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Democrats take control of House. TRANSCRIPT: 1/3/2019, All In w. Chris Hayes.

Guests: Xochitl Torres Small, Joseph Neguse, Adam Schiff, Maxine Waters, Lynn Sweet

Show: ALL IN with CHRIS HAYES Date: January 3, 2019 Guest: Xochitl Torres Small, Joseph Neguse, Adam Schiff, Maxine Waters, Lynn Sweet

STEVE KORNACKI, NBC NEWS NATIONAL POLITICAL CORRESPONDENT: We have seen each party build up enough power to finally push its agenda through but what we don`t what we don`t see is the public then will reward either party for what it`s done. Backlashes and waves, it become the known, and so of transfer of power like we watched today. That`s HARDBALL for now. "ALL IN" with Chris Hayes starts right now.

(BEGIN VIDEO CLIP)

CHRIS HAYES, MSNBC HOST: Tonight on ALL IN live from Washington D.C. on a big day for Democrats.

REP. KEVIN MCCARTHY (R), CALIFORNIA: To the Speaker of the House, Nancy Pelosi, I extend to you this gavel.

HAYES: Nancy Pelosi and the Democrats have taken power in the House.

REP. HAKEEM JEFFRIES (D), NEW YORK: House Democrats are down with NDP, Nancy D`Alesandro Pelosi.

HAYES: Tonight, the new plan to check the President.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: We shouldn`t be impeaching for a political reason and we shouldn`t avoid impeachment for a political reason.

HAYES: Plus my interviews with two new committee chairs about to start exercising the first real oversight of the Trump era, Adam Schiff and Maxine Waters.

REP. MAXINE WATERS (D), CALIFORNIA: Reclaiming my time.

HAYES: As we await a vote to reopen the government. Some of the new faces of the 116th Congress join me live.

UNIDENTIFIED FEMALE: Nancy, Nancy Pelosi.

HAYES: ALL IN live from the capital starts right now.

(END VIDEO CLIP)

HAYES: Good evening from Washington D.C. I`m Chris Hayes. And for the first time since Donald Trump entered the White House nearly two years ago, there is tonight a check of this presidency. It has been a historic day here in the nation`s capital. It is not over yet. This is a live look at the House floor where very soon we expect Nancy Pelosi and the newly empowered House Democratic majority to engage in their first concrete exercise of power, a vote to end the 13-day old trump shutdown and reopen the government.

The bills that the new Democratic House Majority plan to pass are similar to what already passed overwhelmingly in the GOP-led Senate as Pelosi noted upon taking the gavel this afternoon.

(BEGIN VIDEO CLIP)

PELOSI: We will debate and advance good ideas no matter where they come from. And in that spirit, Democrats will be offering the Senate Republican appropriations legislation to reopen government later today.

(END VIDEO CLIP)

HAYES: Standing in the way of hundreds of thousands of Americans getting paid and getting back to work is one man really, the President of United States who appeared briefly today to congratulate Pelosi and insist on funding for the border wall that Mexico was supposed to pay for. It was bills depressing briefing but the Trump -- the president refused to take a single question from reporters.

Now, the stark difference in the current makeup of the two parties, their coalition`s and their politicians has never been more clear. The GOP represented by a sea of white male faces both at the White House and the House of Representatives were only 13 Republicans are women and just nine are not white. The House Democratic caucus, by contrast, is historic. 89 women, 96 people of color, and led by the woman who became the first female Speaker of the House in 2007 and who was now returned to that position 12 years later.

For Donald Trump, this is a nightmare scenario. House Democrats now has subpoena power which means they could compel testimony and make people turn over documents that Trump and his allies would very much like to keep hidden. Investigations will come from a variety of committees. I`m joined now by the man who`ll chair one of the most important of them, Adam Schiff, Democratic California, the new Chair of the House Intelligence Committee. How are you feeling today?

REP. ADAM SCHIFF (D), CALIFORNIA: Good, good. It`s a new day.

HAYES: You now chair this committee which was the subject of tremendous scrutiny and controversy in the last Congress under the chairmanship of Devin Nunez. The first question I guess is they -- there was a formal inquiry that that committee convened and released a report by the majority saying there was no collusion, nothing really to see here. What do you do now? Do you restart the inquiry?

SCHIFF: Well, for us the inquiry never ended. The Republicans walked away from. It as you say, they issued a report which was a political document saying nothing to see here. We believe everybody who came in and everything they had to say including Michael Cohen and everybody else. We always thought that it was perilous to just suggest that we don`t have to compel answers to questions we don`t have to do, any follow up to get documents and materials to determine whether people were telling the truth or not, phone records, the kind of things that are a staple of real investigations. We now see what a folly that was.

But we for our part, when the Republicans walked away and decided they were going to devote their entire time to investigating the investigators, kept our work going in. So we kept bringing witnesses in. It was hard because we couldn`t compel them. So we`re going to continue that work. We will invite the Republicans to rejoin the investigation if they`re interested, if they`re willing. We`d like to work in the bipartisan fashion which we committed doing at the outset but it will be up to them whether they`re interested.

HAYES: Are there glaring holes, glaring things that are the obvious first priorities in terms of getting your hands on in terms of subpoenas or requests?

SCHIFF: There are. And you know, I`ve held up this example before because it`s such a graphic illustration of the kind of investigations the Republican we`re leading and where they fell short. We know in the run-up to this meeting at Trump Tower that there were phone calls going back and forth between Trump Jr. and the Russian oligarch`s son Emin Agalarov where Don Jr. was trying to find out are the Russian serious, and what do they have to offer, and should I take this meeting, should I bring my brother- in-law, should I bring the campaign chairman. This is the most important time. They haven`t even summon up the nomination yet.

And sandwich between those calls back and forth between Don Jr. and Emin Agalarov is a blocked call. And we wanted to know, did that come from the President. Was the president involved in the planning or the approval this meeting? So we said let`s subpoena the phone records to find out and the Republican answer was no, we don`t want to know.

