IE 11 is not supported. For an optimal experience visit our site on another browser.

The Rachel Maddow Show, Transcript 07/25/12

Guests: Norm Ornstein, Jonathan Mann, Spencer Ackerman, Neil Barofsky

EZRA KLEIN, GUEST HOST: Good evening, Michael, and thank you. And our thoughts are with Ed and his family at this difficult time Thank you to you at home, as well, for sticking around for the next hour. Rachel has the night off. Today on the floor of the United States Senate, the top Democrat, Harry Reid, said something that he doesn`t normally say. He said something that is kind of unusual, actually. He said -- you know what? Why don`t I just play it? (BEGIN VIDEO CLIP) SEN. HARRY REID (D-NV), MAJORITY LEADER: That is poppycock. (END VIDEO CLIP) KLEIN: He said poppycock. The reason that Harry Reid said the totally awesome word poppycock on the Senate floor today was because he and the top Republican in the Senate, Mitch McConnell, were trading jabs back and forth about which side is to blame for nothing getting done in the Senate this year. And when Mitch McConnell blamed that on the Democrats, well, out came -- (BEGIN VIDEO CLIP) REID: That is poppycock. (END VIDEO CLIP) KLEIN: That is awesome. What happened in the Senate today aside from the poppycock reference was something truly remarkable. In a chamber that has been essentially paralyzed by filibuster after filibuster on nearly everything over the last two years, there were two votes held in the Senate today that were not filibustered, that only need a simple majority to pass -- 51 votes to pass, just like the Founders intended. And these weren`t meaningless votes, weren`t naming postal offices. These were votes of consequence. It was about what to do when the Bush tax cuts expire at the end of the year. Democrats and Republicans each got the chance to put up their own plan for a popular vote in the Senate and to see what happened. Republicans went first. Their bill would have extended the Bush tax cuts for everyone including all incumbent millionaires and billionaires. That bill failed. It was defeated by nine votes including two Republicans who crossed party lines to vote against it. Then it was the Democrats` turn. The plan from Senate Democrats was to extend the Bush tax cuts for all income up to $250,000. So everybody keeps their tax cuts on that income, but millionaires and billionaires lose their tax cut on income over $250,000. So, they keep it on the $250,000, they lose it above that. Hey, look at that, the Democratic bill actually passed. It passed the Senate by a vote of 51-48. Vice President Joe Biden was even on hand to gavel the bill through, marking the historic occasion of the Senate kind of working. So this was really a remarkable turn of events. The Senate was functional today. It went as it was supposed to go. Both sides put up their plans and in the end, one side prevailed. In this case, it was the Democrats. The only thing, as there`s a little catch I need to tell you about, the reason Republicans allowed that vote today, the reason they didn`t filibuster like they usually do, is because there is a rule in the Constitution which says if any bill relating to taxes must originate in the House. It has to begin in the House. It cannot begin in the Senate. And this bill did not originate in the House. And that is why McConnell didn`t filibuster. He said, quote, `The only reason we won`t block it today, the bill, is that we know it doesn`t pass constitutional muster and won`t become law. What today`s votes are all about is showing the people who sent us here where we stand." OK, so if you thought even for a minute that the Senate was actually doing something today, well, poppycock. There`s McConnell to remind you it was all just posturing. Thank you, Mitch McConnell. Meanwhile, what was happening over in the House today? (BEGIN VIDEO CLIP) REP. DARRELL ISSA (R), CALIFORNIA: I would ask the gentleman from Virginia, if he would be willing -- or let me rephrase that -- he would not object to a unanimous consent in the House to make a correction to what was clearly a typographical error made by nonpartisan professional staff at the lead counsel`s office. REP. GERRY CONNOLLY (D), VIRGINAI: Madam Chairman, this member will reserve the right to object at the appropriate time. ISSA: Reclaiming my time -- UNIDENTIFIED MALE: Gentleman from California. ISSA: Nothing could be more insincere than to pick on professional staff on a typographical error. (END VIDEO CLIP) KLEIN: Well, you just saw house Democrats and House Republicans fighting over whether a typo, a typo in a bill could be fixed or not. I wish I was kidding. I am not kidding. So that was Congress today. The Senate voted on a pair of totally meaningless bills. The house fought about a typo. If any of this comes as a surprise to you, you probably have not been paying close attention, because this is not just a bad congress or even a pretty bad congress. I think the case can, should, and probably must be made that this is one of the worst congresses we have ever had in this country. And I know people say stuff like that all the time. It just sounds like hyperbole, but I think I can prove it. We got the number here. There`s convincing evidence that this particular Congress, the 112th Congress, is one of the worst of all time. Let us begin with just the simplest measure of how much Congress is getting done, congressional productivity. It`s the number of laws they have passed, public laws they have passed. This graph shows the number of public laws passed by every Congress dating back to the 80th Congress in 1947. That Congress, by the way, was a Congress Harry Truman called the do-nothing Congress. As you can see, it varies every year but it`s generally in the many hundreds. Ready for this Congress? Yes, that`s it. That tiny