All in with Chris Hayes, Transcript 5/8/2017

Guests: Sheldon Whitehouse

CHRIS MATTHEWS, MSNBC HARDBALL HOST:  - him look bad and make her look very good.  It could be the last part making Sally Yates look good that`s driving the man in the White House up a wall.  Remember how as Senator Elizabeth Warren once wonderfully put it, he can`t stand the fact that he`s losing to a girl.  And that`s HARD BALL for now, thanks for being with us.  "ALL IN" with Chris Hayes starts right now.

(BEGIN VIDEO CLIP)

CHRIS HAYES, MSNBC ALL IN HOST:  Tonight on ALL IN.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA:  Ms. Yates, what did you tell the White House about Mr. Flynn?

HAYES:  Sally Yates speaks out.

SALLY YATES, FORMER DEPUTY ATTORNEY GENERAL:  We believed that General Flynn was compromised with respect to the Russians.

HAYES:  For the first time ever, the former Acting Attorney General on what she told the White House about Michael Flynn.

YATES:  The underlying conduct that General Flynn had engaged in was problematic in and of itself.

HAYES:  Tonight, what we now know about what Michael Flynn was doing with the Russians and why President Trump ignored all the warnings.

SEN. AL FRANKEN (D), MINNESOTA:  President Obama had told the incoming President-Elect that two days after the election, don`t hire this guy.

HAYES:  Then, the Kushner family caught selling real estate visas and access to the White House.  Why Jared Kushner`s family is today apologizing with the reporter who broke the story.  All of that plus House Republicans feel the heat at home over Trumpcare.

REP. RAUL LABRADOR (R), IDAHO:  Nobody dies because they don`t have access to health care.

HAYES:  When ALL IN starts right now.

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HAYES:  Good evening from New York, I`m Chris Hayes.  For the first time today, the person at the center of one of the most extraordinary dramas of the Trump administration spoke out publicly.  Former Acting Attorney General Sally Yates telling members of Congress that she clearly and repeatedly warned the Trump White House that it`s one-time National Security Adviser Michael Flynn faced potential blackmail from a hostile Russian government.

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YATES:  We believe that General Flynn was compromised with respect to the Russians.

Logic would tell you that you don`t want the National Security Adviser to be in a position where the Russians have leverage over him.  Now, in terms of what impact that may have had or could have had, I can`t speak to that.  But we knew that that was not a good situation, which is why we wanted to let the White House know about it.

(END VIDEO CLIP)

HAYES:  Yates and Obama administration holdover who serve as Acting Attorney General for just ten days was fired by Trump after refusing to defend his ban of travelers from seven predominantly Muslim nations in Court.  Four days after she said she warned the White House that Flynn was lying about conversations he had with the Russian Ambassador, that the Russians likely knew about Flynn`s lies, which are being repeated by Vice President Mike Pence and others.

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YATES:  Not only did we believe that the Russians knew this, but that they likely had proof of this information.  And that created a compromise situation, a situation where the National Security Adviser, essentially, could be blackmailed by the Russians.

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HAYES:  That was not the first warning the trump White House had gotten about Flynn, as first reported by NBC News, three former Obama Administration officials now say that former President Obama himself warned President Donald Trump directly against hiring Flynn as his National Security Adviser.  He did that less than 48 hours after the November election when the two sat down for a 90-minute conversation in the oval office.  Trump hired Flynn anyway and even after Yates` warning allowed Flynn to remain as National Security Adviser for another 18 days.  A time when he was taking part in classified briefings and even participating in a phone call with the Russian President, Vladimir Putin.  Trump only fired Flynn after Yates` warning was leaked to the public.  In her testimony today, alongside former Director of National Intelligence James Clapper, Yates said that when she warned the White House Counsel Don McGahn, that Flynn was potentially compromised because he had lied to the Vice President, McGahn responded, in part with a question?

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YATES:  One of the questions that Mr.McGahn asked me when I went back over the second day was essentially why does it matter to DOJ if one White House official lies to another White House official?  And so, we explained to him it was a whole lot more than that.  Every time this lie was repeated and the misrepresentations were getting more and more specific as they were coming out, every time that happened, it increased the compromise.

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HAYES:  The White House has previously sought to plead down Yates` warning, both Press Secretary Sean Spicer and Chief of Staff Reince Priebus referring to it as little more than a simple quote, "heads up."  But Yates testified today, she made clear the gravity of the situation.

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YATES:  The first meeting occurred on January 26.  I called Don McGaHn first thing that morning and told him that I had a very sensitive matter that I needed to discuss with him, that I couldn`t talk about it on the phone and that I needed to come see him.

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HAYES:  Before the hearing, President Trump sent out a tweet that appears to conceivably violate federal law prohibiting the intimidation of witnesses, writing, "ask Sally Yates under oath if she knows how classified information got into the newspapers soon after she explained it to White House Counsel."  Senate Republicans did the Presidents bidding and Yates denied leaking and said she didn`t know who did.  Republicans also peppered Yates and Clapper with questions and statements that seemed on the whole design to shift the spotlight away from both Flynn and the White House and the underlying question of what they did, including Yates` decision not to defend the travel ban and the surveillance of the U.S. citizens.  Senator Ted Cruz, amazingly even managed to reference Huma Abedin and the scandal around Hillary Clinton`s e-mails.

