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The Rachel Maddow Show, Transcript 12/22/2016

Guests: Kellyanne Conway

Show: THE RACHEL MADDOW SHOW Date: December 22, 2016 Guest: Kellyanne Conway

RACHEL MADDOW, MSNBC HOST: And thanks to you at home for joining us this hour.

We do have a very special guest here tonight. I`m very, very much looking forward to this conversation.

In the presidential campaign of 1984, Ronald Reagan was running for re- election against Walter Mondale. And in August of that election year as things were heating up, the Reagan campaign picked just a bull`s eye religious conservative issue, not just to work on as policy because he was president, but to campaign on for re-election as well.

And so, President Reagan gave a radio address in August of that year, and you know, it was designed for the campaign. He was talking about what he was doing as president, he was haranguing the Democrats in Congress for making him do it. It was one of the perfectly calibrated campaign year issues.

And you can still get the text of the radio address that he gave on this subject. You can still get the text of it online at the Reagan Library website.

Here`s how it starts. Quote, "My fellow Americans, I`m pleased to tell you that today I signed legislation that will allow student religious groups to begin enjoying a right they`ve too long been denied -- the freedom to meet in public high schools during nonschool hours."

So, that`s the issue that he picked. And that`s the text of that radio address.

Here`s the thing, though -- this was a radio address, it was audio only. He was going to do the radio address from his house in Santa Barbara, California. As they were setting up for him to give this address, as they were checking the audio levels and getting him ready to start, he didn`t just say the top of his speech. He didn`t just say, "My fellow American, I`m pleased to tell you that I have signed legislation that will allow student religious groups to" blah, blah, blah. He didn`t say that, which was the real first line of the radio address, when he was doing his sound check, while they were setting up his microphone.

He started to do the first line but then he turned it into a joke.


RONALD REAGAN, FORMER PRESIDENT OF THE UNITED STATES: My fellow Americans, I`m pleased to tell you today that I`ve signed legislation that will outlaw Russia forever. We begin bombing in five minutes.


MADDOWW: He said that into the microphone. Everybody laughed. "We`re outlawing Russia forever. The bombing will begin in five minutes."

After he did that sound check, somebody leaked the tape. But that is what he said. It was a joke. He had a sense of humor. You know, what`s the big deal?

Well, the big deal it turns out was he was an American president and the subject matter was nuclear weapons. Do you know what happened next?

We found this in the NBC archives today. Watch this. This is from two months after he made that "We begin bombing in five minutes" joke. This is two months later. This is in October right before the election in November that year.

NBC News two months down the road, it was finally able to piece together what happened after Reagan made his "I`m outlawing Russia, we begin bombing in five minutes" joke. Watch this and watch the graphics here in particular. This is awesome.


TOM BROKAW, NBC NEWS ANCHOR: It was the joke heard around the world, the one by President Reagan about bombing the Soviet Union. And it resulted in a Soviet red alert and it became a campaign issue in this country. Now, Marvin Kalb has learned that the Soviets responded in their own fashion.

REPORTER: The president was joking his way through an audio check on August 11th.

REAGAN: I`ve signed legislation that will outlaw Russia forever. We begin bombing in five minutes.

REPORTER: By August 14th, the story became world news. A major item on Moscow television where the joke was not treated as a laughing matter.

August 15th, a coded message left Soviet military headquarter in Vladivostok. It said in part, "We now embark on military action against the U.S. forces."

The code was instantly broken by U.S. and Japanese intelligence. This is what then happened -- a special command unit in Yosodis (ph) went on wartime alert. Key Japanese military units raised their readiness status. Soviet naval vessels in the North Pacific baffled by the order checked with Vladivostok. Confusion.

U.S. intelligence originally canvassed for signs of an imminent Soviet attack, found none.

Later, officials of the top secret National Security Agency briefed Congressman Michael Barnes.

REP. MICHAEL BARNES (D), MARYLAND: There was what they described as a wayward operator in the Soviet Far Eastern command who sent out a message, alerting Soviet forces in that area that a state of war existed between the United States and the Soviet Union.

REPORTER: Within 30 minutes, the mysterious Soviet alert was canceled.


MADDOW: So, within 30 minutes, the Soviet alert, the Soviet alert that said there was an active state of war between the Soviets and the United States, that alert was ultimately canceled after it had been issued.

But that joke from the president in 1984, it started in motion a series of events that put nuclear-armed warships and military command units in a state of confusion and in some cases a state of alert. And ultimately nobody shot anyone and the alerts got dialed back, but whew.

President`s talking about nuclear weapons is nothing to mess around with, not even if you`re obviously joking.

Today, just before noon, without any warning, apropos of "we don`t know yet what", the president-elect announced via Twitter what appears to be a 180- degree U-turn in American nuclear weapons policy. He wrote this, quote, "The United States must greatly strengthen and expand its nuclear capability until such time as the world comes to its senses regarding nukes."

That would appear to be a 180-degree u-turn from decades of U.S. policy in which we`re reducing our stockpile of nuclear weapons. Now, we`re going to be greatly expanding our nuclear capability "until such time the world comes to its senses".

What on God`s green earth does that mean?

And I ask you guys through this camera, I ask you guys these questions a lot these days when it comes to covering the transition to the new administration, the difference tonight is that I have someone here to ask in person.

I`m very pleased to say joining us live for the interview tonight is newly announced presidential counselor Kellyanne Conway.

Kellyanne, thank you so much for coming back.


MADDOW: It`s nice to see you.

CONWAY: My pleasure.

MADDOW: Congratulations. I have not seen you since the election. Congratulations on the election.

CONWAY: I appreciate it.

MADDOW: Congratulations on the announcement today.

CONWAY: Do you agree? He`s your president, too.

MADDOW: Yes, we only have one president.

CONWAY: Thank you very much.

MADDOW: He`s, however, not the president yet.

CONWAY: That`s right.

