The Rachel Maddow Show, Transcript 8/15/17 POTUS and Extremism

Guests: Karen Bass, Adam Davidson

Show: THE RACHEL MADDOW SHOW Date: August 15, 2017 Guest: Karen Bass, Adam Davidson

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

RACHEL MADDOW, MSNBC HOST: Good evening, Joy. Thank you, my friend. Much appreciated.

And thanks to you at home for joining us this hour.

In 1924, the Democratic Party need to pick a presidential nominee to run against Calvin Coolidge. They knew it was going to be hard. Coolidge was fairly popular. He had become president when Warren Harding keeled over and died in office. Harding`s vice president was Coolidge. That`s how Coolidge got to be president in the first place.

As president, Coolidge was pretty widely liked. He was overseeing a pretty good economy. He was running basically as an incumbent to try to hold on to that seat. And the Democrats knew that Coolidge was going to be hard to beat in 1924.

But the Democrats headed into their convention that year in the hot summer of 1924 intending to pick somebody to run against Coolidge and they at least felt like they had a couple of good candidates to choose between. Again, this is a time when they choose their nominees not in a primary process so much as just at the convention, at the big meeting of the national party.

So, when the Democrats converged in New York City the summer of 1924, they knew they had two front runners for the nomination. One was a Democrat named Al Smith, who was very popular. He was governor of New York at the time. His chief rival for the nomination that year was a guy named William Gibbs McAdoo.

McAdoo He was originally from Tennessee. He ultimately became a senator from California. In the Woodrow Wilson administration, McAdoo was secretary of the treasury.

And he pulled off the major coup of marrying President Wilson`s daughter while Wilson was president and while McAdoo was serving as the secretary of treasury. They held the wedding at the White House. It was a big society deal. He was a very high profile secretary of the treasury to say the least.

So, McAdoo is the son-in-law of the former president. He himself is a former treasury secretary. He is a senator. He is very rich. He`s got ties both to the West and to the South. He`d been the vice chairman of the Democratic Party. He was very, very, very well-connected.

And in fact, the last time Democrats need to pick a presidential candidate four years early in 1920, they very nearly picked McAdoo. In 1920, a lot of Democrats thought they should have and they might have done better with him in 1920 than the guy they ultimately picked who lost.

So, heading into 1924, Al Smith had a good shot of getting the nomination but William McAdoo, he was in good stead as well. And McAdoo had one ace in the hole. He had a secret weapon, which is that he also had the Klan.

This was 1924. Ku Klux Klan was absolutely ascendant in that part of the 1920s. The racist seminal film "Birth of A Nation", that glorified the Klan, that film had come out in 1915, and swept the nation, and it helped revivify the Klan from its old days in the Civil War era and the Reconstruction Era.

The Klan got even more wind in their sails when they became one of major powers pushing for prohibition. Looking back on prohibition, it seems like one of the more unlikely things in American history we ever as a country would have decided, right, to ban alcohol as a country, really, we decided that?

But an unsung but important part of why that happened was the Klan supporting prohibition. And by the time the Democratic Party was making this hard choice of who to pick to be their nominee for president in 1924, the Klan thought it should have a say. The Klan was big enough, confident enough, widespread enough in terms of their reach that they thought they should get to make the call as to who the Democratic Party would pick for their presidential nominee that year.

And again, the two front runners for the nomination that year were that guy William Gibbs McAdoo and Al Smith. And you know what? For the Klan, that was a really easy pick because Al Smith was a Catholic. And the Klan was as anti-Catholic as they were anti-Semitic and anti-black. So, they`re not going to pick Al Smith. The Klan went all in for Williams Gibbs McAdoo.

And the Klan ended up being absolutely central to the fight for the presidential nomination that year. An anti-McAdoo delegate from Alabama of all places put forward a plank for the party platform that year that would have condemned the Klan, denounced the Klan. The fights over whether or not to approve the anti-Klan plank for the party platform absolutely convulsed the convention that summer. They were literally fighting in the aisles. They at one point called in a thousand policemen to break up the brawling on the floor of the convention.

Ultimately, the anti-Klan plank and the party platform, it was voted down. It was voted down by one vote.

Politico.com did a retro report on this a little more than a year ago and resurfaced this old headline from the contemporaneous coverage. As you can see, it`s "The Baltimore Sun.", "Anti-Klan Plank loses by 541 3/20ths of a vote to 542 3/20ths of a vote.

Riotous scenes marked the roll call. And you see just below that, little blurry, but you can see it there, bedlam over the Klan. Second poll is required to settle the question on this Klan question.

And then, actually, in the little chart there in the third column, it`s the list of all of the people at the convention and who voted how on the Klan plank. It was that big of a deal. So, it failed by one vote. And when the anti-Klan -- so the pro-Klan side won, right?