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SEN. TED CRUZ (R) TEXAS:  Have you ever knowingly forwarded classified information to a non-government employee on a non-government computer who did not have authorization to receive that information?

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HAYES:  Joining me now, Democratic Senator Sheldon Whitehouse of Rhode Island.  He is the ranking member of the Senate Judiciary Committee on crime - Sub-Committee on Crime Terrorism which held today`s hearing on Russian interference in the 2016 election.  Senator, the President has offered his own debriefing of what happens today in a series of tweets, one of them basically saying this was all old news.  I`ve seen that line picked up and carried forward by a number of outlets that are sort of aligned with the President.  Is it old news, do we learn anything new today?

SEN. SHELDON WHITEHOUSE (D), RHODE ISLAND:  Some old news, what we learn today is that the FBI had predication to send FBI agents into the White House to interview the sitting National Security Adviser and that when they came back, their report was so concerning to the Acting Attorney General of the United States, that before the FBI agents could properly type up the 302 statement, the witness statement report, she got on the phone to White House Counsel and said I need to see you right away, I`ve got something sensitive to discuss and rushed right up that very day to inform them of concerns that the Russian government may very well have compromised the United States of America`s National Security Adviser.  I mean, you think this would happen in a third world country.  The idea that this happened in the United States is stunning.

HAYES:  Well, here`s one thing that struck me as new as well today which is the question has surrounded what exactly the interactions between Flynn and Kislyak, the Russian Ambassador, what did they amounted to?  What is the content?  What is the center of all of this?  And we`ve got some indication from Sally Yates, I`m going to play you that and ask for how you understood that testimony, take a listen.

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YATES:  The first thing we did was to explain to Mr. McGahn, the underlying conduct that General Flynn had engaged in was problematic in and of itself.

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HAYES:  The underlying conduct general - conduct General Flynn had engaged in was problematic.  What do you make of that?

WHITEHOUSE:  Well, Ms. Yates wouldn`t confirm that she was talking about the conversation between General Flynn and the Ambassador KIslyak, but that is what everybody understood her to mean and that would rebut the reports that have come out of the White House that the contact between the National Security Adviser and the Russian Ambassador was improper - was not improper.  So she appeared to find that it was problematic.  The White House said it was not improper.  So there`s one difference just right there.

HAYES:  Your republican colleagues today spent a lot of time, some spent some time on the travel ban, others spent time, a lot of time, even the Chair of the Sub-Committee Lindsey Graham on unmasking and so forth.  I want to sort of give them the benefit of the doubt in these respect and get you to respond.  Can you imagine if you`re Don McGahn and Obama administration acting A.G. comes over and tells you, we`ve got transcripts of the conversation in your National Security Adviser, while you might be a little spooked or worried about the possible political use of intelligence?

WHITEHOUSE:  I think that you could.  But I think your first thought ought to be, wait a minute, what are the National Security ramifications of this?  And the fact that after this meeting, after Sally Yates came over and we learned today for the first time that she didn`t just come over once, she was brought back the following day to further explain herself and even after all of that they, apparently, took no steps whatsoever to limit General Flynn`s access to highly sensitive meetings to classified information.  He remained a fully operating member of the Trump National Security Establishment for 18 days, despite their knowing that the FBI and the Department of Justice of United States had determined that this was a guy who was likely compromised.

HAYES:  To that end, I want to - I want to play you a flashback, which is the President himself being asked about the earliest reports about Flynn, which first appear if I`m not mistaken in the Washington Post.  And he`s on a plane, he`s asked about this.  Now, we now know that he has - his White House Counsel has been briefed on this, I believe that we know he has been communicated to about it. And this is his reaction, take a look.

UNIDENTIFIED FEMALE:  Mr. President, what do you make of this report that General Flynn had conversations with the Russians about sanctions before you were (INAUDIBLE)?

DONALD TRUMP, PRESIDENT OF THE UNITED STATES OF AMERICA:  I don`t know about it.  I haven`t seen it.  What report is that?

UNIDENTIFIED FEMALE:  (INAUDIBLE) reporting that he talked to the Ambassador of Russia before you inaugurated about sanctions?

TRUMP:  I haven`t seen that.  I`ll look at that.

(END VIDEO CLIP)

HAYES:  That`s February 10th.  Seems plausible that he was not being truthful there.

WHITEHOUSE:  Well, Sean Spicer, who generally speaks for the President, said that when McGahn was first briefed on this information, he - and I`m quoting Sean Spicer here, "immediately went to tell the President what he had heard."

HAYES:  And just to be clear on the timeline, that`s many days before that February 10th clip we just played.

WHITEHOUSE:  That would have - well, immediately, would have been some time after the Sally Yates meeting on the 24th - no, the 26th, it would have been.  26th.