MADDOW: That`s part of why I want to ask you about foreign policy pronouncements because you have said -- and you`ve been most clear on this out of everybody in Trump world that you respect that President Obama is still president. He`s president until noon on January 20th. Usually what that means is that a president-elect would avoid trying to box in the existing president, specifically on matters of foreign policy. The United States has to speak with one voice on foreign policy.

In the transition that we have seen, Mr. Trump criticized and in some ways undermined the one-China policy. We saw him today call on President Obama to do a specific thing at the United Nations. We`ve now had this announcement of what would be a very dramatic turn on nuclear weapons.

Isn`t he kind of cashing checks that President Obama has to cash?

CONWAY: No, look, this is him preparing to be president. He`s asked constantly what his position is on X, Y or Z. And in the case of the nuclear comment, I discussed it with him directly. And he is making the point that this is about nuclear proliferation in the face of rogue nations and regimes that are stockpiling weapons, it would seem.

And all he`s saying is, look, his first priority is to keep us all safe and secure. His first doctrine is peace through strength. In a perfect world, Rachel, we wouldn`t have any nuclear weapons. But it`s not a perfect world. In fact, it`s a very dangerous world. And --

MADDOW: In proliferation, what do you --

CONWAY: Well, what he`s saying -- I think all the president-elect is saying is that we have to be able to be -- to keep ourselves safe and secure, and when others stop building their nuclear weapons, then we`ll feel more secure in that regard.

MADDOW: Who is he talking about?

CONWAY: Well, he`s talking about anyone who fits the description of a regime that would do us harm or a rogue nation.

MADDOW: Is there -- is he -- I mean, I`m asking you this not to try to trap you on this, but in all seriousness, this is really a big deal. Is he making a claim that there`s some new nation that`s a proliferation risk, that nuclear weapons are being developed by a country that we don`t know about, that we haven`t been talking about?

CONWAY: No, he`s not. But let`s fair, too, I don`t think the tweet was groundbreaking in this regard. It seems that President Obama himself has invested -- has called for an upgrade in our capabilities. I read in one or two articles up to $1 trillion is the price tag. So, we all, you know, President Obama, President-elect Trump, everyone shares the same, I think, core value and their first duty is to try to keep us all safe. And we know it`s a dangerous world and that includes nuclear weapons.

MADDOW: When he says we have to expand our nuclear capability, does he -- I mean, does he mean more nuclear weapons? Because for decades, we haven`t been creating -- we haven`t been making nuclear weapons since George H.W. Bush, as I`m sure you know. Is he talking about more nuclear weapons? Do we need more than we have?

CONWAY: I think what the president-elect is really saying that it`s his first obligation is to keep us safe and secure, and he believes in peace through strength. He recognizes at the same time, Rachel, that other people are nuclear capable. That`s not abating. It`s not like we`re going to tell them, please stop doing that because we said so. And he wants us to be prepared.

He makes very clear that this maybe a way for others to stop doing what they`re doing.

MADDOW: Honestly, though, the American position on nuclear weapons worldwide for a very long time now, not just as a partisan matter but over multiple presidents, has been that we are trying to lead the way in reducing the number of nuclear weapons in the world. He`s saying we`re going to expand our nuclear capability.

CONWAY: He`s not necessarily saying that.

MADDOW: He did. He did literally say we need to expand our nuclear capability.

CONWAY: What he`s saying is we need to expand our nuclear capability, really our nuclear readiness or our capability to be ready for those who also have nuclear weapons.

I mean, this is what happens. When you say that terrorism, particularly ISIS, radicals or terrorists being contained, that are the jayvee team, we don`t have to worry about them anymore and then people are being killed in Nice, in Berlin this week, certainly in Orlando at the nightclub in May, in San Bernardino a year ago, in Paris, in Brussels, it doesn`t ring true to anybody that they`re not advancing. It doesn`t ring true to anybody --

MADDOW: What does that have to do with nuclear weapons?

CONWAY: I`m going to give you the analogy. That just saying it doesn`t make it true. In others, us saying they`re contained and then attacking proves that everybody who feels unsafe in a world where terrorists, particularly in the case of ISIS are advancing, that they`re still wanting to do them harm.

So, us -- he`s trying to in his -- I think in his quest to keep us safe and secure, he`s putting the world on notice that he will do what he thinks he needs to do to keep us safe and secure.

MADDOW: By expanding our nuclear capability. I mean --

CONWAY: He`s not trying to change a policy through Twitter.


CONWAY: He`s not trying to project what he will do as president.

What he`s merely saying is that this is a man who gets his intelligence briefings regularly, the PDB, presidential daily briefing refers to a product, but in addition to that which we know he received today or yesterday or both, he also has other intelligence sources and he`s learning many different facts that I`m not privy to. And this is one of the responses that he felt compelled to give based on those facts.

MADDOW: Do you feel confident that the president-elect understands what we`ve got for a nuclear arsenal right now?


MADDOW: Is he saying that we need more weapons on hair trigger alert, on launch on warning status? Is he saying that we need more weapons -- more nuclear weapons in Europe? Is he saying that we need different kinds of nuclear weapons?

I mean, as you know, there`s a nuclear triad. We`ve got three different kinds of nuclear weapons. A lot of weapons experts, a lot of nuclear experts say we need to get rid of one of those legs of the triad. Does he agree with that? Or is this an announcement that we`re not getting rid of that third leg of the triad?

CONWAY: He thinks that a nuclear triad is important to maintain. But I just want to make very clear more broadly speaking, that he`s not calling for any of the specific policies that you suggested/asked me. What he`s merely saying is he wants us to be ready to defend ourselves and he`s not making new policy. I mean --

MADDOW: This sounds like really new policy. On nuclear weapons, it`s really a sensitive matter.

CONWAY: Well, of course, I would agree.

MADDOW: Who has the most nuclear weapons after us and Russia?

CONWAY: I don`t know. But I`m sure he does.

