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Government shutdown marks 17th day. TRANSCRIPT: 1/7/2019, The Rachel Maddow Show.

Guests: Adam Smith, David Leonhardt

Show: THE RACHEL MADDOW SHOW Date: January 7, 2019 Guest: Adam Smith, David Leonhardt

RACHEL MADDOW, MSNBC HOST: Thanks to you at home for joining us this hour as well.

So, for a few weeks now, all the local headlines have described it as a murder for hire case. And in part, it is. That is one very, very serious part of this case. Here`s how prosecutors in the eastern district of North Carolina spelled out that part of the case in just one of the criminal complaints that has been filed in association with it.

They say, quote: While living in the United States, Leonid Teyf employed a live in housekeeper that came from Russia. The housekeeper, her husband, and their son all resided with the Teyfs. At some point, the couple`s employment ended and they moved out of the Teyf residence. Likewise, their son left as well.

However in February of 2018, Leonid Teyf told confidential human source number one that Teyf believed his wife had been involved in a romantic relationship with the housekeeper`s son. Teyf wanted additional proof of the cheating. Teyf first told the confidential human source that he wanted to pay someone to get the housekeeper`s son talking and then overdose him on drugs.

Quote: At another point, Teyf told the confidential human source that he wanted the housekeeper`s son to be kidnapped and taken into the woods and forced to admit to having sex with his wife, forced to admit that on video and then he should have killed. Teyf told confidential source number one that he had hired a private investigator to help obtain information regarding the whereabouts of the housekeeper`s son.

Ultimately, that private investigator would himself later be arrested and charged with multiple felonies in conjunction with this case. But the purported hit man that this guy allegedly hired to kill the housekeeper`s son, that hit man ended up being a bad choice for that particular job because the alleged hit man is also described in court documents around this case as a confidential source who was working with the FBI.

According to prosecutors, this past summer, this guy Leonid Teyf arranged for this would be hit man, a confidential source with the FBI, to pick up a 40 caliber pistol wrapped in plastic tape under a bush next to the Autowash Express car wash on Six Forks Roads, in Raleigh, North Carolina. The gun was left there for the would-be hit man to pick it up. That gun that was left there under that bush at the car wash, it also, according to prosecutors had it`s serial number filed off, presumably to make it more difficult to trace that gun after it had been used to kill the housekeeper`s son who this guy thought was shtupping his wife.

Prosecutors say, in addition to providing the would-be hit man with a gun with the obliterated serial number, he also allegedly paid the would-be hit man $25,000 to carry out the murder.

Now, paying the hit man $25,000 to kill the guy using the illegal gun, that was apparently only one of the alleged criminal schemes this guy pursued. Prosecutors say he also paid a $10,000 bribe to someone who worked at the Department of Homeland Security because he believed that $10,000 bribe could get this kid deported back to Russia.

Quote: Teyf explained to confidential human source one that if the housekeepers son was back in Russia, he would be, quote, buried already. So, it`s actually really two different murder-for-hire plots, right? He apparently thought that bribing someone from Homeland Security Department to get the kid deported to Russia would be as good as murdering him because the kid would be killed once he had landed in Russia.

According to prosecutors, it was only when that plot was taking too long that the guy decided he would go the more direct route and just pay a hit man to shoot the kid. The housekeeper`s son, though, survived. It turns out both the hit man and the bribed homeland security employee were working for the FBI. And Leonid Teyf, the defendant in this case, has been arrested and denied bond. He`s being held in custody in North Carolina.

But what makes this just -- what makes this just a story of national interest now and not just a particularly lurid crime saga from the Carolinas is that apparently, the FBI and federal prosecutors only stumbled upon this murder for hire, murder by deportation bribery case, they only stumbled upon this by accident because what they were looking at this Leonid Teyf guy for in the first place was a gigantic money laundering and theft case, and I mean gigantic.

This looks like a government building. This looks like maybe a parliament building, this is his house. This is the house in Raleigh, North Carolina, that belongs to Leonid Teyf. It was raided in the FBI in the first week of December. It is a 17,000 square foot house.

It`s along a golf course beyond these big walls and gates. After the FBI raided that huge mansion and the first indictments were filed in this case, we learned that prosecutors said they intended to seek forfeiture of that huge 17,000 square foot mansion, plus another condominium owned by Teyf in downtown Raleigh, North Carolina. That condo, when they raided that one, turned out to be sort of a safe house where this guy was apparently storing ammunition and cash and large numbers of guns.

Prosecutors are also seeking the forfeiture $400,000 worth of Mercedes Benz vehicles that belong to Teyf. They`re also seeking the forfeiture of more than $39 million stashed in dozens of bank accounts. All accounts associated with Leonid Teyf and his family.

