Nadler: "We are now in a constitutional crisis." TRANSCRIPT: 5/8/19, All In w/ Chris Hayes.

Guests: Sheila Jackson Lee, Jeffrey Harris, Jeff Merkley, Martin Sheil,Aram Roston, Claire McCaskill, Basil Smikle

CHRIS MATTHEWS, MSNBC HOST:  Call it grace under pressure.  The scriptures put it better.  John teaches us there is no greater job than to lay down one`s life for one`s friends.  We are country of many guns and some few who would use them to kill.  But we`re also a country of true souls who would give up their lives to save those of others.

And that`s HARDBALL for now.  Thanks for being with us.  "ALL IN" with Chris Hayes starts right now.

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CHRIS HAYES, MSNBC HOST:  Tonight on ALL IN.

UNIDENTIFIED MALE:  Mr. President, if the Mueller report clears you, why not let Congress see all of it, sir?

HAYES:  Donald Trump moves to stop Congress from getting the Mueller report.

REP. JERRY NADLER (D), NEW YORK:  This was a very grave and momentous step.

HAYES:  And Democrats moved to hold the executive accountable.

NADLER:  We`ve talked for a long time about approaching a constitutional crisis, we are now in it.

HAYES:  Tonight, how President Trump provoked a constitutional crisis.

REP. SHEILA JACKSON LEE (D-TX):  The president now seeks to take a wrecking ball through the Constitution of the United States of America.

HAYES:  Plus, why Senate Republicans have reportedly agreed to subpoena Donald Trump Jr.

DONALD TRUMP JR., SON OF PRESIDENT TRUMP:  Honestly, I don`t know.

HAYES:  Then, what we`re learning from the New York Times bombshell about Donald Trump`s taxes.

HILLARY CLINTON, FORMER PRESIDENTIAL CANDIDATE:  He didn`t pay any federal income tax.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES:  That makes me smart.

HAYES:  And how the president managed to stay ahead of the con.

UNIDENTIFIED FEMALE:  If anything, you read this and you`re like wow, it`s pretty impressive.

HAYES:  And the reporter who broke the big Jerry Falwell Jr. story joins me live.

JERRY FALWELL JR., PRESIDENT, LIBERTY UNIVERSITY:  What sounds grouchy to me might not sound grouchy to him.

HAYES:  When ALL IN starts right now.

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HAYES:  Good evening from New York I`m Chris Hayes.  In response to a frontal assault on the authority of Congress, Democrats took the unusual step today of voting to hold Attorney General William Barr in contempt of Congress by a party-line vote in the House Judiciary Committee.

Barr has defied congressional subpoenas to testify before that same committee and to turn over an unredacted version of the Mueller report including all the underlying evidence.  But Democrats real target is not the Attorney General, it is instead the President of the United States who is now challenging the very foundation of Congress`s constitutional role.

This morning the President retroactively claimed executive privilege over the entire unredacted Mueller report in order to block the House Judiciary Committee subpoena.  This despite having waived that privilege when the report first came out.

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WILLIAM BARR, ATTORNEY GENERAL, UNITED STATES:  The President confirmed that in the interest of transparency and full disclosure to the American people, he would not assert privilege over the special counsel`s report.

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HAYES:  OK.  Before voting to hold the Attorney General in contempt, House Democrats tore into the President for attempting to nullify their oversight powers.

(BEGIN VIDEO CLIP)

LEE:  I can only conclude that the president now seeks to take a wrecking ball through the Constitution of the United States of America.

REP. JAMIE RASKIN (D-MD):  He says there will be no cooperation with the lawful demands of Congress for information.  Congress shouldn`t be looking anymore.  The president-king declares this is all, it`s done.

REP. HANK JOHNSON (D-GA):  We have lawful responsibilities, constitutional responsibilities to engage in, one of which is possibly impeachment.

(END VIDEO CLIP)

HAYES:  It would be one thing if the president were simply asserting broad powers on the merits of this one issue.  But here`s the thing that I think has gotten lost and is important to remember.  He is currently doing it across the board denying every single request from Congress in the course of its routine oversight, denying in effect the Congress has the right to conduct oversight of the president at all.

The president isn`t just withholding information on the issues he`s especially touchy about like for instance the Mueller report or his tax returns where they flatly denied in violation of the plain letter of the law but also on some of the most disastrous and consequential episodes in his administration like child separation and the thousands left to die in Puerto Rico in a rescue effort that he oversaw.

They haven`t given the House a single document.  I want to repeat that again.  The White House has as of yet not produced a single document to the House of Representatives in response to its requests.

(BEGIN VIDEO CLIP)

NADLER:  We`ve talked for a long time about approaching a constitutional crisis, we are now in it.  We are now in a constitutional crisis.  This is far broader than Republican or Democratic or even the rights of Congress.  This is whether we can put limits on the power of the president, any president, and an executive branch and hold the president, any president accountable.  That`s what is at stake here.  We cannot flinch and we will not flinch.

(END VIDEO CLIP)

HAYES:  Now, let`s be honest.  If you`re Donald Trump, it makes sense to conduct yourself this way, throwing your weight around, acting as it can touch you.  That`s how he`s behaved since he was a young real estate heir managing to skirt the law and accountability at every turn.

