First results in Ohio special election. TRANSCRIPTS: 8/7/2018, All In w Chris Hayes.

Guests: Rebecca Davis O`Brien, Elie Mystal, Andrew Cuomo

Show: ALL IN with CHRIS HAYES Date: August 7, 2018 Guest: Rebecca Davis O`Brien, Elie Mystal, Andrew Cuomo

STEVE KORNACKI, NBC NEWS NATIONAL POLITICAL CORRESPONDENT: I got ten seconds to tell you this looks like all the yearly vote. The question now, the same day vote, it`s starting to come in. "ALL IN" with Chris Hayes starts right now.

(BEGIN VIDEO CLIP)

CHRIS HAYES, MSNBC HOST: Tonight on ALL IN.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We have to keep the House.

HAYES: Election night in America.

TRUMP: Because if you listen to Maxine Waters --

HAYES: The polls are closed in Ohio.

TRUMP: She goes around saying we will impeach him. We will impeach him.

HAYES: In the last special election before November.

TRUMP: We must elect more Republicans and we must elect Troy Balderson.

HAYES: Tonight, the stakes for the President, the stakes for Democrats and all the results as they pour in. Plus, another explosive day inside the trial of Trump`s Campaign Chairman.

PAUL MANAFORT, FORMER CAMPAIGN CHAIRMAN, TRUMP CAMPAIGN: It`s obviously what our position is.

HAYES: New details on how prosecutors are squeezing the President`s fixer.

MICAHEL COHEN, FORMER LAWYER OF DONALD TRUMP: I`ll do anything to protect Mr. Trump.

HAYES: And how the new Trump push to curb legal immigration plays into the midterms.

UNIDENTIFIED MALE: This is an amazing moment.

HAYES: When ALL IN starts right now.

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HAYES: Good evening from New York I`m Chris Hayes, polls have just closed in Missouri and in parts of Kansas as election results are coming in as I speak to you tonight in the special election in Ohio. That`s a head-to- head Congressional race and it`s the final real-world political barometer of the country before the midterm elections now just 91 days away. In Ohio`s 12th Congressional District polls closed about a half hour ago. Republican Troy Balderson and Democrat Danny O`Connor have been locked in an extremely close contest even though Donald Trump carried the district by 11 points in the 2016 Presidential Election. Democrats of course have been over-performing in special elections by an average of about 12 points. Tonight, we`ll see if that kind of Democratic performance is holding off.

I`m joined by MSNBC National Political Correspondent Steve Kornacki and his big board. Steve, what are we seeing in Ohio?

KORNACKI: Yes, we`re in a very interesting moment a very, very brief pause. In fact, it`s starting to end as I speak. They have counted all of the early votes. A significant portion of all the vote was cast early out here. It`s counted quickly. You`re looking at it right here. So, Daniel O`Connor now, don`t be fooled, the fact that Danny O`Connor, the Democrats up by 27 points that does not mean we are looking at a Danny O`Connor landslide right here. The Democrats have tended to do much better in the early vote. Certainly, that`s been the case in Ohio. We expect that to continue to be the case so we expect this to tighten but when you take a look at where. Here`s one of the big stories we`re seeing right now, Franklin County, this is Columbus, this is the immediate Columbus suburbs, this is the place Hillary Clinton won by nearly 20 points in 2016. The early vote here, you`re looking at O`Connor sitting at about 80 percent. Balderson sitting at 19 percent.

We think -- this is you know, this is a matter of accounting when people vote Election Day very early but you go back to 2016 in the early vote here and we think Trump got about 30 low, 30 percent here in the early vote so that would be lower again. This is the Democratic heart. This is where Democrats need to run up the score and get a ton of people out there to the polls. The other question though is like for instance out here this is Balderson`s bases Amesville, Muskingum County here. Again, Donald Trump won this county by 29 points over Hillary Clinton. Already just in the early vote, Balderon in his own backyard at 23. And again, if Republicans do much better on Election Day, he could drive that up a little bit more.

So really the story here is Balderson as these Election Day votes are counted particularly in the rural parts and then a key is going to be Delaware County. This is more than a quarter of the district right here. Again, this is a County Republican -- if a Republican isn`t winning Delaware, and isn`t getting a healthy margin out of Delaware, that Republican in this district is in big trouble. This is the early vote for Delaware County. These can be subject to wild swing so I caution everybody but Balderson, this is a big thing. We`re going to be watching in the next hour or two as they count the election day vote here. Can Balderson get ahead of O`Connor? He`s got to do that, can he get significantly ahead of him in Delaware? If he does that, that maybe -- that`s going be a very key thing tonight, Chris.

HAYES: Right, so the numbers we`re going see right now, they`re counting that early vote. Everyone`s been saying the early vote should be wildly in favor of the Democrat O`Connor just don`t bracket that, that the election day vote is going to -- is going to shrink that pretty quickly. My question you though is we know Trump carry the district by a pretty, pretty healthy margin, the district itself though it`s not just that Trump carried him, and this has been a Republican district for quite some time.

KORNACKI: It is a really a perfect story though of the Republican Party in the era of Donald Trump because we say this is historically been a Republican district and it`s historically been a Republican district because of the Columbus suburbs, Delaware County, again you`re talking higher income white-collar professional suburban. Think of like John Kasich the Governor of Ohio, the symbol of sort of moderate Republican opposition to Trump. He was the Congressman from this district from Westerville, Ohio that strain of Republican -- Republicanism used to be the heart of this district. In 2016 what we saw happen with Donald Trump on the scene is, for instance, Franklin County, that was dead even when it was Obama versus Romney. Obama won it by maybe two points. Donald Trump comes along, Hillary Clinton wins it by nearly 20 points.