little bar over there on the right, the one with the arrow. Now, to be fair, there are still five months left in this session, but at this rate, they`re on track to be by far the least productive Congress in modern times. It`s the do less than the do nothing Congress. That sort of legislative ineptitude has also led the 112th Congress to become the single most despised Congress of all time in the eyes of the public. Democratic Senator Michael Bennet of Colorado put together this handy graph that shows this particular Congress is less popular than the IRS, the airline industry, lawyers, less popular than Richard Nixon during Watergate, than the banks in the oil and gas industry, than BP during the Gulf oil spill, than Paris Hilton. This Congress is less popular than communism and Hugo Chavez. The only thing less popular than Congress, Fidel Castro, and he`s not even much less popular. On top of being historically inept and unpopular, there`s also the matter of this Congress doing real measurable damage to the country. Do you remember the debt ceiling debacle last year when Republicans took the country to the brink of default for the first time? That wasn`t just an ugly political fight. That had real world consequences. This is what monthly job growth looked like last year. Looked a little uneven there in the middle, it drops very far. After starting the year off pretty strong, job growth essentially fell off a cliff beginning in May, which is right around the time speaking John Boehner kicked off the debt ceiling fight, as Congress debated whether America is going to pay its bills or not, hiring slowed. Then look at that, once that fight was over, the next month, hiring picked up again immediately. Here`s how the debt ceiling fight affected consumer confidence. You see that big drop in the middle of 2011? That right there is the debt ceiling fight and it is a huge drop. So, by having this useless petulant fight over the debt ceiling, they tanked consumer confidence, they effectively slowed down job growth, and we as a country lost our AAA credit rating for the first time in our history. We just learned this week, by the way, that the debt ceiling fight has so far cost U.S. taxpayers $1.three billion in extra borrowing costs also. So, thank you 112th Congress for that, too. This Congress has been so incompetent it can barely even keep the lights on in its own building. And I mean that literally. Every year, Congress has to pass 12 annual appropriation bills to keep the government funded. That has to happen by October 1st. As you can see, some sessions of Congress are a lot more successful of doing that than others. They get three bills passed on time. I said this Congress was bad, I didn`t say others were good. Could we show how the 112th Congress did last year? Huh, that`s not a graphics mistake. That is a zero. This Congress passed exactly zero appropriations bills on time last year. Great, one particular department of the government got it the worst, after Democrats and Republicans failed to reach a compromise last year, the Federal Aviation Administration shut down. In the middle of a weak economy, 4,000 FAA workers and 70,000 airport construction workers were furloughed from their jobs. They were out of pay and out of work until Congress finally managed to get its act together. This is not normal. This is not how it`s supposed to work. This Congress has not only been historically unproductive, it has taken steps that have directly harmed the country, that have directly harmed our economic recovery. And it`s not just people like me who think this. It is the most credentialed experts on the manner. Thomas Mann and Norm Ornstein are perhaps the most respected scholars of Congress in Washington, period. They have been studying, and defending and explaining and advocating for the institution for more than four decades, and earlier this year, they came to this joint conclusion. Quote, "We have been studying Washington politics and congress for more than 40 years and never have we seen them this dysfunctional." Joining me now, the aforementioned most credentialed experts on the matter, Norm Ornstein, residential scholar at the American Enterprise Institute, and Tom Mann, senior fellow in government studies at the Brookings Institution, also the co-authors of "It`s Even Worse Than It Looks: How the American Constitutional System Collided with the New Politics of Extremism." Thank you, guys, both for being here. JONATHAN MANN, BROOKINGS INSTITUTION: Happy to be with you, Ezra. KLEIN: Norm, the book does something that I think is fairly courageous given you guys have built up a lot of bipartisan credibility over the years. And you say that what has gone wrong in this Congress is large part is one of the two parties has become extreme. The Republicans have simply dropped off the cliff and come to see the basic values of governing like compromise as an anathema. Is that what`s going on here? Is that a correct analysis of our thesis? NORMAN ORNSTEIN, AMERICAN ENTEPRISE INSTITUTE: It is, Ezra, and you`re right. It would have been easier to say everybody does it, a plague on both their houses. But that`s not the reality now. We know it not just because we kind of see it or we have some anecdotes that would express it. In many ways, some of the Republican leaders have provided the evidence directly for us. In particular, Mitch McConnell, who often has strange bursts of damaging candor. KLEIN: Mitch McConnell the Senate minority leader. ORNSTEIN: Mitch McConnell, the Senate minority leader. And, of course, not only said the famous my number one goal is to make Barack Obama a one-term president, but basically made it clear after the midterm elections that, of course, we were not going to cooperate with the Democrats. If these things looked bipartisan