MADDOW: It`s France. India and Pakistan. One of the most important things about -- to know about India and Pakistan having nuclear weapons is the number of nuclear weapons that they`ve got on launch status. Do you guys talk about that? Like is that like --

CONWAY: Well, I don`t. He`s surrounded by national security team.

MADDOW: If the United States announces a U-turn on nuclear policy, India and Pakistan don`t have any nuclear weapons on launch status. They could move them to that status because a new nuclear arms race is about to start.

CONWAY: So, we`re getting ahead of ourselves, Rachel.

MADDOW: But that`s what happens in the past when presidents have made even joking remarks about nuclear weapons. So, I think what I`m trying to get at is a lot of people are hiding under the bed right now because he doesn`t -- it doesn`t seem like he knows what he`s talking about on this issue.

CONWAY: That`s not fair. It`s not fair.

MADDOW: Well, then, how can you make policy on Twitter and then say he`s making policy?

CONWAY: He`s not making policy on Twitter.

MADDOW: Expanding our nuclear arsenal and announces it on Twitter is a big deal.


CONWAY: He said our capability and again perhaps he is also echoing what President Obama himself has tried to do here, which is get upgrades to our nuclear systems. I saw in one or two or three reports to the tune of a price tag of a trillion dollars. And -- so, but again, he`s talking about keeping us safe and secure.

In a perfect world, we wouldn`t be talking about nuclear weapons. It is not a perfect world. It is a world in which this exists and it is a world in which --

MADDOW: We need more?

CONWAY: No, he didn`t say necessarily.

MADDOW: Expanding our nuclear capability. OK, all right.

CONWAY: I just want to say this, in the world in which we live, which is not perfect, in fact, it`s very dangerous and very uncertain, I hope we can all agree -- military might has been one of the ways to deter people from doing bad things. Now, that can take on any number of different aspects, but on this one, I think that we`re getting a little too far ahead of ourselves that he`s changing policy and making policy in a way that he did not intend.

MADDOW: OK. The president making policy happens whenever the president speaks on a national security matter.

And I want to ask you about a couple of other national security personnel decisions. On Election Day, the new national security adviser, Retired General Michael Flynn, wrote an op-ed in which he argued that the United States should extradite a guy who Turkey wants us to extradite. It now appears that General Flynn`s company was being paid by the Turkish government, and he did not disclose that in the op-ed, he did not disclose that publicly when he was announced as an adviser to the campaign. He has never talked about it in terms of being national security adviser.

I mean, I don`t have anything against General Flynn personally, but he was being paid by a foreign government and advocating their policy positions in the U.S. government while advising your candidate now the president-elect.

CONWAY: I heard you say it appears. Is that --

MADDOW: Well, he`s never -- I mean, it`s been reported that he was -- his company was receiving money from the government of Turkey and people who -- as somebody who works in his company has confirmed that.

CONWAY: I have not discussed that with him. So, I would not be the right person to ask to comment on that.

MADDOW: If he was on the payroll of a foreign government while advising your candidate would that be disqualifying for him as national security adviser?

CONWAY: Not necessarily. I would need to know the facts. And, obviously, that decision only lies with one person, the president-elect.

MADDOW: General Flynn during the campaign accused Hillary Clinton of being involved in sex crimes against children.

CONWAY: You`re talking about a tweet?

MADDOW: Yes. He wrote this. It wasn`t a retweet.

CONWAY: Or fake news.

MADDOW: He wrote a tweet.

CONWAY: Is that the fake news story?

MADDOW: I mean, during the campaign, late in the campaign, said that Hillary Clinton was involved in sex crimes with children.

CONWAY: But I think the source of that was a fake news report.

MADDOW: Right. But he tweeted it. He broadcast this.

CONWAY: I haven`t seen his Twitter feed. But I trust you.

MADDOW: He did. You can ask him, he did.

As national security adviser, it will be his judgment that the president turns to in times of national security crises, no matter what they are. His judgment is such that he did publicly accuse Hillary Clinton of being a child rapist.


MADDOW: He did. He did.

CONWAY: That`s a little hyperbolic.

MADDOW: Well, sex crimes against children --


CONWAY: -- fake news retweets myself. But --

MADDOW: It wasn`t a retweet. He said that everybody needed to check out this news that Hillary Clinton was involved with sex crimes with children.

CONWAY: Rachel -- I`m sorry.

MADDOW: So, if that`s his judgment -- I can understand how he might be involved at some level on the campaign, he might have things to offer -- why would a person with judgment like that be national security adviser? Wouldn`t you want somebody who has rock solid instincts and judgment particularly about public information to be in that kind of a key role?

CONWAY: But you`re conflating two things. You`re saying that -- you`re telling you`re audience, frankly, one negative thing about him and we`re not looking at his overall credentials and his years in the national security community, his tours of duty. I`ve talked to him about those directly, his tours of duty, the three goals he has for the country as national security adviser which include government reform, peace through strength, a stabilization of the Middle East. I mean, these are his goals. He`s got a full, long resume of very impressive national security skills and accomplishments that I just can`t wash away based on a tweet.

And the other thing I just want to say --


MADDOW: You like run down somebody in a crosswalk. There`s no defense to that, to say, like, look at all the other days, I had such a great driving record. You know what I`m saying?


CONWAY: I disagree. It is not a perfect analogy.


MADDOW: No, it`s not a perfect analogy. But comment on the judgment that it takes to have said something like that and never apologize for it?

CONWAY: If I may I would like to comment on the judgment of what we currently have, my heart breaks every single day when I look at Aleppo. Why? Well, because I`m a compassionate human being.

I can`t stand the fact, Rachel, that women are choosing suicide over rape. I can`t stand the fact that you`ve got basically plurality is not a majority of children under the age of 14 or so gone now either displaced or dead and killed. And I look at that as a humanitarian crisis.

We`ve done next to nothing of value for 5 1/2 years. Where is the judgment of our secretary of state? Where is the judgment of the administration?