HAYES:  That`s right.  So, one of the strange mystery here to me - I like to hear your thoughts on this - is the fact that ultimately what General Flynn appears to have done was to lie to the Vice President of the United States and he was then fired by the President of the United States for lying to the Vice President and yet the conduct by the President would seem to indicate the President thinks he was unfairly the subject of a witch hunt and bears him no hand in this for the fact he lied to the Vice President.

WHITEHOUSE:  Yes, which is kind of peculiar behavior because he lied to a lot more than the Vice President, he lied to everybody he spoke to and there`s a very good chance that he lied to the FBI in the interview, which would be a violation of 18 United States Code Section 1,001 a false statement felony for which people can go to prison.  So that`s a lot going on in the White House to have the President been wrap around him this warm embrace of oh, it`s not so bad, he`s a good guy, nothing serious here.  Keep on moving, folks, there`s nothing going on.  And it suggest, I don`t know what, but it suggests that there is some sensitivity to Russia in this White House that prevents them from reaching obvious conclusions like my National Security Adviser may be compromised, let`s firewall the guy until we get to the bottom of this and this guy did a lot of really dirty things and may even broken federal law.  He`s not somebody we need to be defending.  I don`t know if they`re trying to send a signal to him or if they`re afraid that he`s cooperating or might be cooperating and they want to kind of calm him down.  I don`t know what that is all about.  It doesn`t make obvious sense.

HAYES:  Finally, James Clapper today said two interesting things.  One, very - the very beginning of the hearing Lindsey Graham said have you seen any evidence of collusion, he says, I have not.  That has been, again, taken with and run with by certain outlets.  But then he also said that he did not - he was unaware of the Counter Intelligence Investigation emanating out of the FBI while he was actually in government.  Sally Yates, when asked the same question about have you seen evidence collusion said I can`t speak to that without betraying classified information, what did you make of that?

WHITEHOUSE:  Yes.  That`s not surprising.  The Intelligence Community inhabits a world where things are deeply classified, but if you have the appropriate clearances, you can get access to them.  So I could go into a classified hearing if I have the right clearances and get intelligence information.  Parallel to that, next to that is the FBI and the Department of Justice, which has criminal investigative responsibilities.  And the investigative information is different than just classified information.  It can be both, but it`s different, so even though I can get a classified briefing, I can`t go over to the Department of Justice and say, hey, tell me about this investigation you`ve got going on because you want to protect the integrity of the investigation from outside influence.  So it`s perfectly logical that there would be elements at what the FBI is doing in this space that relate more to the criminal side and they would parse some of the material out to the Intelligence Community if they thought it had intelligence importance.  But they wouldn`t necessarily tell them about all of what`s going on.  You want to protect sources, if you got somebody who`s cooperating, you want to make sure as few people as possible know about that.  There are a whole lot of reasons why you want to keep the prosecutive part, the investigative part separate and in a separate lane.  That`s absolutely normal.

HAYES:  Spoken like a former U.S. Attorney and Prosecutor, Senator Sheldon Whitehouse, thank you for joining me.

WHITEHOUSE:  Thank you.

HAYES:  Coming up, despite many red flags, multiple warnings from even the President himself, President Obama, why was Michael Flynn able to stay on in the Trump administration for as long as he did.  The unbelievable chain of events after this two-minute break.

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HAYES:  Even before former Acting Attorney General Sally Yates testified before the Senate Sub-Committee today, there were numerous red flags about the man that Donald Trump hired for the most influential national security job in an administration that was still forming.  NBC News reports today that on November 10th of last year when President Obama sat down with then President-Elect Trump, he warned Trump directly against hiring Michael Flynn who the Obama administration fired in 2014 as the Head of the Defense Intelligence Agency, because, according to three former Obama administration officials, the President Obama, believed Flynn was not suitable for such high-level post as National Security Adviser.  A Trump administration official said Obama`s remarks seems like it was made in jest.  Just seven days after that warning, came a report in Yahoo News describing how Michael Flynn was receiving intelligence briefings while advising foreign clients.  Late last week, both the Washington Post and Associated Press reported that during the transition, Trump`s own transition team was concerned about Flynn`s contact with the Russian Ambassador.  Now today, Sally Yates, under oath, said she warned the White House in January that Flynn had misled Trump officials, including Vice President Mike Pence about his contacts with the Russian Ambassador and that the Russians knew about it.  Yet Flynn managed to hold onto his job as Trump`s National Security Adviser for nearly three more weeks. 

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AMY KLOBUCHAR (D) MINNESOTA:  Michael Flynn did not resign his position as National Security Adviser until February 13th, that is 18 days after you went over there with the formal warning.  And in particular, after they knew about this on January 28th, Flynn was allowed to join President Trump on an hour-long telephone call with Russian President Vladimir Putin.  Do you have any doubt that the information that you conveyed to the White House on January 26th should have been made clear that Flynn had been potentially compromised?

YATES:  The purpose and our telling them again was so that they can act and so that they could convey that information.  So I would hope they did.