at all, they would have benefited from them. So, there was an obvious strategy, to block, to make any victories look ugly. And we also know Dave Obey, former chairman of the appropriations committee, when they started to do a stimulus bill, called in his ranking Republican member Jerry Lewis and said, we want to work with you. Go to your members, let us know what things you like, what things you don`t like. And Lewis laughed and said, I`ve got orders from on high. We are not going to cooperate. There are smoking guns all over the place. KLEIN: Tom, I look at what`s happening here and I agree with you guys. I think the Republican Party has become very extreme. I also see a large historic trend towards polarization, the parties getting further apart from each other. One thing you say is there`s a mismatch between polarized parties, the kind of act as discipline units and the rules of in particular the Senate but Congress more generally. And so, when I look at this, it seems to be the first thing to do is to get rid of what we call on this show the Tarantino, but which in the broader world is known as the filibuster. Is that wrong? Am I barking up the wrong tree? MANN: Well, there`s no question we have a mismatch. Our parties are now parliamentary style. Ideologically polarized, internally unified and vehemently oppositional. Now, listen, if Mitch McConnell or John Boehner led the opposition party in a parliament and were as aggressive and anti-negotiation as they have been, who cares? The majority puts its program into place and is held accountable. But in this system, a minority party can frustrate the majority and the key to that is the Senate filibuster, which as you have written, is an accidental element of Senate procedure. It occurred early in the 19th century when the motion to -- on the previous question was left out of the rules. But that filibuster which was used selectively, carefully, and in full public view for many decades, has now become a routine 60-vote hurdle that allows a minority that can muster 41 votes over the long haul to frustrate any effort of that majority party. If they were willing to deal, if the filibuster requirement set up the incentives to find some agreement between the two parties, it would be OK, but they decided on day one they were not going to negotiate on anything. It would be Obama`s economy and we wouldn`t have our fingerprints on it. KLEIN: And what worries me about that, Norm, you know, is that, you know, we just spent a fair amount of time in this segment explaining a weird quirk of procedure. Now, most Americans are normal being humans and correctly do not spend their time paying attention to Congress. So, I really worry about the breakdown of accountable in our elections when voters blaming the majority, be they Republican or Democrats for essentially outcomes that are dictated by minority obstruction. I mean, if you had no filibuster, you would have much more stimulus, a different health care bill. But instead, the broad mass of voters get angry because Congress isn`t working and they blame the majority, but Congress tends to work often because of the minority. ORNSTEIN: You know, one of troubling things here, Ezra, is you could go back to the 1994 mid-term elections when a similar process of obstruction took place with a Newt Gingrich-led Republicans against Bill Clinton. It worked like a charm in 1994, obstruction worked even more like a charm in 2010. What Republicans learned in both cases is if you get people frustrated enough, they just vote the ins out and the outs in. And now, we`re in a situation with divided government where people are even angrier, where you have a Congress that is in much worse repute even than the last one. Where are voters to turn? Figuring out who to hold accountable is fuzzy now and it`s the biggest one we have given the way the parties are operating. They not only gridlock and do great damage as you say, and it really is damage to the country, the fabric of the economy, but they leave voters with little opportunity to figure out who genuinely to blame. And frankly, the press corps is an unindicted co-conspirator to that. KLEIN: I cop guilty to that. Norm Ornstein of the American Enterprise Institute, and Tom Mann of the Brookings Institution, co-authors of "It`s Even Worse Than It Looks", which I have read and is terrific. And you guys should all check out, gentlemen, thank you very much for being here. ORNSTEIN: Thank you, Ezra. MANN: Thanks, Ezra. KLEIN: Republican presidential candidate Mitt Romney has a bone to pick with President Obama`s foreign policy. At least he says he does. In fact, he says it all the time. It`s just not clear exactly what that bone is. That is next. And Kim Jong-un of North Korea has taken a bride. That`s not the best new thing in the world today. That distinction belongs to the reporting of Lil` Kim`s big announcement by a journalist both revered ad beloved by THE RACHEL MADDOW SHOW. Stay tuned. (COMMERCIAL BREAK) KLEIN: In one word, how do the big banks feel about President Obama? Hint, that word would not be grateful. That story plus tonight`s bit of television daring do, the Ezra Klein challenge is coming up. (COMMERCIAL BREAK) KLEIN: Mitt Romney wanted to be the Republican presidential nominee in the 2008 election. And he failed. He got close, but he didn`t win the nomination. Senator John McCain won. McCain then, of course, lost to now President Barack Obama. That was the bad news for Mitt Romney and the Republicans. The good news is there was a lot for Mitt Romney to learn from the `08 campaign from McCain and his own example. For example, do not pick an untested, un-vetted shoot for the stars running mate. It will not end well for you. Another lesson was a little less obvious and a little more personal. One Mitt Romney needed