New York Times just revealed that he lost more than a billion dollars in the heyday of his career making him either the worst businessman in America, or a tax cheat, or possibly some combination of the two.

But despite those extraordinary losses, despite having to clear bankruptcy six times being sued literally thousands of times, besides being named persona non grata by almost every major financial institution in the nation, the president has been able to get away with everything.  Thanks to a blend of bullying, salesmanship, and of course bailouts from Daddy.

Now, he`s running another con not just on the American people but essentially on our entire system of constitutional government.  And the question is whether he can roll the country the same way he used to roll the New York tabloids.

Congresswoman Sheila Jackson Lee sits on the House Judiciary Committee voted today to hold Attorney General William Barr in contempt of Congress.  Congresswoman, Chair Nadler said that we are now in a constitutional crisis.  Do you agree and what does that mean?

LEE:  I absolutely do agree.  And I saw this coming and mentioned the constitutional crisis was pending over the last couple of weeks.  When I concluded my remarks today in the hearing, I added another metaphor which was that we were seeing a Saturday night Massacre of rejection.

And what I meant is as the Saturday night massacre occurred were toppling officials refused to adhere to Nixon`s instruction.  We`re getting from the White House a massacre of rejection rejecting every single constitutional request that the Congress is making on behalf of the American people.

Chris, I think that`s really the point.  This is not a congressional fight, this is not a Republican, Democratic, fight this is actually the duty of the Congress in its legislative and oversight responsibilities that the president is now rejecting.

I don`t think he`s going to last.  I don`t think this is going to last.  I think the American people are going to see clearly that this is not in the best interest of this country.  And once that occurs, as we pursue the legal options which is going to the floor of the House for the final vote on this civil contempt, holding in our back pocket and inherent contempt, moving forward to the courts.

And I believe we can make the argument that this goes to the very seat of government and we ask the federal courts to expedite their decision.  I frankly believe they will do so because what is occurring are acts not only by the President`s agents and cabinet members but their actual acts by the president.  I think the federal courts will have to take note of that.

HAYES:  To play devil`s advocate for a moment, I want to give you an argument I`ve seen around, and it goes like this.  Eric Holder was -- had a dispute with Congressional Oversight Committee when the Republicans are running Congress over a document production around fast and furious.  He gave them some documents, he withheld others, he asserted privilege.  He was found in contempt of Congress.  It was litigated, eventually sort of found in Congress`s favor.  And that wasn`t a constitutional crisis.  So what makes this different?

LEE:  I`m glad you asked that question and I`m glad you gave a good rundown of General Holder`s activities.  And of course, that was under Republican Congress.  And he did provide 7,000 pages of documents.  He came to the Congress himself and sat down with Chairman Issa, and Ranking Member Cummings to seek an accommodation.  He continued to engage and frankly, he was fighting against a political operation.

This is really hugely different if I might say.  First of all, Fast and Furious were policies that caused the tragic loss of life which we will always regret, but they were not direct actions by the President of the United States.  We`re frankly dealing with direct actions by the president.

First in volume one, a deep dive into interacting with one`s adversary who has now committed to be engaged in the 2020 election.  So protecting America`s democracy is at stake.  And then 700-plus federal prosecutors have said if President was not the President of the United States, he would be indicted by the elements in the obstruction volume two which are clear in that volume.

I don`t think a court is going to spend time extending their decision when we frankly have a situation where a president could operate and endanger the governance of this nation.  We are not targeting Mr. Trump.  We`re not targeting again, the people who work for him.  What we are trying to do is find the truth.

He has now taken it upon himself encouraged by the Attorney General to give a blanket executive privilege.  Never in the history, Chris of the United States has this happened so we have historic parameters that the article three courts just cannot overlook.  They cannot extend it like they`re dealing with policies on Homeland Security.  They`re actually talking about the running of this country.

We`re going to pursue it in that way.  We`re going to go to court with the same kind of sense of urgency and legal explanation to the court and court documents when -- and court cases to suggest that the court needs to act expeditiously to protect the democracy, to protect a sovereign nation.

HAYES:  That was --

LEE:  And that`s why we think it`ll be very different.  We`re going to be persistent.  You can`t block out Congress` work.  You can`t stop us from finding about the Affordable Care Act and pre-existing condition.  You can`t stop us from finding out about 3,000 people as you indicated that lost their life in Puerto Rico, or stop us from trying to track down every single child that was separated, why they were separated and to connect them with their families.

These are things that are imperative.  My last point on this, Chris, you can`t stop us from trying to find out why a ship is in the Mideast.  Are we at war?  Can we trust the administration in making these determinations?  Congress has the responsibility of oversight and I don`t want to see a constitutional collapse along with the constitutional crisis.

HAYES:  All right, Congresswoman Sheila Jackson Lee who serves on the House Judiciary Committee as you saw earlier, thank you very much.

LEE:  Thank you for having me.

HAYES:  The president clearly does not want public attention focused on the contents of the Mueller report which includes of course, damning evidence the president did in fact attempt to obstruct justice.  At least according to more than now 800 former federal prosecutors who say Donald Trump would have been charged if he weren`t the president.

