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The Rachel Maddow Show, Transcript 10/20/11

Guests: Paul Krugman

RACHEL MADDOW, HOST: Good evening, Lawrence. Thanks. And thanks to you at home for staying with us for this next hour. This is how Secretary of State Hillary Clinton found out that Moammar Gadhafi might be captured or dead or captured then dead. At the time earlier today, it was unclear which. (BEGIN VIDEO CLIP) HILLARY CLINTON, U.S. SECRETARY OF STATE: Wow. Huh! UNIDENTIFIED MALE: Unconfirmed. CLINTON: Unconfirmed, yes. No. Unconfirmed reports about Gadhafi being captured. Unconfirmed. Yes. We`ve had too many -- we`ve had bunch of those before. We`ve had, you know, had him captured a couple of times. (END VIDEO CLIP) MADDOW: That very, very, very pregnant woman you saw handing Secretary Clinton her BlackBerry there in that footage, that`s Huma Abedin, famous for being one of the secretaries senior aides for a long time now and also famous incidentally for being married to Congressman Anthony Weiner. I know, like a weird detail. But it was a small snapshot, a strange set of detail we got thereabout how the news of Moammar Gadhafi`s capture or death spread around the world, even at the highest levels of government. And once the news was confirmed that Gadhafi was not just captured but in fact dead, it immediately came clear that there would never be an Isratine. Remember Isratine? Isratine was Gadhafi`s personal solution to decade-long Israel- Palestine issue rather than negotiating a two-state solution, an Israel and a Palestine, Gadhafi`s big innovation was that he would combine them, he would combine Israel and Palestine into a new thing that Gadhafi said should be called Isratine. Gadhafi also once decided he did not like the names of the months. So he took a look at the calendar and renamed a couple of the months. August became Hannibal, named after his son, Hinabal, I guess. July renamed Nassar, in honor of Egypt`s second president. Gadhafi delivered the Isratine speech at the United Nations in New York back in 2009. That was the very first and the only time Gadhafi ever visited the United States. In that speech, he spoke at great length, 90 minutes. He did the whole Isratine thing. He pretended to rip up the U.N. charter. Gadhafi also made a lot of New York area local news on that 2009 trip because he has said he wanted it stay in a tent instead in a hotel to room. He wanted to pitch that tent in Central Park in New York City. He was frankly interested in doing that, but New York was not interested in having him -- thank you very much. So the colonel ended up pitching his sleeping tent on some property north of the city. Some property incidentally that was owned by Donald Trump. The process that resulted in Gadhafi finally being allowed to come to New York and pitch both the idea of Isratine and a tent at Trump`s place, that process started right after 9/11. Gadhafi was one of the first Arab leaders to denounce the 9/11 attacks. He shared intelligence with the U.S. about al Qaeda and then he made an agreement with the Bush administration to give up his weapons of mass destruction program. In return, what U.S. trade for all that was bringing Gadhafi essentially in from the cold. We pretended like Gadhafi wasn`t a murderous rogue dictator and narcissistic freak show, in exchange of a sort of alliance, a pretend relationship, a facade of an effort to treat Libya like a normal country with a normal president. But Libya, under Moammar Gadhafi, was not a normal country and he was not a normal president. Libya under Gadhafi had blown up a Pan Am 747 over the town of Lockerbie, Scotland, in 1988. All 249 people on board were killed. Eleven people on the ground were killed by falling debris. Libya under Gadhafi also blew up a French passenger jet over Niger in 1989. Another 170 people killed there. He was behind the hijacking of Achille Lauro, an Italian cruise ship. And in 1984, officials in the Libyan embassy in London or at least somebody inside the Libyan embassy in London fired at protesters, shot at protesters and killed a police officer. Gadhafi is also reported to have had forces storm a prison near Tripoli and massacre more than a thousand prisoners there. But then the American relationship with Gadhafi went from us bombing Libya in 1986 because he was that kind of country and that kind of tyrant, it went from us bombing them in 1986 to this kind of thing -- an official visit by a delegation of American senators led by Arizona Republican John McCain who even tweeted about this trip, tweeted about staying up all night with the colonel and what an interesting man Gadhafi was. Today, in response to the news of Gadhafi`s death in Libya, Senator McCain said, quote, "I think it`s a great day." (BEGIN VIDEO CLIP) SEN. JOHN MCCAIN (R), ARIZONA: I think it`s a great day. I think the administration deserves great credit. Obviously, I had different ideas op tactical side. But this is -- the world is a better place and the Libyan people now have a chance. But this is just the beginning. (END VIDEO CLIP) MADDOW: The ambassador of the United States from post-Gadhafi government in Libya was asked for his response to Gadhafi`s death. He said this. (BEGIN VIDEO CLIP) UNIDENTIFIED MALE: Thank you very much, America. Thank you. You took the right decision. (END VIDEO CLIP) MADDOW: Thank you very much, America. You took the right decision. In February, against the backdrop of the popular uprisings all over the Arab world, the Arab spring, right, the ouster of the longstanding dictator in Tunisia, the fall in just a matter of days of seemingly permanent dictator Hosni Mubarak in Egypt, the