to learn the hard way. Even if the election doesn`t seem like it`s all about foreign policy, you have to at least appear like you know what the heck you are talking about. You`re asking to be the commander in chief, not the haircut in chief. So, do not confuse all of the bad guys, all of the people that don`t like America, but don`t like each other and roll them into one ball of evil. (BEGIN VIDEO CLIP) MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: This is about Hezbollah, Hamas and al Qaeda and the Muslim Brotherhood. This is a worldwide jihadist effort to try to cause the collapse of all moderate Islamic governments and replace them with a caliphate. (END VIDEO CLIP) KLEIN: It is not that. Half of those people hate the other half. Sounds scary what Romney said, but it`s not true. A couple days after revealing that rather broad misunderstanding of geopolitics, Mitt Romney single-handedly manufactured an even bigger embarrassment. What is the one thing you know about the war in Iraq? What is the one thing every single reputable every foreign policy, national security and defense expert agrees on, no matter what party affiliation? What is the big agreed upon fact? When the United States invaded in 2003, Saddam Hussein did not, no, not, not, not have weapon of mass destruction. (BEGIN VIDEO CLIP) SEAN HANNITY, FOX NEWS: Am I the only one thinking in all of the build-up to the war, those weapons of mass destruction got moved? ROMNEY: It`s possible. HANNITY: It`s possible, right? ROMNEY: It`s entirely possible. (END VIDEO CLIP) KLEIN: What Sean Hannity said there was that the WMDs got moved to Syria, and no, they did not. It`s not even remotely possible that Saddam had WMDs at the time. Even Bush agreed it wasn`t remotely possible. It`s just a little embarrassing. So, now, it`s 2012 and Mitt Romney has a shot at the presidency all over again and he basically gets a do-over. Few people remember that he didn`t know the difference between bad guys and thought, maybe Iraq had WMDs. Romney has a chance to prove himself a serious foreign policy guy who should be elected president of a country that is still at war even today. Now, we may not act like a country at war, but we are at war and Mitt Romney wants to be the guy in charge of that war. Now, for my entire lifetime, there has been a singular Republican playbook that has been incredibly successful against Democrats and it goes like this. Republicans are hawkish and tough and uncompromising on security. They will protect you. Whereas Democrats are weak and they enjoy funny kinds of sailing and all of the flip-flopping. It would be foolish for any Republican to see the foreign policy national security advantage to Democrats. So this year, Romney in a close election needed to get it right. Run on the economy, sure, but don`t give up the whole national security thing. The problem is Mitt Romney is running against the president who finally killed Osama bin Laden and ended the really, really unpopular war in Iraq and who amped up the drone war like it or not, that has killed almost every guy to hold the title al Qaeda`s number three. So, what does Romney say about al Qaeda to differentiate himself from the president, how does he come across tougher than President Obama? Well, yesterday, Romney spoke to the Veterans of Foreign Wars, VFW. The topics are the military and national security and external threats, et cetera. Not once in his speech did Mitt Romney mention the phrase al Qaeda. Not once. Go ahead, we have linked the transcript on our blog. You can go there, you can hit control F, and type in al Qaeda. You will get nothing. In anticipation of that speech, Romney campaign put out this fact sheet telling the candidate`s foreign policy. There were lots and lots of bullet points but again, not any mentions of al Qaeda. Control F al Qaeda, bupkis. As we speak, Mitt Romney is on a foreign tour. His own campaign is pushing it as a big deal and a chance for the candidate to display his foreign policy global bona fides. Yes, there is something missing from the map, though. It makes sense why he would go to London for the Olympics. It`s key part of his biography, and Israel, which is a key ally, and Poland, is on the trip, which is fine. In the words of George W. Bush, you don`t forget Poland. But how do you go on your big presidential trip as a presidential candidate and not going to Afghanistan? How do you not go to where we`re still at war? In an interview today with NBC News Brian Williams, Mitt Romney turned down the opportunity to criticize the president on foreign policy while being on foreign soil and whatnot. But if you actually compare Mitt Romney`s foreign policy and Obama`s foreign policy, you see that while Mitt is good at using the tough sounding words that have worked so well for Republicans for a generation, he`s less good at actually differentiating himself from the president. Joining us now is Spencer Ackerman, national security writer for`s "Danger Room", a friend of mine, and somebody who has actually dug deep into Romney`s foreign policy. Spencer, it`s very good to see you. SPENCER ACKERMAN, DANGER ROOM SENIOR REPORTER: Good to see you as always, Ezra. KLEIN: So, you wrote a great piece today, and the title of it was the five things we`ve learned about how Mitt would run the world. Number one was that he seems to run the world when it comes to Afghanistan, Egypt, and maybe even Iran, a lot like Obama is running the world. ACKERMAN: A lot like if Romney hired Obama`s aides but they had nothing but bad things to say about themselves. That`s what you get. You get a lot of rhetoric about how this is failed policy, this is an overly politicized foreign policy, but I`m going to do the same thing. KLEIN: Right. And -- right, so that`s key, right? They don`t have functional