When the anti-Klan plank lost by that one vote, 20,000 masked hooded Klansmen rallied across the Hudson River in New Jersey to mark the moment. They didn`t think they would be able to rally in New York, not with their robes and their mask. They crossed over to New Jersey and they showed force, 20,000 of them.

They had an effigy of New York Governor Al Smith, that Catholic, they had an effigy of Al Smith at their rally, and they beat it up and tore it apart.

But then the convention had to move on to picking its nominee, right? You got to pick the Klan candidate, the candidate who was clearly favored by the Klan who wouldn`t denounce them or say a word against them at a convention that couldn`t approve an anti-Klan plank, or are you going to pick the Catholic guy, the governor of New York, Al Smith. I mean, if that`s the split in your party, how do you bridge that kind of split?

For the Democratic Party that year in 1924, they couldn`t bridge it. They started balloting. They started taking votes on who the delegates wanted to be their nominee and honestly, they couldn`t get there and they couldn`t get there and they couldn`t get there. That convention dragged on and on and on in the July heat in Madison Square Garden. That thing went on for 16 days with thousands of people in there and no air conditioning and the fights and the cops and they kept going ballot after ballot after ballot. Famously, that one ultimately went to 103 ballots, a record.

And in the end, they couldn`t decide. The Democrats finally in the end, exhausted, they picked neither of their two candidates. They did not pick William McAdoo nor did they pick Al Smith. They couldn`t figure it out.

They ended up throwing in the towel, picking some other guy named John Davis who nobody knew and basically had no constituency. They were absolutely spent from their fight with the Klan and over the Klan that summer in New York. They ran that guy John Davis half-heartedly. He got trounced.

Coolidge won the election. Coolidge sworn in in March of 1925 and the Klan, having flexed its muscles that way in national politics in the lead up to the election, Coolidge wasn`t their guy. They wanted a Democrat in there. But they decided that once Coolidge was in there, it was time for them to make another show of political power. And this time they didn`t want to make it within one political party, particularly a political party out of power. This time, they wanted to flex their muscles on the national stage.

This picture is from August 1925. This is during the first year of Calvin Coolidge`s presidency after the election of 1924. Michael Beschloss tweeted this out today. Those aren`t like choir robes, right? Those are Klan robes, the Ku Klux Klan marching in full hoods and robes down Pennsylvania Avenue, right through the heart of Washington, D.C. That was their show of national force in 1925.

And then a year later, they decided to come back and do it again, this time, even bigger. In the fall of 1926, September of 1926, the Ku Klux Klan held their conclave, their national conclave in Washington, D.C., second time they rallied thousands strong in D.C. in two straight years. When they turned up in 1926, they turned out 50,000 masked robed Klansmen who marched in formation through Washington, D.C.

Most of these pictures are from the Library of Congress. No matter how many times I`ve seen them, no matter how many times I have gone through these pictures, I have a hard time believing that that show of Klan force in Washington, D.C., I still have a hard time believing it`s real. But that was real. That was 1926, 50,000 Klansmen marching in Washington, D.C.

The following year in 1927, there was a Klan rally and march in New York City. It started off with a group of fascists, literally fascist black shirts who clashed with New York City police and then that melee was joined by about, according to contemporaneous news coverage, by about a thousand Klansmen who turned out in New York, in Queens, to march against the police.

"The New York Times" published at the time some of the texts of the handbills that the flyers that the Klan was distributing at the time explaining why they were marching, why they were rallying. The headline on the flyer said Americans assaulted by Roman Catholic police of New York City. That was the explanation for why they had to march against the police. And so, in May of 1927, a thousand Klansmen and some assorted fascists marched in Queens, in New York City and they ultimately rioted and fought with police. Nobody was killed.

There was a lot of news coverage of it at the time, which survives both from "The New York Times," from "The Brooklyn Daily Eagle", from a few other papers. The police commissioner at the time made a point of telling the public that this was kind of a landmark moment for the Klan in New York City. It`s not that he didn`t know that the Klan was active in New York City. It`s just that New York City had never before seen a thousand Klansmen turn out in the streets in robes and masks like they did in May 1927.

According to news reports at the time, there were seven men who were arrested at that Klan march in New York, one of them was Fred Trump, who is the father of Donald Trump.

Donald Trump has previously responded to reporting about this incident by saying it never happened, never happened. Never happened. The whole thing is made up.

But there is contemporaneous news coverage that both describes and shows pictures of that mass Klan march, including Klansmen marching in New York City in hoods and robes and his father`s name does show up as one of the arrestees from that March.

And the sins of the father are not the sins of the son, for anybody. But that is not a reason to ignore history and pretend that everything that`s happening in our lifetimes is happening for the first time. I mean, we think of the Klan now in terms of its role as a terrorist organization during Reconstruction, during Jim Crow, during the civil rights eras in the South.