The flipside though is when you get outside of Franklin, outside of the wealthy suburbs of Delaware here into the blue-collar rural small city parts Licking County, Muskingum, Richland up there in Mansfield, you saw some of the biggest swings in the country from Romney in 12 who did terribly to Trump in 2016 who won Muskegon County by 30 points. Obama carried the Muskegon County portion of this district in 2012.

HAYES: So, Steve Kornacki, this is -- this is a fascinating race. Thank you for that. We`re going to be checking back with you throughout the show as hopefully, we get some more results. For more on what`s happening on the ground in that district, we have MSNBC Correspondent Garrett Haake. He joins you from the Danny O`Connor election headquarters in Westerville, Ohio. And Garrett, there was something that Balderson, O`Connor`s opponent said about Franklin County, that of course being that core of the district that`s most Democratic-leaning around Columbus that has got him in a little bit of hot water right into Election Day.

GARRETT HAAKE, MSNBC CORRESPONDENT: Yes. Chris, this is a good old- fashioned campaign gaffe for one of his last stops of the campaign. Troy Balderson said he didn`t want to see someone from Franklin County representing this district. Well, Franklin County as Steve just pointed out so well is the Democratic heart of this district. It`s not where Balderson`s base is located. It`s one of those examples of saying something in your indoor voice side, your outdoor voice instead. But the O`Connor campaign has done everything they could to take advantage of it in the last 24 hours or so of this race. They sent out something like 60,000 text messages to their supporters at people who they think might be their supporters in Franklin County just to make sure they`ve heard about it in the races last 24 hours.

And really, Chris, they`re starting to fill in at this party here. There`s a relatively positive atmosphere. It is not the dance party that the Ossoff campaign headquarters was during Georgia Six. The O`Connor folks and their supporters have been very cautious about how they looked at this race but really, they have to feel pretty good about it. They ran mostly error-free baseball especially in the last 48 hours here and I think that may blunt some of the effect that publishing got from having President Trump here. We`re just going to see whether or not that this is a sort of a case of numbers versus enthusiasm the Democratic base here does seem to be more fired up. They just have a huge math problem to overcome.

HAYES: All right, Garrett Haake who`s live there at Danny O`Connor headquarters, we`ll be checking in with him throughout the hour. We`ll go back to you as events warrant. There are more fascinating races across the country tonight. In Kansas, we`ve got Kris Kobach known for his extreme rhetoric and policies on immigration and voter restrictions. He got an eleventh-hour endorsement from President Trump and his Republican primary for Governor. Democrats are eager to see if Kobach will defeat the sitting Republican governor giving Democrats they think a potentially better chance at taking that governorship.

In Michigan, Muslim-American Rhodes Scholar, Public Health official Abdul El-Sayed is running the Democratic Primary for Governor. He`s won the backing of Bernie Sanders. The front-runner in that race Gretchen Whitmer, she`s the state`s former Senate Minority Leader. She has worked in politics in that state for a while. She`s been endorsed by Emily`s List. They`re both in the ballot tonight. Like every contest in the past year and a half, today`s elections stand in the shadow of course of the 2016 Presidential Election and the man who became president and the wreckage of those he associates himself with.

Today we learned that Trump`s former lawyer, his fixer Michael Cohen is under investigation for tax fraud for under-reporting income from his taxi medallion business according to The Wall Street Journal, and that "federal prosecutors subpoenaed Mr. Cohen`s former accountant back in April before the raids happened. Interesting nugget. And in the trial of Paul Manafort Trump`s former campaign chairman, we sat through hours of testimony from his former business associate Rick Gates, a former Trump campaign deputy chairman. Gates detailed a slew of criminal activity that he said he and Manafort together engaged in for years. Just for instance an almost at random hiding bank accounts in Cyprus, falsifying documents to get bank loans, falsifying documents to lessen Manafort`s tax burden and much more.

Fundamentally, Gates` testimony over the past two days has portrayed basically a criminal enterprise, not just a few one-off ethical slips. And Gates described Manafort as a man who basically went broke after the income stream from Russian-backed candidates in U.K. came brought it up but not the scope of this trial. Gates also has essentially established the conditions under which Paul Manafort who just a few months after his financial distress would have been extremely vulnerable of becoming essentially a compromised asset of a foreign power while he was acting as a volunteer campaign manager for candidate Donald Trump.

For more on both the Cohen and the Manafort saga I`m joined by NBC News Intelligence and National Security Reporter Ken Dilanian who`s been covering the Manafort trial, he was in that courtroom today. We also have Rebecca Davis O`Brien who covers white-collar law enforcement to The Wall Street Journal. She was a Co-author of that breaking news item on Cohen today. Ken, I`ll start with you. We got some really dramatic testimony today and we also got the first big cross. What happened when Manafort lawyers got their crack at cross-examining Rick Gates?

KEN DILANIAN, NBC NEWS INTELLIGENCE AND NATIONAL SECURITY REPORTER: Chris, we didn`t have any Perry Mason moments in the cross-examination. You know, Rick Gates didn`t leave weeping from the stand but I think they did do him some damage. I mean, he wasn`t a great witness on cross-examination and he started out poorly by failing to come to grips with the fact that he lied to the FBI and he pled guilty to that. He was kind of dancing around the question with when Manafort`s Lawyer Kevin Downing was asking him you know, whether he lied to the Special Counsel. He obviously did. He`s pled guilty to that as the judge pointed out and it kind of went downhill from there.

You know, the problem is that Gates has admitted embezzling money from Manafort`s operation behind Manafort`s back but it seems like the accounting was so loose he couldn`t even say how much he took. There were all these wire transfers that he testified to from these foreign bank accounts. Some of which he said were legitimate bonuses. It allowed Manafort`s lawyers to make it seem as if he may have -- for all they know he may have embezzled millions of dollars and it`s not clear what the jury is supposed to believe about that.