people of the one country that borders of both of those other places are the people of Libya took to the streets against their own seemingly permanent, seemingly omnipotent dictator. In response, Gadhafi called his own people rats, and cockroaches, drug addict and terrorists. He promised he would crush them. Whether or not the rebels had the option was clear from the outset in Libya that there was never going to be peaceful demonstration, sit-in type protest movement to try to get rid of Gadhafi, it was pretty clear from the very beginning that it was going to be an armed conflict. It was always going to be a military conflict. And although there were high level defections of Libyan officials early on, Gadhafi turned the might of the military, including the militias run by his sons, against his people, against the rebels who were rising up against him. Early on, the rebels did not have the skills or the training to fight very well, no matter how hard they wanted to fight, no matter how much they were willing to sacrifice. (BEGIN VIDEO CLIP) RICHARD ENGEL, NBC NEWS (voice-over): Another rebel showed me he isn`t actually armed at all. (on camera): It`s a toy gun. This is amazing. He just handed me his gun. I didn`t realize until he put in my hand. It`s actually just made of plastic. It`s a toy. (voice-over): The rebels have no communications, no commanders. But they do have weapons. Artillery, mortars, even surface-to-surface rockets, but no idea how to use them. (END VIDEO CLIP) MADDOW: Faced with the likely and promised prospect that Gadhafi`s military would destroy the rebel-held city of Benghazi in Libya, the United States agreed to take part in but not lead a military mission to essentially take the rebel`s side. The United Nations authorized to protect Libya`s civilians, which meant, of course, protecting civilians from Gadhafi. Although President Obama pledged repeatedly that the U.S. would not lead that military effort, that the United States would just be one player in an ensemble effort, in fact, the U.S. was in the lead, especially in the first weeks of the operation. We spend more on our military than all other countries in the world combined. And we have been at war constantly for the last 10 years. We have military and technological capacity that other countries do not have. So, when it comes to drones and command and control and some intelligence and targeting and surveillance, the United States was in the lead. But over time, compared with other NATO countries, the proportion of Americans, say, air sorties, the proportion of U.S. responsibility in that NATO military effort declined. And no U.S. combat troops were ever deployed in Libya. By August, Gadhafi has fled his home in Tripoli, in Libya`s capital city. And the rebels gleefully overran his compound in Tripoli. Since then, since taking Tripoli, the rebels consolidated their gains. They took control of basically every city and every region in Libya, except for Gadhafi`s hometown of Sirte. Well, today, Sirte fell to the rebels. And reportedly while fleeing Sirte, Moammar Gadhafi was killed. Now, I want to show some of what we know happened today. Fair warning here, some of these images are a little bit graphic. We will not show them for very long. These images show Gadhafi apparently wounded, maybe still alive. But captured in the back of some vehicle. You can see Gadhafi raising his arm here. See? As he is being pushed around. The people around him taking pictures with him. You can hear gunfire, presumably celebratory gunfire, although we don`t know, in the background. Other footage, obviously chaotic, shows what appears to be Gadhafi`s dead body on the ground. After a lot of conflicting reports of exactly how he died, there now is no ambiguity about the final results. Moammar Gadhafi is now dead. (BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When Gadhafi and his forces started going city to city, down by town to brutalize men, women and children, the world refused to stand idly by. Faced with the potential of mass atrocities, and a call for help from the Libyan people, the United States and our friends and allies stopped Gadhafi`s forces in their tracks. Without putting a single U.S. servicemember on the ground, we achieved our objectives. And our NATO mission will soon come to an end. Working in Libya with friends and allies, we have demonstrated what collective action can achieve in the 21st century. (END VIDEO CLIP) MADDOW: What collective action can achieve. Collective action for problems for which the world takes collective responsibility -- responsibility to protect civilians. If there is an instance in which the world agrees, the civilized world agrees, the organized civilized world agrees, that something needs to be done that requires force -- the United States will take part as part of collective action. The president today not only reflecting on the death of Gadhafi, but using the Libya example to explain American foreign policy now, to explain American use of force, in a world in which we are the biggest and most capable military in the world, but in a world where we have questions about how frequently and where we should use that military might. We will act when there is a problem in the world that requires force to address it. The U.S. will be involved. We will help organize. We will even lead when necessary. But we will act collectively. We will act with others. Vice President Biden put it more bluntly and more simply when he said this today about Libya. (BEGIN VIDEO CLIP) JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: As an example of how the world is beginning to work together. (END