One of those prosecutors used to work closely with the President`s personal lawyer Rudy Giuliani and says Giuliani would have filed charges too.  I`m joined by Jeffrey Harris who was a principal assistant to then-Associate Attorney General Rudy Giuliani during the Reagan administration.

Tell me about your thinking about this case and how you think you would have prosecuted it or not prosecuted it when you were working for one Rudy Giuliani?

JEFFREY HARRIS, FORMER DEPUTY ASSOCIATE ATTORNEY GENERAL:  Well, let me tell you.  There are so many incidents that Mueller reported.  Let`s just take the simplest and the clearest.  Someone is going to be a witness in a federal investigation and the person that you are seeking to prosecute told that person to lie or to create a false document.  End of story.  That`s it.  That is obstruction of justice.  And that`s a very simple matter to prosecute.

In this case, the difference is in quantity and over the time period that it occurred.  And I think what the letter says most cogently is that in our opinion, the 800 of us and more every day that we don`t think it was a close call.  It`s an easy call.  This would have been prosecuted and other than the fact of the OLC opinion that says a president can`t be prosecuted while in office, he would have been indicted.

HAYES:  I want to just read you what the President`s lawyer Rudy Giuliani said.  He said, I would not bring a case where there was no underlying crime, nothing actually obstructed.  Jeff was a Dem I believe.  I doubt he voted for Trump.  Indeed, I`m not sure any of them.  Rs and Ds. Supported Trump.  What prosecutors were offer -- what prosecutors would offer a gratuitous opinion in a case they didn`t investigate?  What do you say that?

HARRIS:  Well, let me give you a couple of prosecutors who offered their opinion.  Rudy did Bill, Barr did.  And let me just tell you how this works.  Very often when you`re a prosecutor, the FBI agents come to you with a file.  You review the investigative file and you make a decision about whether you`re going to take the case and go with it and prosecute it.

In this case, we have Mueller`s report which is far more extensive than any FBI file that I ever got to review.  And the notion that just because you haven`t done the investigation, you can`t have an opinion about it is ridiculous, frankly.

HAYES:  You`re saying that essentially, in this case, the file presented to the prosecutor is the thing that you would base the judgment on from a prosecutorial standpoint.

HARRIS:  That`s correct.  Sometimes you`d get a file and you`d say gee, I`d like you to get a little more on this or that or the next thing.  But basically the agents are doing the investigation and you as the prosecutor review the report they produce, review their reports of interview, and make a decision about whether to go with the case or whether it needs further investigation.

So the notion that prosecutors don`t offer opinions on prosecution for cases they haven`t personally investigated is simply not true.

HAYES:  You know, one thing that I`m getting from you, and corrected I`m wrong and I feel that I`ve interviewed other signatories of the letter and talked to a lot of people in the legal world, it`s just a baseline at which are sort of legally appalled by the behavior that is described in the report.  Whether that behavior were going to be undertaken by a private citizen, but particularly when it`s the President of the United States.  It`s just not the kind of thing that you would ever countenance, that you were ever counsel, that you would ever defend in a colleague, that you would ever imagine undertaking yourself.

HARRIS:  Well, that`s exactly right.  And when you add to that for example, I think bill Barr put his finger on the scales for Trump.  And he did so by releasing a misleading four-page letter then withholding the report for two or three weeks so that the president could go on his victory tour.

And it`s not something -- I worked for some great Attorney Generals.  Edward Levi, Judge Griffin Bell, William French Smith, none of them would have conducted themselves in this way.

HAYES:  Do you think his behavior has been a departure and has been -- has violated or compromise the integrity of that office?

HARRIS:  Absolutely.  You know, I really am quite appalled by it.  You know, I loved my time in the U.S. Attorney`s office, in the Department of Justice.  It was the best professional experience I ever had.  And to see what`s going on now at the top is very disheartening.  And that`s one of the reasons I felt I signed the letter because I had to speak out when I see what`s happened at the Department of Justice.

HAYES:  All right, Jeffrey Harris, thank you very much.  I really appreciate hearing from you tonight.  For more on the showdown between the President and Congress, I`m joined by Senator Jeff Merkley, Democrat from Oregon.  The -- it`s a weird time because we feel like we`re in a crisis though it`s sort of slow motion and it lacks any kind of specific moment you can point to.

So as a member of the United States Congress and the U.S. Senate charged with a constitutional duty to protect and defend the Constitution, how do you understand today?

SEN. JEFF MERKLEY (D-OR):  Well, I can tell you that the weight of evidence is growing for the House to take decisive action.  I have here the letter you`ve been talking about, the statement by the former federal prosecutors.  I encourage everybody to read this.

It lays out the witness tampering and -- from the viewpoint of a federal prosecutor.  It shows the witness tampering and the false evidence and the effort to fire the head of the operation, Mueller, the effort to constrain the investigation so that the president was outside the scope of the effort.

All of this is classic, classic obstruction of justice, not in my evaluation, I`m not a lawyer, but in the eyes of hundreds, as you said over 800 now former federal prosecutors who said the individual, that is the president, would have been indicted but for the opinion of the White House Counsel that you can`t do so.