But, Chris, but none of this really impeached the more dramatic testimony from earlier in the day where the prosecution used Gates to walk through a series of documents. So they were saying don`t just take his word for it. Here are the documents. Here are the e-mails from Paul Manafort, here are the tax records that clearly show that both men were in or I mean, very -- I mean the evidence is very strong that they were involved in tax fraud, bank fraud.

As you said you know, understating income to make it look like loans for example to lower Manafort`s tax liability. You know, all these overseas accounts that he was supposed to report on his tax returns but didn`t and there`s a clear wreckage of that and then when he was broke in 2016 he was more concerned about generating loans from banks then they were overstating the income of the business and there was some testimony that showed that Manafort actually took a Microsoft Word document and manipulated it to make it appear that the business was earning more than it was to get money out of a bank.

HAYES: Yes, he had liabilities and some loan that was you know, $650,000 or something and it comes in and it`s like he`s got the liability on it and then he puts the value or the income. He goes in and makes it $3.5 million basically then $3.5 million. You`ve also got to be -- my understanding is this correct -- that basically you`ve got this thing where when they`re making a lot of money they`re trying to reduce tax liability, they`re lying to undershoot and then when they want to go to banks with loans and they want to get collateral they`re lying to overshoot sometimes on the same stuff?

DILANIAN: Yes. It`s really incredible. First of all, it`s incredible that Paul Manafort according to prosecutors earn $60 million over ten years and apparently spent it all and then it`s incredible that Paul Manafort who had been working on Republican campaigns since Gerald Ford apparently couldn`t get any clients after his sugar daddy from Ukraine fled to Russia. They were flat busted. They had nothing. It`s weird how does everyone stayed away from this guy but one person the nominee Donald Trump who would go and be President United States. NBC News Intelligence and National Security Reporter Ken Dilanian, thank you for that thank.

DILANIAN: Thank you, Chris.

HAYES: Rebecca, I want to turn now to your piece on Wall Street Journal regarding Michael Cohen. What do we learn today about how prosecutors are treating the President`s former lawyer?

REBECCA DAVIS O`BRIEN, CRIMINAL JUSTICE REPORTER, WALL STREET JOURNAL: Thanks for having me. Well, first of all my colleague and I today, what we reported on was the latest development in this month`s long wide-ranging investigation into Michael Cohen`s personal business interests and his work on behalf of Donald Trump. What we reported on today was simply the latest development which is that prosecutors appear to be looking into potential tax fraud charges or tax violations related specifically at least to his underreporting or potential underreporting of income as a result of his taxi medallion business.

HAYES: Right. So he had -- I mean this is someone who had a variety of different businesses. One of them is a taxi medallion business. That is a business that I think it`s fair to characterize as often operating in marginal gray areas of the law and a very cash heavy business that would be susceptible would someone be interested in doing this to some kind of tax evasion.

O`BRIEN: Well, it`s an interesting business because the values of these medallions has -- it was -- it fell precipitously in the past years because of Uber and Lift and other ride-sharing services but it also -- you know that the same time they`ve been looking at the potential bank fraud charges related to low -- sorry, excuse me -- loans that were related to his taxi medallion business. But now we`re learning that there`s also possibility that he underreported his income as a sort of tax evasion scheme and it is as you mentioned a tax cash heavy -- cash -- yes cash every business.

HAYES: Final question on this. This is -- this is all being run out of this the Southern District in New York. This is not Mueller`s team who`s looking into this correct?

O`BRIEN: Correct. This is prosecutors out of Manhattan`s Southern District of New York and the FBI.

HAYES: Rebecca Davis O`Brien, thank you very much.

O`BRIEN: Thank you.

HAYES: For more of the vast legal implications at hand here I`m joined by Attorney Elie Mystal Editor of the legal blog Above The Law and MSNBC Legal Analyst Jill Wine-Banks, former Assistant Watergate Special Prosecutor. Well, I`ll return to Cohen in a second. Let`s start with Manafort because you got -- you know, today was like the best sort of quiet -- and I was there but I read the transcript. It was your --

(CROSSTALK)

ELIE MYSTAL, EDITOR, ABOVE THE LAW: You got your shiraz, you got some popcorn just watching the trial. It`s a hilarious day. Look, let`s tie this to shop because that`s more interesting right now. The established narrative is that this has nothing to do with Trump, Manafort is on his own. It`s just about tax evasion. But here`s the thing. What we saw today establishes the motive and opportunity for Trump -- for Manafort to collude with the Russians, right? He has motive, he was broke, he needed the money and opportunity, he had all these Russian contacts. Like from the collusion standpoint, like that`s what I saw today.

And the other thing that I saw today is -- and people need to understand this. It is unprecedented for a President`s campaign manager to be this deep into as you put it a massive scheme for tax fraud. I mean, this guy is like Wesley Snipes with his taxes and Trump is like hasn`t said anything to it.

HAYES: No, he doesn`t -- well what is he said? He said he`s getting the - - he`s getting a raw deal, he`s getting rough treatment.

MYSTAL: His campaign was managed by Blade and he`s like I don`t -- this is -- they`re mistreating him so badly. Paul Manafort today was exposed during the trial of being a massive tax fraud and he and the President`s campaign.

HAYES: And the President said not one word and when he has he`s tweeted support for him. And there`s you know, Jill, I was thinking about this sort of idea of fish -- you know, the fish rots from the head or sort of cultures of corruption. You know, one of the things that preceded Watergate right or preceded Watergate bringing down Richard Nixon was that like oh by the way his vice president is getting bags of cash delivered to the vice president`s residence and I don`t think that was accidental right? Like there`s cultures of corruption, there are sort of ethical standards that people do or don`t hold people in their orbit to.

In the case of Richard Nixon, you had this remarkably corrupt vice president, it does say something about the kinds of people the president selects regardless of what he did with Russia what we`re learning in a Manafort trial.