(END VIDEO CLIP)

HAYES:  Joining me now is Matthew Miller MSNBC Justice and Security Analyst who served at the Justice Department under Attorney General Eric Holder and Malcolm Nance, former U.S. Intelligence Officer MSNBC Terrorism Analyst, author of "The Plot To Hack America."  Let`s start with the 18 days because that in some ways remains the strangest part of this entire thing.  I mean, the acting Attorney General gives us warning, nothing happens for 18 days.  The only thing that ends up precipitating his exit are essentially published reports in the press.

MATTHEW MILLER, MSNBC JUSTICE AND SECURITY ANALYST:  Yes, I think we have to ask today after hearing the timeline of events at Sally Yates laid out where she had these two meetings and then she had this phone conversation.  One, were they ever going to fire Mike Flynn if it didn`t become public.  Because it`s not clear at all they were.  They didn`t tell the Washington Post reporter.  Two, I think we have to ask, we always thought that Sally Yates was fired because she refused to defend the travel ban in court.  And it`s clear that`s a precipitating event but was it also an excuse to fire her?  Because she was the adjutant may - you know, forcing these issues saying that Mike Flynn was potentially compromised.  And by firing her, they made that adjutant go away. 

HAYES:  What do you make of - I have to say as someone who is not - doesn`t spend his life in intelligence, the idea that there`s - that Flynn was compromised because of these calls, is a little hard to get your head around partly because we`re consistently talking about interactions, the content of which we do not know.

MALCOLM NANCE, MSNBC TERRORISM ANALYST:  Right.

HAYES:  As someone who is an Intelligence officer, career intelligence, what does that mean to you?

NANCE:  Well, I mean, we`re talking about as Mike Flynn being compromised on this one issue, right.  There could be many other issues, we`re not even talking about Turkey, possibly, working for, you know, the Russians, you know, the Russians.  you know, after Putin had played him to come to Russia Today.  That`s an entirely different line of compromise, which could have led to this.  This one compromise involved the United States kicking out 25 Russian intelligence collectors and him picking up the phone and communicating to Moscow, right, supposedly independently and it was all supposedly covered up and Mike - he lied to Mike Pence, very hard to believe.  The point is, and this is what Sally Yates was saying today.  There is a phone conversation recording done by the Russians in a transcript that the Russians have in their possession.  Mike Flynn -

HAYES:  Both sides.  Both sides are on the call.

NANCE:  Yes, both sides are on the call.

HAYES:  It`s like a party line.

NANCE:  But by him lying on the White House, you know, accepting his descriptions of what was going on, he could be blackmailed by Moscow.  Now, and that`s what she was most concerned with.  But there are other factors in here which make it even more compromising.  We don`t know whether he was turned asset of Russia.  There`s a lot of -

HAYES:  Well, that`s a - that`s quite a thing to say.

NANCE:  It is a quite a thing to say but why would you pick up a phone five times on the same day we`re kicking out Russian spies.  Was he directed by the President, apparently not.

HAYES:  And the President later would say, well, I didn`t know - I didn`t tell him to do it, had I known he was doing - again, we don`t know what he was doing - I would have told him to do it. 

NANCE:  Yes.

HAYES:  BY the way, that`s the official -

NANCE:  Sure.  But the worst part about all of this is, this is a hair on fire intelligence breach, no matter how you look at it, because, you know, I`ve been in situations where people - when I was in the NSA, a person on the same floor as my entire operation, you know, everyone got re- polygraphed, everyone was considered an accomplice in this.  The White House should be going through full lifestyle polygraph to determine was Michael Flynn just an individual liar or did he have an accomplice.

HAYES:  So, you think this is - this is - what you heard today and the facts of the matter say to you that she should have been, she comes to the White House and it`s total immediate fire alarm in the White House.

NANCE:  Yes, the White House Counsel himself should have said, we have to assume a national security breach.  We have to assume everyone associated with this is part of this is part of this operation if it`s an operation and we need to re-clear everybody.

HAYES:  I`ve not - I`ve not worked at the Department of Justice but hearing Sally Yates describe this trip to the White House today, it just seem extraordinary.  Like this is not a thing that happens -

MILLER:  Well, it`s pretty extraordinary for the National Security Adviser to the President to be compromised by Russian intelligence.  That`s not something that happens every day.  So yes, it`s an extraordinary thing for the - her to have gone and done.  I don`t think that that`s extraordinary.  She went inform the White House basically if you read between the lines that Mike Flynn was under Federal investigation by the Justice Department.  When she told Don McGahn that he had been interviewed by the FBI and McGahn said how do you do and she says I won`t tell you, that`s a -

HAYES:  She saying - she saying -

(CROSSTALK)

MILLER:  - under investigation.

HAYES:  Right.  (INAUDIBLE) under investigation and possibly lied to federal investigators in violation of the federal law. 

MILLER:  Exactly right.

NANCE:  But they had this good fellow sort of attitude towards everything that she was bringing to them, you know.  Starting off with this -

HAYES:  What he`s doing nosing around her business.

NANCE:  Yes.  Not just what you do and nosing around her business.  What`s it to you, right?

HAYES:  Right.