We think of the Klan and their attendant modern white supremacist groups as a magnet for toothless losers and con artists and small-time violent thugs and some people who are legitimately freaking nuts. But it`s not ancient history, it`s not even ancient family history to recognize that the white supremacist movement in this country, which persists decade after decade after decade, their goals have never been to just exist on the fringe as some sort of kooky throwback peanut gallery for parolees, right?

I mean, their goals and their expectations have always been that they should exert real mainstream political power, that they should get to pick the president, at least they should get to pick who runs. I mean, what is unpredictable now is that we don`t know what to expect from those groups going forward now that it`s a modern president who appears to be picking them.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: When you say the alt-right, define alt-right to me. You define it. Go ahead. Define it for me. Come on. Let`s go.

UNIDENTIFIED FEMALE: Senator McCain defined them as the same groups --

TRUMP: OK, what about the alt-left that came charging in? Excuse me. What about the alt-left that came charging at the, as you say, the alt- right. Do they have any semblance of guilt? Not all of those people were neo-Nazis, believe me. Not all those people were neo-Nazis or white supremacists by any stretch. Those people were also there because they wanted to protest the taking down of a statue of Robert E. Lee.

So, excuse me. And you take a look at some of the groups and you see -- and you know it if you were honest reporters, which in many cases you`re not. But many of those people were there to protest the taking down of the statue of Robert E. Lee. So, this week, it`s Robert E. Lee. I notice that Stonewall Jackson is coming down.

I wonder is it George Washington next week and is it Thomas Jefferson the week after? You know, you really do have to ask yourself, where does this stop? But they were there to protest -- excuse me. You take a look at the night before, they were there to protest the taking down of the statue of Robert E. Lee.

(CROSSTALK)

REPORTER: Heather Heyer --

(CROSSTALK)

REPORTER: The neo-Nazis started this thing. They showed up in Charlottesville, protesting --

(CROSSTALK)

TRUMP: Excuse me. You had some very bad people in that group. But you also had people that were very fine people on both sides. You had people in that group -- excuse me. Excuse me. I saw the same pictures as you did.

You had people in that group that were there to protest the taking down of -- to them, a very, very important statue and the renaming of a park from Robert E. Lee to another name. You had many people in that group other than neo-Nazis and white nationalists, OK? And the press has treated them absolutely unfairly.

REPORTER: We`re saying that the press treated white nationalists unfairly? I don`t understand what you`re saying.

TRUMP: No. There were people in that rally, if you look, there were people protesting very quietly the taking down of the statue of Robert E. Lee. You had a lot of people in that group that were there to innocently protest and very legally protest.

(END VIDEO CLIP)

MADDOW: After the president`s remarks today praising the white supremacist gathering in Charlottesville, Virginia, this weekend, this became another one of those days where there was condemnation of the president from Democrats and observers, there was mild condemnation of the president from members of his own political party.

It was an interesting thing that happened late this even, early this evening when some White House officials tried to distance themselves from the president`s remarks as well, at least one senior official anonymously telling NBC News that members of the president`s team were stunned by the president`s words today. This one senior White House official telling reporters, telling NBC News that the president went rogue, that there was no expectation among the White House staff that the president was going to make remarks on this subject at all. And as much as some White House official might want us to believe that, it`s clear that that account is not true.

"The Associated Press" caught this high resolution shot of the president folding up notes clearly about the white supremacist rally and sticking them into his suit jacket pocket before he started taking questions on this today. The president was not there to talk about infrastructure today. He was obviously intending as well to talk about this matter today. He had prepared to talk about this matter today.

White House staff who say that this was completely shocking to them, that he went rogue, he wasn`t supposed to touch this subject. Those members of the White House staff are covering for themselves and inventing something that happened today that makes them look better that is not actually what happened.

And this was a lot of things today. It was not apparently a mistake. And at some point it`s going to have to stop being treated as a surprise. This was not the president accidentally blundering into something that inadvertently sounded like sympathy for people with unpopulated political views, right?

I mean, this is on purpose. This is what it was meant to be, the president building up and trying to center up in American politics a long standing force in white American politics and culture that we have been trained to think of as a fringe thing. But it does have a very long history and it does have real force.

The president is not messing up here. He did not trip and accidentally praise white supremacists and neo-Nazis and pro-confederate demonstrators who actually killed somebody this weekend. This was not a screw up.

What he is building back up is something that was a long-standing force for political power and terror in this country for generations and he is now doing what he can to help them come back. And partisan affiliations come and go, right? The party having the huge fight over the Klan in 1924 was the party of the Civil Rights Act by 1964. Parties change, party affiliations change, ideological alliances come and go, candidates come and go to the point that we can`t remember the names of most presidential candidates not too long down the road in history.

