruled out the following potential causes. They say it is possible, as yet, that something went wrong with the other electrical system in the plant, which is 120-volt system. They say also it is possible they have not ruled out that part of the problem was a golf cart that was stored in the seed room at the plant. Officials say golf cart batteries have a history of causing explosions. But they have not recovered enough pieces of the golf cart in question to eliminate it or to damn it in this case as a potential cause. They also say they have not ruled out the possibility that the fire was set on purpose. So, the investigation is still ongoing, and ongoing, and ongoing, and open. The paramedic has pled not guilty, says he has nothing to do with it. We`ll keep you posted as we learn more. But watch this space. (COMMERCIAL BREAK) MADDOW: Chart imitates life. All right. There was a time in the 2012 presidential election season when Republicans tried to make the major issue of the presidential campaign, the defining issue of the campaign, the fact that President Obama had not been able to cut the deficit in half in his first term. Remember the big debt clock running at the RNC, right? The president had said that it was the goal of his first term to cut the deficit in half, and he did shrink the deficit by hundreds of billions of dollars, but he did not cut it in half, which he had said he would try to do. And that issue, arguably, is the major reason that Republicans picked Paul Ryan to be their vice presidential nominee in 2012. They wanted to keep the heat on, on this deficit issue, right? Paul Ryan was their deficit guy, and that deficit argument, that the deficit was too big, one of their main arguments against re-electing President Obama. We have just received the new estimate of what the deficit is going to be by the end of this year. This is what the deficit had been up through last year, so 2009. That`s President Obama`s first year, 2010, 2011, 2012. Now, show the next year. This is what they had projected the deficit would be by the end of this year. But now, that estimate has been revised. They have revised the projected deficit for this year, and as of now, this is what the new deficit. We have that slide whistle. We have never used it before. Are you kidding me? The opportunity cost. Anyway -- as of now, this is what the new estimate of what the deficit will be by the end of this year. As you can see, this means that the deficit has shrunk by about $800 billion since President Obama has been in office. This is the fastest deficit reduction we have had as a country since World War II. And honestly, that`s kind of terrible. It`s kind of terrible to the extent that we are working on this stupid deficit issue, spending less instead of more to put people back to work. This is the thing that "The New York Times" crunched the numbers on last week in the big, devastating front page article. They found if we were not doing what we have been doing to reduce the deficit, we would have 1.5 million more jobs right now. The unemployment would be down a full point, to 6.5 percent, had we not been doing the stuff to reduce the deficit. Economically, reducing the deficit this much, this is not at all what we need as a country. But it is what the Republicans said would be their highest priority -- if they got control of the White House. It was the thing they said they must most wanted President Obama to do. The thing they most lambasted him for not doing. Think they`ll give him any credit now for actually doing it? That does it for us tonight. We will see you again tomorrow night, where we are going to bring you a very important wig-related story about a Russian spy that nobody else has reported. It`s going to be really good. That`s tomorrow night. But now, it`s time for "THE LAST WORD WITH LAWRENCE O`DONNELL word". Have a great night. THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. END