JILL WINE-BANKS, MSNBC LEGAL ANALYST: As they say, birds of a feather flock together and the same thing that happened in the Nixon administration where you had a lot of cash flowing, overflowing safes in the White House and at the community to reelect the President with cash and the same thing is happening here. You have Cohen, you have Gates, you have Manafort. All with underreporting their income to evade taxes and then over reporting it to get loans. And the only thing I can say is the person who`s missing from that list is Donald Trump and that`s only because we haven`t seen his tax returns. It`s probably the same thing with him. We know he`s been in bankruptcy, we know that very few banks in America would loan money to him and he was getting money from overseas.

HAYES: I should -- I should note they`re just -- in terms of running those three together Michael Cohen according to Wall Street Journal is being an investigator for this. He, of course, has not been charged with anything. That`s not true of Paul Manafort. He`s of course on trial for this and Ricky Gates admitted to doing it today.

MYSTAL: And Jill makes an excellent point. How do we live in a world where the President`s closest associates are either under investigation or on trial for tax fraud at least however seen his taxes. Like how is how is that the timeline we`re on?

HAYES: And also, I mean there`s this question I have. You know, Paul Manafort was able to get away with this basically for years. I mean, he was -- he was seen as a sketchy guy but in fact, even in the opening statements of defense, I said well how come the IRS never got to him? How could they didn`t audit him? How guilty could he be? And it`s like well people can get away with a lot. I mean, that`s one of the lessons of Paul Manafort. If in fact he`s found guilty is that people can get away with lot.

MYSTAL: Especially when you have a loyal deputy and that`s -- and that`s the counter here right? His defense besides the fact that it does -- everybody does this is that I did do it, Rick Gates did this right? And when you look at the prosecution`s evidence so far, a lot of the documents that they have are signed by Rick Gates. That`s why they have to bring Rick Gates on the stand and that`s why they have to expose Rick Gates to the kind of cross-examination and Ken Dilanian said that he wasn`t you know -- it didn`t draw a lot of blood. I mean, the man had to admits an affair does an open court like he was talking Kyra Sedgwick. Like it was not a great day for Rick Gate.

HAYES: No, it was a rough day for Rick Gates. I mean, Rick Gates has not had a great few days. I mean, Rick Gates is up there basically being like I`m a serial criminal. I -- you know, I defrauded the government but I also defrauded my boss because -- and maybe I defrauded the inaugural committee because I like to file false you know, false claims. Jill --

BANKS: The good news for the for the prosecution though is that there are documents, it`s not just Rick Gates`s word, the documents prove that the income came in. The documents prove that expenses exceeded the income. They also prove he had 60 million in income he didn`t even notice that he was being embezzled. That`s how much money --

HAYES: Right.

BANKS: So, I mean, I think we have to keep that in mind and that the jury will get that.

HAYES: Yes, it`s crazy. What a bizarre financial picture but to your first point we should -- everyone should just keep in mind the picture of desperation distress the prosecution has painted of Manafort in a period right before he joins this campaign. Elie Mystal and Jill Wine-Banks, thank you both. We will have much more coverage on this election. Ahead you see that ticker? That`s what we call it down there, ticker, lower part of the screen. Steve Kornacki, you know him, you love him, you`ll love to see him at the big board. He`s standing by ready to give us the latest results from that special election in Ohio. He`s also straight -- I`m about to say, is he talking right now? He is. Because he`s streaming live on nbcnews.com calm in between and will come to him shortly.

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Also, former Obama speechwriter, Host of Positive America and the Wilderness podcast Jon Favreau is here to talk about how Democrats are fighting to regain electoral power and I`m going to ask the New York Governor Andrew Cuomo if he`ll join calls by his primary challenger Cynthia Nixon to abolish ICE. All that more coming up.

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HAYES: There are a number of contested primaries around the country that will help shape the Democratic Party`s message and his priorities as it heads into the midterm elections. One of those primaries is right here in New York with two-term Governor Andrew Cuomo and his challenger Activist and Actress Cynthia Nixon who has been critiquing Cuomo from his left on a number of issues. I got a chance to speak with Governor Cuomo today about where Democrats stand going into this election and his recent legal battle with the NRA.

(BEGIN VIDEOTAPE)

HAYES: Governor let`s start with the NRA. Your department, your sort of insurance department here in New York State canceled a form of insurance the NRA offers. You`re now being sued by the NRA that says essentially this is viewpoint discrimination. You`re going after them because you do not like their politics. What`s your response?

GOV. ANDREW CUOMO (D), NEW YORK: My response is it`s a frivolous lawsuit, Chris, but they`re right I don`t like their politics. First, on the lawsuit itself. The State has regulate insurance as you know. This state has a very clear law that says you cannot insure someone for an intentional bed act. Their insurance policy, what they were selling was called carry guard. It was a policy designed for people who carry weapons and it essentially insured them for an intentional bed act and that violates the law in the State of New York. It`s very clear. We brought an action against the insurance carrier. They paid a fine. They agreed to a consent order and they`re not selling the product. The NRA was basically the broker for the product. They`re claiming a loss of revenue because the insurance policy was canceled.

Frankly, I have no sympathy for a party that was doing something illegal. We then stopped the illegal act. They lose revenue. If I have a 21-year- old kid who`s selling drugs and he gets busted and he complains I lost the revenue from the drug sale, that falls on death in ears. But yes I am a political opponent of the NRA. I have been for many years. My father was before me, since I was in the Clinton administration and we had the safe gun agreement with gun manufacturers that the NRA went out of their way to blow up. I believe they are the main political force that is stopping common sense gun reform. I believe they are the reason why Republicans will not agree to reform that 90 percent of the American people want. They bully, they`re extortionists and I believe they`re stopping progress in this country on an issue that is literally killing people.