But whether you voted for Trump or not, whether you have a partisan affiliation or not, whether your own family has ever lived through the terror that is this persistent fascistic violent racist element of American culture, this persistent fascistic violent racist element in American culture and politics is a real thing that we have lived through before as a country. And it waxes and wanes but it has never really gone away.

And now, the president, working overtly as president is doing what he can to bring it back and build it up. And so far honestly, it`s working.

Head`s up. This is not a mistake. He is not screwing this up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE H.W. BUSH, FORMER PRESIDENT: When someone asserts that the Holocaust never took place, then I don`t believe that person ever deserves one iota of public trust. And when someone has so recently endorsed Nazism, it is inconceivable that such a person can legitimately aspire to leadership -- in a leadership role in a free society.

(END VIDEO CLIP)

MADDOW: President George H.W. Bush speaking in 1991. He was weighing in on what was then the Louisiana governor`s race between Democrat named Edwin Edwards and a Republican named David Duke, the former grand whatever of the Ku Klux Klan.

David Duke and Edwin Edwards were actually running neck in neck in that governor`s race at the time President Bush made those remarks. But the sitting president of the United States threw his weight against David Duke as the candidate of his own party. He disowned him. He denounced him. He did it repeatedly. Duke ended up losing that race in a landslide.

And that`s one way to do it. Today, we saw a very different approach.

Joining us now is Michael Beschloss, NBC News presidential historian.

Michael, thank you so much for being with us tonight. I`m really glad you could be here.

MICHAEL BESCHLOSS, NBC NEWS PRESIDENTIAL HISTORIAN: Thank you. Me too, Rachel.

MADDOW: As a historian, what was your reaction? How did you absorb these comments today from President Trump and how important do you think they are given his past history on the subject?

BESCHLOSS: I was completely horrified and I think it`s a departure from what almost every other president of the United States has done because, you know, Rachel, most presidents understand that, you know, it`s not in the Constitution. But the president has a job, two things particularly.

Number one, you know, this is a country that`s hard to pull together. And every president has the job of trying to unify this country. From the day of his inauguration when Donald Trump gave that very divisive speech, he`s gone the opposite way.

You know, today he went -- you know, that was exponentially increased. And the other thing is that most presidents feel, as Franklin Roosevelt once said, that the presidency is a place, he said, of moral leadership. Roosevelt wasn`t perfect himself but every president tries.

What we saw today with Donald Trump was someone saying essentially, I want to give political power to these ugly hate groups. You know, I don`t care about the job of moral leadership. It came out of an ugly part of his soul.

And I think I would say to all Americans that we`ve got a problem because we`ve got a president who sent a big message today to hate groups -- I`m going to make it easier for you. And he also sent a message which may be, you know, I am the overseer of the Justice Department and the FBI. I may make it easier for you in terms of what I ask my executive branch to do.

MADDOW: Michael, I opened the show tonight with a little bit of a discussion about the Klan and what the Klan used to be in this country. I was very struck by the tweet that you made showing the Klan marching in formation.

BESCHLOSS: Not by accident, as you noted.

MADDOW: Yes, in Washington, D.C. and the reason that I wanted to focus on that, the reason I`m so glad you put that out there, I feel like part of what people are contending with now is trying to figure out if the president is playing with actual fire. If he`s emboldening people that are actually dangerous and conceivably could be moved to the center in American politics, or if they`re now so inerrantly and inherently fringe, that this is a throwaway thing. That he`s causing offense, he likes causing offense, it gets some attention, but he`s ultimately not going to do much harm.

BESCHLOSS: No, we always have to assume that these hate groups are dangerous. And what we haven`t seen all the way back to the 1920s, as you were saying was, a president licensing this, either by omission or commission. You know, sending a message that was so strong that David Duke, whom you mentioned, tweeted today, thank you for your honesty, President Trump.

He liked what Trump said.

MADDOW: Michael Beschloss, NBC News presidential historian, Michael, thank you for the help you give us here at NBC and at MSNBC in terms of thinking about this stuff, and thanks for being here tonight. I appreciate it.

BESCHLOSS: Thank you, Rachel. Be well.

MADDOW: Thanks.

All right. We`ve got much more to get to tonight, including one of the leaders of the Congressional Black Caucus is here tonight. Plus, a real live Republican.

Stay with us.

(COMMERCIAL BREAK)

MADDOW: You know how people always say, oh, to be a fly on the wall.

Here`s a meeting where I`m not sure I would have wanted to be a fly on the wall. Because in this case I`m not sure my little fly heart could have taken the tension. Do flies have heart attacks?