NANCE:  You`re Justice why are you here in our White House?  And that`s sort of an understandable that she would come in there.  But a good Justice Department - you know, a good White House Counsel, someone who really is looking out for the interest of the United States would immediately say, this is a crisis meeting we`re having here.

HAYES:  Or protecting your client.  I mean, let`s not forget about national security issues, is seems to me that if you`re the White House Counsel, you`ve got a serious problem for the client who`s the President from the legal perspective that you need to get straight.

MILLER:  That`s right.  But this gets to what we don`t know what happens in the White House.  Presumably, Don McGahn recognized the national security risk and presumably someone in the White House recognized the political risk.  This is an enormous scandal when it comes out which of course that eventually did.  We don`t know whether they went to the President and the President said, you know what, I don`t care, I want to keep him anyway.

NANCE:  Yes.  Because this is a loyalist White House, right?  This is a group of people, again, the Goodfellas analogy, they don`t care.  You know, as long as they`re - you know, -- it`s close (INAUDIBLE) all amongst us.

HAYES:  The President public remarks in the wake of it have seemed to be that basically, Flynn got a raw deal.  Matthew Miller, Malcolm Nance, thanks for joining us.

Coming up Republicans use today`s hearing as an opportunity to grill Sally Yates on her refusal to defend President`s Trump`s original travel ban and Sally Yates came prepared.  That amazing moment after the break.

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SEN. JOHN CORNYN (R), TEXAS:  Could you just explain to me your perspective on what your - where your loyalties will lie given the fact you are appointed by the President, to serve at his pleasure.  Can you tell the President no?

YATES:  I can tell you very simply where my loyalties lie and that is to the people of the United States and to the constitution.

(END VIDEO CLIP)

HAYES:  Two years ago, Sally Yates was repeatedly questioned about her loyalties.  But then she did end up telling a President no, refusing to defend President Trump`s first travel ban.  For that, she was fired and accused of betrayal.  Then the Trump administration itself ended up withdrawing and rewriting the travel ban anyway after numerous courts backed Yates interpretation ruling it unconstitutional.  Yet despite that fiasco, Republican Senator John Cornyn of Texas decided to relitigate Yates` decision not to defend the order regardless of the recommendation of the office of legal counsel.

(BEGIN VIDEO CLIP)

I find it enormously disappointing that you, somehow, vetoed the decision of the Office of Legal Counsel with regard of the lawfulness of the President`s order and decided, instead, that you would countermand the executive order of the President of the United States because you happen to disagree with it as policy matter.

YATES:  Let me make one thing clear, it was not purely as a policy matter.  In fact, I remember my confirmation hearing in an exchange that I had with you and other of your colleagues where you specifically asked me in that hearing that, if the President asked me to do something that was unlawful or unconstitutional and one of your colleagues said or even just that would reflect poorly on the Department of Justice, would I say no?  And I looked at this, I made a determination that I believed that it was unlawful, I also thought that it was inconsistent with principles with the Department of Justice and I said no and that`s what I promised you I would do and that`s what I did.

(END VIDEO CLIP)

HAYES:  In a fitting ironY of happenstance, the very same time that Sally Yates was defending her decision on President Trump`s first travel ban, Trump`s revised travel ban faced its first hearing before the 4th Circuit Court of Appeals where judge after judge asked Acting Solicitor General Jeffrey B. Wall about statements during the Presidential campaign and afterward in which Trump talked about a Muslim ban.  Now it`s unclear how quickly they fourth circuit might rule but to resurrect the administration`s policy in full, the Justice Department would have to win in Richmond and its upcoming appeal of the Hawaii Ruling at the U.S. Court of Appeals for the 9th Circuit or eventually persuade the Supreme Court to intervene. 

Still ahead, he went from being one of the most respected intelligence officers of his time to being, potentially, compromised by Russia, exactly what happened to General Michael Flynn, that`s next.

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SALLY YATES, UNITED STATES DEPUTY ATTORNEY GENERAL:  The underlying conduct that General Flynn had engaged in was problematic in and of itself.  My knowledge of his underlying conduct is based on classified information and so I can`t reveal what that underlying conduct is.

CHRIS HAYES, ALL IN WITH CHRIS HAYES HOST:  At the center of the Trump- Russia controversy the man President Obama personally warned Donald Trump not to hire General Michael Flynn, a decorated military veteran with some very serious counter insurgency chops.  He rose rapidly through the army intelligence ranks, becoming the Director of the Defense Intelligence Agency in 2012 but he was fired two years later.  The former senior U.S. official who worked with Flynn said the firing was for insubordination, after the Army lieutenant general failed to follow guidance from superiors.

After that Flynn`s remarkable career trajectory took a different attack.  He appeared on Russian Statement TV, spoke at the Gala and had dinner with Vladimir Putin.  The most famous, he became one of Donald Trump`s top aids and advisers because the Washington Post to simply put it last year, he was one of the most respected intel officers of his generation, now he`s leading lock her up chants.  Joining me now is Evelyn Farkas, MSNBC National Security Analyst, former Deputy Assistant Secretary of Defense of Russia, Ukraine, Eurasia.