We can`t just look the other way when things like this happen. That is not me changing the subject. That`s me saying, if we talk about judgment, let`s look at what a lack of judgment, a lack of action has wrought in some hot spots around the world beginning with Aleppo.

MADDOW: In a complicated and dangerous world, I think that it`s reasonable and I don`t think it`s -- I think it`s almost inarguable that there`s at least question if not concern that we`ve got a president who`s got no governing experience, no foreign policy experience, no public service experience, and that`s -- you know, that`s an unprecedented thing, but obviously he put that case to the American people and the American people elected him. So, it`s settled but now --

CONWAY: That`s a big asset to them.


CONWAY: And, you know, President Obama had -- he had been in the United States Senate for practically a hot minute before he announced he would run for president. He`d been a state senator but I think people liked that, too. They liked the fact that they had somebody in 2008 and again in 2016 who arguably can look them in the eye, especially given who their opponents were, and say, "I will go to Washington as your president owing nobody anything. And I will work for you."

It was a compelling argument for President Obama in 2008. It was a compelling argument for Donald Trump in 2016.

MADDOW: On national security issues, you`ve got President-elect Trump, though, without any national security or foreign policy or governing experience.

You`ve also got a secretary of state who only has private sector experience, no public service, no governing, no diplomacy experience.

You`ve got a national security adviser who phrased some of the questions about -- that I have about his judgment notwithstanding other impressive things about his career, but there are some things that stick out like a really big red flag in terms of him, and in terms of the other policy -- personnel decisions that have been announced.

I mean, Monica Crowley is someone I like very much from the cable news world. I met her in green rooms like this, in studios like this. Monica Crowley has just been announced as a deputy national security advisor, possibly his spokesperson for the National Security Council.

CONWAY: She has a PhD in that field.

MADDOW: She also claims publicly -- she has claimed publicly that Barack Obama -- President Obama is secretly not black. Barack Obama is not black, yet this guy is campaigning as black and painting anybody who dares criticize him as racist. I mean, that is the biggest con I`ve ever seen.

It`s one thing to talk like that in, you know, dummy cable news, this environment or on -- or on talk radio, which is where she made those remarks. But how could you put somebody who has a record of saying things like that as potentially the spokesperson or the deputy of the National Security Council? Where -- why aren`t there more serious people being picked for these very critical roles on the most serious issue of all, which is national security?

CONWAY: I have never heard that comment. I don`t even know what that means, frankly. I heard you say it.

MADDOW: It`s amazing.

CONWAY: It`s -- I don`t know what it means. But I know Monica. She`s incredibly smart and incredibly thoughtful and deliberative in her work. And you`re right, people say things on cable TV or talk radio sometimes that I guess they would take back, that probably applies to everyone.


MADDOW: You guys have just given her an incredibly important national security job.


CONWAY: She has a PhD. She worked with President Nixon on a number of things. And the president-elect has faith in her to be somebody who can effectively communicate what the National Security Council, the National Security Agency is doing at a very fraught time.

And I do think you`re cherry-picking some appointments in that we`ve got -- we`ve been lauded by some of his naysayers and detractors as having put together -- he, not we. He`s put together an amazing cabinet of very qualified men and women, people who have done great things in the private and public sector and who are willing to share those experiences in the cabinet.

And I would just say, you know, eight years ago at this time, I certainly - - I don`t know about other people -- but not critical of the cabinet that was in formation because you want the new president, whoever the occupant is, to be able to take his time and maybe one day her time to form that cabinet in a way that helps -- will help to execute on their agenda, on their issue for the world and for the nation`s economy. And those who at least are giving the president a wide -- president-elect, excuse me, the wide berth and the deep breath to do that, I think will be very impressed with who he`s put there in some of these different positions.

MADDOW: Kellyanne Conway, stay right there.


MADDOW: You can`t leave.

CONWAY: You got it.

MADDOW: Kellyanne Conway, soon to be counselor to the president, first ever Republican female campaign manager and the first woman to ever win a presidential campaign. She`s here tonight for "The Interview".

Stay with us.


MADDOW: Here`s some breaking news from "The Wall Street Journal", just published tonight. I`m going to read it straight off the lead out of "The Wall Street Journal."

Quote, "President-elect Donald Trump`s pick to run the Health and Human Services Department traded more than $300,000 in shares of health-related companies over the past four years while sponsoring and advocating legislation that could potentially affect those companies` stocks."

"Congressman Tom Price, a Georgia Republican, bought and sold stock in about 40 health care, pharmaceutical and biomedical companies since 2012, including a dozen in the current congressional session." That`s according to a "Wall Street Journal" review of hundreds of pages of stock trades.

"In the same two-year period, he sponsored nine and co-sponsored 35 health- related bills in the House, his stock trades included Amgen, Bristol Meyers Squibb, Eli Lilly, Pfizer and Aetna. Is largest single stock buy was August of this year, between $50,000 and $100,000 in a biomedical firm who`s largest shareholder is a congressman on the Trump transition team. That stock has since doubled in price since he bought it in August."

Joining us once again is the newly announced counselor to the president, Trump campaign manager Kellyanne Conway.

Kellyanne, thank you again.

CONWAY: Thank you.

MADDOW: If the stock filings are accurate that "The Wall Street Journal" is reporting on, your pick to head up Health and Human Services in the cabinet was personally investing in companies while he was sponsoring legislation that could affect their stock price. If these stock filings are accurate, would that be a problem for you?

CONWAY: I really -- I`m learning about that while I`m sitting here, so I`d have to learn more information. I don`t even know what the rules are that govern the ability of members of Congress to have stocks. I take t they`re getting that information from information he has filed.


CONWAY: So, it`s not from lack of transparency or some furtive cover-up. It`s actually information he`s filed. He`s put it all out there for everyone to see, which, "A," I appreciate as a private citizen.