On March 22nd, members of the Congressional Black Caucus went and took a meeting at the White House with President Trump. It took two months for the president to agree to meet with them. But once the members of the Black Caucus were there, he invited in the cameras and he said to them for the camera`s benefit, quote, this means more to me than anyone would understand or know.

Mainstream politicians, elected officials are frankly reeling today after the president`s comments on white nationalism. But imagine what it must be like to be in the leadership of the Congressional Black Caucus today, right, trying not just how to decide how to handle this presidency on any given day on a day-to-day basis, but how to deal with this today from this president.

Being an elected official is hard work. This is almost unimaginable in terms of what this challenge must be like.

We`re joined now by a member of the Congressional Black Caucus. She`s part of the leadership there, Congresswoman Karen Bass from California.

Congresswoman, thank you for being with us on what I know is a very tough day. I really appreciate you being here.

REP. KAREN BASS (D), CALIFORNIA: Thanks for inviting me.

MADDOW: Let me just ask your top line reaction, where you were when you heard the president`s remarks today and what you thought.

BASS: Well, I was watching it on TV, but I just have to thank you because, you know, prior to listening to your coverage right now, I did think that he had just come unhinged. But the fact that you laid out that this was actually deliberate is insightful and it`s left me with a thought.

You know, all of the things that he`s done with Russia, the corruption, et cetera, while all of that noise is happening, you know, the real danger is in his administration and some of the policies. Take one department, the Department of Justice. The rollback of affirmative action, the Civil Rights Division, the consent decrees, all of the things that have happened that actually have very clear racial implications.

And what he did today was essentially give license to the racists to keep up their protests. I mean, he gets a high five from David Duke right after. So, maybe part of what he`s doing is his response to the united front resistance that has taken place all across this country. I mean, even the demonstrations that happened over the weekend, many of the demonstrators were white, which I think is wonderful because it shows that racism is not just an issue that impacts people of color, it impacts our country as a whole.

And, so, you know, it was pretty devastating to hear him essentially give approval to Nazis and to the Klan. But maybe we need to understand that this is now a new strategy to essentially give a green light to the alt- right to go ahead and organize. And you have my full blessing and the blessing of the Department of Justice to do that. I think that`s the message from today.

MADDOW: And with that green light where you just described as essentially him giving them license, I think the thing that I`m trying to really wrap my head around is what they can do with that license, as you described it from the president, that they wouldn`t otherwise do. That they couldn`t otherwise do.

How does that enable them, empower them, embolden them, make them stronger. I don`t know what to expect -- I mean, I`ve been watching the American right for a long time both as a student of history and just over the course of my lifetime. And I`ve seen lots of different types of racists organizing and Nazi skin head organizing and all those sorts of things up close and personal. I`ve grown up with it.

The thing I don`t know how to anticipate is what happens when a president gives that license, when the president says yes. How that changes the movement? Do you have any sense of what`s coming down the pike here?

BASS: Well, yes, I mean, if you think of his policy -- so, just imagine one. You know he started this voter suppression commission which is what I call it, because it has nothing to do with protecting the right or expanding the right to vote. So, you have a voter suppression commission. You have elections coming up.

And when you have communities that organize against these policies, the next time there`s a police shooting, for example, Black Lives Matter goes out. I think the license that he`s giving is you go ahead and you attack these demonstrators and you know what? You`re not going to be prosecuted. We`re not going to come after you.

Now, when I heard that the department of justice was going to do an investigation into the demonstration, I wouldn`t be shocked for one minute if they came back and they proposed charges against both sides because they equated it. And so, I think that as we are organizing to resist this administration, we need to keep a very careful watch on movements now that come from the right and whether or not they`re going to get increasingly violent. That`s the license I think he gave today, which was go right ahead, go at it.

MADDOW: Congresswoman Karen Bass, member of the leadership of the Congressional Black Caucus, represents California in the House of Representatives. It`s really nice to have you here with us tonight, Congresswoman. Thank you so much for your time.

BASS: Thank you for your work.

MADDOW: Thank you.

All right. A member of another Republican White House joins us in just a moment and you will definitely want to hear what he has to say. He has been quite remarkable in his response to the president today. That`s next. Stay with us.

(COMMERCIAL BREAK)

MADDOW: If you are a person who goes on TV specifically to appear on the FOX News channel, your on air on FOX musings about the president, they very rarely coming sounding like this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Where he really lost me was when he was saying and objecting, saying there were some fine people in that protest in Charlottesville. They were chanting things like Jews will not replace us. There`s nothing good about that.

UNIDENTIFIED FEMALE: It`s honestly crazy for me to have a comment on this right now because I`m still in the phase of where I`m wondering if it was actually real life, what I just watched. It was one of the biggest messes that I`ve ever seen. I can`t believe it happened.