And Doug Wise, former Deputy Director of the Defense Intelligence Agency, he overlaps Michael Flynn for about a month.  And Doug, let me start with you, the arc of Michael Flynn is very, very difficult to put together because reporting about his career, particularly JSOC, the work he did was (INAUDIBLE) in Iraq and Afghanistan is quite laudatory.  How do you understand this man?

DOUG WISE, FORMER DEPUTY DIRECTOR OF THE DEFENSE INTELLIGENCE AGENCY:  Well, I`ll tell you what, it`s a mystery to many of us who are in the intelligence community and who knew Mike Flynn very well.  As you said, as Washington Post indicated, his set of experiences coming into the job as the director of DIA, we`re quite deep and extensive.  Combat and Command Senior Intelligence Officer job, the J2, as you said, the J2 for Joint Special Operations Command, service withstand the crystal and yet another war zone and the senior intelligence officer of the joint staff.

And after that serving under Jim Clapper as the Director of Partner Engagement for the DNI.  And so he came into this job with impeccable credentials and what appeared to be quite a political environment surrounding him.  So it --it`s a mystery to many of us as to his behavior from the minute he left the agency.

HAYES:  Evelyn, part of -- part of the question for me also is you would think that someone who is an intelligent professional will understand the stakes of everything.  I mean, just even so simple as not being forthcoming or truthful in an FBI interview is, you know, that you are -- that is not - - that is a big no, no and to think that this individual is doing that it`s just very hard to square that with the career that Doug had just outlined.

EVELYN FARKAS, MSNBC NATIONAL SECURITY ANALYST:  It is really hard and Chris Iƒ_Tve known him actually since he was also in Afghanistan and we -- I traveled there a lot because of previous work that I had.  And, of course, I knew him when I was the Deputy Secretary of Defense for Russia and he was DIA Director.  And at the time, you know, having contacts and doing what he did going to Russia and meeting with his counterpart, that in and of itself wasn`t unusual because we were trying to have an open line of communication, we were still in that reset.

But what`s stunning to me is that he would take money from RT, basically from the Russian Government.  Yes, he did tell people in Washington and he clearly told people in the DIA that he was going to Russia to participate in that dinner and give a speech there, but he didn`t tell the full story.  He must have known that that was going to be a problem.  If you`re getting paid by foreign government which is seen as an adversary by that point, very clearly by the U.S. Government, that`s a problem.

And I just wonder why he was warned then by the transition folks and probably many other people along the way.  Why did he persist?  It just doesn`t make sense, was it humorous, or was it that he thought the president had his back any way?  And what was he trying to achieve?

HAYES:  Well, Doug, his dismissal from the Defense Intelligence Agency, there`s a lot of people have sort of pointed that as a kind of turning point that that was really difficult for him.  And as he sort of went on, this sort of -- I don`t know any other way to characterize it but, kind of, radicalization happens afterwards what was your sense that he was insulted or crestfallen or angry by what happened to DIA?

WISE:  In my -- in my interactions with Mike before he departed, he seemed to be very even tempered.  He didn`t express any anger toward the Under Secretary of Defense for Intelligence.  He didn`t seem to manifest anything other than regret and not being able to finish out, you know, his three- year tour as the director of the agency.

HAYES:  Evelyn, there`s been some back and forth today about the degree to which he was vetted or not vetted with essentially Sean Spicer and the White House casting blame for any possible problems on the previous White House for having grant him security clearance.  Today Jim Clapper saying, actually, incoming National Security Advisers have a much higher standard of vetting than just a basic clearance process.  Is that your understanding of how things work?

FARKAS:  Yes, there are two processes, Chris.  First, you have the security clearance.  So can you be trusted with the country`s secrets, basically?  That`s something that`s done by security professionals, the Department of Defense was responsible for that and we understand that General Flynn have that renewed in January of 2016.

But once he became a candidate in essence for National Security Adviser position then the White House Office of Personnel Management, they should have asked him, first of all, to update his security clearance information so what countries did you have dealings with since January, you know, who were your -- who were your friends and associates, where have you traveled, certainly his financial disclosure forms, we know that he didn`t fill them out completely and honestly but he would have been required to do that and then the FBI does a check on you.

They look to see, have you broken any laws, you know, did you shoplift?  Anything from shoplifting to did you publish any -- this is not FBI, but the political folks in the White House, did you publish any articles that might embarrass the president of the White House.  So they do a pretty thorough vetting.  Oftentimes they`ll also interview you, you know, when is the last time you made a sex tape, kind of thing.  So I think that he somehow escaped this vetting or they vetted him and they said, well we don`t care.  The president likes him and we`ll back him.  I can`t understand it for the like of me.

HAYES:  All right.  Evelyn Farkas and Doug Wise, thank you both.  Still ahead, the Kushner family business showcasing their proximity to the president in a pitch to wealthy Chinese investors.  All talks the reporter that broke that story ahead.  Plus, trying to defend the indefensible night Thing 1, Thing 2, next.