HAYES: The last time that I had you on the program, Governor, I was down in McAllen, Texas on the border. We were recovering the family separation policy. This -- your state had taken some actions and I want to ask you about sort of a broader question about ICE which has become a kind of flashpoint in national politics, Democratic Party politics. Your primary opponent Cynthia Nixon and the Senator from your state Kirsten Gillibrand with whom I think you have a good relationship have both come out in favor of abolishing ICE, getting rid of the agency. Do you favor that position?

CUOMO: Well, look, I think what has happened is the President has politicized the ICE. ICE as a police force, their intent, their purpose, their founding mission was right which was to fight terrorism, right? We`re New York State 9/11 we want a police force that fights terrorism. We don`t want what we have in ice which is a politicized police force which is doing the President`s political bidding and that`s really the problem. We don`t want him politicizing ICE, we don`t want him politicizing the FBI, we don`t want him politicizing the U.S. Marshals and that`s what has to be abolished.

We do need a police force obviously that fights terrorism but that`s not what this police force is doing under this President because he has politicized it and we don`t want him do it ICE or any federal police force. You`re supposed to keep your politics away from law enforcement and that`s the violation of this President.

HAYES: You`re -- when we last -- we talked to talk about the border. There are ways in which this state obviously and local authorities interact with federal immigration officials and immigration enforcement. Are there ways in which the state interacts with ICE that you`re reconsidering whether that`s sharing data or contracts or anything like that?

CUOMO: I will do nothing cooperatively with ICE. I have sent them letters asking for an investigation. I have said if they do any criminal acts which a police force can do, we will take criminal action against ICE because I believe they are politically motivated.

HAYES: Final question because this pertains in a way to the midterms, right? There`s a lot of competitive Congressional races in your state, in the state that I`m in right now New York State, a number of ones that could go either way. There was a New York Times article the other day about a weird quirk of New York electoral law which is that candidates can be on multiple lines. The Independent Party is a party here in New York. You`ve accepted their line as is Kirsten Gillibrand and other and fear from some Democrats that that might pull votes away from straight-ticket voting on Democratic lines in those competitive races, places like New York 19 where John Fasso is up, and others. Is that a concern of yours? Is that a legitimate fear that accepting that line for the independent party hurts Democratic Party chances in congressional races?

CUOMO: No, Chris. That is the way the system has been in this state for many, many years, it`s called fusion voting. In a perfect world, you wouldn`t have it, but it is the reality of New York. Democrats often run on several lines as do Republicans.

I don`t think that is going to have any effect, it hasn`t in the past. I don`t believe it will have an affect here.

I believe the Republicans are in real trouble in this state, and across the country, worse in this state, because the Republican congressional people took votes that were adverse to the interests of the citizens of this state.

That tax reform bill had a penalty for New York and 12 other Democratic states that eliminated deductibility. It essentially raises everybody`s taxes 30 percent. So, the Republicans are in real trouble.

I would like to see the Democatic Party, frankly, be less negative, because Trump is doing the best negative case that we could ever do and start to be more affirmative about what the Democrats will do when we get in power. You know, the negative is onlyp part of the equation, it`s the positive, affirmative. And if you look back, I believe that`s why the Democrats have lost in the past.

We have not had a credible vision that people believed would make their life better. And at the end of the day, it`s not enough to criticize the other party, you must have a credible vision that people believe you can implement. And that`s what this Democratic Party needs for the mid-terms and beyond.

And people have to believe you can do it. It can`t be abstract, theoretical, pie in the sky. This is how I will make your life better. It all comes back to the Bronx, Chris. What are you going to do for me?

HAYES: Now you`re pandering, governor. You`re pandering.

Governor Andrew Cuomo who knows what he`s doing. Thank you very much, governor. I appreciate it.

CUOMO: Thanks, Chris.

HAYES: Bye.

Next, why Republicans advised the president to steer clear of primary candidate Chris Kobach, and why the president went ahead and endorsed him anyways. That story after the break.

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HAYES: There are a lot of reasons why the national GOP did not want the president to endorse Kansas Secretary of State Chris Kobach for governor in tonight`s Republican primary. We`re going to get those results hopefully by the time we`re off the air, maybe a little later.

Now Kobach built a national profile now he built a national profile advancing extreme alienating policies on things like voting and immigration. He served as co-chair of the president`s, quote, voter fraud commission, which has since been dispanded and accused of bias. The voter ID law that Kobach pursued in Kansas was not only thrown out by a federal judge, the judge went so far as to hold Kobach in contempt of court for defying an official order. And then Kobach then paid the resulting fine using public funds. Nice. Nice work if you can get it.

More recently, there was this report that Kobach first built his career by helping small cities and towns pass anti-immigrant ordnances and then getting himself hired to defend them in court. Some of those towns ended up millions of dollars in debt while Kobach himself reportedly pocketed more than $800,000.

National Republicans fear that all tha baggage, and I`m really just scratching the surface, could give Democrats the chance to take back the governor`s mansion this fall. So, the president, as he often does, ignored their advice, tweeting out his full and total endorsement of Kobach yesterday and that could make all the difference.

(BEGIN VIDEO CLIP)

CHRIS KOBACH, REPUBLICAN GUBERNATORIAL CANDIDATE, KANSAS: I am optimistic, obviously, with the president`s endorsement that helps a great deal. One of our latest polls showed 20 percent were still undecided, so hopefully President Trump can help them make their minds up.

(END VIDEO CLIP)

HAYES: The president is betting the mid-terms, and the future of his presidency on just like Chris Kobach and Kobach`s message and issues like immigrantion. The Trump administration`s war on immigrants has been waged so far on two fronts. There`s been, of course, the cruel treatment of undocumented immigrants, people showing up at the border asking for asylum, including the separation of children from their parents at the southern border. As the latest report, 572 kids taken from their parents are still separated from their moms and dads.

But what`s gotten less attention is the administration`s systematic assault on the rights of documented and authorized immigrants. Today, NBC News revealed that in the coming weeks the administration is expected to issue a proposal that would make it harder for legal immigrants to become citizens or get green cards if they have ever used a range of popular public welfare programs including subsidies on Obamacare exchanges.