A gathering full of white supremacists Nazis doesn`t have good people in it. Those are all bad people, period. And the fact that that`s controversial makes me want to -- I don`t know if I should just like laugh. So, I mean, like, I have too much eye makeup on to start crying right now. It`s disgusting.

(END VIDEO CLIP)

MADDOW: I don`t usually play highlight reels from cable news shows but that shows you little of the sense of how not normal today was for this president. I mean, if that`s what is happening on the FOX News Channel, you can guess how strong the criticism was from, like, you know, the Democratic leadership in Congress.

This caught my eye. Democratic Senator Chris Murphy made this statement this afternoon, caught just stopped on roadside to read president`s remarks. I nearly threw up. An American president offering a defense of white supremacists. My God.

That was kind of the flavor from the Democratic side today.

Speaker of the House Paul Ryan did not call out the president by name in his statement today but he did say this, quote: We must be clear, white supremacy is repulsive. This bigotry is counter to all this country stands for. There can be no moral ambiguity. Passive voice.

Republican Senator Jerry Moran from Kansas said this: No one, especially the president of the United States, should ever tolerate white supremacy, bigotry and racism. Stronger.

The Republican leader in the Senate Mitch McConnell has so far not said anything.

Steve Schmidt worked in the George W. Bush administration. He was a senior advisor to the McCain presidential campaign. Steve is not shy in general.

He was particularly no shy to the president`s remarks today. As soon as the president finished speaking, Steve posted this, quote: A completely unhinged performance by the most powerful man in the world. Quote: That performance will send shivers down the spine of every allied leader. It will inspire every adversary. Everyone sees the unfitness.

Joining us now is Republican strategist Steve Schmidt.

Steve, thank you for making time to be here tonight. It`s really nice to see you.

STEVE SCHMIDT, MSNBC POLITICAL ANALYST: Good to see you, Rachel. Thank you.

MADDOW: So, you have been critical and outspoken about this president a number of occasions in the past. Can I ask you, reading your response today, I wanted to know if you see this as kind of a marginal advance in what you see as offensive behavior by this president, or do you see this as something qualitatively different, a big leap?

SCHMIDT: I would say qualitatively different. The moral obtusity and the psychological fragility on display at that disgraceful news conference today are bone-chilling. This is a seminal moment in the history of the Republican Party. The statements by the speaker of the house are not sufficient to the moment.

There can be no equivocation here. The moral failure is complete. It`s almost irredeemable.

The Republican leaders have to condemn the president for this false equivocation directly by name. They have to center him or they risk sliding into a moral abyss with him.

Now, optimistically, I think people of good faith in this country, whether they be liberal Democrats or conservative Republicans, I think the righteous anger of the American people over this incident, and watching in 2017 Nazis, young men largely, many of them looking privileged, venerating the most evil regime and the most evil leader in the history of humanity that unleashed a level of human misery and suffering that in the words of General Eisenhower upon seeing his first concentration camp described the images as beggaring the imagination.

And as we approach the end of a human lifetime for the last of the survivors of the people who were in those concentration camps, and the last of the men who stormed the beaches in Normandy to crush Nazi tyranny, what a disgrace. What a disgrace today.

MADDOW: Steve, what you`re describe in terms of this being a seminal moment, a returning the point for the Republican Party, can I ask you, when you talk to fellow Republicans, you spent a lifetime in Republican politics -- are these conversations happening behind closed doors? Are they happening privately and it`s just elected Republicans feel like for the most part they can`t speak their mind? Or are Republicans who you know genuinely conflicted and don`t know how much they should still support this president despite concerns they may have?

SCHMIDT: Most politicians have a finely-tuned instinct for self preservation and truthfully, most issues that we debate about whether they`d be the size of spending bills or the rate of tax reduction probably aren`t worth losing your political career over. Rarely does an issue of such moral clarity come along. And so, Republicans who privately shiver, who say that he`s unfit, who say that he`s erratic, who are deeply disturbed by the rhetoric, who thinks that he lacks all of the qualities of character necessary to be commander in chief are deeply worried about his capacities for judgment in the face of a nuclear crisis that we saw, for example, with North Korea last week.

What this issue does is force a moral reckoning. The Republican Party, the party of Abraham Lincoln, a party that has done much good for the advancement of human freedom in the world, and despite the Southern Strategy and despite the whistles and the dog whistles that have played out by too many Republican campaigns over the last 40 years, this is -- this is something different.

This requires a clear unequivocal repudiation of the president`s moral failure. We can`t book this as a country. You have neo-Nazis marching doing violence, doing murder in broad daylight in an historic college town on a beautiful Saturday afternoon. A torchlight parade reminiscent as of SA.

And let`s be clear: when we look at the celebratory statement of Nazis like Richard Spencer, we should stop using the alt-right label. They`re celebrating the president`s comments today. It needs to be repudiated by every single Republican elected official by name.