VIDEO CLIP) MADDOW: Joining us now is NBC News chief foreign correspondent, Richard Engel, who is in Libya when the rebellion began and was there to see Tripoli fall in August. Richard, thanks for joining us tonight. ENGEL: Well, thank you very much. And I was here in New York when I got the call early this morning that there were these reports that Gadhafi was captured. And I think I`ve been in this building ever since. MADDOW: We sort of knew this day might be coming. It seemed like the fall of Gadhafi became inevitable at some point during this uprising. A year ago today, could you have foreseen a populist, popular uprising in Libya toppling him? ENGEL: Absolutely not. Gadhafi was strong. After the Iraq war, when he decided to give up his weapons program, he was emerging as an international figure again. He`d come in from the cold. He was making better relations with the United States. Better relations with Europe. Gadhafi`s position a year ago looked pretty strong. MADDOW: Let me ask you if you think this is over now. Do you expect there could be more violence, that there could be left over elements of the Gadhafi regime or from anyone else who might mount a sort of insurgency against the new government in Libya? ENGEL: Well, the war is over. And the war against Gadhafi and his regime ended today. There could be some elements who decided to set off a car bomb in Tripoli or Benghazi. That`s possible. You don`t need very many people to carry out a couple of terrorist attacks or open fire some place. But a war that involves rebel columns moving to advance, to drive back cities and take over cities. No, I think that phase is over. MADDOW: What do you know? What do you expect about what this new government will be like toward its own population, but also internationally, toward potentially extremist groups and toward the United States? ENGEL: Well, it will be a religious government. The people are Libya are quite religious. It is no doubt that every time you hear the rebels say something, they say, Allahu Akbar. So, there will be definitely more Islamic character going forward in the Libyan state. And that`s going to be the same case in Tunisia. There are elections coming up in Tunisia and it looks like Islamic parties are going to win, probably the same situation in Egypt. But it will also be in Libya, I expect, a very pro-American government. Right now, this rebel movement is the most pro-American movement in the entire Middle East. When I was there, journalist, American journalist, Americans, or anyone from NATO country, could basically do no wrong. We -- I don`t remember paying for a single coffee when I was in Libya. You know, you`d go and you try and pay and somebody would come up and take your bill for you. So, it is a country that definitely appreciates the support that it got from the West, from America in particular, from France especially, and we`ll try and engage them in their foreign policy. MADDOW: Libya, of course, and we`ve talked about this before, Richard -- Libya is just crawling with weaponry. Gadhafi stockpiled weapons beyond any reasonable military need whatsoever. The country is stuffed with RPGs, assault rifles, land mines, these surface-to-air missiles, shoulder-fired missiles. What do you expect is going to happen there? Does Libya just become the world`s arms bazaar for a while? Or can there be some sort of effort to secure all of that? ENGEL: Well, they need to start securing that right now. And there are some efforts under way and luckily there are two cooperative countries on the borders. There are, you know, we have Tunisia and Egypt, both of which don`t want to see massive amounts of illicit arms trafficking through. The problem is you have Algeria and Nigeria and Sudan, all along the southern border, which basically don`t control borders or don`t care if weapons come through. And I know people in the military and intelligence communities are deeply concerned that groups like al Qaeda in North Africa are getting already some of the weapons that have gone missing in Libya. So that is probably the biggest problem that the region will face is that Gadhafi just bought so many weapons. New weapons, from Italy, from the U.K. And people don`t know where these weapons are going. MADDOW: NBC News chief foreign correspondent Richard Engel, who`s job on a day like this is to explain how important this all is to Americans. I know have you been doing this all day, Richard, but it`s been really, really helpful. ENGEL: Can I throw one thing in? A little factoid. I think you`ll like it. MADDOW: Of course. ENGEL: You talked about Iraq and you talked about how Gadhafi wanted to come in from out of the cold. Well, the reason he decided to reengage the United States was when he saw Saddam Hussein in that hole being pulled out by the Americans. That was his epiphany moment when he decided, you know what, I better get rid of my weapons, I better get rid of this Lockerbie situation and he reengaged the West. Yet, today, he was pulled out after drainage pipe by rebels who then smacked him around, pulled his hair then ultimately put a bullet in his forehead. MADDOW: NBC chief foreign correspondent Richard Engel -- Richard, thank you. Appreciate it, my friend. Some of you may remember, there is a little used space on THE RACHLE MADDOW SHOW. It is THE RACHEL MADDOW SHOW man cave. I know, awesome. It is the place reserved for conversations just with the fellas. Conversations with the fellas that are about the ladies, and how the ladies work. Mitt Romney, I`m officially inviting you to THE RACHEL MADDOW SHOW man cave. As of today`s news about you, it is clear that there are gaps in your