It is not an accident this proposal is being floated in an election year. President Trump and his hardline immigration czar, Steven Miller, appear to believe their war on immigrants, even legal ones, will energize their base ahead of the midterms.

Joining me now to discuss whether that`s a good bet, New York Times columnist Michelle Goldberg and former Obama speechwriter Jon Favreau, co- founder of Crooked Media, host of the new podcast The Wilderness, which I have to recommend as a podcast connoisseur myself is excellent. You should check out The Wilderness, it`s really good work.

So, I think, Jon -- I think Miller and Kobach and the president, all these people think like this is our special power. Like if we -- like MS-13 is coming for you and your loved ones and the Democrats are going to be like letting them run wild. And I just think they`re -- what do you think about that strategy?

JON FAVREAU, CO-FOUNDER CROOKED MEDIA: I mean, they tried that in Virginia with Gillespie`s race and it didn`t work. It was all MS-13 ads all the time. Ralph Northam won there.

Look, I think this is their best strategy right now, but it is not necessarily a winning strategy as we have seen at least. Like it is going to be rile up the base, obviously, but I don`t really think it is going to get him across the finish line in a lot of districts and states that they need.

HAYES: Yeah, The New York Times reporting on this was interesting. Alex Burns (ph) on Ohio 12, which is basically Balderson starts by being like, I am a good Christian, and I am a family man. And I like got the budget in control in Ohio, and everyone is like boring. We don`t care. And then it is like this is -- this is what he is closing with. Check out this ad.

(BEGIN VIDEO CLIP)

ANNOUNCER: The liberal resistance is demanding open borders. They want to eliminate the law enforcement agency that enforces our immigration laws, opening America`s doors to more crime and drugs. And they want Danny O`Connor`s help.

(END VIDEO CLIP)

HAYES: Michelle, like that is what they have ended up on.

MICHELLE GOLDBERG, THE NEW YORK TIMES: Well, I think that -- you know, there has been this debate going on ever since the catastrophe of Trump`s election about what motivated it, right. What motivated these people to choose this manifestly unfit man. Was it kind of quote unquote economic anxiety, or was it racial grievance? And he, I think, Trump -- we know now what the Trump campaign thinks.

HAYES: Trump has a theory.

GOLDBERG: ...of their own voters, right, like what they think works with their own voters. And then the other part of it is just, they don`t really have -- I mean, the economy is doing well overall, but they don`t have much of a record to run on wth their own voters, because when you look at -- you know, kind of people don`t pay attention to GDP, they pay attention to their own personal well-being, right, and for most people wages are not keeping up with inflation, right. Most people are not better off. And so to basically be like we delivered I feel like people will be like, wait, that`s it? That`s what we`re getting?

HAYES: Yeah, Jon, it is, it is fascinating to me that there is so little attempt to run on the record, right, like the tax cut bill they thought was going to be a big deal, it`s even like, look, Raqqa fell. Like ISIS`s caliphate basically was smashed, like you can imagine a universe in which you run around taking victory laps. They don`t even want to talk about that, because it seems like the persecuction is so central to what motivates their voters.

FAVREAU: Well, partly it is because even if Republicans di want to run on the tax cut, which some of them do, which I still don`t think is popular and it`s not a good idea, Donald Trump is not going to let them run on anything but whatever Donald Trump tweets that day.

So, I mean, Donald Trump and the Republican Party`s closing message in the Ohio 12th was Donald Trump attacking LeBron James, right. So, they don`t really have the message down.

HAYES: Yeah, it`ll be like, oh, Ohio, what a terrible place. I am your president, vote Balderson.

There is also I think the backlash effect, too. Like, the degree -- you know there`s I think this idea that you see the Republicans use Nancy Pelosi, like we`re going to associate everything with Nancy Pelosi, because we know you don`t like him. But the president is a remarkably polarizing figure. When he touches stuff like he has this impact. Like you see it on immigration. The immigration polling is fascinating.

In 2010, it was split between whether people thought they strengthened or burdened the country, by 2017, it is plus 40 in favor of immigrants strengthening the country.

GOLDBERG: Right, I mean, trust in the media is up. Trust in everything that Trump opposes is up. And I feel like Trump`s incredible unpopularity is often undercounted, because of just the shocking fact that he is still in office, right. He won ion despite of all of these factors. He`s not being held accountable and so it makes it seem as if he is Teflon.

And I think we lose sight of the fact that the majority of the country really dislikes him, probably a plurality of people passionately hate him, and -- but we focus a lot on kind of the feelings of these Trump voters in, you know, kind of in the Rust Belt, the feelings college educated people who cannot believe what is going on, people of color who have reviled this man, I think that those feelings are going to be just as important when it comes to the midterms.

HAYES: Well, and this -- Jon, you did this great series, about -- the podcast series The Wilderness, it`s sort of about how Democrats are dealing with this political moment. And I wonder what you think about how the kind of culture war tropes that we`re seeing, what do they do on the left side, like what do they do to the sort of motivating the other side?

FAVREAU: Well, I will say like looking at those numbers you just put up, Democrats should not be afraid to talk about immigration. And I think a lot of them are, right. Like I do believe that our most powerful message is an economic populism, especially in a lot of these counties that swung from Obama to Trump.

But we should never run away from issues like immigration, because Republicans are going to make the argument no matter what on immigration. As we`ve seen, they`re going to run on that.

We need to have an answer for that. And we live in a country where most people think that immigrants strengthen the country, most people think they deserve a path to citizenship, most people believe that the DREAMers deserve a path to citizenship. We shouldn`t run away from the issue or be afraid of it. And I think Democrats have done that in the past.

HAYES: Yeah, we`re going to see. It`ll be really interesting. The Cory Stewart Virginia -- the Ed Northam and Ed Gillespie race -- Ralph Northam and Ed Gillespie race in Virginia was instructive in that respect. We will see what happens tonight in Ohio 12. We`re going to keep watching those results.