MADDOW: Republican strategist, Steve Schmidt -- Steve, it`s always great to have you here. I craved your clarity today, watching other people try to struggle to respond to this.

SCHMIDT: Thank you, Rachel.

MADDOW: Thanks. Appreciate it, my friend.

All right. Still ahead, something totally different. Stay with us.

(COMMERCIAL BREAK)

MADDOW: About decade ago, the largest bank in Kazakhstan was called BTA Bank and in 2009, the chairman of that bank took off, fled the country and went to London. The government in Kazakhstan, international investigators discovered after he was gone that half of all of the loan book for that bank, between $8 billion and $12 billion in loans, had been made to entities controlled by that bank chairman. Must be nice, right? You run the bank, you make loans to yourself and then flee the country.

When he fled to London, it became clear they weren`t even loans at all. The bank chairman was keeping all that money for himself. He wasn`t planning on paying any of it back. In England, that former Kazakh bank chairman lived very well. He lived in a 15,000 square foot mansion. He also owned a hundred-acre estate in the countryside.

When the British court eventually sentenced him to prison for what he had done, the chairman got smart and fled that country, too. Went to France.

In France, he was ultimately arrested the following year at a villa on the French Riviera by police who had disguised themselves as gardeners on the villa`s grounds. I want to read that book. That ex-bank chairman is now fighting extradition.

That`s BTA bank, back in the 2000s, largest bank in Kazakhstan. But half its loans were going to the bank chairman`s pockets in all the diffuse shell companies he controls.

OK, now, here follow this money. Because in 2005, that same bank, BTA Bank, they agreed to loan several hundred million dollars to the nearby country of Georgia to redevelop a crumbling town that didn`t much seem like it was ever going to house a luxurious estate.

Here is the funny thing, though, all those hundreds of millions of dollars from BTA Bank ended up going to a whole bunch of different subsidiaries of one company. It was a company that had never done any real estate deals. It never developed dilapidated resort town or any other town for that matter. No experience in this whatsoever.

But this apparently, completely unqualified company took all of these hundreds of millions of dollars and it dispersed them among its many subsidiary companies. So, follow the money from that corrupt, fraudulent Kazakh bank that`s funneling half its money to all these shell companies controlled by its chairman and then the money travels to a company in Georgia which further distributes the money to a whole bunch of even smaller companies that are very untraceable.

Fast forward a few years, in 2012, enter Donald Trump. Trump agrees to license his name to brand this new seaside resort development in Georgia, the one that got all the loans. That would be the Trump Tower Batumi, I guess.

He did a big publicity campaign for the deal with Georgia`s president. For use of his name, Trump is paid a million dollars. He went to Georgia. He did a big unveiling. And nobody on his team, nobody involved in the deal appears to have asked where all of this money was coming from or why Donald Trump`s new partner in this real estate deal had been able to secure all this money from a bank that was literally all over the news at the time for being involved in this spectacular lurid fraud with its chairman running off with half the bank`s loan book, living it up in London before fleeing to France and being arrested by the cops slash gardeners at a villa on the Riviera and all of it.

Trump Tower Batumi never got built. It`s not clear if it was ever intended to be built. Right after Trump signed the licensing deal, his new business partner, that company that mysteriously got all that money from the Kazakh bank, they bought the land on which the tower was supposedly going to be built. To buy that land, they paid $12 million to a company that was owned by a company that was owned by a company that was owned by themselves.

For this supposed big real estate development, this big investment in the city of Batumi, the company that partnered with Donald Trump was buying property from itself, which is a good way to just move $12 million around just for that part of it. I mean, if you are able to keep your eye on the money in this particular game of Three Card Monty, right, what you are seeing in all of those transactions were text book red flags for money- laundering, all right? A bank engaged in massive fraud loans money to a company in another country which disperses that money among all its subsidiaries then moving money back and forth between themselves in real estate deals that make no sense.

I mean, money laundering is complex on purpose. That`s the whole point of how you lose track of the money. And when it involves these overseas real estate deals, it seems like it`s becoming a hallmark of at least what I understand about overseas money laundering, that maybe it doesn`t matter if anything gets built. But Donald Trump did make his million dollars.

This is a new story told by reporter Adam Davidson in "The New Yorker Magazine" this week. It is a remarkable piece of reporting. And Adam makes two other points briefly noting about this story.

The first after the BTA Bank chairman fled the country with all those billions of dollars, the Kazakh government took control of that bank, which means the Kazakh government has all of the bank`s files and transactions and archives, they know everything about the deal. The Kazakh government does.

Kazakh intelligence collects dossiers on every significant business transaction in that country and they are known pretty much to share everything we`ve got with Russian intelligence. BTA Bank is currently controlled by the son-in-law of Kazakhstan`s dictator, that son-in-law is on the board of Gazprom, which is the Russian state gas company which is basically Vladimir Putin`s pet energy company.