HAYES: So can you just do that tomorrow?

SCHIFF: We -- well, we can`t actually do it tomorrow because we --

HAYES: You don`t have the committee yet.

SCHIFF: We don`t have the committee constituted yet. But when we are constituted, we can get those phone records. And you know, we`re going to continue to for our part seek voluntary compliance and only use the subpoenas last resort, but we do anticipate that it will be a necessary resort in some cases.

HAYES: What about witnesses that have come before your committee and told you things that you now suspect you`re false?

SCHIFF: Well, probably our first step will be to provide the transcripts to Bob Mueller so that he can have the benefit of the evidence they contain but also determine and take appropriate action where people came before a committee and lie and hold him accountable as indeed Michael Cohen was held accountable. So that`s an early and I think important step.

HAYES: You -- I want to take a step back for a second because I think that people who have sort of come to follow your committee closely in this era have a view of it that`s very different than what its reputation had been. But I was covering Congress being an office right over there. You know, the Intelligence Committee is one of these like glad handy, very bipartisan committees.

You guys sort of stood kind of four square largely because there was a real kind of back-and-forth with the intelligence community. It`s all very secret and cloak-and-dagger. You`re in this very elite group of people that gets information. I mean how much is the committee been broken, its culture, its sort of institutional basis by the last two years?

SCHIFF: I tell you the good news or the bad news. The bad news has been pretty obvious. We operated in a bipartisan fashion up until March 20th. That was the day in 2017 when James Comey testified publicly before our committee that there were actually two investigations, not just a Clinton investigation, but have been one of the Trump Organization.

That prompted the now infamous midnight run by our Chairman the following day or even. That completely blew up bipartisan work on the Russia investigation. You can`t conduct a legitimate investigation if you`re basically in cahoots with someone who may be implicated in that investigation.

The good news is that notwithstanding all of that dysfunction on the Russia investigation, we continue to do the work that you were familiar with about our committee before which was the day job, the bread-and-butter, the oversight of these mammoth agencies making sure they`re funded appropriately and doing the work they should and maintaining people`s privacy --

HAYES: And operating legally.

SCHIFF: And operating constitutionally and legally, and all of that we have continued to do in a non-partisan way. Now you don`t see that --

HAYES: So you`re able to -- I mean, I guess the point there is what from a sort of almost emotional human level but he institutionally you`re able to sort of like cordon those things off of each other.

SCHIFF: We have and you know, Mr. Nunez and I, I think made the decision without ever the need to discuss it. We were not going to let our differences on the Russian investigation impede the otherwise vital work of the committee.

HAYES: So here -- then there`s a broader question. It`s a question I want to ask all Democratic leadership. We`re living right now through this era of kind of both polarization, institutional norms unwinding, and I think maximalism increasingly be employed tactically legislatively, OK.

One of the big victories of the Republican Congress, when they got the majority 2010, was they used the debt ceiling default as a kind of threat to get an austerity legislation passed. It worked. It was incredibly reckless. It was unprecedented nearly. What is your personal theory of your wielding of power and you are respect from norms balanced against imperatives to deal with what you`re dealing with?

SCHIFF: Well, I think we need to get back to operating rationally and civilly. We have to stop holding the government and all of its employees and contractors hostage when you can`t get the votes for your priority whether it`s a wall or anything else. So we need to get back to some rational order. We don`t want to repeat the mistakes the excesses, the overzealous partisanship of the Republicans.

HAYES: I hear that all the time. But what if that`s the way the world works now? What if you cannot unilaterally put Humpty Dumpty back together?

SCHIFF: You know, I don`t accept that and I can`t accept it. I think you know, we fight hard and we fight tough and smart for our priorities but we also recognize there`s something bigger than us. That we`re going to come and go in this beautiful building behind us and we have an obligation to the entire country and to its institutions. Right now, this is the most precarious time in my lifetime in terms of our republic.

Now we have a president who denigrates the freedom of the press, who goes after the independence of the judiciary, and in so many ways I think is threatening the livelihood of our democracy. The answer to that cannot be more of the same. That just drags us all down.

HAYES: Congressman Adam Schiff, the new chair of the House Intelligence Committee. Thank you so much for making time on this.

SCHIFF: Thank you.

HAYES: Huge day for Democrats as they take control the House and are expected to vote on ending that shutdown and reopening the government tonight. While we await that I`ll be joined here by someone who is now one of the most powerful people in Washington D.C. Congresswoman Maxine Waters right after this.

(BEGIN VIDEO CLIP)

HAYES: Congressman Hakeem Jeffries who was -- what`s you`re leadership position now?

REP. HAKEEM JEFFRIES (D), NEW YORK: Chair of the House Democratic Caucus.

HAYES: Chair of the House Democratic Caucus, getting all sorts of focus profiles written of him.

JEFFRIES: Only on this -- only on this person right here.

HAYES: On the up and up, right.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

HAYES: we are back here live outside the Capitol where we are moments away from a vote to reopen the government, the first official action of the House Democratic majority. New Speaker Nancy Pelosi has said she will introduce Republican legislation that already passed the Senate just a few weeks ago. The White House has said the President plans to veto the bill. Of course, he already said that he would be the one shutting the government down.

Now, before today, the House Committee on Financial Services has never been chaired by an African-American or chaired by a woman. That all changed today when Congressman Maxine Waters of California took the gavel this afternoon. She becomes one of the most powerful people in Washington joining the other Democratic committee chairs. And Congresswoman Maxine Waters joins me now. Madam Chair --

REP. MAXINE WATERS (D), CALIFORNIA: Thank you.

HAYES: You just -- you said you were up all night working last night.

WATERS: Yes.

HAYES: What were you working on?

WATERS: Basically getting prepared for the work that we have to do today and tomorrow perhaps and maybe over the weekend.