You can see Chris Kobach there who is early returns coming in from Kansas.

Michelle Goldberg and Jon Favreau, thank you both for being with me.

Coming up, our election coverage continues with Steve Kornacki. Fresh results in Ohio 12. He`s going to take a break from streaming on NBCNews.com -- sorry NBCNews.com -- to bring us the latest from the big board next.

(COMMERCIAL BREAK)

HAYES: All eyes on Ohio tonight where we`re watching a tight race in that special election between Republican Troy Balderson and Democrat Danny O`Connor for House District 12, a seat that`s been held by Republicans since all the back in 1982.

Let`s go to Steve Kornacki at the big board for the latest -- Steve.

STEVE KORNACKI, MSNBC: As you were introducing me there, we just got a big pile of votes added here, so the bottom line is this, we saw the early vote come in first. It was counted and what happened with the early vote, O`Connor jumped out to a 27 point lead. We say we expected that. We expected him to take the lead. We expected it to be big. We just -- in the last 45 seconds his lead came down, you can see here, to 11 points, 55-44. Literally, as you played your music coming back from the break it was 15.

And that is the story right now. For Republicans, it is can they make up that gap in the same day vote, the folks who went out today and cast a ballot for the Democrats -- you know, it`s basically can they hang on.

As you see Balderson now, he is within 11 points.

The story we`re seeing -- and I want to perhaps be surprised -- here we go, it just came down. I`m sorry to flip up this screen, because look at this, we just got another update. It is now down to a 5 point race.

Balderson is closing very fast right here. And, Chris, if you bear with me, I`m going to tell you right now, if we are getting this out of the key part of the district -- I want to look inside Delaware County, this is very interesting. This is traditionally the Republican backbone of the district. You still don`t have any sameday votes counted here.

You go down below, you don`t -- I`ll tell you this, though, in the Democratic heart of the district, this is a third of the district in terms of vote, they have only counted so far a couple thousands same day votes.

You`ve got a ton of Democratic votes to come here. And the wild card is Delaware County. You want to see, can the Democrats improve there on what Hillary Clinton did in 2016, or does this go back to being the backbone of the Republican part of the district.

But Balderson now within 5.

HAYES: Balderson within 5, so we are going to be looking for the sort of benchmarks, looking for what -- when we start getting Delaware and Franklin in, that will give us a sort of clearer sense of under and over performance, right.

KORNACKI: Yeah, although I can tell you this, we are getting a sense -- it`s a small -- in terms of proportion of the district, it`s small, but you look at the rural part of the district. One of the questions tonight going into this was, you know, Muskingum County, you know this is Balderson`s home county. It`s Zainsville (ph). This was Trump surge country. Trump won this by almost 30 points in 2016 after Obama carried it in 2012, so the question was we figured that Balderson would do OK. How is he doing there? He is getting Trump numbers out of Muskingum. He is up 29 points. We`re seeing something similar if you take a look -- I think if you go next door, it is not quite working.

But I think we are starting to see a gigantic, and this is the story of the Trump era in so many ways, a gigantic divide between those suburbs right next to Columbus and those blue collar areas sort of outside of it. HAYES: All right, well the strategy right, of the president arriving. And there was some back and forth about whether he was invited. If the place he went in the district was the right place to be jazzing people. But the strategy there right, is I`m going to go turn out my voters in a district that I carried by 12. If, you know, that will be obviously if in fact Balderson is victorious tonight, the president is going to do a victory lap on precisely those terms.

KORNACKI: And we said Delaware County is going to be the key as it comes in, that`s where the rally was, that`s where Trump went.

This was a place, you know, look, it was the highest income county in Ohio. It is a place that Trump won by 16, but for a Republican that`s bad. Romney won it by 23 a couple years earlier, so that`s the question.

HAYES: Well, that will be interesting. That`ll be a very interesting number to look at. What that number...

All right, Steve Kornacki, thank you for that update. I like it when you say Zainesville (ph).

I`m joined now by Jess McIntosh, executive editor of Share Blue; Connie Schultz, syndicated columnist who won a Pulitzer Prize during her 18 years at the Cleveland Plain Dealer; and Jason Candor, candidate for mayor of Kansas, former Secretary of State of Missouri, author of a new book I think out this week "Outside the Wire."

Connie, let me start with you. You know, I`ve been seeing a variety of articles that basically are making a version of this case, which is that the sort of swath of the greater midwest, right -- Pennsylvania, Ohio, Wisconsin, Minnesota, the kind of industrial Midwest, you might call it, particularly white voters, white noncollege voters, swung towards Trump in 2016, but that the last two years have seen a lot of those voters move back, at least in the polling, at least in special district.

I`m curious, what do you think of that?

CONNIE SCHULTZ, SYNDICATED COLUMNIST: Well, first of all, let`s keep in mind how many wealthy people voted for Donald Trump. I just want to remind us of that.

HAYES: And in fact, let me just say that one of the sort of corollaries to that is that he`s doing great in Florida among wealthy white retirees, just to be clear.

SCHULTZ: Right, right, right.

In Ohio, the issues that right now the issue is health care, as you know, and Balderson just last month had vowed that he was open to increasing the eligibility age for Medicare and Social Security. He`s trying to walk that back now, and he has got his mother in an ad. But I think that was telling that he said that.

I don`t think we should put all our hopes in this race or decide that it is a decider for the entire state or that it`s a signal to the country. This race should never have been competitive for theRepublicans and now it is.

And I`m still looking at polling and still hearing from so many suburban mothers -- I think we aren`t talking enough about this, Chris, they really care about the family separations. And the only way that issue goes away in the country I think if we journalists don`t stick with it.