But, B, I really -- what I know about Tom Price, the congressman, in HHS designee, is that he`s for free market, patient-centric health care, that he`s voted to repeal and replace the Affordable Care Act many times because he believes and he hears from many people that, you know, reducing our quality and increasing our prices and reducing our choice and our access was really not was intended for many Americans. Some have coverage, some are very happy, many are not.

I`m sure you saw the polls just this week that show two real lenses about the Affordable Care Act as part of President Obama`s legacy. You have people saying -- you have people saying, it was his greatest accomplishment and people saying it was his greatest failure.

So, on this --


MADDOW: And another 6-point-something million people signing up in this current enrolment period.

CONWAY: That`s right. I said that.

MADDOW: But if he`s got -- if he`s got an ethics problem -- I mean, if what "The Wall Street Journal" is reporting is accurate and what they`re reporting is not very complicated. He was trading in stock while sponsoring legislation that could have affected the price of that stock. Is that the kind of ethical problem that would pose an issue for him in terms of being nominated?

I look at the Code of Ethics that was put out by the transition. A lot of it is about, you know, whether or not people can be lobbyists after they leave the administration and stuff like that way down the line, which will have a very hard time enforcing when it comes to it. But something like this, if he did this, if he was trading for his personal gain on information that he had because he was a lawmaker --

CONWAY: But that doesn`t say that, in fairness.

MADDOW: Well --

CONWAY: But does it say it`s illegal?

MADDOW: Well, if it`s a violation of the Stock Act, then I mean, presumably, there will be an investigation of that. But it wasn`t technically illegal but he was still affecting a stock price through his work as a congressman, and then buying that stock, that would be a problem, right?

CONWAY: You just gave the Democratic senators a good line of questioning to ask in those hearings. I`m sure they will, Rachel. I`m sure they`re watching you.

MADDOW: Well done. Well done.

Let me ask you something along the same lines. I`m not going to ask you about the president-elect`s tax returns because that`s very well -- but he did release a financial disclosure form --

CONWAY: One hundred and four pages.

MADDOW: And in that financial disclosure, one of the lines of one of those 104 pages said that he had between $3 million and $15 million invested in a hedge fund that has placed a particularly big aggressive bet that Fannie Mae and Freddie Mac are going to be privatized.

So, he picks this treasury nominee last month. The day after he picks Steve Mnuchin to be his treasury nominee, Mnuchin says, I want to privatize Fannie Mae and Freddie Mac. And the stock goes through the roof.

If Donald Trump is invested in that hedge fund that took that big bet, he just financially benefited to pretty significant amount with a multimillion dollar investment from what his treasury nominee said.

CONWAY: Well, first of all, I don`t know if he has that investment.

MADDOW: Yes. And do -- can we know that?

CONWAY: Well, I don`t know. Let me get back to you.


MADDOW: It`s important.

CONWAY: Because remember, he also has accountants and lawyers working literally around the clock to making sure that what needs to be done for a man who`s been so brilliant and so successful in business, unprecedented, in modern times in our presidency, Rachel, is sufficiently disentangled for him to take his job as president of the United States and focus on that 110 percent.

Secondly, I would expect the treasury secretary designee of a conservative Republican president to say they would like to privatize Fannie and Freddie. I don`t think that should strike anybody as brand new information or tied to something that`s been --


MADDOW: It wouldn`t be controversial if we knew whether or not the president was going -- with every other president we`ve known, we`ve never even had to ask. You just look up and check to see whether or not the president had a financial entanglement where he would be personally benefiting. The issue here is that we don`t know what Trump has.

I mean, "The New York Times" directly asked directly, asked the transition does he still hold this particular investment which was directly affected by this announcement the day after he announced them, and the answer was, we are not releasing this information at this time. That would be easy enough to announce.

CONWAY: No. The third thing I want to say about that, though, is that`s a pretty small holding compared to everything that the man has --


MADDOW: $3 million to $15 million.

CONWAY: Well, it sounds like a lot of money to me and you, but the fact is that it`s not a huge investment when you consider the idea that he would pick Steve Mnuchin to be the treasury secretary and say, hey, while you`re out there say you`d like to privatize Fannie and Freddie, an idea that many conservatives have had for a very long time. That doesn`t seem to me to be causal connection.

MADDOW: Should we not be concerned about any private financial gain he`s going to have from any of his actions?

CONWAY: No, I didn`t say that. What I`m saying is, I think the presumptive, you know, guilt, or the presumptive negativity --

MADDOW: It`s a question.

CONWAY: -- not necessarily by you, but by others, it`s -- it`s ubiquitous. The other thing I just want to say is, a lot of the stock market seems to like the fact that Donald Trump will be the president. It`s been booming.

MADDOW: Mazel tov.

CONWAY: You know, 20 percent -- excuse me it`s up to 20,000, close to 20,000. It`s had, I don`t know, maybe a dozen or so gains in the days or maybe more by now since he was elected president.

And, by the way, the opposite was predicted. First, it was that he can never win, this is a joke, go home. He -- there`s no map, there`s no path. We heard it on this network and elsewhere.

And then the minute he got elected literally, he takes a call from Secretary Clinton. She concedes, everyone concedes and congratulates him. I was standing right there.

And the stock market likes it the next couple of days.

MADDOW: Yes, if you are going to short the expectations market, you`re definitely going to win in this environment. We can give that advice to everybody.

But there is something unique going on here, in addition to you guys winning and getting to brag about that.

CONWAY: We`re not bragging.

MADDOW: And rub the naysayers` noses in it and everything.


CONWAY: No, it`s really not. It`s honestly not that. Do I look like somebody who rubs people`s noses in anything?

MADDOW: But let me -- but when, government of Azerbaijan, they rent out Trump Hotel Suites at the Trump Hotel in Washington, the president-elect makes money from that. When his building project gets green lit by the government in Buenos Aires, he makes money from that.

CONWAY: Well, his corporation does.

MADDOW: Yes, he`s the primary owner of his corporation. So, he`s -- it`s money for him. Anybody who wants to, any foreign country, anyone can -- they now have the option basically to pay money to the American president by doing favors for this business that he owns.