(COMMERCIAL BREAK)

HAYES:  Thing 1 tonight, republican congressman, Raul Labrador has claimed that nobody dies because they don`t have health insurance.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  You are mandating people on Medicaid accept dying.  You are making a mandate that will kill people.

REP. RAUL LABRADOR, (R) IDAHO:  No one wants anybody to -- you know, that line is so indefensible.  Nobody dies because they don`t have access to health care.

UNIDENTIFIED FEMALE:  If you have ever been in an ER at three in the morning, explaining to a parent that their 2-year-old has leukemia and the first thing they ask is, "Will she live?"  And the second thing they ask is, "How can we pay for this if we don`t have insurance?" - it absolutely kills people.

(END VIDEO CLIP)

HAYES:  Labrador posted Saturday in part, "ƒ_Ýone of my answers about health care wasn`t very elegantƒ_ÝIn the five-second clip the media is focusing on, I was trying to explain that all hospitals are required by law to treat patients in need of emergency careƒ_Ý"  Today PolitiFact graded Labrador`s claim, and subsequent explanation pans on fire.  The Washington post notes citing a 2009 setting 45,000 deaths annually ruling to lack of coverage that uninsured-working-aged Americans have a 40 percent higher risk of dying than their insured counterparts.

That talking point about emergency rooms has been around for a while but now, republicans are trying a new strategy to defend Trumpcare.  Blatantly lying about what the bill actually does at Thing 2 in 60 seconds.

(COMMERCIAL BREAK)

HAYES:  Here is one clue that you sent a bad tweet.  It`s called the Death Ratio.  For instance, 450 people replied to it and just 54 like it.  That tweet is from House Majority whip Steve Scalise today defending Trumpcare saying, "nobody can be charged more than anybody else." That`s patently false.  Bald-faced lie.  As Brian Butler (ph) writes, "That is the complete inverse of the truth," because the bill, the house U.P. just passed specifically allows for waivers to let insurers charge sick people more than healthy people, but that just one of several (INAUDIBLE) falsehoods republicans are using to defend Trumpcare including this on Medicaid.

(BEGIN VIDEO CLIP)

JAKE TAPPER, CNN CHIEF WASHINGTON CORRESPONDENT:  Are you actually saying that $880 billion in cuts, according to the CBO, however you want to talk about that not being a cut, that that`s actually not going to result in millions of Americans not getting Medicaid?

TOM PRICE (R-GA), SECRETARY OF HEALTH AND HUMAN SERVICES:  Absolutely not.

GEORGE STEPHANOPOULOS, ABC NEWS CHIEF POLITICAL CORRESPONDENT:  So you don`t think anyone is going to be hurt when you`re taking $880 billion out of the system?

PAUL RYAN, SPEAKER OF THE UNITED STATES HOUSE OF REPRESENTATIVES:  No.  No, I don`t.  Because I think the micromanagement of Medicaid by the federal government, the Medicaid system isn`t working.  By getting the states the ability to customize the Medicaid population they are programmed to work for them.  Whenever we`ve had a waiver giving to a state so they can customize that works better.

HAYES:  Catch that?  Customize their Medicaid population.  To be the clear the nonpartisan CBO found the 880-billion-dollar cut to Medicaid would mean as you might expect it would because obviously, how could it not.  "ƒ_Ý14 million fewer Medicaid enrollees by 2026ƒ_Ý"

(COMMERCIAL BREAK)

HAYES:  In the much anticipated presidential election in France, the centrist, Emmanuel Macron, a businessman who has never held elected office, age 39, soundly defeated the far-right nationalist Marine Le Pen in her national front party by a two to one margin.  It`s safe to say that much of Europe breathed a sigh of relief.  There were celebrations in France and across the continent, in French restaurants and United States because Macron was not the only winner, the European Union was a big winner.

Macron wants his (INAUDIBLE) while Le Pen had vowed to leave it.  President Obama who formally endorsed Macron was a winner.  Even U.S. scientists were big winners since Macron has candidate had wound up.

UNIDENTIFIED MALE:  Please, come to France, you are welcome.  It`s your nation.  We like innovation.  We want innovative people.  We want people working on climate change, energy, renewables, and new technologies.  France is your nation.

HAYES:  That`s a good climate science foreign legion over there.  Though she gained more support than many might have wanted, Marine Le Pen was a loser along with the alt-right trolls who supported her.  President Donald Trump who all that he endorsed Le Pen.  Congressman Steve King tweeting about our shared civilization, also a loser.  Congressman Dana Rohrabacher who along with King met with Le Pen and then there`s Russian President Vladimir Putin also meeting with Le Pen during the campaign hosting her at the Kremlin.

Here`s another loser in this picture.  As well as the widespread last minute hacking of the Macron campaign though not yet definitively tied to Russia.  Since President Trump`s election, the right-wing ethno nationalists across the globe are 0 for 3 in Austria, Holland, now France.  Next up, why were members of the Kushner family business in China using Jared`s name and the president to sell visas to rich Chinese investigators.  And why were reporters kicked out of the event.  That`s after the break.