This is very serious stuff.  And I think what`s happening now with the president saying I`m not going to allow my folks to testify before Congress, I`m not going to send the information whether it`s on children on the border, or it`s related to the Mueller report, this is a complete violation of the checks and balances of our Constitution.  So I do believe we have now entered that constitutional crisis.

HAYES:  I should just note that was the OLC opinion of the DOJ, not the White House counsel`s office that you`re referring to.

MERKLEY:  Yes, thank you.

HAYES:  Just to clarify.  What do you -- what do you say -- I want you to respond to the same argument I made to Congresswoman Sheila Jackson Lee which is explain to someone why this fight is different, right.  There are fights between the branches all the time.  Eric Holder was held in the contempt.  There were all kinds of battles over all kinds of things when you had a Republican Congress and a Democratic administration.  What is different to your mind?

MERKLEY:  Well, in the previous case, it was a single issue.  It was a case where lots of evidence was provided to Congress, where lots of negotiations were held to protect sensitive national security information.  So it was a deep effort to collaborate and work together to get the information Congress needed.

In this case, it`s an outright obstruction of the ability of Congress to have any oversight of the White House even on issues that are completely separate from the Mueller investigation.  So this is a real breakdown in division of three branches of government that provided check on each other.

HAYES:  Your colleague Senator Warren took to the floor yesterday after Mitch McConnell`s speech declaring case closed.  Although it seemed a little premature since Don Jr. just got subpoenaed before the Senate Intelligence Committee.  She says the House should start impeachment.  That is her view.  She`s on the record saying that.  Do you agree with your colleague, Elizabeth Warren?

MERKLEY:  I think they should have a committee that does a very intense investigation of these charges.  I want them to weigh very carefully the information that`s been provided and analyzed by these hundreds of federal prosecutors.  I believe it is substantial.  I believe that if a president committed crimes that any other person would be indicted for, then that individual should face an impeachment in the House.

HAYES:  All right, Senator Jeff Merkley, thank you for your time tonight.

MERKLEY:  Thank you.

HAYES:  Still ahead, in ten years, Donald Trump lost over $1 billion rendering him either an incompetent businessman or a complete con.  The myth of Donald Trump in two minutes.

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HAYES:  After #BillionDollarLoser trended on Twitter last night in the wake of the New York Times piece about Donald Trump losing $1 billion, it has been entertaining I have to say, to watch Trump and his T.V. networks spin that actually it`s a good to lose a lot of money and that means you`re smart and not a dumb idiot who pays taxes like a sucker.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  This blockbuster story probably went across your updates last night on your iPhone or your iPad.  This is the New York Times got to hold the ten years of the president`s some of his businesses tax returns.  And it shows that he lost a lot of money over the course of ten years if you consider $1 billion a lot of -- a lot of money.

He`s a bold businessman which is chronicled here.  There`s nothing about this article that surprised anybody.  For us or at least for me, I can`t imagine having that much money, spending that much money and being in debt.  For him it makes sense.

(END VIDEO CLIP)

HAYES:  Totally.  Meanwhile, Trump himself explained that A, everyone did it, B, it was just sport.  Again you`re a sucker if you pay taxes.  And C, the pieces is somehow fake news anyway.  But it seems like they`re only really a few options here.  Either the President is record-level bad at running the business or he was doing some record-level tax evasion.

To help get the bottom of it I`m joined now by former IRS Special Agent Martin Sheil.  He served over 30 years as investigator and is a designated expert witness for money laundering for the IRS and DOJ.  All right, when you look at these documents, as someone with the background you have, what do you -- what do you see --  what do you want to know when you look at these kinds of losses over ten years?

MARTIN SHEIL, FORMER INVESTIGATOR, IRS:  Well, those are really large losses, but from a criminal investigative or prosecutorial point of view, what you need to do to bring to prosecute and indict would be to focus on what we refer to as badges of fraud.  That is willful intent, corrupt intent, or the mens rea of Mr. Trump and his corporate representatives.

What we need to focus on is if we could -- I mean the New York Times article yesterday was amazing in terms of the amounts of money and the losses over $1 billion and losses that they referenced, but their earlier article even better in terms of focusing on the badges of fraud.

What I would look at as a criminal investigator would be the shell companies, the false invoices, and the way that wealth was transferred from Fred Trump to Donald Trump aided and abetted by Donald Trump in those years.

What he did was he evaded gift taxes by setting up basically a phony company which operated as a conduit and he would then invoice for refrigerators, boilers, other types of things needed for apartment buildings etcetera.  And that was all inflated.

So when you look to make a criminal tax case, the first -- one of the first questions that the prosecutor is going to ask the agent will be what`s your intent, how much intent do you have --

HAYES:  Right.

SHEIL:  And that`s where you got to focus.  Now when you -- when you look at the past prosecutions of Paul Manafort, Rick Gates, Michael Cohen, each and every one of them was indicted and prosecuted for both tax fraud and bank fraud in addition to other charges.

My approach would be if I was with one of these congressional investigations or in the Southern District of New York would be to open up a grand jury looking at potential criminal tax fraud but also inviting the FBI in to look at bank fraud and focus on the accountants and the preparation of the financial statements, the work papers that go in, and the schedules that go in to support those schedules.