CONWAY: By renting a hotel room?


CONWAY: I think that`s so attenuated. By the way, the money goes to the corporation --

MADDOW: Small scale corruption is still corruption, right?

CONWAY: That`s not corruption.

MADDOW: I`m not -- what I`m saying --

CONWAY: That is not corruption. That`s a hotel room.

MADDOW: But if you want to give money to the president, the American president, we have never had a way to do that before. No foreign government has had a way to do that before. The American people special interests haven`t had a way to funnel money to the American president right now.


CONWAY: Nobody`s (ph) funneling money to him.

MADDOW: No, but you can through his businesses, as long as he still has a business -- as long as he still has an ownership stake in it.

CONWAY: He has said he will not be involved in his businesses when he takes the oath of office.

MADDOW: But he will still benefit from their financial bottom line. And so, anybody who affects that is in effect paying the president.

CONWAY: No, look, I disagree. And here`s why: two things quickly. One is we`ve never had this situation before. It`s unprecedented. So, it is difficult to get arms around.

MADDOW: We agree.

CONWAY: Usually, we have a politician moving from political office to political office to political office, who just moved their lifetime pensions and great health care along with them.

MADDOW: And their tax returns. It`s amazing.

CONWAY: Americans ended up not caring about that. They heard that. I was, you know -- that was --

MADDOW: Some of them are.

CONWAY: That question was vomited at me every single day by 50 people on TV, and nobody cared.

MADDOW: Vomited?

CONWAY: That`s how much it was said. It`s like, his tax returns --

MADDOW: I asked you about it --

CONWAY: And nobody cared.



CONWAY: You`re right. Just sort of, you know, a metaphor.

But the American people didn`t care enough about that.

But, secondly, remember when the Trump Corporation benefits from a financial transaction, please don`t lead people the impression that the money goes into Donald Trump`s pocket. He employs tens of thousands of people worldwide.

MADDOW: Hold on. Hold on. He`s the primary owner, he owns this corporation. It`s not like people own a stock in it.

CONWAY: At the moment.

MADDOW: Is he going to give up ownership?

CONWAY: He has said he will do whatever is necessary to comply with the law and the -- comply with the law and the protocols --

MADDOW: He`s never said that he`s going to give up ownership. Are you making news here?

CONWAY: No, I didn`t say that. I said he`ll do whatever is necessary to comply with the law --

MADDOW: But as long as he owns it, any benefit goes to his business goes to him.

CONWAY: Yes. But I mean, we`re presuming. OK, you said something that I thought was remarkable, actually. A lot of things you say are frankly remarkably brilliant and very well-prepared.

MADDOW: Thank you.

CONWAY: And the Democratic Party could use that these days. They`re on identity crisis. But the fact is, Rachel, you just said that there`s never been a president that a foreign country can funnel money. I was like, ding, ding, ding.

We had a secretary of state that did exactly that and Americans didn`t like that. She used the State Department as a concierge for foreign governments to dump money into the foundation.


CONWAY: Her husband gets a million bucks over in Russia to give a speech. She gives up 20 percent of our uranium rights.

I mean, this is --

MADDOW: You realize it was only yesterday they had to cancel the $500,000 hunting trip with the boys.

CONWAY: But guess what happens there?

MADDOW: You guys made such a huge issue about that with the Clinton Foundation.

CONWAY: Not the same.

MADDOW: And right now, you have Ivanka sitting in on the meeting with the Japanese prime minister while seeking --

CONWAY: Not the same.

MADDOW: -- while seeking funding from a Japanese-owned bank. I mean --

CONWAY: The Softbank, the $50 billion?

MADDOW: No, nice try. No, I mean, the government-owned from which her apparel deal she was seeking financing. She sits on that meeting with Abe.

CONWAY: But she didn`t discuss that with him.

MADDOW: But she`s there in the meeting. I mean, you`re talking -- if you guys were going to make an issue of pay to play, you have --

CONWAY: Where is it here? Show me where it is here, because it was clearly on the mind of Americans about Hillary Clinton and the State Department. That`s just obvious. That hurt here. They can blame Russian hacking, they can blame Jim Comey, they can blame poor Bernie Sanders who did a terrible thing of giving people another alternative and apparently they wanted one because he won 22 states and over 13 million votes.

They can blame everyone they want to blame, the weather on Election Day. But the fact is, people cannot get past that honesty and integrity and veracity number that, the obstacle that she had and a lot of that was embedded in --

MADDOW: You are not -- no longer speaking for an active campaign.

CONWAY: No, no --

MADDOW: You`re speaking for a president-elect who has an unprecedented problem on this -- wait, you have to hold on for a second.

CONWAY: Unprecedented success.

MADDOW: Yes, entanglements.

All right. I have to do business right now. We`ll be right back.

Kellyanne Conway stays with us for just another moment. Stay with us.


MADDOW: We have one more segment to talk with Kellyanne Conway. She says yea. We didn`t have to chain her to the desk. But we do have the zip cuffs ready.

When we come back with Kellyanne Conway, I`m going to introduce her to one of the people who I am most impressed with in this business, in the business that I am in. And that introduction is right after this.

Stay with us.


MADDOW: This is an unrequited thing but I`m just going to say it. There is a woman who I have always admired in this business who I never worked with directly. Don`t know her personally. But from a distance, I always thought she was really impressive, long stretches reporting from the war in Bosnia, more than 25 reporting trips to Iraq starting with the initial invasion of Iraq. One of the best Iraq reporters we`ve had of either gender.

She was the first reporter to get the scoop when Abu Musab al Zarqawi was killed. She also wrote an incredibly moving, incredibly well-reported book on the battle for Sadr City in Baghdad and what that was like for the First Cavalry Division fighting that house-to-house battle. And at the same time, what it was like for the families of First Cav back home waiting for news while they were in this incredible battle.