(COMMERCIAL BREAK)

HAYES:  Saturday afternoon at the Ritz-Carlton hotel in Beijing, China, Nicole Kushner Meyer made a presentation to Chinese investors.  Now, Meyer is the sister of Jared Kushner.  President Trump`s son-in-law and senior adviser.  The New York Times reporter Javier Fernandez will join me shortly was there in the room.  Quote, I asked Kushner`s sister whether a hundred and fifty million dollars in Chinese investment posed a conflict of interest.  Leave us alone, her entourage, yelled.

PR reps kicked us out of Kushner meeting with investors in Beijing saying, "We don`t want to make a scene."  And from a Washington Post researcher, "People from the Chinese company that works with Kushners surrounded me and grabbed my shoulder.  I was threatened, harassed, and forced to delete recordings and photos of the Kushner family recruiting Chinese investors."  Why all the ruckus?  Meyer had invoked her brother`s service as Chief Executive of Kushner Companies and as his resignation from the company to join the Trump administration as she solicited a hundred and fifty million dollars to finance Kushner development in New Jersey.

The money would be provided through a much-criticized government program known as EB-5 that awards foreign investments a path to citizenship in exchange for investments of at least $500,00 in American development projects.  The next day, Sunday, Kushner companies apologized in a statement that reads in part, "Kushner companies apologizes if that mention of her brother was in any way interpreted as an attempt to lure investorsƒ_Ý"

But the very same day, Sunday, Kushner properties was in Shanghai making another pitch to potential investors at the Four Seasons hotel.  Security guards kept reporters outside in the lobby.  Two presentations in two days.  It does make you wonder how many of these pitch meetings have been made since Donald Trump`s election in which reporters were not present.  And joining me now live from Beijing, Javier Hernandez, China Correspondent of the New York Times.  And Javier, I know we have a bit of delay.  So Iƒ_Tm going to just ask you what exactly was the scene there?  What was the goal of the event that you attended?

JAVIER HERNANDEZ, THE NEW YORK TIMES CHINA CORRESPONDENT:  Well, it was a very high-end event, meant to attract the wealthiest of Chinese who are very interested in getting green cards to come to the U.S.  And so on a Saturday afternoon we went to the Ritz-Carlton.  It was a publically advertised event, sat down, and listened as the Kushner Company made this presentation pretty on this pitch for investors about this new building.

HAYES:  And the idea here is that if you invest a certain amount of money, you get a visa to the U.S.?  That`s the basic press of it?

HERNANDEZ:  That`s right.  It`s $500,000 and that puts you on the path to a green card.  And for a lot of Chinese that`s a really popular idea.  They want to escape the smog, they want to escape a poor education system in some places, and so they`re willing to put up that money.  For investors they get a great source of relatively cheap financing.  So for both sides it`s a win, win deal and there`s a lot of interest right now.

HAYES:  And tell me about the contacts in which Jared Kushner and the president, Donald Trump, were mentioned in the course of this pitch.

HERNANDEZ:  Well, Jared Kushner`s sister, Nicole mentioned that her brother had recently left as CEO and was now serving in the Trump administration.  There was earlier in the -- in the presentation by another pitch, there was a presentation, a slideshow that showed the president`s image as a key decision maker on the EB-5 visa program.

HAYES:  That seems to be key here because the thing they`re actually pitching is actually attached to federal immigration policy that the existence of this visa and you`re saying in the -- in the contex of the pitch, they`re saying very explicitly to investors, this is a program run by the U.S. Government who would Donald Trump sitting at the head of it?

HERNANDEZ:  Right.  And there`s been a lot of criticism and talk of reform about the EB-5 program.  Some people suggested getting rid of it entirely, so it`s a -- it`s a really important decision in the next six months whether they`re going to renew this program or not.  And certainly from the Kushner side they were trying to reassure about investors in at least from this image that -- that`s these were the key stakeholders and it`s likely to be renewed and the criteria might change, but we can sort of assume that it will be renewed.

HAYES:  Now, part of the reason they`re doing these roadshows in Ritz- Carlton in Beijing is because they`re having trouble with financing for the project, the Bloomberg headline, "Kushner Project Touted in China Is in Trouble at Home."  They need this capital.  That`s why they`re doing these roadshows, is that correct?

HERNANDEZ:  They`ve turned to this program, this EB-5 program several times and I think it`s a really popular way for them because as I mentioned, the investors here don`t really care about the return on the investment.  They`re just looking for green cards.  It gives them a very quick access to a lot of money, $150 million in this case which is about 15 percent of the entire project.  So we`re talking about a very, very efficient way if you want to build something in New York, New Jersey, these high-end markets, to get your funding, and to get a lot of people involved.

HAYES:  All right.  Javier Hernandez who broke the story, did a great job reporting it in Beijing tonight.  Thank you for your time, I really, really appreciate it.  That story is remarkable.  I just want to say, this is probably one of the most glaring incidents we have seen so far of the potentials for conflict being realized right before our eyes.  That is all in for this evenings.  Rachel Maddow Show starts right now.  Good evening, Rachel.

 

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