knowledge about basic lady physiology. Come on over. I have an Xbox. Come on. That`s next. (COMMERCIAL BREAK) MADDOW: Mitt Romney has only taken four questions from his traveling press pool this month. So maybe he is getting a little soft. I say that because today in Sioux City, Iowa, a woman attending a Mitt Romney town hall asked him a question about one of his own positions that seems to have stumped Governor Romney. It`s sort of weird that he did not have an answer prepared for this. I`m personally sure that his campaign knows this question is out there, even just because this show has been e-mailing his campaign trying to get an answer on this issue for sometime now. And I know that other news organizations have been asking him too. Other news organizations have written that they have asked for comment on this issue, too. So they know there are questions about this. But Mitt Romney seems to have no idea. (BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: You are on Governor Huckabee`s show a few weeks ago. And one of the things that you folks talked about, was that you support a life begins at conception amendment. Now, that would essentially mean that banning most forms of birth control. Ninety-eight percent of American women, including me, use birth control. So, can you help me understand why you oppose the use of birth control? MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I don`t. I`m sorry. Life begins at conception. Birth control prevents conception. (END VIDEO CLIP) MADDOW: Mr. Romney went on to explain he is anti-abortion and he wants Roe versus Wade overturned so that individual states can outlaw abortion if they want to. But this voter in Iowa was not asking about Roe versus Wade. She was asking about this. (BEGIN VIDEO CLIP) MIKE HUCKABEE, FOX NEWS: Would you have supported the constitutional amendment that would have established the definition life at conception? ROMNEY: Absolutely. (END VIDEO CLIP) MADDOW: Absolutely. The life begins at conception amendment, these personhood amendments that Mitt Romney and Mike Huckabee now say they support, these amendments do not just ban abortion. I mean, they do ban abortion. They ban abortion outright. But in addition to that, if any fertilized egg is considered a person, a miscarriage would be cause for criminal investigation as a potential murder. And as that Sioux City voter asked about, a law like this could also outlaw some forms of birth control. People facing the prospect of one of these amendments understand that it could potentially ban birth control. These images from the rally to save the pill in Oxford, Mississippi, this week. Mitt Romney apparently does not understand that this is what he says he supports, absolutely -- a birth control ban. That is what these personhood amendments are designed to do. There`s one on the ballot in Mississippi. That`s what it is designed to do. But whether or not Mitt Romney understands his own position, thanks to this awesome hero after voter in Sioux City, Iowa, today, Mitt Romney at least can no longer avoid the question. (BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: I don`t know if you want to have some staff look into this, but hormonal forms of birth control work a little differently and so they actually prevent implantation, not conception. So it would ban hormonal forms of birth control, which is what most women use. So, I don`t know if you want to look into that. But as someone who uses birth control, this is a terrifying prospect to me. So, I hope that you can, you know, you look into that, I guess. So, thank you. ROMNEY: Thank you. Appreciate that. (END VIDEO CLIP) MADDOW: Appreciate that. Mitt Romney may appreciate that but I don`t think he understands that. The woman trying to explain to Mitt Romney that his position does mean that birth control could be outlawed. Seeing that happen today, in Iowa and seeing that Mitt Romney just move on and not address what she said about birth control is one of those moments -- I watched this thing three or four times today. And it just keep -- what is this -- you know what it is getting at for me? Because one of those moments in American politics and you look around and you realize, you know what? Politics is mostly guys. And the media is really mostly guys. And the way we talk about politics is mostly guys. And sometimes guy in politics nevertheless talk about uteruses and sometimes I`m not sure they really get it. So, we have done this one time on the show before. We got tons of criticism for it. But I think it is warranted. Ladies, women who are watching this show, you can take a powder. You guys can leave for a second. We`re going back to the man cave set. Do we got the man cave? All right. I`m just going talk to the fellas here for a second. This is our virtual man cave set. Actually, do we have the special -- didn`t would he w dough a special Mitt Romney edition to make Mitt Romney feel more at home here? Do we have that? Oh, yes, Harvard, see? Harvard. Salt Lake City Olympics. Do we have that one? Oh, yes, there we go. All right. Oh, oh, and a beer. And so everybody is OK it is near beer. All right, fellas. This is just for the guys now. It is very simple. This is how a baby is made. Here is the basic idea. Egg gets produced in the ovary, which then starts moving on up thanks to your old pal, the fallopian tubes, all right? If that egg happens to meet up with sperm, that`s where you guys come in. If that egg happens to meet up with sperm and the egg gets fertilized, it heads on into the uterus and attaches itself to the wall in there. If all this goes well, it emerges about nine months later as a lovely baby -- or in my case, as an angry red screaming thing look that looked like a (INAUDIBLE) about 14 months old and had black hair that stood out like this. Now, here`s the really difficult part -- second beer for this one. Here`s the really difficult part. Sometimes, people like to engage in acts that result in sperm getting near these parts and the eggs and everything. Even though the people involved in those activities would not like to result in pregnancy. I know this is a very, very upsetting concept. But we are talking the vast majority of straight ladies who at some point in their lives want to do the kind of thing that means you may encounter sperm in these there relevant parts but despite the fact that sperm is going to be around, they do not want to get pregnant. It happens. People feel that way. The most commonly used contraceptive methods in this country, so you can have sex without getting pregnant, the most commonly used contraceptive methods in this country, particularly for younger women were be hormone based contraceptives. OK, fellas, how am I doing? Put my hand up if you are lost at this point. I know this can be upsetting. It can be too much. Here, watch this. (VIDEO CLIP PLAYS) MADDOW: OK. Excellent, right? Come on. Yeah, all right. One more? Can we have one more picture? Yes. Vince Wilfork, 330 pounds running the ball down the field after getting an amazing interception against San Diego. I know, right? OK, hormonal birth control. The way most hormonal birth control works is that it causes changes in a woman`s body so that even if there is sperm in the right neighborhood, a pregnancy does not result. This kind of birth control works in a few different ways actually. Up in this part, up here up north, it works to stop ovulation to stop the production of eggs. But that is not the only thing it does. It also changes this other part here to stop sperm from getting to the very important part of the lady parts where that egg just might be. It also changes this part, so that if somehow an egg is produced and if somehow a sperm still does get to that egg, that fertilized egg will not implant in this part of the body and start to grow into an embryo. This is how the birth control pill works. It`s how the IUD works. It`s how the morning-after pill works. This is how that ring thing your girlfriend told you about that you didn`t totally understand, this is how that works. This is how birth control used by the vast majority of American women works. This is how hormonal birth control works. This is how birth control works that Mitt Romney told Mike Huckabee he would like to make illegal when he supports a life begins at conception constitutional amendment. And that`s why people are making signs like these in Mississippi. If that sperm and that egg happened to get in that specific neighborhood together and that egg becomes fertilized and that`s a person, then anything that keeps that fertilized egg from being implanted could be illegal. So, the pill, illegal. IUD, illegal. That ring thing, illegal. Hormonal birth control, illegal. At least if Mitt Romney gets his way. And state constitutions are amended to get the government involved in litigating the secretary second by second legal status of what is happening in somebody girlfriend`s uterus on Friday night. So, OK, out of the man cave. But I`m keeping the beer. Ladies, you can you come on back. I know is awkward to talk about these things sometimes. Do you believe that this is getting talked about on cable news at 9:00 on Thursday? I know, right. But this is what man caves are for. We have to do this even though it`s awkward. Criticize away. Right now, Mitt Romney`s stated position is that he would absolutely support a constitutional amendment to bake birth control illegal. When confronted with that position today, he said he does not want to make birth control illegal. This woman in Sioux City Iowa called him on it. She called him on it in a purely, factually correct way. And she did notice, by the way, that he never answered the question. (BEGIN VIDEO CLIP) REPORTER: Were you satisfied to your question on birth control rights? UNIDENTIFIED FEMALE: Well, I mean, the question wasn`t on abortion rights, it was on birth control. I think is troubling that someone running for president doesn`t understand how birth control works. I think that`s part of the problem. You know, they are campaigning on these extreme bills that would say life begins at conception and not contemplating the consequences. (END VIDEO CLIP) MADDOW: Iowa town hall hero. Even if Mitt Romney does not understand he wants to ban birth control, that woman in Iowa understands that that is Mitt Romney`s position. Mitt Romney does not seem to be taking questions from news organizations on this topic. Ever since he told Mike Huckabee he absolutely would favor a constitutional amendment to ban birth control. He doesn`t seem to be taking questions from news organizations on this. But you know what? Mitt Romney does have to take questions from voters. So ,tonight at our Web site you will be able to find and print your own copy of THE RACHEL MADDOW SHOW man cave not too upsetting guide to the down-there parts. You can you print it out. You can keep it in your pocket. In case you run into Mitt Romney somewhere, maybe can you point out the relevant parts to him and get him to understand. (COMMERCIAL BREAK) MADDOW: Here is some uncomfortable news. The billionaire Koch brothers have decided to go after a producer on this show by name -- a producer who neither printed, nor uttered a single inaccuracy about the Koch brothers. People as big financially as the Koch brothers can`t really pick