HAYES: You`ve got a lot on your plate in this committee and I want to play something very -- there`s something you said. There`s a few news stories about people, some blind item quotes about how will the Chair Waters --

WATERS: Yes.

HAYES: -- deal with investigating Trump or doing other things. And this is what you had to say today. Take a listen.

WATERS: OK, all right.

(BEGIN VIDEO CLIP)

WATERS: To those who said I`m going to spent all my time trying to get subpoena, and trying to do investigation, and I`m not going to do that. I`m just going to spend some of my time.

(END VIDEO CLIP)

HAYES: You crack yourself up.

WATERS: That`s right.

HAYES: Well, what --- how are you thinking about the balance between those two imperatives in your --

WATERS: Well, first of all, we have to be very clear that we have lots of responsibilities in this committee. And as you know, I`ve been focused on the Consumer Financial Protection Bureau. That was the centerpiece of the Dodd-Frank Reform. And of course, Mulvaney who was sent over temporarily by the President to oversee it after the guy who headed it left to run for governor. And he`s tried to dismantle the Consumer Financial Protection Bureau. And before we got the Consumer Financial Protection Bureau in the Dodd-Frank legislation, consumers had no real protection. Nobody was looking out for them.

And so this is extremely important. I`m going to focus on that and we`re going to try and undo the damage that Mulvaney has done. Fair housing, the GSEs that is Fannie and Freddie. We have all of that work to do and so we`re going to -- we`re going to do our work. Now, don`t forget. Inquiries into Deutsche Bank was part of the work we had already started to do. We had sent letters to Deutsche Bank trying to find out about two internal reviews that they had done. And what did they find out? Of course, they did not answer us.

We`ve been trying to find out about the money ties to Russia through Deutsche Bank. We know that Deutsche Bank lends this president, have loaned him a lot of money, and we want to know whether or not some money laundering is going on. So we`ll do a little of that. We`ll do some of that continuing our work, but we won`t be concentrated just on that.

HAYES: So the Deutsche Bank inquiry, Deutsche Bank has already paid these enormous settlements right, with both I think domestic and international regulators --

WATERS: That`s right. That`s right.

HAYES: -- about money laundering. So you already had pre-existing inquiries. They just also happen to be the bank that became the kind of lender of last resort to the president.

WATERS: That`s right. No other bank will lend you money.

HAYES: And it`s Deutsche Bank. And so you want to -- do you want to talk to the head of Deutsche Bank? Do you want to call him before the committee? Are you going to investigate them? What --

WATERS: Well, I think we are going to follow up on the letters that we have already sent and see if they have a change of mind now that things have changed in the House.

HAYES: You`re saying the letters you sent them as the ranking member as opposed letters you might send now that you`re the chair.

WATERS: That`s right. That`s right. We did not respond to those so we got to see if they got to be a little bit more cooperative and then we`ll see where we go from there.

HAYES: You talked about Mulvaney and CFPB. There`s been two things that have happened in the area you oversee about financial services. One is a real kind of deregulatory push at the -- at the sort of executive level.

WATERS: That`s right.

HAYES: There`s also been legislation passed that ruled back some of Dodd- Frank.

WATERS: That`s right.

HAYES: How perilous, how dangerous do you think the last two years had been for the sort of health of the system?

WATERS: Well, the last two years have been very dangerous. I have been appalled and surprised at how blatant it has been. This administration is not at all concerned about the welfare of the average family and the welfare of people who struggling every day to make a living. They don`t mind them getting ripped off in many ways. Whether we`re talking about the Consumer Financial Protection Bureau that oversees things like payday loans, they involved in you know trying to -- that -- this administration is involved in many ways in trying to undo the work that we have done to try and protect the average family and homeowners.

HAYES: You entered Congress I believe in 1991, right?

WATERS: Yes.

HAYES: So that`s been -- that`s 28 years ago. What is it like today to see this incoming class and the variety of backgrounds they represent compared to what it was like when you walked in and took that oath 28 years ago.

WATERS: Well, it`s very different. When I came to Congress, the Financial Services Committee was the old banking committee and people were fleeing the bank because there was a bank scandal going on. So those of us who were pushed on to it were kind of punished.

HAYES: It was a bad assignment.

WATERS: Oh, terrible assignment.

HAYES: Oh because of like savings and loans and things that?

WATERS: The savings and loans scandal that was going on.

HAYES: So you got on there because it was -- it was a backwater.

WATERS: That`s right. That`s right. That`s exactly right. But I paid my dues. I stayed on, I worked hard. I learned from great chairmen.

HAYES: You`ve been on for 28 years. You`ve been there the whole time.

WATERS: Yes, I have. Yes, yes. And I learned an awful lot. I know an awful lot, and I`ve been the leader as a ranking member for the Democratic caucus and helping to explain to them the issues that go through that committee and helping to guide my caucus in trying to make sure that we protect some of the work that we have done for the consumers.

HAYES: You know, the big banks hated the CFPB.

WATERS: Yes.

HAYES: They have hated it from day one. They`ve been fighting it the whole time.

WATERS: That`s right.

HAYES: What is -- what is your analysis of how much control Wall Street has now ten years after the big crisis, after the crash, after Dodd-Frank, having this new group that came to town and sort of let the reins off a little bit? Where do things stand?

WATERS: Well, let me just say this and I`ve said it over and over again. The big banks of America have basically controlled the Congress of the United States as far as their issues are concerned. Many of our members have failed to even try to rein them in because the way that they have concocted these issues, it makes it sounds as if it`s so complicated that nobody else understands or knows what they`re doing when they talk about derivatives and margins and they talk about the bond market etcetera, but it`s not that complicated at all.

And so what I am saying to the big banks right now is stop it. Stop it. Don`t come in here with all of these bills where you`re trying to undo everything that we have done and you`re sending a message to you investors that you`re looking out for them. I want a moratorium on this.

HAYES: You`re telling them that.

WATERS: That`s what I`m telling them.

HAYES: Don`t come in here and lobby on doing stuff.