disagreements, and yet they have sort of big rhetorical agreements. Romney said Obama has been around apologizing for America, and a broad point he makes is that the difference between him and Obama is resolve, it is will. That he will have the resolve in America, and there`s nothing we can`t do if we sort of put our backs into it. That reminds me quite a bit of early term George W. Bush. It was about how much America wanted it. I mean, the realists in Romney`s camp, the people who are chastened by the Bush administration, they have to be reeling a bit from that. ACKERMAN: And what`s even stranger about it is that if you want to look towards the guy whose words and actions match up and have been more consistent, that`s Obama. It`s not Romney. It`s Obama who in 2007 said he was doing to have an all-out effort to kill Osama bin Laden with or without Pakistan. It was Obama who said he was going to increase troop levels in Pakistan. It was Obama who said that he was going to end the Iraq war. Whereas, if you look at Romney then, sometimes now, sometimes last Tuesday, sometimes next Wednesday, it`s a little different. You`ve got an actually more hawkish Romney on Iran than you do this time around. All of a sudden now, Russia is the biggest geopolitical foe until this new speech at the VFW in which Iran poses the bigger danger. It`s a little bit more difficult to get a sense of where that resolve actually plays out. And I tell you, Ezra, I wanted to walk out on this speech so badly. And Romney denied me the facts, figures, numbers. KLEIN: Didn`t give you the details. (CROSSTALK) KLEIN: -- a graph, it`s hard to do it. On Iran, because he did, he said now Iran is the single biggest threat. Obama has done a major virus attack on Iran to bring down some of the nuclear reactors. He has been a participant in multiple rounds of sanctions. How different was what Romney proposed to do in Iran than what Obama has proposed to do on Iran? ACKERMAN: On the level of rhetoric, it`s very different. It`s a lot more bellicose than Obama`s rhetoric. It`s very contemptuous of what Obama did in terms of saying at the beginning of his presidency, that he was going to talk to Iran without preconditions. On the level of substance, very different. Romney didn`t rule out negotiating with Iran. He just simply said that zero enrichment of uranium was the goal. Didn`t really clarify whether that was the beginning of talks or the end point to them, but didn`t immediately say the bombs are going to drop in five minutes. Similarly, he`s really against Russia. He`s against Obama moving closer to Russia. However, if he backs away from that position, Russia has every incentive as it did before the Obama administration`s drift toward Russia to go back to helping Iran and frustrating international consensus on Iran. It`s hard to see how that knits together for Romney and his advisers, kind of, play that away rather than deal with it head on. KLEIN: Spencer Ackerman, national security writer for`s "Danger Room" and I`m sorry you were denied the opportunity to walk out today. ACKERMAN: One day. KLEIN: Maximum information, minimum lapsed time. The wonkiest two minutes in television are coming up next. (COMMERCIAL BREAK) KLEIN: You`ve probably heard the name Sanford Weill or maybe you heard Sandy Weill to his friends. Sandy Weill is to Wall Street bankers say to what Jerry Seinfeld is to sitcoms or Tony Bennett is to Connors. Even if you don`t pay much attention, he`s the one you have probably heard of. Sandy Weill used to run Citibank. He got real really, really, really rich doing it. And today on CNBC, Sandy Weill said that the United States government should break up the big banks. You know, the big banks like Citi which he ran. Imagine Jerry Seinfeld saying there should be no more primetime sitcoms or Tony Bennett saying no more crooning. That`s what Sandy Weill suggested today, which leads us right into the Ezra Klein challenge where I try to explain complicated stuff especially in the economy that seems at first chance a little mystifying. Tonight, what the heck they`re talking about when they talk about breaking up the big banks. Everyone says it, Weill says it, everyone hears it, but it doesn`t often get explained. So, what is breaking up the big banks? How would they do it, and why would we want to? May I have my two minutes please? OK, there it is. Ready, set. You have heard of all of the big banks -- JPMorgan Chase, Goldman Sachs, Citigroup, Wells Fargo, these names are big. And it means they have as assets a really big percentage of our gross domestic product, trillions and trillions of dolls. But what we`re worried about here isn`t just that they`re big. It`s that they`re too big, that they are too big to fail, to be precise. When say a bank is too big to fail, we mean it`s got so much money and so many debts to other banks and investors that its failure could bring down other parts of the financial system as well. That is what happened when Lehman and AIG began to go down. When they went down, they owed so much money to everyone else, and the very fact of their failure made other banks fine. Banks that were fine the day were not fine the day after. And here`s the thing, the banks are even bigger today than they were then, before the crisis. This graph from "Bloomberg Businessweek" tells a story. In `06, the five biggest banks had $6 trillion in assets. Today, they have $8.5 trillion. That`s more than half what the entire U.S. economy produces in a single year. So when folks say they want to break up the big banks, it`s because they believe a series of smaller banks would be able to fail without threatening everyone else. Now, there are a couple ways we could go about doing that. The government could, for instance, tax the hell out of any bank that is bigger than we want it to