on someone their own size because nobody is their own size. But picking on my staff, singling them out by name, that I have a response for -- a loud one. That`s coming up. (COMMERCIAL BREAK) MADDOW: Here was the headline on MSNBC at 12:35 Eastern Time this afternoon: Gadhafi body now in Misrata. Here was the headline on CNN at the exact same time: Moammar Gadhafi is dead. Here is the headline on FOX News that exact same time: Rick Perry backs flat tax. Hey, look, there`s Steve Forbes. This tripartite screen shot was posted at "Daily Kos" today. In Republicanland, Gadhafi shmadafi. This flat tax thing, this is the big news. This guy that was supposed to be the front-runner but isn`t, has decided to take a page out of the playbook of the guy who wasn`t supposed to be the Republican front-runner but now is. He`s using on the popularity of Herman Cain`s 9-9-9 plan, Perry now announced that he, too, wants a piece of that sweet, sweet, simplified tax plan action. (BEGIN VIDEO CLIP) GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: The long-term growth strategy requires a fundamental reform of our tax code. It starts with scraping, excuse me, you might want to scrape it too -- but scrapping the 3 million words of the current tax code, starting over with something simpler. A flat tax. (END VIDEO CLIP) MADDOW: A flat tax. Rick Perry will apparently announce the details of his flat tax next week during a speech in South Carolina. Rick Perry was supposed to be in first place by now, wasn`t he? He was supposed to save the Republicans from Mitt Romney. Rick Perry is the jobs governor, right? Rick Perry has never lost an election if his life. Rick Perry is the Southern religious right guy with all of the conservative bona fides and a ton of money. And yet, look at where Rick Perry is now, polling in a state like Iowa. He is polling sixth behind Newt Gingrich and Michele Bachmann. Rick Perry`s appearance yesterday in Nevada did not seem to do him any favors in that early caucus state. "McClatchy`s" report on that campaign stop, quote, "There was little enthusiasm for Perry`s candidacy." This is not to say that Rick Perry won`t have a resurgence in months ahead, but if he is going to have a resurgence, it is going to need some fuel. It doesn`t look like it`s going to happen on its own -- which brings us to the flat tax, Rick Perry`s attempt to steal some of Herman Cain`s mojo by offering his own 9-9-9 type tax plan. Mr. Cain`s plan has been received well politically on the campaign trail. But this week, it did finally get scored in terms of what it would do economically. Jared Bernstein posted on his blog today a rally helpful graph from the Tax Policy Center showing the impact of 9-9-9 on different income groups. Look at this. It`s kind of amazing. Under 9-9-9, the bottom 20 percent of Americans will see their taxes go up by about 1,800 bucks per year up. Taxes on the second 20 percent would also go up by about $4,000 a year. The middle 20 percent, that`s $4,300 tax hike, please. Under this 9-9-9 version of the flat tax, the lowest income Americans would see their taxes go up, all of them, right? But the richest Americans on the other hand, look what happens for the top 1 percent richest Americans. That would be a tax cut of $238,000. Thank you, Herman Cain. And then there is the top 0.1 percent. Check out what their tax cut would like under this plan. We scroll down to see how far -- keep going. Still going. Still going. Still going. Keep going, going, going. Come on, scroll faster. Jeez. Yes. That`s still their tax cut. Oh, there we go. OK. Under this sort of flat tax, the top 0.1 percent of Americans would get a tax cut of $1.3 million. So, wow! Yes!. Look, that`s how small you have to make it in order to get it to vaguely to scale. Rick Perry, are you sure you want to jump on the flat tax bandwagon right now? Now that people are finally figuring out what that would actually look like? Wow. Nobel Prize-winning economist Paul Krugman joins us for the interview tonight. And that is next. (COMMERCIAL BREAK) (BEGIN VIDEO CLIP) PERRY: Our long-term growth strategy, requires a fundamental reform of our tax code. It starts with scraping -- excuse me, well you might want to scrape it too. But scrapping the 3 million words of the current tax code, starting over with something simpler, a flat tax. (END VIDEO CLIP) MADDOW: A flat tax. The flat tax is the new P90X. It`s like this year`s red tie, white shirt, blue jacket for the Republican candidates. The defining feature of the most expensive failed vanity Republican presidential candidacy of 1996 -- hi, Steve Forbes -- it`s back. And these guys think that it`s money this time. Could the flat tax do for Rick Perry what 9-9-9 has done for Herman Cain? Joining us now for the interview is Nobel Prize-winning economist Paul Krugman, who is a columnist for "The New York Times." Mr. Krugman, thank you for your time tonight. PAUL KRUGMAN, NEW YORK TIMES: Hi. Hi there. MADDOW: Politically, everybody is poised for the inevitable Rick Perry campaign come back. Next week in South Carolina, he is due to unveil his plan for a flat tax. How would that work? What would you see the impact of that being, given its popularity among the Republican candidates right now? KRUGMAN: Wow. I mean, I can`t predict what Republican base is going to say. I mean, it`s -- the Cain plan looks like a total disaster from the point of view of most Americans and that almost has to be true of anything Perry proposes as well, right? A flat tax almost by definition will be a big tax increase for the poor and middle class. MADDOW: In terms of pulling ourselves out of the economic hole that we`re