WATERS: That`s right.

HAYES: But you must have -- I mean I imagine they give you money right? They contribute to you.

WATERS: Not really. You know, I don`t take money from the big banks.

HAYES: You don`t.

WATERS: I have taken some contributions from small community bank but I don`t really take money from the big banks.

HAYES: A lot of people on that committee, one -- I mean, one -- it`s funny that you say you were put there as a backwater. That committee has become enormous. And part of the reason it has become enormous is a lot of freshmen get put on it because you could raise money because all the financial interests, all of a sudden start writing your checks right?

WATERS: Yes.

HAYES: I mean, that`s -- it`s part of the nature of that committee is that from day one you`re a freshman, you get put on financial services and you start getting checks.

WATERS: It certainly has happened and it`s been talked about and I think that not only are many of our new members not want to be involved in that kind of support from those who are looking for something in exchange. Some of our other members have resisted that slowly but it has been the way that many members have been able to raise money. Because they may be in difficult districts and they need the campaign contributions and they have just allowed themselves to receive those contributions from those banks.

HAYES: I want to ask you the same question I just asked the Chair Schiff. A lot of people look at the ways that the Republicans conducted themselves in the House and they see a lot of sort of destruction of norms and precedent, but also some effectiveness in terms of getting the you know, the Budget Control Act in 2010 with this -- 2011 with this blatant threat about defaulting on the debt, the debt ceiling. How do you think about balancing the sort of new norms and maximalism as a way of getting things done that you want to get done and respect over not destroying things in your way?

WATERS: It is not easy to do. Number one, we have a financial services community that`s very central to our economy. We need the banks. We need them to operate and provide certain kind of services. But that does not mean that they could use their influence and their power to basically control the decisions of Congress. And we`re going to have to work hard at it.

One of the good things about what is happening is some of our younger members are going to be very vocal. The newer members are going to be very vocal.

HAYES: You like that.

WATERS: Yes I do. Yes I do. I`d like that. They`re going to raise questions. You`re going to see a new kind of approach in the hearings that we have. They`re going to come right out with it. They won`t be ashamed, they won`t be afraid, they really believe in what they`re doing. I think that`s good for the institution.

HAYES: Congresswoman, now Chair of the House Financial Services Committee, 28 years in tenure of the House, the first African-American, first woman to chair that committee, thank you very much.

WATERS: Yes. You`re so welcome and thank you.

HAYES: Much more live tonight outside of the Capitol where Nancy Pelosi reclaims the gavel as Speaker of the House. The first person to do so in over 60 years.

(BEGIN VIDEO CLIP)

HAYES: I`m here with Congressman Khanna and Congressman Yarmuth. Are you guys ready first-day opening day?

REP. RO KHANA (D), CALIFORNIA: Absolutely.

REP. JOHN YARMUTH (D), KENTUCKY: It`s a brand new day.

HAYES: Are these your majority suits?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

HAYES: Congressman Hakeem Jeffries nomination of Nancy Pelosi for Speaker garnered a standing ovation from practically every Democrat in the House today.

(BEGIN VIDEO CLIP)

JEFFRIES: Let me be clear. House Democrats are down with NDP, Nancy D`Alesandro Pelosi, the once and future Speaker of the United States House of Representative. I proudly place her name in nomination. May God bless her. May God bless the United States of America.

(END VIDEO CLIP)

HAYES: Short time later after securing 220 votes, Pelosi did something that has not been done in more than 60 years. She reclaimed the gavel of Speaker of the House. The last person to do that was Texas Democrat, the legendary Sam Rayburn in 1955. A politician whose legacy is so renowned that the ceremonial swearing-in of new House members take place in the Rayburn room in the Capitol. It`s the legislative company Pelosi now finds herself in. She once again is second in line for the presidency.

For more on the incredible day for Pelosi and the Democrats, I`m joined by Lynn Sweet Columnist and Washington Bureau Chief of the Chicago Sun-Times, Jennifer Rubin, Washington Post Columnist and MSNBC Contributor, and Adam Jentleson former Deputy Chief of staff to Harry Reid, now Public Affairs Director at Democracy Forward.

Lynn, someone said to me today, a legislator said if you were doing a fantasy draft on Capitol Hill right now of legislative talent, just pure -- he said your number one pick would be a Nancy Pelosi and now she`s running the House.

LYNN SWEET, WASHINGTON BUREAU CHIEF, CHICAGO SUN-TIMES: Oh, absolutely. And another point to make since we`re talking about history here, don`t estimate the consequence of her being a female because in the dozen years since she has -- between her having the gavel, 2007 and 2011 and today, she is still the only female who has been the speaker in the entire history of the United States of America.

HAYES: Adam, what do you -- you know, people are talking about already the kind fractures and lines in this new Democratic caucus. And I think any majority caucus has them, that`s sort of the nature of politics, that`s the nature, particularly being the majority, because you`ve got to keep a bigger group together.

What do you think of what this house majority caucus looks like and where it will be on the spectrum of sort of craziness of the Freedom Caucus and the weak speakerships of John Boehner and Paul Ryan to the much more sort of powerful leadership of Pelosi the first time around?

JENTLESEON: Yeah. I mean, look, I think the caucus looks like America. And I think the visuals today were unbelievably striking. You had the Democratic side of the House chamber looking incredibly diverse, colorful in dress an in skin color, and it was wonderful. And then on the other side you had a mostly male, mostly white group of Republicans. So, I think the visual contrast was pretty stark.

In terms of the divisions, I think, you know, look, there`s going to be family squabbles, but that`s all a function of energy. I mean, I think what you have here is an incredible amount of new energy, a deep commitment to policy, and the battles that we`re having, the arguments, the family squabbles, are about policy ideas, they`re about new ideas, bold ideas like the green new deal. So, you know, I mean it -- it can lead to disagreements here and there, but fundamentally what you see is energy and that`s a good thing for us as Democrats.