be. No bank would want to pay such a tax, so no bank could profitably allow itself to be so big. But then we would have a bunch of smaller banks. The problem there is that even smaller banks can still be too interconnected to fail. They could have so many trading partners and so many bets and so much leverage, financial system can`t handle their fall. And then, of course, there`s a problem of global banks which can be huge and can go down. In other words, breaking up the banks that are called too big too fail may or may not solve the problem because the problem isn`t so much too big part, it`s the fail part. The challenge is how to keep any of them from failing at all, at least in a way that hurts us. Three seconds left. Ta-da. And coming up next on the show, the man in charge of overseeing the money in the banks in `08 has a lot to say about how we`re trying to prevent fail. How we`re failing at preventing fail, and I`ll ask him to explain Wall Street, which loved Barack Obama in `08 doesn`t seem to like him too much this time around, even though the president has basically left them alone to get incredibly rich all again. The Neil Barofsky challenge is coming next. (COMMERCIAL BREAK) KLEIN: All right, pop quiz. What do gun enthusiasts and Wall Street executives have in common? Well, for starters, there`s not anything intrinsically or fundamentally wrong with what they do. Quite the opposite in fact. America is based on the freedom to be a super rich banker guy, if that`s what you want to do, or to collect firearms if that`s what you`re into. But in both cases, what Wall Street guys and gun lovers, the rest of the about country would really appreciate it if they would avoid being too risky with their hobby. Because they can both do terrible, horrible damage if they`re not careful. Also in terms of their relationship with the government, they would both rather not be bothered. Like at all. Ask them how`s it going and you`re likely to get a big, what`s it to you? There may not be a pair of groups more certain that everybody is out to get them. But probably their most significant commonality this election year is that gun owners and Wall Streeters are both in super duper, unadulterated hate with Barack Obama. Why? It`s a good question, actually. Gun lovers hated Barack Obama back in 2008, too. They were totally sure he is going to take away their guns as soon as he took office. But if you look at his record of actually restricting gun ownership, Barack Obama as president has done negative one thing to rollback gun rights. He actually signed a law allowing people to bring guns into national parks and wildlife refuges. But the gun lobby still hates and fears him and then hates him some more. As for Wall Street, they did not hate Barack Obama back in 2008. In fact, once upon a time, a long time ago, Wall Street loved Barack Obama. Goldman Sachs was Obama`s second largest contributor in 2008. JPMorgan Chase was his sixth largest contradictor and Citigroup was his seventh largest contributor. Not so this time around. This year, Wall Street is totally bailing on Obama. This year, Goldman Sachs is Mitt Romney`s biggest contributor. JPMorgan Chase is his second largest contributor. And Citigroup is his sixth largest contributor. So it seems something has changed between 2008 and today. The bankers aren`t just hating the president out of some reflexive paranoia like the gun lobby. These guys used to like Obama. They gave him tons of money in the last election. But if you think there`s an easy explanation, that there`s just agreement that the Obama administration has been viciously tough on Wall Street, you`d be wrong. Not only is there not a consensus that President Obama has been an enemy of Wall Street, there`s an argument made in some corners he`s been much too friendly to the finance industry. Joining us to give voice to that argument is Neil Barofsky, who served as a special inspector general for TARP, is a former federal prosecutor for the southern district of New York, and is author of a new book, "Bailout: An Inside Account About Washington Abandoned Main Street while Rescuing Wall Street." Mr. Barofsky is now a senior fellow at NYU School of Law. Thank you for being here. NEIL BAROFSKY, AUTHOR, "BAILOUT": Thanks for having me. KLEIN: So, Neil, please tell me if I have this wrong. You don`t seem to have been super happy with how the bailout was conducted. I`m reading your book, you don`t seem like a huge fan of it. BAROFSKY: Well, no, Ezra. I mean, in almost every critical juncture when it came to really meaningful choices in conducting the bailout, this administration and the prior administration, there was no real material difference between the two, consistently chose the interests of the Wall Street banks over that of homeowners, over that of the broader economy, and you know, we saw that time and time again, really from the day I got there. KLEIN: And so the broad critique you make in your book when you bring up here is that there were a bunch of moments when there was a choice of what to do with the TARP funds. They could have gone in a direction that was either more punitive to the banks or put much more strict regulations on them, asked more of them, and they didn`t. And you could argue it was because their top contributors were bankers if you want to be cynical about it, but the bankers hate him now. They don`t at all feel they got a sweet deal out of the administration. They feel Dodd-Frank was intensely punitive to them. They feel that the administration has been very aggressive in demeaning the role of the financial industry in American life in the president`s rhetoric. So, why -- what is the reason for this gap between what you see as a substance of the choices made on the bailout and how the bankers feel about the bailout and