in, stemming a second recession, as far as I understand it, we really have a demand problem. We sort of desperately need to put some more demand into the economy so businesses have a reason to hire people because they`ve got people to sell to. What would a flat tax achieve in that regard? KRUGMAN: I mean, to a first approximation, nothing but to a second approximation, it will make things worse. I mean, to the extent, it`s going to matter at all, people are going to be hit by it who are going to be made worse off are the people living closer to the edge and will therefore cut spending. And the people benefiting are the people who have plenty of money already and are now going to spend the extra windfall. But, you know, the real question is why on earth are we talking about this right now? We`ve got 14 million unemployed people. Tax policy is something that if it`s going to have any impact at all, it`s going to be long-term. You know, even if you thought that this kind of tax reform was a good idea, which you shouldn`t, this is not the time. We should be focusing on the unemployment problem. It says something about the GOP right now, that this is what they are arguing about. MADDOW: In terms of unemployment, you have been early and off then persistent critic of President Obama on economic policy, on whether or not he is focusing enough on bringing unemployment down. President Obama is now barn storming the country with a pretty populist economic message. Are you feeling encouraged at all, economically speaking, by what you are seeing from the White House, or do you think it`s -- or do you think it`s not enough? KRUGMAN: Well, I mean, the new jobs plan is a funny thing. It`s a lot better than I expected and it is greatly encouraged. It`s also vastly inadequate to the problem. So, on one hand you say, well, look, this is about a quarter of what we really need. But on the other hand, at least it`s a quarter of what we need, h is a lot closer certainly to anything the Republicans are saying and closer to where we should be than where Obama was not long ago. So, at least he`s got the right message new. Since it`s not going to be enacted, the numbers in a way don`t matter that much. MADDOW: In terms of the right message and basically having the right conversation about the right problem, I know that you went down to "Occupy Wall Street" protests tonight to see the demonstrations down there. Do you feel like that has had any affect at moving the conversation at least to be framed on the right problems, if not the right solutions? KRUGMAN: Well, you know, conversation changed a lot in just the last month or so. You and I are both people who track this a lot. And just six weeks ago, it was all deficit, deficit, deficit -- which is the wrong subject and no talk about jobs. All of a sudden we are talking about jobs. Some of that is Obama. But I think a lot of it is "Occupy Wall Street" stuff. And it`s amazing actually. These are such a good-natured, mild-mannered group of demonstrators. This was not the -- these were your neighbors basically down at Zuccotti. But just because somebody finally stood up and said, hey, the real problems are not the things you guys are talking about seems to have made a big difference to the country. MADDOW: Paul Krugman, Nobel Prize-winning economist, always a valued guest on this show. We`ll talk to you whenever you`ll talk to us, Paul. Thank you. KRUGMAN: OK. Thanks a lot. MADDOW: Thanks a lot. All right. It turns out that the Koch brothers of all people are very mad at me, mad at us as a show -- which is so weird and also sort of awesome. My response to them is next. (COMMERCIAL BREAK) MADDOW: Koch industries, the Koch brothers are mad at us. Christmas comes early. Koch Industries is the second largest privately held corporation in the country founded by -- let`s call him dad -- founded by Fred Koch in 1940. The company is still in the family. It makes chemical, runs refineries, has its sketchy overseas subsidiary, do business with Iran even though that`s supposed to be illegal for Americans. Koch Industries is doing great. They`re doing great for the Koch family. For the Koch brothers who inherited the company from dad, the Koch brothers are richer than Warren Buffett now, a combined fortune of more than $50 billion. And as the brothers have become richer and richer and richer in the past few years, they have also fired thousands of Koch Industries employees. Now, remember, Koch Industries is private. Profits do not go to people who buy stock in the company on the stock exchange or something. The profits go to the brothers, to Charles and David. And the brothers have done great recently. And as they have done great, as they have done greater and greater and greater in the last few years, they have been firing American workers by the thousands. But now, they are mad at me, at this show, which is exciting for all of us here, I will not life. The Koch brothers have always used their enormous inherited fortune to dabble in politics. In 1980, David Koch ran for president on the libertarian ticket. (BEGIN VIDEO CLIP) REPORTER: The party can afford to go it alone financially because its vice presidential candidate, industrialist David Koch, is loaded. And under campaign law, he can spend as much as he wants. (END VIDEO CLIP) MADDOW: When you are the richest man in New York City, say, when you are one of the richest heir to an oil and chemical fortune in the world and the law says you can spend without limits. Do you know things like this for your campaign -- David Koch paid to mint dimes with his own face on them. That`s him in the back as the vice presidential candidate. David