She`s the only American reporter to have reported in a combat mission from an F-15 over Afghanistan. She`s just -- again, she`s operating at a totally different level in this business that I am. I`ve never worked with her, but I`ve always admired her. She`s really been through it.

Kellyanne Conway is our guest right now for "The Interview".

Kellyanne, I`m raising this issue right now because here is how your boss has been talking about her in public.


DONALD TRUMP (R), PRESIDENT-ELECT: How about when a major anchor, who hosted a debate, started crying when she realized that we won? How about it?


Tears. "No, tell me this isn`t true."


MADDOW: We know from the number of time he`s told that story that he`s talking about ABC`s Martha Raddatz there. Martha Raddatz did not in fact cry on election night. She did not say, "No, tell me this isn`t true." There were no tears streaming down her face.

It`s wrong what he`s saying about her. But what I`m bothered by is the way he`s singling her out, not just with wrong information but singling her out.

Is this how even a reporter like Martha Raddatz is going to be treated by this president?

CONWAY: No, and I would have updates but they`re privately held. We`ve been discussing this with ABC News. I talked to the president of ABC News about this directly and I`ve talked to the president-elect.

Look, we all have enormous respect for Martha Raddatz as a journalist. Everything you just said about her would get a plus one from me. And we do have enormous respect for her and her colleagues at ABC news. Anybody who watches just this past week the job she did sitting in for her colleague on "This Week with George Stephanopoulos", it was a tour de force in how you interview people right, left and center about issues you know something about.

MADDOW: She`s among the best we`ve got in this country.

CONWAY: I completely agree with you. But I would like to broaden the conversation if I may out in terms of --

MADDOW: Wait. Are we going to get an apology from the president-elect on that? He`s telling a story about that that`s not true and telling it to great effect and have people jeered her. Will he correct that?

CONWAY: So, apologies like that are not made publicly necessarily, but --

MADDOW: But the accusation was made publicly.

CONWAY: So, the accusation is made by a number of people. I`m just telling you, I`ve got an update to what you presented there, it`s all -- I`ll say, and it would make you happy.

So, in terms of his relationship with the press, I mean, Rachel, I don`t know how anybody can disagree with the just the empirically provable fact that Donald Trump got more negative press coverage than anybody in modern political history.

MADDOW: Also, quantifiably more press coverage than anybody in modern political history.

CONWAY: Well, because people were trying to --

MADDOW: He was a phenomenon.


CONWAY: -- the president.

Well, he`s a heck of a lot more interesting to cover, that`s true, than the alternative. No doubt people wanted to cover him.

But -- I mean, the negative press, the presumptive negative press and I`m somebody who is very pro press, I am somebody who I think has good relations with most of the press, the print and electronic media. But it is frustrating oftentimes if you`re in Trump world to not be able to get your message out, which is why he ended up taking it directly to the American people.

We -- people would ridicule us for doing these rallies, but it was his way of being the master communicator, master connector he is, of making people feel like they were part of his movement, not part of a garden variety post-election (ph) campaign.

Let me just say, his way of cutting through the noise or cutting through the silence on an issue, whatever the case was at a given time.

MADDOW: It`s on an issue like, just to stay specific to Martha Raddatz here, he did say something publicly that isn`t true. And until he corrects it publicly, the people will hear him say it will continue to believe an untrue thing about a woman who doesn`t deserve it. I will just make that case to you.

And I have one other thing on this to ask you about, which I don`t ever think -- I don`t think you`ve ever commented on. Peter Thiel`s part of the transition.


MADDOW: He put a news organization out of business. He did not like how covered him in Silicon Valley. So, he funded a legal strategy against them. They got sued for over $100 million.

It made that company go away. They no longer exist because Peter Thiel sued them out of existence.

The lawyer he used to do that is now representing Melania Trump in a lawsuit that she has filed against a blogger you`ve never heard of.

CONWAY: I heard of him.

MADDOW: A $150 million lawsuit against a blogger -- is that going to continue after inauguration? Is the Trump family going to try to sue to bankrupt news outlets and bloggers?

CONWAY: That`s not the goal here. The goal here is to tell the truth, is that Melania Trump --

MADDOW: To collect $150 million from that guy?

CONWAY: No, let`s be fair here. First of all, let me go back to what you said about Peter Thiel. I don`t want anybody to leave here misinformed or misled, that somehow he sued a company out of business. He filed a lawsuit. The judge and jury heard all of the evidence. Gawker didn`t settle. They may have --

MADDOW: Ask him why he did it. He said he did it to put --

CONWAY: But he succeeded.


CONWAY: And he succeeded with apparently an excellent lawyer who`s now been hired by Mrs. Melania Trump who also has been slandered and maligned. She has a right to defend herself. This woman is brilliant. Anybody who mis -- anybody underestimates her or misunderstands does so at their own peril. I know her very well. She`s going to make an amazing first lady.

MADDOW: Is that lawsuit going to continue once she`s first lady?

CONWAY: I don`t know the course of the lawsuit. Meaning, I don`t what it`s -- where it is in the process right now, but she has the right to defend herself.


MADDOW: This is a very unusual thing, though, what Peter Thiel did. It`s a novel legal strategy. He`s the one who`s pioneered -- he invented it. He has pioneered it.

CONWAY: And he succeeded at it.

MADDOW: And he succeeded it.

CONWAY: With his lawyer.

MADDOW: And it made a journalistic enterprise disappear.

CONWAY: They made themselves disappear by --


MADDOW: Because they wrote a thing about Peter Thiel.

CONWAY: -- and by not settling, and by being arrogant I guess going forward. That`s my guess. That`s how the legal system works.

MADDOW: He accomplished what he set out to do. We both acknowledge.


CONWAY: The man`s an amazing success story.

MADDOW: But with the Gawker thing, he set out to fund that lawsuit to make Gawker disappear, and it worked. Is the Trump family now embracing that strategy?

CONWAY: Not at all. Not at all.

MADDOW: But that is what she is doing.