They have to do one of two things.  You know, essentially you know, what you want to do is box them in and force them to tell the truth because what you`re looking at here is probably once again potential shell companies, false invoicing and maybe a double set of books.  One set of books and records for the banks,  one set of books and ratings for the IRS.

HAYES:  Right.  Can I ask a broad -- just a broader question here.

SHEIL:  Sure.

HAYES:  One thing that strikes me as strange is these numbers are bizarre, right, there anomalous.  I mean, you`re talking about a guy who`s filing and losing more than twice the next amount.  You`re talking about a guy who one year has $53 million in interest income just show up out of nowhere.  And I guess my question is, it`s sort of amazing this didn`t get flagged, like what am I not getting here that you`re filing these kinds of returns and no one`s saying coming knocking on the door.

SHEIL:  Well, we don`t know for a fact that they haven`t been flagged.

HAYES:  Right.

SHEIL:  No one does.  I mean, the fact Mr. Trump says in fact --

HAYES:  It`s been audited all time, right.

SHEIL:  Yes.  So we need to find that out.  What The Times report last night reflected were transcripts of IRS records, you know, the transcripts of the tax returns.  And those transcripts will only have pretty much bottom line numbers for each line on the tax return.  They will not reflect the underlying schedules that show you the source of whether it`s loans that he made.

And that`s -- if you want to focus on the $51 million, it would seem to me that would almost have to be a loan, a large loan like maybe like $500 million.  A loan that was made so that he could collect that you know, ten percent interest in one year.

HAYES:  All right --

SHEIL:  He`s not -- he`s not a lender, he`s a borrower`s so that doesn`t make sense.

HAYES:  It does not make sense.  Martin Sheil, thank you so much for sharing your expertise tonight.  I appreciate it.

SHEIL:  You`re welcome.

HAYES:  Next, how the President is trying to stay ahead of the con and what his current tax information could reveal.

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HAYES:  Oftentimes, when bad news comes out about the president, you will hear people jump ahead to the conclusion that his base won`t care: it doesn`t matter what or how bad the story is -- hush payments to women, to the Mueller report, his massive losses in business, as the New York Times reported just last night, they will say Trump`s core supporters just will not be moved.

And it is fascinating to watch how the president`s defenders contort themselves and they story so that they don`t have to care.  Take Trump TV this morning reacting to that New York Times story about the president`s taxes, for example.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Guess what?  Not all of us win on everything we buy.

UNIDENTIFIED FEMALE:  I think that`s how the voter feels.

UNIDENTIFIED MALE:  Absolutely.

UNIDENTIFIED FEMALE:  I feel like they realize he`s a billionaire.  He was campaigning on the trail with his plane behind him that`s as big as a Delta jet with his name on it, it is -- we can`t even fathom that kind of money.

If anything, you read this and you`re like, wow, it is pretty impressive all the things that he`s done in his life.  It`s beyond what most of us could ever achieve.

(END VIDEO CLIP)

HAYES:  It could very well be true for the Trump base, but what`s also true is that Donald Trump has fought truth and nail for years now to keep his tax returns from coming out.  And there`s a very good reason for that, he has, apparently, pulled off a major con. 

The New York Times makes it clear that Trump was a con artist back in the `80s and `90s and he is still one now who is trying desperately to stay ahead of it.

Joining me now, former Democratic Senator from Missouri, Claire McCaskill, now an NBC News and MSNBC political analyst, and Basil Smikle, Democratic Strategist and policy analyst, former executive director of the New York State Democratic Party.

Senator, let me start with you.  I mean, so there is this idea that, like, it`s not going to matter to the base and sort of putting that aside for a second, it also strikes me there is a reason he doesn`t want them to come out.

CLAIRE MCCASKILL, (D-MO) MSNBC POLITICAL ANALYST:  Well, I think that`s pretty obvious, but that was obvious during the campaign.

HAYES:  Right.

MCCASKILL:  And I will say this, even though his base is very defensive and very protective of the president, there is some wobbling going around right now, and we`re not spending a lot of time talking about it, but it is with the farmers.

HAYES:  Yeah.

MCCASKILL:  The farmers out there are -- they know what losses are.  They know what real estate losses are.  They know what loss carry forward is.  And they know that they`re going to have a lot of them this year.  And they know that the tariffs are not getting resolved.  They can`t even get -- he`s more interested -- this president is more interested in punishing Puerto Rico, and in the process hurting his base, which are the farmers of America.  So it is fascinating to me.

HAYES:  Do you think there`s a point -- I mean, I talked to -- I had Jon Tester on last night, we talked about this.  And he was talking about people getting -- you know, they`re taking a bath.  Like it shows up in the spreadsheet.

MCCASKILL:  Taking a bath.

HAYES:  And I guess the question always is like, do people`s symbolic attachment outweigh whatever material losses there are?  And is there a tipping point at which they no longer do?

MCCASKILL:  Well, I think one of the thing you h ave to realize is a lot of people who begin to question him, like farmers, and whether or not what he`s doing is wise and whether or not he`s really looking after them, or the working folks out there that really aren`t seeing the manufacturing Jobs on every corner is that they may not talk about it.  And they certainly don`t want to bend a knee to folks that are speaking out of Washington.

HAYES:  Right, yes.

MCCASKILL:  Or maybe out of New York.