HAYES: You know, Jennifer, what Adam just said, it was really striking. So, I was in the Capitol today and I was in the room where they were doing a ceremonial swearing in. People are in there. They`re with their families. A lot of folks with young kids, because there`s a lot of fairly young new members. And it`s just so striking that, you know, where we have ended up here in 2019 is like two coalitions in American life, one is very multi-racial and fairly gender equitable in terms of, you know, the politicians, although still not at total parity, and the other is not. And it`s just -- you can`t avoid just seeing it right in front of your face when you walk around the Capitol now.

RUBIN: Absolutely. And you`re right. That picture on one hand of these gray in hair color and in suit color men on the Republican side and these colorful women and just the joy with which she accepted the gavel. She looked pleased as punch today, and she should be.

There was some joy. There was talk of love. There was talk of unity. There was talk of the constitution. I couldn`t help, but go back to the inaugural address that weird blankty blank blank, as George W. Bush said it, that Donald Trump greeted us with, with American carnage and darkness and hatred and kind of a dismal view of America compared to what she was talking about, which is each time we swear in a new congress, it`s a rebirth of democracy, and these are problems we can solve together.

If you put aside the pure partisanship, in some ways it was a very Reaganesque speech, and not simply because she quoted Ronald Reagan, it was morning in America. It was we can do this. It was positive. It was respectful towards the people who defend us around the world. It was talking about American leadership in the world. She sounds more like Ronald Reagan than the current Republican Party does.

HAYES: Lynn?

SWEET: Well, she has this so thought through, Chris. Everything has been thought through. The methodical way she reclaimed the leadership, the way she`s going to conduct the speakership, her knowing how to be a legislator. She likes to, you know, give herself the compliment she`s a master legislator. She is also -- she is the rare person who could master -- is a master of politics and is a master of policy and can marry the two. She could do domestic policy. She could do international global policy. She could do trade.

Part of this is the vast experience she has, which I think I hope when the new members, many of who are younger without experience, I hope they devalue experience as it goes along with all the new ideas. And she welcomed that newness, but I just hope that experience is not devalued.

HAYES: You know, Adam, it`s funny that Lynn says that, because one -- there`s one part of the Freedom Caucus that I sort of dispositionally admired, which was just the idea of like it doesn`t have to always be done the way it was before, right. There` was a sort of rambunctiousness about getting in there and sort of tearing things up a bit, and I think that could be a healthy thing for any institution. It could be healthy for a democracy that the sort push towards conformity, particularly in the way that lobbyists work over new members and the way that fundraisers work over new members, it is kind of important I think for the new class to resist that, right?

JENTLESEON: I completely agree.

I mean, you know, the world around our legislative body changes, and so the legislative body itself also needs to change and adapt to the new realities around it. And I thought, you know, you`re already seeing that in some extremely productive and healthy ways. You saw a lot of the incoming freshmen tweeting out from the orientation process about the number of lobbyists that were doing the orientation essentially welcoming them to Washington and telling them how things were done and simply naming the names of people that they were talking to and pointing out the vast majority of them were lobbyists was an incredibly productive thing to do.

And I think, you know, raising those kinds of issues is very healthy, very productive, and will lead to a healthier legislative body.

HAYES: Jennifer, we`ve got a situation -- there was a very funny, weird moment today. The president comes out of the briefing room in what I thought was a very transparently desperate attempt to sort of wrench attention back from this day and Capitol Hill, which I didn`t think worked. But now the House tonight just in a few minutes probably is going to pass this bill to reopen the government. The White House has issued a veto threat. Now this sort of standoff begins between Pelosi and Trump. And where do you see it going?

RUBIN: Well, I think it`s interesting that Donald Trump had his temper tantrum. Mitch McConnell declared that the Senate has no role, so I guess they can go home.

HAYES: Yes, he just took himself out of it.

RUBIN: So much of the greatest deliberative body in the world, my gosh. What a force that is become. And so the American people see a picture: a temper tantrum, a guy who`s checked out, and a woman full with energy trying to reopen the government, trying to fix Medicaid, trying to fix Medicare, trying to fix the ACA, trying to fix education. There is a difference now in intensity and interest in governance and in energy.

And I hate to say it, but those Republicans are low energy guys right now. And all they`re doing is moping around, obsessing over their wall. They`re not getting anything done. They can`t even keep the lights on.

So I think she has a unique opportunity here to really hit them -- smack them in the face and tell the American people you want people like us or you want people like them. And every single poll we see, and it`s no surprise for those of us who have been around awhile, says a quarter of America backs this crazy shutdown? That number is probably going to drop to about 15 percent if this goes on, and the trash piles up in the National Parks.

HAYES: Although someone said -- Lynn, someone is saying today about, you know, if you`re the president, it`s like well it`s either this or, you know, special counsel headlines or subpoena headlines or, you know, who the heck is your AG? And why is he covering up his role in this corrupt enterprise that he was on the board of?

SWEET: And why do you have interim in other cabinet agencies, too? So, here`s the thing, Nancy Pelosi is playing chess while the president for the moment is playing checkers, as they say, because you just had two chairman on who are going to launch investigations. He could come in and make a turn at a briefing for a sugar high if he wants some attention. It`s not going to stop the trajectory that the House Democrats are on.

HAYES: That`s what changed today. I think really for the first time is power.

SWEET: Absolutely.

HAYES: We`ve all been caught in this vortex now for going on three years, but now there`s actually a change in power.

Lynn Sweet, Jennifer Rubin, Adam Jentleson, I want you to stick around. I`m going to come back to you in a bit.

Meanwhile, back inside that building behind me right now, we`re still awaiting a vote on the House floor to reopen the government, as you said, and as we`ve been noting all night, it will be the first big vote for literally the most diverse freshman class in American history. I spoke to two incoming Democrats with two incredible stories just moments ago.