CONWAY: Melania Trump -- no, she`s defending herself. She got I think an unusual if not unprecedented apology even though --

MADDOW: She got a retraction. And now, she`s still pressing ahead with the lawsuit.


CONWAY: It`s unheard of. Well --

MADDOW: But why press the lawsuit after the retraction?

CONWAY: Why is it OK to treat her that way, Rachel?

MADDOW: Well, I`m not talking about her treatment. I`m talking about --

CONWAY: No, that`s what this is about, though. If you`re going to lie about Melania Trump --

MADDOW: I also have no opinion on the Hulk Hogan sex tape. But I do have an opinion on using a legal strategy, a novel legal strategy to disappear journalistic enterprise.

CONWAY: That`s not what this is about. I think in her case, it`s a straight-up.

MADDOW: Why use the same lawyer?

CONWAY: Because he`s effective. He did a great job.

MADDOW: He`s effective at this legal strategy.

CONWAY: That is one type of case that he handled. But that`s not the goal here. The goal here is to, I think punish and to call out people who lie about Melania Trump.

MADDOW: And a retraction isn`t enough. Even if you retract it, the first family will continue to sue you?

CONWAY: It`s not the first family. Let`s be fair. She`s a private citizen. She --

MADDOW: OK. So, the first lady of the United States, if you apologize, you get it wrong. You apologize and you retract it, you will continue to be sued, perhaps as an individual for over $100 million.

CONWAY: Let me ask you a question.

Do you think an apology --

MADDOW: That`s going to continue?

CONWAY: Well, hold on, Rachel. Do you think an apology and a retraction undoes the damage? I think when humpty-dumpty falls off the damned wall --

MADDOW: And you guys are endorsing this strategy --

CONWAY: No, I didn`t say that. I`m asking a question. Why is it OK --

MADDOW: But you`re defending it.

CONWAY: I`m not defending it. I`m defending her and her right -- her right to sue people who spread lies and vicious lies about her.

MADDOW: If the Trump family believes that there are journalist --

CONWAY: How about people just start doing that? I found a great novel strategy --


MADDOW: -- every president, every president, not only in the modern era, every president back to the beginning of news print has believed that the press has lied about them and has hated the press and has inveighed against the press. I have never seen a first family, never seen a president or his family members trying to put newspapers out of business through a novel legal strategy and I want to know if the Gawker legal strategy --

CONWAY: She`s not trying to do that. She`s not trying to do that. That is not her lawsuit.


CONWAY: Her lawsuit is suing someone and suing a publication that lied about her. And they --

MADDOW: Are they going to do that to everybody?

CONWAY: -- issued a retraction and they apologized.

Well -- are people going to stop lying about them? And she didn`t file that lawsuit as the first lady. She filed the lawsuit as a private citizen.

MADDOW: Will it continue when she`s first lady?

CONWAY: Are people going to continue lying about her?

MADDOW: Well, presumably --

CONWAY: You`re engaged in hypothetical.

MADDOW: Presumably, the first family will continue to believe that people are lying about them. All presidents do.

CONWAY: I know.


CONWAY: Do you know what we were discussing eight years ago around this time, not you and me necessarily. But you and me several -- do you know what the country was discussing eight years ago? We weren`t discussing any negative stuff associated with President-elect Obama. It was basically, what will they wear to the inaugural? What will he try to push through? How long will take to get healthcare? It`s just different for the Trumps, and you know it.

But as a private citizen being lied about, I`m very proud of her. I`m proud of her as someone who admires her, who knows her, and proud as a woman who gets sick and tired of watching other women torn down in the press, especially a public figure like that. I`m proud of her for pushing forward with that lawsuit.

And she got a retraction. She got an apology. You`re asking me, is it enough? Is the damage undone? Do you think you can`t pull up that story somewhere? I bet you could pull it up right now on your computer. So, the damage is always there and that`s not fair to her.

MADDOW: Are you glad that Gawker`s gone?

CONWAY: I haven`t made much attention to it. Am I glad that they`re gone?

MADDOW: So, if someone lies about the first family, you see it as a lie. Would you want that news enterprise to be gone in punishment?

CONWAY: No, no. Of course not.

MADDOW: This conversation that we`ve just had will be taught in journalism classes.


CONWAY: I`m looking at the time, I have a quick addendum to that. I certainly don`t want them gone, but I also want the legal process to take its regular course without interruption from anyone else.

So, if the lawsuit includes a judgment, if the verdict includes a judgment that puts said Gawker out of business because they did not settle or they did not protect their assets, or they didn`t -- if that`s the result, that wasn`t -- that may not have been the intention. That`s the result.

MADDOW: That`s the intention.


CONWAY: The man is brilliant.


MADDOW: Kellyanne Conway --

CONWAY: Thanks for having me.

MADDOW: It`s really nice to have you here. I hope you will continue to do this. And you told me last time we spoke that I get to speak with your candidate during election.

CONWAY: He`s going to be watching now.

MADDOW: It didn`t happen. But you owe me one.

CONWAY: He wanted me to tell you, because I told him last week I was coming on your show, and he said he was so happy, and when I talked to him two days ago, he said, make sure you announce on your show that you`re coming into the White House. He was very good. And I`m sure he`s watching.

MADDOW: Congratulations on your new gig.

CONWAY: Thank you very much. I appreciate it.

MADDOW: We`re way over time. We`ll be right back. Sorry.


MADDOW: Where does the time go? I want to thank the Trump transition. I want to thank Kellyanne Conway personally for agreeing to come in here and talk to me. I cannot get a lot of Republican and Republican operatives, let alone people involved in high-level Republican politics to have a conversation with me.

I know everybody wants blood on the floor. A lot of what I want is to be able to hash things out in person in a way that is civic, civil and confrontational when it needs to be, without being mean, and I appreciate Kellyanne Conway being willing to have that conversation with me.

Thank you.

That does it for us tonight.


Good evening, Lawrence.