HAYES:  Totally, right.

MCCASKILL:  So they are really going to push back if they are confronted, and say, wait a minute, the only reason the president is not doing well is because the system is against him, which of course is silly.  It`s dumb.  That`s not the reason that he`s not doing well, it is because he`s not a very good president.

HAYES:  Well, there`s a question, right, also about like how prickable is this sort of aura around him to a certain segment of the population that views him as a master billionaire.  You know, you heard them -- it was funny say like he`s got this big plane.  He`s got all this stuff that like the idea that the whole thing is a mirage is both I think sort of devastating for him, but also almost too much to process.

BASIL SMIKLE, DEMOCRATIC STRATEGIST:  You know, going back to an earlier point that you made, we were talking about this a lot in 2016, that this was this house of cards that would have to fall apart at some point.  But we have also come to realize is that voters compartmentalize a lot.  There was this comment around that time that said don`t take him literally, just take him figuratively.  You don`t have to take -- and that`s shocking when you are talking about the president of the United States, right?

And, so, voters have found a way to get along with him and to sort of try to believe him, but I don`t know that works necessarily for the voter that voted for Obama twice and him once.

HAYES:  That`s the question.

SMIKLE:  I think those are folks that we can kind of peel away.

HAYES:  I mean, when I look at this, I think of this guy.  This -- I think that there`s a case to be made that he is the most successful con artist of all time, literally of all time.  Name someone who has -- I mean, this is someone who built this entire reputation for himself as an  independent businessman that was completely a bailout of daddy`s money, the whole way through.  We know that now increasingly  from the New York Times, then turned this myth of being a reality star television -- into the most powerful person in the world.

MCCASKILL:  It`s true.  And all he did --  I mean, banks -- as you`ve said, Chris, banks avoided him.  The only bank that would with him was the wealth desk at Deutsche Bank.  Nobody would do a deal with him.  All he was doing was selling his name.

HAYES:  But here`s my question, why -- you were on Capitol Hill across -- you were there when he was there, right?  You got colleagues that are all ego driven people generally in politics.  They`re pretty cock sure.  They think they know what they`re doing.  What is it like -- like, does the con work in person?  Does it work -- how is it working on the Republicans?  I just don`t actually understand why it works.

MCCASKILL:  I don`t think it`s working on the Republicans.  I think they`re doing a good job of -- most of them keeping their head down and trying not to say too much.

I mean, if you look across the board, there`s a  few outliers like Lindsey Graham who appears to have lost his mind and others, but the vast majority of my former colleagues that are Republicans, they don`t talk much about Donald Trump.

SMIKLE:  And it`s a little bit -- I`m sorry, and it`s a little bit...

MCCASKILL:  And they`re afraid of him.

SMIKLE:  Yeah, and it`s a little bit of being out of control of what you`ve wrought, right, because this is not just Donald Trump, this is 10, 15 years in the making of kind of creating this divisive atmosphere.  If Donald Trump didn`t exist, he would have been created. 

So, now that he is here, how do they roll back all of what they`ve done?  It`s not just from the election, it`s going back a decade.

HAYES:  But it also strikes me that there`s like the kind of shamelessness and boundary pushing is a kind of comparative advantage in a lot of these standoffs, right.  I mean, it is here, like he`s doing stuff that`s just crazy and out there, and he`s getting away with it.  And it seems like he`s doing that with congress now.

MCCASKILL:  Well, yeah, that`s why the courts -- that`s why we need really good lawyers that pay attention to what the president is, what the case law is, and get in front of a court about the constitutional duty of congress to do oversight.

That`s what this really is about, it`s -- and it would be different if the president were picking an individual fight, like Fast and Furious, on one individual thing.  He`s basically saying I`m done with it.

HAYES:  That`s it.

MCCASKILL:  I`m going to treat you like I used to treat the people who worked on my development projects.  I`m just not going to pay you and then maybe I`ll sue you...

HAYES:  I`ll walk away.

MCCASKILL:  Yeah, he`s treating a duly elected branch of government as if they are something that can be ignored.  And I can`t believe that the courts are doing to allow that to occur.

HAYES:  I think that`s probably right.  We`ll see.

Claire McCaskill, Basil Smikle, thank you both for being here.  It`s great to have you here.  Come back.

MCCASKILL:  Thank you.

HAYES:  Ahead, why was conservative leader Jerry Falwell seeking out the help of Michael Cohen?  The reporter who broke that story and how it matches up with Falwell`s endorsement of then candidate Donald Trump coming up.

Plus, tonight`s Thing One, Thing Two starts next.

(COMMERCIAL BREAK)

HAYES:  Thing One tonight, by now I`m sure you are familiar with the cable news morning show known as Trump TV and Friends.  I should hope so.  We have been playing clips of it here all night.  You can imagine how much pressure there is to give audience of one some love on the day the big story is that he lost a billion dollars of his daddy`s money and that his entire master business guy image is essentially a fraud.

Today, is not a day to (inaudible) Judge Napolitano.  No, today is a day for rose colored glasses.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  He`s a billionaire.  He was campaigning on the trail with his plane behind him that`s as big as a Delta jet with his name on it.  It is -- we can`t even fathom that kind of money.