(BEGIN VIDEOTAPE)

HAYES: Joining me now, two members of that freshman class, Congresswoman Xochitl Torres Small of New Mexico who won that state`s most conservative congressional district, and Congressman Joe Neguse of Colorado, the state`s first African-American congressman.

It`s great to have you both here.

REP. XOCHITL TORRES SMALL, (D) NEW MEXICO: It`s great to be here.

HAYES: First of all I guess just from a human level, like how`d it feel today?

REP. JOE NEGUSE, (D) COLORADO: After you.

SMALL: I think remarkable is a great word. I think amidst all of the hectic craziness, as soon as you walk through to that dome, you have to stop and take a breath and just realize this incredible responsibility that we have.

NEGUSE: It was a special day. And I think as you said, this class is very reflective of the American dream. A lot of historic firsts. And so it was incredible to be able to share it with Xochitl and so many other members of our freshmen class.

HAYES: Was your family here today? Your parents came as refugees from Eritrea in 1980, right?

NEGUSE: They did. So my dad and mom both came from Eritrea as refugees, you know, sacrificed a lot for me for my sister to be able to have these opportunities and freedoms that don`t exist in a lot of places in the world. And for my dad to see me sworn in to the United States congress...

HAYES: It must have been wild.

NEGUSE: It was very special. And it`s reflective of this country and just how great this country is.

HAYES: Well, but then you`re also entering at a time when U.S. refugee admittance is the lowest in decades. It has been cut year after year after year. We`re seeing what`s happening at border at ports of entry to stop people from getting in to stake their legal claim to asylum, like how much has that informed what you feel your mission is here?

SMALL: Well, I grew up along the border. My grandmother immigrated from Mexico to build her American dream. She picked cotton in the fields.

And so having my dad here was incredibly powerful, to have his mother be a farm worker and his daughter a member of congress, and that`s why I know how important it is to have a border that is vibrant and to have a border that is strong. And so we have to work together to make sure that as we address border security, a fundamental piece of that is a clear and moral immigration system that works, that`s not used as a talking point to divide people.

HAYES: As someone who represents -- you`ve got about 178 miles of border right in your district, as someone who represents actual border and places that can be quite dangerous to cross one of the young women of the girl who died 7-year-old Jakelin Caal came through Antelope Wells, which is in your district. What do you make of this border wall, if it even -- I don`t even know what we`re talking about to be honest at this point. But what is your understanding of what we`re talking about?

SMALL: That`s a very clear point, because the border is incredibly diverse. So the 178 miles that I represent includes very different areas. So, we`ve got a very major port, Santa Theresa that has a large import- export -- New Mexico is a net exporter and so we`ve built an economy around that vibrant trade, which is why we need resources for our ports of entry.

But then you`ve got these remote areas, these places where it`s incredibly difficult to get resources like medical equipment, like the staff and personnel that we need. And in those areas, a wall makes no sense, because you have people who are just...

HAYES: ...the wall.

SMALL: It`s an incredibly border. And so what we do need is we need technology, and we need personnel to be able to identify people who, you know -- but we also need the facilities where we have these changing circumstances where we have families who are presenting instead of single men who are being interdicted. So we have to respond to those changing circumstances.

HAYES: You`re in a district -- you represent an around Boulder, right. What is the racial makeup of that district?

NEGUSE: It is around 90 percent white.

HAYES: 90 percent white. You know, you`re one of a really interesting phenomenon in this year`s class. I think there are about five or six members of congress who are African-American representing majority white districts. I think before this congress there was maybe one. How much do you think about that? How much is that even a factor in the way you think of the dynamics of representation?

NEGUSE: I don`t know that I think about it too much. I mean, I do think, at least with respect to Colorado my election and the elections of any number of people were reflective of just how forward and inclusive looking of a state we are -- Jared Polis, my predecessor, is not the first openly gay governor in the United States in Colorado.

We`re a very forward-looking state. And I`m grateful for the voters being willing to send me to represent them in congress. Obviously, I think the election as a whole, there`s much to glean from the resounding message that voters set that regardless of the color of your skin that they`re going to have faith and trust in you if you`re willing to do the right thing.

HAYES: It`s just nuts to -- you know, the president ran on this sort of threat, threat, threat, the wall, they`re coming for you, the caravan. They got their butts kicked. The biggest majority, you know, popular vote majority in basically history. And now you`re starting day one with the government shutdown over that exact same kind of rhetoric from the president.

SMALL: And being on the border, what`s frustrating to me is that it`s being distilled to this or that rather than recognizing the complexity of what it means. And every time people try to use it as a talking point, I say let`s start looking at solving the problem.

HAYES: But the wildest thing is your sitting there on the border, you actually represent the border. The president will got a rally up in Duluth, Minnesota, literally, and he`ll talk about the southern border, build a wall, people go nuts. >> you`re sitting on the border. SMALL: And that`s why I`m so honored to represent my home.

NEGUSE: It`s intellectually dishonest and it`s obviously morally reprehensible.

HAYES: There`s a rules package today. I`m curious about this. There`s a whole bunch of stuff you`re going to have to vote for in the rules package. One of the things that`s gotten a little bit of controversy is the pay-go provision, right, which is the idea that you are pledging if you`re going to, you know, appropriate new money that you have to find tax revenue for it. A lot of people are like why are you doing -- didn`t -- do you see what the Republicans have done? Like, they don`t bind themselves. They put themselves in these handcuffs. Why are you doing it? What do you think?

SMALL: Honestly, I believe in fiscal responsibility. I know that we have to make tough choices because nothing comes for free. And so when we have a provision that also complies with existing law, which would require it anyways, it`s important to be in control and for us to take responsibility for those tough choices.

NEGUSE: We`re a big tent party, right. So we represent a lot of different areas of the country and are going to have different views on this. I thought that Representative Pocan, Representative Jayapal struck the right tone in a compromise that ultimately we should pursue a statutory repeal of pay-go, which is something I support.