the financial regulations and the Obama administration? BAROFSKY: Well, first of all, there`s no question that the president and his treasury secretary defended the status quo of too big to fail. There were opportunities in regulatory reform that compelled breaking up the banks, to try to break up this almost cartel of powerful financial institutions that helped drive us into the financial crisis and they beat that back at every opportunity. But you ask a fair question. So why are they not supporting him now? And I think that the premise here is based on looking at it and trying to find a degree of humanity that just doesn`t exist within these institutions, suggesting that they should be grateful for what they received. You know, President Obama famously said, I`m the one thing standing between you and the pitch forks is what he said to the 13 of the top bankers. But look, time and time again, the banks had proven that the faith that this administration and prior administration put in them was not justified. You know, during TARP, again, that level of deference the program was supposed to restore lending and put some lifeblood into the economy, so they didn`t put in conditions. They told me repeatedly, we don`t need fraud protections bought the banks wouldn`t embarrass themselves. They would never risk their reputations. Then, again, when forming the housing policies under TARP, there was this trusting the banks by giving them control over the program and not getting rid of conflicts of interest which they used to shake down homeowners, squeeze out savings and throw them on the foreclosure scrap heap. And now, now we`re saying, well, gee, isn`t it surprising that they`re not grateful. Of course they`re not grateful. What they`re interested in two things. One, they want to back a winner. And they look at the economy of the United States and they think, right or wrong, that Romney is the horse to back. But more importantly, Romney is offering them a better deal potentially from their perspective than Obama is. Even Dodd-Frank, even though it protected them and put them in a situation where they continue to have this incredible advantage and their size being too big to fail, did have good restrictions in it. I mean, the Consumer Protection Bureau is a very positive thing. And they hate anything that could possibly eat into their profits and their ability to exploit their size and power. And Mitt Romney is offering a repeal of Dodd-Frank. So Dodd-Frank was actually very helpful in preserving the status quo for the banks, but better to have nothing, better to go back to the go-go days of 2006 and 2007 where they could print money off the backs of American homeowners. But I don`t think it`s not -- and also, I think it`s really hard to underestimate how thin-skinned bankers are. It`s something that -- KLEIN: Yes, (INAUDIBLE) amazed by within. But we will have to continue, I fear, this conversation another time. I`m being told we got to run to a commercial. Neil Barofsky, former special inspector general for TARP and author of the new book "Bailout" -- thank you so much for being here tonight. BAROFSKY: My pleasure. Thanks for having me. KLEIN: You know how this is called the great recession, not the depression, not quite yet? Well, now, we`re really getting ready to relive another defining event of the 1930s, Tom Jones style. I`ll explain next. (COMMERCIAL BREAK) KLEIN: You know that old joke, and I`m not saying it`s a good joke, about how Greenland and Iceland should switch names because Iceland is actually green and Greenland is actually frozen or at least Greenland is mostly frozen a lot. Tonight, I must give you the unsettling news that now in our scary hot summer, Greenland is suddenly not so reliably frozen. NASA took this picture of Greenland`s ice sheet from space recently. The ice sheet typically melts some in the warmer months. The white part is what remained frozen when the NASA satellite went by on July 8th. It`s about 40 percent of the typical whole. Four days later, another NASA image has the ice sheet all but gone. Almost all of it had melted. It had all melted in four days. Scientists think the ice sheet has already begun icing again. They say it has happened before in the 1800s. Maybe it`s OK that Greenland melted this month or maybe we`re heading for some very weird times and this is all just a frightening preview. Your hot world is coming up next. (COMMERCIAL BREAK) KLEIN: I don`t know where you live, but there is a good chance it`s really hot outside right now and it`s been hot for a long time. Now, you can look at this as a local phenomenon. The city of St. Louis just confirmed that a 24th person has been killed by the heat this summer. The temperature was 107 today, the 16th straight day of triple digits, but that just St. Louis. It is their problem, their weather. Or you could see the conditions on a national scale. Across the country, we have broken more than 40,000 records for daily highs this year, and it`s only July. So far, this has been the hottest year on record. It comes after a string of very hot years, after last year`s heat, NASA reported that nine of the 10 hottest years on record have occurred since 2000. Along with the heat this summer, we have witnessed a really quite frightening drought. This comes from the National Climactic Data Center. Everywhere you see the dark purple, that`s extreme drought. Red is severe, which is not as bad but is bad. Gold stands for moderate drought. A third of all American counties have now been declared disaster areas. The rain will come back shortly, but right now, our nation is drying up. America`s farmers have not faced this kind of drought for half a century or even more. Farmers are pulling their corn early since it is growing well enough to sell for dinner tables. Ranchers