(END VIDEO CLIP)

HAYES:  Yeah, he has a plane. What do you have?  But things really got interesting when the team left the confines of the curvy couch to get out there and talk to the folks.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Johnny, retired truck driver, do you care about Trump`s tax returns.

UNIDENTIFIED MALE:  No.  I don`t really give a rear end about it.  That`s what I`m trying to do, I don`t care.  If anybody shows it or not.

(END VIDEO CLIP)

HAYES:  OK.  He doesn`t care.

But a couple of questions.  First, what exactly did you expect to hear from the guy from Wisconsin in a Trump hat?

And second question, why was that guy eating so many eggs?  We`ll unscramble the mystery in Thing Two in 60 seconds.

(COMMERCIAL BREAK)

HAYES:  So this morning when Trump TV turned to a totally random voter in Wisconsin to tell us that we definitely don`t need to see Trump`s tax returns, lots of people took note that it was not a particularly surprising take from a guy with Trump`s name on his hat, but the folks at the website`s Splinter took note that the plate in front of that guy had 10 eggs on it carefully arranged in the round side by each sunny side up.

Weird, right?

But wait a second, later the reporter was back.  Different table, same eggs?  Later the reporter went to a third table and in the background Trump hat guy has no eggs.

Something is going on here.

Splinter called the restaurant to try to crack the case, what they found is there was a apparently a rotating plate of prop eggs cooked by diner staff for the Trump TV taping.

Of course, this is not the kind of thing you can get at any old omelet bar.  The plate of 10 eggs at Johnny V`s Classic Cafe is part of the King`s Challenge, which is 10 eggs, 8 pancakes and a whole lot more that you have to eat in under an hour.  No the Burger King challenge, that`s something the president might be into.

But as for breakfast, Trump`s favorite is bacon and eggs, bacon medium and the eggs over-well.

(COMMERCIAL BREAK)

HAYES:  Since we appear to be careening towards truly Apocalyptic levels of global warms, you have to take your laughs where you can get them, even if it`s gallows humor.  And I have found it perversely amusing to watch conservatives contort themselves into new versions of bad faith denialism to pretend that what is clearly happening around them isn`t actually happening.

First, it was actually the globe is cooling, you idiots. The thermometers are wrong.  That proved an increasingly difficult sell as it got hotter and hotter, so a lot of them have moved on to, well, yes, the Earth is warming, but honestly, who knows what`s the cause?  It is not man made, it`s natural cycles or some other nonsense.

But it takes truly heroic levels of both idiocy and venality to try to sell the idea that actually climate change is a good thing, yet somehow Secretary of State Mike Pompeo was up to the challenge.

At a meeting in Finland of the eight nation Arctic Council dedicated to protecting the Arctic`s  increasingly fragile and endangered ecosystem, seven nations agreed to a pretty standard joint declaration acknowledging the threat of climate change to the Arctic, but but the United Sates did not sign on.  Pompeo, on behalf of the Trump administration and you and me as U.S. citizens, objected effectively killing that statement, but not before he gave a speech that described one of the effects of climate change in the Arctic and said essentially, hey, look on the bright side.

(BEGIN VIDEO CLIP)

MIKE POMPEO, U.S. SECRETARY OF STATE:  Steady reductions in sea ice are opening new passageways and new opportunities for trade.  This could potentially slash the time it takes to travel between Asia and the west by as much as 20 days.

(END VIDEO CLIP)

HAYES:  Who needs the icecaps when you can get through the North Pole to get from China  to the U.S.  Isn`t that amazing?  Steady erosion of sea ice, what`s that happening from?

Pompeo also said that China and Russia were acting too aggressively in the region and said the U.S. would beef up its security presence in the Arctic.

This is really the Trump administration in a nutshell -- bad faith, gaslighting, reckless destruction of the planet, combined with opportunistic profit seeking and foreign policy threats to back it up.

It`s humiliating for Mike Pompeo, for the entire nation, and it`s dangerous, and history will judge it harshly if we manage to make it to history.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JERRY FALWELL, PRESIDENT, LIBERTY UNIVERSITY:  In my opinion, Donald Trump  lives a life of loving and helping others, as Jesus taught in the great commandment.  He cannot be bought.  He is not a puppet on a string, like many other candidates.

(END VIDEO CLIP)

HAYES:  Always been a bit of a question about how Jerry Falwell Jr.`s decision to endorse, of all people, noted serial adulterer and New York libertine Donald Trump in the very crowded GOP primary field just days before the Iowa caucus.

And we just got a story that denials to the contrary notwithstanding, maybe shed some light on that endorsement.  So it turns out that Michael Cohen, yes, that Michael Cohen, is buddies with the Falwells, that`s pretty established.  I didn`t know that, but that appears to be true.

Now, also according to Reuters, at least, Cohen claimed to have helped Jerry Falwell Jr. and his wife with a racy photo problem and helped make it go away, just months before Falwell endorsed Trump.  That`s according to a recorded conversation reviewed by Reuters.

NBC News, I should note, has not had a chance to review a recording of that phone call.

And a source insisted to Reuters the endorsement and the help of the photographs were separate issues. 