Koch minted dimes with his own head like he was Caesar. Koch money, Koch bucks to promote him running for president in 1980. Since then, David Koch and his brother have become Republicans. They fund Republican candidates and they fund the big money Astroturf parts of the Republican Tea Party movement. All the Americans for Prosperity stuff in the Tea Party movement, that`s Koch brothers and their Koch box. But in the midst of all that Koch brothers conservative activism, the brothers are still very busy. They still own dad`s giant oil and chemical conglomerate, right? That`s graduation present ever. Keys to the kingdom, operations in 60 countries give or take a republic or two. Charles and David Koch are still running the empire that dad gave them, only now, they are running it in ways that try to make not just money but also political points. And so, last week, Koch Industries posted this map of their job openings in the U.S. to put your mind at ease -- 48 Koch jobs in Wisconsin, one Koch job in North Dakota. And Nevada, Arizona, Utah, you don`t get any Koch jobs. Sorry. This is note they put one their map of job openings. It says, quote, "For those concerned with jobs, Koch has some good news. It is looking to fill 1,200 jobs across the country." Now, to be fair, the Koch brother do think about jobs a lot. For example, after Congress passed the first economic stimulus to create jobs in 2009, the Koch funded Americans for Prosperity group ran ads attacking Democrats who voted for it. When the money from that stimulus started flowing to local governments to create jobs, the Americans for Prosperity group demand that had local governments reject that money. Now that we are facing a double-dip recession and President Obama is calling on Congress to create jobs and infrastructure and for cops and teacher and firefighters, the Koch brothers` political arm is talking about the, quote, shadow of threats to loom if the government creates jobs. If the government tries to stop people being laid off to help the economy. Backed by the Koch brothers, the Americans for Prosperity has been driving around the company on a cut spending now tour. The message from Koch on the face of the biggest jobs crisis since the Great Depression is: don`t try to fix it. If you`re worried about jobs, hey, come work for Koch. America shouldn`t try to do anything to fix the economy or make jobs. If you`re worried about jobs, we`re hiring a few people. As we pointed out on you are blog last week, there are currently almost 21,000 unemployed or underemployed Americans for every one of those jobs listed on the Koch Industries Web site. Almost 21,000 people say for that one Koch job in North Dakota. We pointed this out on our blog last week. Now, a couple of days ago, the P.R. department at Koch Industries tweeted us a link. So we followed that link and up pops this angry Koch industry message about THE RACHEL MADDOW SHOW. They write our point from that blog post, quote, "appears to be that unless we offer enough job openings to everyone that is unemployed, any number of openings is objectionable." That would be a strange argument if in fact it were the one that we were making. To help with their argument which I think is that they`re bigger than us, which we already knew, Koch also posted this animated map so you can see how many job openings Koch Industries is advertising versus how many MSNBC is advertising. And, obviously, Koch Industries has us outnumbered by a factor of like infinity. MSNBC has not got even one job in North Dakota and Koch Industries does have that one job there. So touche, you got us. You got us, multi-billion dollar corporation that laid off thousands of workers while its corporate overlords grew even more enormously wealthy, and then those same corporate overlords use their enormous resources to try to keep Congress and the president from doing anything to create jobs. If I had become billions and billions and billions richer while firing thousands and thousands and thousands of Americans from their jobs, and then I had decided to spend multimillion-dollar chunks of my fortune trying to make sure that teachers and firefighters would get laid off and stay laid off, if I was that kind of guy, if I was the kind of guy who minted gold dimes with my own head on them, if I was the kind of guy who wanted to take money out of my own pocket and see my own face looking back at me from the money, if I was that kind of guy -- then maybe I would it was reasonable to say: hey, if anybody is worried about unemployment, come work for me. And otherwise, stay unemployed. But even if I was the kind of guy who minted myself on to coins, even if I was that kind of billionaire, I still cannot imagine using my multi- billion dollar oil and chemical conglomerate to take shots, to take shots by name, at a producer for this show who with 100 percent factual accuracy simply reported what you did. We got nothing wrong here. There`s no factual allegation that we got anything wrong here. This was just a shot at me and specifically at a member of my staff by name. Charles Koch, David Koch, you are trying to intimidate the wrong people. This kind of thing is as pitiful from billionaires as it is from anyone. So, I reiterate my many earlier invitations to you, guys. Come sit for an interview. I would love you have to. Come sit for an interview and let`s talk this out. Rather than having daddy`s company attack my producers one by one by name, feel free to man up any time. Your beef is with me. So, let`s do this face to face right here any time. We would love to have you. THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. END