But the rules package has a whole lot in it that`s incredibly helpful for the citizens of our country. The first diversity office in the history of the United States Congress, a select committee on the climate crisis. So, ultimately I voted yes because I thought that on balance it was worth pursuing and supporting.

HAYES: I got to say, it`s great to talk to you guys. You` know, I`m talking to members of congress that are younger than me, makes me feel a little old. First you start with basketball and they`re younger than you and now members of congress, but it`s great to talk to you Representative Joseph Neguse and Xochitl Torres Small, thank you very much.

NEGUSE: Thank you, Chris.

(END VIDEOTAPE)

HAYES: With Democrats in control of the House Judiciary Committee, they have new tools to hold the president`s acting attorney general, who is still there somehow, to account. How they plan to use them right after this.

(BEGIN VIDEO CLIP)

HAYES: Here with Congresswoman McBath, the newest member of congress from Georgia`s sixth district, squeaking out a really improbable victory. How does it feel to be here today?

REP. LUCY MCBATH, (D) GEORGIA: Exciting. Ready to get to work for the people.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

HAYES: With Democrats now in control of the House, one of their first priorities is oversight of the woefully under-qualified man currently running America`s Justice Department. Ethically suspect Matt Whitaker who was never confirmed by the senate and whose performance yesterday in a cabinet meeting made clear how he got the job.

(BEGIN VIDEO CLIP)

MATT WHITAKER, ACTING ATTORNEY GENERAL: Sir, Mr. President, I will start by highlighting the fact that you stayed in Washington, D.C. over the holidays, giving up Christmas with your family, New Year`s with your family, trying to bring an end to this shutdown and security to our southern border. You have demonstrated your dedication to delivering on this critical issue for our country and for the American people.

(END VIDEO CLIP)

HAYES: The new House judiciary chair Jerrold Nadler already sent Whitaker a letter calling him to testify before the committee this month and now Nadler is threatening a subpoena if Whitaker doesn`t show up.

For more on this new era of Justice Department oversight, I`m joined by MSNBC justice and security analyst Matt Miller, former chief spokesperson for the Justice Department.

Matt, I know it happened yesterday and I talked about it on the show last night, but I would like to hear from you as someone who used to work at the Justice Department about you made of Mr. Whitaker`s performance yesterday.

MATT MILLER, MSNBC JUSTICE AND SECURITY ANALYST: It`s so embarrassing for him and for the department, although I will say, you know, Jeff Sessions did the same thing during cabinet meetings, so it`s not exactly new. I mean, Jeff Session went and grovelled before the president just as much as Whitaker did yesterday.

So, I have a lot of problems with Matt Whitaker and that was an embarrassing performance, bu, you know, not that unprecedented.

HAYES: Continuity.

MILLER: ...unfortunately. Yeah.

HAYES: So, this is a piece of news that`s pretty wild to me, and it takes a little unpacking, and you had strong reactions to it. So, I want to talk about it a second. This is from AP`s Eric Tucker who said this yesterday, he said "acting AG Matt Whitaker had breakfast at the Willard Hotel this Am former AG Ed Meese," Ed Meese of course notoriously Reagan`s attorney general, "who tells me Whitaker told him John Huber," who is someone inside the Justice Department, "continues his investigation into various FBI related concerns raised in the last year by GOP lawmakers, including claims of improper surveillance.

So here you`ve got these -- you know, Jeff Sessions was under tremendous pressure from House Republicans to initiate a bunch of counter investigations into the investigation to try to tie the Justice Department up in knots. He kicked it to a guy named John Huber in, I think mostly to say OK, guys, you happy now? And you`ve got Whitaker briefing Ed Meese about it?

MILLER: Yeah, it`s completely inappropriate. So, the department rules are pretty clear, ongoing investigations you don`t talk to the public about, you don`t talk to private citizens about, even former attorneys general. You know, they don`t have any -- these no special carve-out that just because you used to run the Justice Department that you get briefed in ongoing investigations. And it`s something about Whitaker.

Look, so I think most people, if they entered office under a cloud, as he has, would bend over backwards to go out of their way not make further mistakes. And he has taken the opposite approach. It`s a very Trumpian way of acting. If you`re just steeped in corruption, just do everything wrong, you know, don`t try to follow any of the rules.

And I think there`s another -- you know, there`s something concerning about the underlying investigation as well. I think you`re right that I think these appointment -- that this investigation or review is never quite clear what it was, that Sessions probably started it just to get House Republicans and get the president off his back, but that was nine months ago when he started these two things. It doesn`t take nine months to do a preliminary review of something where there was no criminal predicate to investigate.

HAYES: Right.

MILLER: So, that leads you to two conclusions. One, either they are actually investigating this and going around investigating something for completely political reasons, or they found that there is nothing really to review, but they just won`t say it, and they`re leaving a cloud over the Department of Justice just to appease the president.

HAYES: Whitaker has been in this job I think longer than I thought could possibly be the case, although everything is new in this era. There`s -- William Barr, who has been nominated to secede. There is going to been hearings. But do you see him before this House Judiciary Committee before then?

MILLER: Well, look, that`s obviously what Nadler is going to try. He did commit apparently in a phone conversation with Nadler late last year to coming at some point in January. But I suspect what he is going to try to do is run out the clock.

You know, Barr now has a confirmation hearing in mid-January. He`ll probably be confirmed barring some problem. You know you would think by mid-February or so, if you look at the timeline under which past attorneys general have been confirmed. So given that timeline, it wouldn`t surprise me if Whitaker tries to run out the clock.

Because there are some questions he really isn`t going to want to answer. He`s not going to want to talk about his conversations with the president about Mueller investigation before he was appointed. There was this report over the holidays that the president asked him why more wasn`t being done to control the Southern District of New York prosecutors who were investigating the president and his family and his private organization. I think that`s a pretty clear criminal act. I`m sure Whitaker doesn`t want to talk about that or whether he followed up on the president`s request.