are rushing cattle to market because there is nothing for the cattle to eat. In the short run, the extra beef means hamburgers cost less, but that`s temporary. Beef, corn, soybeans, the stuff we make out of beef, corn, and soybeans, all of it should become more expensive. So will milk, eggs, and chicken. Food inflation is particularly hard on folks who haven`t got much to spend and is hard on the entire economy. In the short run, the Agriculture Department is pledging to help farmers, but the Ag secretary says he cannot do enough, not really. And right in the middle of this crazy heat and the nationwide drop and the crops that will grow and the food inflation we don`t need, our do- nothing, do-less-than-nothing Congress cannot pass a farm bill, one of the most routine chores of being in Congress. "Politico" looked back through 50 years of farm bills and could not find a farm bill that was stymied the way this one is. More evidence, I guess, that this is one of the worst Congresses ever. I was not lying about that. Unless Congress acts, the current farm bill expires on September 30th, just in time for all these small-town harvest fairs. As difficult as the drought is for farmers and people who eat, however, it is worse for another sector of the economy, energy. Depending on your politics, you might find it good news that the drought has put pressure on companies that do fracking. You need a ton of water to blast the natural gas out of rock. I`m guessing you would not find it such good news if the drought led to a blackout. The power plants that keep the lights on in much of the country need water to function. There`s no water, no light. Also, less corn equals more expensive ethanol, which means more expensive gasoline, maybe a nickel or so a gallon. And maybe this is just one historic drought in the year of hot years. We can`t know yet whether what`s happening around is weather or climate change. A lot of it we think has to do with La Nina, a cyclical cooling of the ocean that maxes (ph) weather patterns. What we do know is that our climate has been getting warmer. That is why this NASA map starts with a lot of blue in the 1800s and ends up covered in yellow and red. Yellow and red stands for the places where the average temperature that be higher than average, and these days that`s just about everywhere. And we also notice as our planet gets warmer, we can confidently predict more extreme weather events like drought. So this drought, this is a preview. It`s what will happen a lot if temperatures don`t come back down. My colleague on Wonk Blog, Brad Plumer, posted this map the other day. It shows a forecast of drought conditions at mid-century if we have moderate emission of greenhouse gases. Purple and red and orange and yellow, you see all that, all those colors? That`s a drought. It is projected drought. It is worse than what we`re seeing now. It is worse than what we saw during the depression-era dust bowl. So here`s what we know: climate change does not just mean that the earth gets hotter, it means the climate gets weirder, it means more droughts and more fires, it means for famines and more floods. And here`s something else we know. Human beings are contributing to climate change and Americans are contributing most of all. But human beings and Americans can also give putting the brakes on climate change, but to do so would require governmental action. And right now, our terrible Congress cannot even pass a farm bill. (COMMERCIAL BREAK) KLEIN: The new thing in the world today arises out of an international mystery that has been solved. Specifically, the mystery of who this woman, seen with North Korea`s new dear leader, Kim Jong-un is. She was first spotted in photographs released by the North Korean government earlier this month at Kim Jong-un`s side, watching a concert featuring costumed Disney characters, presumably unlicensed Disney characters. Today, she was outed as Kim Jong-un`s wife. It happened during a state television broadcast. We found out that her name is Ri Sol-ju, but that`s about all the state-run media revealed. However, South Korean media says there`s a North Korean singer named Ri Sol-ju, so maybe the same person. I don`t know. Do you think that is the same person? But the solution of who is the lady, the mystery is not the best new thing in the world today. Neither is the fact that the mystery lady is not the one people thought she might be, a different singer whom I mention because she is known for singing a song called "Excellent Horse-Like Lady," which is the most excellent song title in the world -- though even that is not the best new thing in the world today. No, the best new thing in the world today comes from Andrea Mitchell, who is, of course, the chief foreign affairs correspondent for NBC News and the host of her own show on MSNBC every day at 1:00 p.m. Eastern Time. This is how MSNBC`s Andrea Mitchell reported the news at the top of our show this afternoon. (BEGIN VIDEO CLIP) ANDREA MITCHELL, MSNBC ANCHOR: Sorry, ladies, he`s off the market. North Korea`s most eligible bachelor, Kim Jong-un has gotten hitched. (END VIDEO CLIP) KLEIN: Andrea Mitchell is a hard news kind of lady. She has covered every important, world leader and world news there is. She has heads of state on speed dial. She can boil things down to their essence and communicate the most important truth about them instantly, and she is awesome. And when Andrea Mitchell cuts to the case, let`s agree -- sorry, ladies, he is off the market is the best new thing in the world today. That does it for us tonight. Don`t forget, you can check out my work at at "The Washington Post", or follow me on Twitter at, and on Facebook, Now it is time for "THE LAST WORD" with Lawrence O`Donnell. THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. END