An attorney for the Falwells told The Washington Post in a carefully worded non-denial, quote, "while the Falwells have a long-standing friendship with Michael Cohen, they never engaged or paid  Cohen to represent them in any legal or other professional capacity, and Cohen did not ever resolve any legal matter on their behalf.

You`ll note the Reuters story does not say that Cohen claimed to be legally representing the Falwells or getting paid, so that part is a little weird.

Also, another thing that`s kind of weird is this other, separate story which came out more than a year ago about the friendship between Jerry Falwell Jr., his wife, and a one-time Miami Beach pool attendant named Giancarlo Granda.  The Falwells met him and befriended him and took him under their wing, so to speak, and ended up investing $1.8 million in a Miami Beach Youth  Hostel the attendant was involved in, which, I don`t know, seems like a lot.

An attorney for the Falwells did not comment at the time about the investment described in a court filing as loans.  An attorney for the one- time pool attendant, now a student himself told the Miami New Times today, quote, Mr. Granda has no idea about the alleged personal photographs Mr. Cohen refers to in his taped conversation.  Mr. Granda is not the person referred to by Mr. Cohen in the tape  recording.

All right, the reporter who broke both the Reuters and the Buzzfeed story is Aram Roston who joins me now.

I am confused by the set of facts and I would love to get some clarity.  So, let`s just start with the most basic thing.  Was it well-known that Falwell Jr. and Michael Cohen are friends?

ARAM ROSTON, JOURNALIST, REUTERS:  No, it was not well-known, but it`s clearly the case, and they`ve had a friendship that`s gone back years.  I mean, you`ve seen that the Falwells put out a statement saying it`s a long- standing friendship.  I think they met back in 2012.

HAYES:  OK, before we get to anything else, isn`t that a little weird?  I just like -- I don`t think of these people moving in the same social circles, but somehow they`ve been friends even before the whole Trump thing happened, or Trump ran for office.

ROSTON:  Well, it`s before -- they met in the context of Donald Trump.

HAYES:  OK.

ROSTON:  When Trump was down in 2012, it was in 2012 that Trump gave the convocation at Liberty University, and that`s where he really came on the stage with Falwell.

HAYES:  I see.

ROSTON:  And Michael Cohen happened to be there.  He was there at that event.

So, yes, it`s an interesting friendship, it`s not what you`d assume.  The one lives in Virginia, one an evangelical, one is a real estate lawyer.

HAYES:  They seem like kind of different guys.

Well, so here is the second question, so that actually provides a kind of economical explanation of the decision, right, that Michael Cohen has been working this guy over.  He is his friend, and he gets him to endorse his boss Donald Trump.

But as to the Michael Cohen recording saying that he took care of a racy photo problem for Falwell, the first thing I got to say is like Michael Cohen is a convicted liar.  Do we have reason to believe this other than what he says on tape?

ROSTON:  We do, yes.  We do have some reason to believe it, if you`ll see our story.

But I can`t really get into that, into the details.

HAYES:  OK.

But your position as a reporter, and you`re a good one, I should note this, is that this is not just a Michael Cohen boast with nothing else backing it up?

ROSTON:  I think that`s true.

HAYES:  OK.

And then the second question I guess becomes like it`s none of my business whatever heck arrangement they have.  They`re friends.  There is photos, I don`t care.  It`s interesting insofar as if it somehow connects to that endorsement, and yet the reporting is that it doesn`t or that`s just a denial?  I couldn`t get that either.

ROSTON:  I`ll repeat that.  In other words, the issue would be there is no link that we could find  between the fact that there was an endorsement where Michael Cohen had requested help in the timing of that endorsement and this claim that Michael Cohen had assisted the Falwells in this other matter involving these personal photographs that they didn`t want exposed.

HAYES:  Right.

I mean, there are obviously other candidates that probably would have made more sense from  the religious right perspective Ted Cruz announced his campaign at Jerry Falwell Jr.`s university. It was seen as a surprise at the time, right?

ROSTON:  Well, it was clear that Falwell was friendly with Trump.  Trump had been at Liberty University.  Falwell had spoken in superlative terms about Trump already.  But, yes, stepping into the race at that time made -- it really was a significant step, especially for Falwell, who is an evangelical  leader who is very important.  He is very influential.  And when he does something, it means other evangelicals kind of do the same.

And as you pointed out, Trump was not a -- not necessarily a natural ally to the evangelicals.  He owned casinos.  He was married multiple -- he was divorced a couple of times.  He was -- you know, he talked about sex openly and so forth.

HAYES:  Yes, quite a bit.

Final question, Giancarlo Granda, who you have also reported on his business arrangement with the Falwells says he has nothing to do with this, and if you`re juxtaposing  the two stories, that`s -- I don`t have anything to do with this.  What`s your response to that?

ROSTON:  We certainly -- there was no mention of that in this story we just did, of course.

HAYES:  OK, so you don`t see some juxtaposition between the two?

ROSTON:  We didn`t put any of that other material in this story.

HAYES:  You just happened to report on them both.  OK.

ROSTON:  I did.  I did.

HAYES:  Aram Roston, thank you so much for that reporting.

ROSTON:  Thank you.

HAYES:  That is ALL IN for this evening.  "THE RACHEL MADDOW SHOW" starts now. 

Good evening, Rachel.

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