So, whatever evidence of malfeasance or willful blindness on the part of the Trump organization there might be on those deals, the Russian government probably has that. So, if they ever wanted to blackmail someone because of their dubious financial dealings, this might be a candidate.

Second thing to know about the story is what Donald Trump`s lawyer told Adam Davidson when Adam contacted him for the story. Jay Sekulow told Davidson on the record that if special council Robert Mueller started looking into the deal, the specific Batumi deal, that might cause the White House to warn Bob Mueller`s office it is exceeding its mandate and if the special counsel persisted into looking into the deal the president`s lawyer then threat understand to lodge a formal objection with the Deputy Attorney General Rod Rosenstein, who, of course, would have the power to dismiss Bob Mueller and end the inquiry.

The president`s lawyers threatening that if this deal specifically is investigative by Mueller, the president`s lawyers might see that as cause to try to fire the special counsel. Makes you wonder why they are so worried about this particular deal.

Joining us now is Adam Davidson. He`s the staff writer at the New Yorker.

Adam, thank you very much for being here.

ADAM DAVIDSON, STAFF WRITER, THE NEW YORKER: Well, thank you, Rachel.

MADDOW: I wanted to have you here yesterday to talk about this when it first came out, but the president keeps talking about Nazis.

DAVIDSON: Yes.

MADDOW: So, it`s been awkward.

DAVIDSON: Well, it`s important to talk about too.

MADDOW: Yes.

Let me ask you, first of all, if I got anything wrong in describing this. You have written about a lot of complex deals involving the president. In this case, it seems very clear that the bank he was dealing with, the money that he was dealing with was quite obviously problematic.

DAVIDSON: Yes. I mean, what the president`s folks say is they did not know that BTA Bank had any involvement until I told them a few weeks ago, that that was the first they learned of it, even though it was a fairly easy thing to find out for example using Google.

And at the time the deal was happening, BTA Bank was huge, as you said, a huge news story. So, I found that, just very, very confusing that they would say that.

Now, every involved said we can`t say for sure, BTA money went directly to Trump, but what we can say is BTA`s primary partner in Georgia was where the people who gave the money to Trump. And at the time they were being investigated for being part of this Ablyazov scheme. They would tell us they were never found guilty, but other people would say they were never found guilty because the Kazakhs agreed to a settlement and agreed to drop all criminal charges.

MADDOW: Is part of the advantage for a firm like the Trump Organization, is part of the advantage of doing business in Kazakhstan, in Georgia and some of these other places, that laws there aren`t necessarily ever going to ever catch you for doing stuff like this? I mean, what`s the liability in terms of being an American company doing this kind of business in this kind of places?

DAVIDSON: I mean, your exposure as American law, it is against American law to facilitate -- for an American company to facilitate money laundering tied to bank fraud in another country. And so, if that is what happened here, that`s against the U.S. law. If there`s government -- if there`s bribery of foreign officials, and an American company was part of that scheme, that would be against the Foreign Corrupt Practices Act.

So, there is enormous risk in legal terms but it is very unlikely ever to be discovered. And that is why I think they felt immune, particularly several years ago when there`s no reason why a reporter like me would spend months, and I have two amazing reporters from Columbia University, Manuel Andrioni (ph) and Ante Pacheco (ph), helping me, just spent months and months and months looking into this paperwork. No one would have done that to just a developer.

MADDOW: Right, but the Russian government if they do have access to this information because there may be clear violations of U.S. law implicated here if all this bears out, that could potentially be a source of what they call kompromat, a way to pressure Donald Trump because they have these records. They have this information.

DAVIDSON: The Russians and Kazakhs have a long history of amassing these huge dossiers of all the financial activity of all sorts of people, foreigners, domestic people, so that exactly to use it for blackmail for political purposes. And what the kompromat experts told me is, even if they had no thought he`d ever be president, Donald Trump, famous American developer, they would have known everything about this deal. They`d have it all. And they would find ways to communicate to him or his staff that they know bad things about him.

MADDOW: It`s a good reason to keep really, really, really good files. You never know who is going to end up being president of the large Western country.

Adam Davidson, reporter for "The New Yorker", the piece is called no questions asked. Highly recommended. We are posting a link to Adam`s article at MaddowBlog.com tonight if you have not read yet, you should.

Adam, thank you very much being here. I really appreciate it.

DAVIDSON: Thanks so much, Rachel.

MADDOW: Congratulations on this.

All right. That is for us tonight. We will see you again tomorrow.

Now, it`s time for "THE LAST WORD WITH LAWRENCE O`DONNELL".

Good evening, Lawrence.

END

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