I`m not convinced -- I think Jon Favreau is right -- I don`t understand why more Democrats aren`t talking about immigration, because the majority of Americans are so opposed to what has happened to these children, all of whom are not white.

HAYES: You know, that is a great point about that, that that -- you know that the polling on that, the politics, the trajectory, the sort of horror in the country about this -- and obviously we`ve been continuing to follow the story. There`s 572 children, 460 around whose parents were deported and who the government apparently thought they were just going to hang on to.

But there is a kind of received wisdom that like that is not what you lead on if you`re running in a competitive district. What do you think Connie`s point?

JESS MCINTOSH, SHARE BLUE: I think Connie`s point is per usual absolutely right. I think there is the idea that you ought to be running on local issues, and that is true. I think we would be completely remiss, not to mention -- it`s hard to call him an elephant, because what did he to the elephants, but the Trump in the room.

People are angry about what he has done to the values of this country, and that matters locally.

I think we saw all of these women running this year. We saw all of these nontraditional candidates come out of woodwork. We saw people who were teachers and doctors and scientists decide that they were going to throw their hats in the ring, non-politicians for the firs ttime, precisely because they were scared that Trump and the people that he brought in were going to make this an unrecognizable country.

That`s national. I mean, they`re running on fixing the potholes and making sure that everybody gets health care, but the reason we are seeing this groundswell, the reason why we are seeing 84 percent turnout among Democrats, up from 2014, that`s an insane number, is because of the national mood.

HAYES: Right.

JASON CANDOR, FORMER SECRETARY OF STATE, MISSOURI: Yeah, sure. Passion is persuasive. And so, and voters don`t talk about issues the way we talk about it on TV, the way politicians do. They don`t live issues one at a time. And that`s what we have to remember.

So, as a candidate...

HAYES: n fact, the evenly -- like the conceit of an issue itself is like extremely artificial.

CANDOR: No, it`s like your mortgage or you`d like to go on vacation, right.

In Kansas City, it`s are you going to have to move across town in order to be successful and move out of town. I don`t know what issue you call that, but that`s why I`m running for mayor to keep people from having to do it.

So, I feel like -- what I learned in all my -- you mentioned the book, I appreciate it -- what I write about in the book is that you don`t make change from within your own comfort zone.

So, it ain`t about trying to answer multiple choice test questions right or anything, it`s about what do you care about, because voters will be able to tell if you talk about what you care about.

HAYES: Can I ask that you a long time nemesis of yours, this Chris Kobach. You guys -- I think you both were secretaries of state together. Is that right?

CANDOR: At the same time, we were bording -- our states never went to war, so success there.

HAYES: Right, well, thankfully.

But you guy have very different perspectives on like letting people vote.

But he -- his political success, the fact that he -- I mean, given what he has done -- I mean that story about the $800,000, I mean, basically getting small towns to hire him. What do you make of this guy? Like, how does this work?

CANDOR: Yeah, so -- so, one of the stories I tell in the book is about -- one of my very first meeting at the Secretaries of State`s Association where he came in with this resolution that he wanted to pass that we would all sign on to, that said we were going to keep the federal government out of elections. And I it is partisan. And he said there`s nothing partisan about this. And I said, well, look, one party wants to keep the federal government out of elections and the other party wants to let black people vote. We kind of haven`t been friends since.

But, the deal with Chris Kobach is this, he has this really dangerous, villainous super power. And it is to say racist and extremist and horrible things in what can sometimes appear to be a reasonable tone of voice. And that is really, really dangerous.

And as somebody who, you know, wants to be the mayor of Kansas City, bordering Kansas, I do not want him to be the governor of that state.

HAYES: Connie, I want to ask you about the -- about sort of how the economic conditions of the country are sort of reverberating politically.

A lot of times there`s real distance between like what the macro top line numbers are at 3.9 percent unemployment and how people are feeling. And I`m curious what your sort of experience has been talking to folks in Ohio.

SCHULTZ: Well, I think Jason and Jess have both touched upon something here, that there is no one single issue, and even if they hear in the news that it`s getting better, if overall they`re scared, fear is driving so much of this right now.

And when I was listening to Jason, I also want -- I`m not at all criticizing you, Jason, it is not a partisan issue to care families. It is not a partisan issue, it should not be, to care about health care and these junk insurance policies now that the Trump administration is trying to use where you don`t even get prescription drug coverage.

It is not a partisan issue, it should not be, that workers should not have to work beyond the age of 65. We`re not talking about people like us. Look at the lives we have. We`re talking about people who stand on their feet eight and 10 hours a day, right. When did it become a partisan issue to care about these people getting their pensions, getting their retirements, getting their Social Security and Medicare at 65.

So we have got to be careful, I think,. And I say this all the time, because of Trump`s fake news thing, which I also wish we had never ever taken on and adopted it, he should not be setting the language. Nobody should be telling us how to talk about this. We know how to talk about these issues. And it is about the human beings involved with them, and that fear that`s driving them right now, that`s what we have to address.

MCINTOSH: Yeah, absolutely. And I think that`s where it goes back to having these candidates who know how to talk to the communities that they want to represent.

I think it is incredible that we are seeing nonpoliticians doing it. We haven`t touched on Kansas yet, but we have Sharice Davids who is running -- she`s an LGBT Native American MMA fighter, comes from a single mother with a military background, this is not the kind of candidate that progressives usually stood up.

HAYES: That`s a good -- as a former magazine editor, I have assigned the profile based on that pitch.

MCINTOSH: I mean, there is nobody in congress who looks like her, and there is nobody in congress representing -- there`s no Native American women in congress period, and only two LGBT women right now, so the idea that we have people who don`t look like your typical class of politician running for congress is incredibly important, and I am really excited to see some of them sget throught their primaries.

HAYES: All right, Jess McIntosh, Connie Schultz, and Jason Candor, thank you all for joining me.

That is All In for the evening. The Rachel Maddow Show starts right now.

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