So it`s an extremely difficult hearing for him. And unless he is going to go up there and just refuse to answer any questions, you would see why he would try to run out the clock. And I think that`s probably why he ends up with a subpoena from the Judiciary Committee.

HAYES: All right, Matt Miller, thank you so much.

MILLER: Thank you.

HAYES: The newly empowered House Democratic majority plans to vote tonight on a bill to reopen the government and end the Trump shutdown. The package includes funding for border security, but not a dime for the Trump border wall that he told us all over and over Mexico would pay for.

I`m joined now against by Lynn Sweet, Jennifer Rubin, Adam Jentleson.

Adam, I wanted to sort of pick up where we left off last time about the sort the dynamics of this showdown, because you worked in Harry Reid`s office and you`ve been through these back and forths. And one of the asymmetries I think that happens in a shutdown is Republicans by and large don`t care. They`re not big fans of the federal government anyway. They think that all the people that work for the federal government are libs who don`t vote their way. So like who cares if they aren`t getting a paycheck.

And what happens over time the Democrats really start to feel kind of substantive imperative to get back to compromise to make things happen. What do you think about that dynamic this time around?

JENTLESON: Yeah, I think that`s absolutely right. And I think this time there is an extra layer of bizarreness, for lack of a better word, where so in 2013, when we`re going through the shutdown, you at least have the feeling like the players involved were responding rationally to what was happening in the world around them.

So if Republicans endured days of terrible press stories, you could reliably count on the fact that they would respond accordingly, and that that would weaken their position. But so far Republicans have endured close to two weeks of terrible stories, and it hasn`t seemed to change their resolve whatsoever. So, in addition to their natural disinclination to care about the government, they don`t seem to care about the fact that they`re getting absolutely destroyed in press coverage, and that poll after poll shows the public overwhelmingly blames them for the shutdown.

So to be frank with you, I don`t really have a clear sense of how this ends. I think it could drag on for a while. There is no obvious end game. Mitch McConnell has made clear that he sees the Senate as essentially an annex of the White House and won`t pass a bill or even bring to it the floor without prior approval from the president, which is incredibly unprecedented for an independent legislative body. So to be totally honest, I don`t really know how this ends.

HAYES: Well, Jennifer, one thing that happened today that was interesting is Cory Gardner -- so to Adam`s point, I think he is right that -- and someone explained this to me actually during the last shutdown about the fact that Republicans felt so insulated from the mainstream media frankly that bad press coverage wasn`t reaching the voters that they cared about.

But there are some exceptions. So, Cory Gardner, who is a senator from Colorado who is -- that is a state Hillary Clinton won, a state Barack Obama won, a state that has trended blue, and a state that he is going to have to win in 2020 made some noises today about maybe a compromise where they pass stuff and they deal with the DHS funding later.

I wonder if you expect to see more of that.

RUBIN: I think you will over time. You`re going to see Susan Collins, who was also up for election in 2020. Thom Tillis from North Carolina who is also up for reelection.

You are going to see I think some breakage or are already seeing it. And I think the fact that ironically, that one facet of government that is suffering is of course homeland security, because that`s the funding bill. Now that doesn`t mean that urgently required people aren`t at their post, they are. But if you ever saw something that was totally counterproductive to their end goal of securing the border, you could shut down the Department of Homeland Security by not funding it not properly.

So I think eventually the Democrats I think will whittle away at the sort of obliviousness of the Republicans, and you`re going see more Cory Gardners pretty soon stepping forward and saying you know, we really have to end this. I have to run in another 18 months or two years, and I`m going to look like a jerk if I was the guy who couldn`t keep the lights on.

HAYES: You know, part of the weirdness of the shutdown is that it`s unclear what it`s for in this sense, and Adam was talking about the rationality question. The president said hundreds of times there is going to be a wall. He described the wall in lurid detail, its height, it`s thickness, it was like a Great Wall of China.

RUBIN: The door.

HAYES: There was going to be a beautiful door. There was going to be solar panels on top. All this stuff, right?

Now, it`s like -- he is like no, but it`s -- he doesn`t know what the heck it is. There is not actually going to be a wall. There is some fencing that is already there, maybe they`ll add some more fencing. But it`s not even clear what the thing is that he`s shutting it down for.

SWEET: What the thing is -- the thing is, is that -- and how it`s going to end. Trump -- Democrats just have to let Trump declare a victory. Trump makes 1s into 7s and 6s into 8s.

HAYES: Right.

SWEET: So it kind of -- he just needs to say I got this done, and sad to say because he is not a follower or an advocate of facts, this could be a way out.

And I agree with you, this wall is a metaphor. Some Republicans...

HAYES: Lindsey Graham said that.

SWEET: Lindsey Graham said, but I`m sorry, you don`t fund a metaphor.

HAYES: Right, well that`s my point. Right, like it`s a metaphor. I get that. But there`s some -- they keep talking about the money and these like (inaudible) terms, like, oh, what`s 5 bill. Just throw out some five bills. Like, what are you funding?

SWEET: If we talk to people and say everybody out there, it`s a $5 billion metaphor, will you pay for it? Or do you want to know what you`re getting, write it down on paper and make that deal.

HAYES: You know, I -- Adam, I think that in terms of how this ends, I think Lynn is right in that some sort of fig leaf that the president kind of an emperor`s new clothes situation where they say, like, great news, guys. With the wall it`s being constructed.

SWEET: It`s done.

HAYES: We`ve just been told it`s done and we can reopen the government. That`s literally how it`s going to end.

JENTLESON: Yeah, I think that`s right. I think, but it`s a psychological question, it`s fundamentally when does Trump decide the fig leaf is big enough to cover his shame and allow it to go forward. And then Mitch McConnell will immediately bring the bill to the floor, so it could end very fast. But he has to get there psychologically.

HAYES: Lynn Sweet, Jennifer Rubin, and Adam Jentleson, thank you all for joining me tonight. That is All In for this evening. Live outside the Capitol on this historic fascinating day. The 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