So where did this guy, Leonid Teyf, get the 17,000 square foot mansion and hundreds of thousands of dollars worth of Mercedeses and the spare real estate. It seems like he had a condo just for his guns and his cash, plus $40 million in cash sitting around in a gazillion bank accounts. Where did he get all of that?

According to the federal indictment against him, Leonid Teyf accumulated all of that through an epic money laundering and theft operation, and the alleged victim of this alleged theft was the government of Russia. This is from the Justice Department press release announcing this indictment.

Quote: The indictment alleges that between 2010 and 2012, Leonid Teyf was the deputy director of -- I`m going to say this wrong, I was going to say Voentorg, I don`t speak Russian. He was a deputy director of Voentorg, a company which contracted with Russia`s Ministry of Defense to provide the Russian military with goods and services. Teyf arranged for subcontractors in Russia to fill the various services required by Voentorg`s contract.

Teyf and others devised a scheme requiring subcontractors to agree that a certain percentage of the government funds they would receive for completion of the work would be paid back to Leonid Teyf and others involved in the scheme. These kickbacks of government funds were paid in cash and amounted to more than $150 million over an approximate two-year span.

A hundred fifty million dollars over 2 years. That`s a lot of cash. That`s a lot of kickbacks. I mean, that`s -- I mean, if that`s the kickback amount, that`s a lot of contracts for which this guy was getting these kick backs, right? I mean, $150 million has to be a portion of the overall contracts that he`s giving out if that`s his cut.

It`s interesting, though. This is a U.S. criminal case. All of that money was allegedly stolen from Russian defense contracts, but the government in Russia does not much seem to mind. They have not been pursuing this guy for this. It`s U.S. prosecutors who are pursuing him and it`s U.S. prosecutors that are saying he did it.

And that may be an important clue as to what`s really going on here and the overall importance of this case. I mean, on its face, this is just a riveting lurid crime story which has been a real focus for local news in North Carolina for weeks now for all sorts of obvious reasons. I mean, the condo with no furniture in it stashed full of guns and ammo and money and the hit man and the bribe for the deportation and the hiding the gun with the obliterated serial number under the bush at the car wash and the gigantic mansion and all the expensive cars -- I mean,, you can imagine like LL Cool J and Chris O`Donnell solving this one on NCIS, right? I mean, this is really over the top.

But now, here`s the big twist that makes this not just a crime story and not just a North Carolina story. In Russia, independent media, of course, has been ruthlessly targeted and shutdown and basically criminalized under the Putin government but independent media is not gone all together and one of the absolutely fearless, independent Russian news outlets that remains in the Putin era is called Novaya Gazeta. Novaya Gazeta`s journalists are regularly threatened and not infrequently murdered in Vladimir Putin`s Russia, but they still exist and they still persist and they still report out uncomfortable news stories that the Russian government doesn`t want anybody reading about.

And Novaya Gazeta has just reported something new about this lurid murder for hire crime case in Raleigh, North Carolina. What they`re now reporting is a sort of crucial alleged detail about how this guy, Leonid Teyf, got so lucky as to happen upon an insanely lucrative cash kick back scheme in Russia where he was able to siphon out $150 million from Russian defense contracts, $150 million in two years without anybody in the Russian government batting an eye and with nobody coming after him. According to Novaya Gazeta, this guy Teyf who`s now sitting in jail in North Carolina while prosecutors make plans to seize his mansions and his cars and his guns and tens of millions of dollars that he stashed in dozens of North Carolina banks, according to Novaya Gazeta, the way he got that money in the first place was yes, through this kickback scheme in which he was able to pocket tons of money himself for doling out contracts for the Russian military.

But specifically what they`re reporting now is that the contracts he was doling out, the person he was steering billions of rubles worth of business to in this scheme, was this guy. His name is Yevgeny Prigozhin. And the reason he looks oddly familiar to you is because Yevgeny Prigozhin is becoming famous in the United States in his own right. He`s the guy they call Putin`s chef. He is the billionaire oligarch close to Vladimir Putin who became a billionaire oligarch in large part because of these huge ruminative contracts he was given from the Russian defense ministry, reportedly through this guy who is now being arrested and is sitting in jail in North Carolina.

Yevgeny Prigozhin is believed to operate the mercenary operation in Syria that has put Russian paid fighters into direct battle with U.S. troops. He is also famously the guy who ran the Internet Research Agency, which resulted in him becoming a defendant in one of the major indictments brought by special counsel Robert Mueller last year. Yevgeny Prigozhin was charged personally, along with his companies and along with a whole bunch of Russian military intelligence officials. Together, they were all charged last night with running the online social media operation of the Russian government`s campaign to disrupt our last presidential election and throw it to Donald Trump.

Now, when Mueller and his prosecutors brought that case against all those Russians, Prigozhin, the oligarch, and his companies and all those Russian military intelligence officers last year, nobody thought that any of those Russian defendants would ever see the inside of a U.S. courtroom, let alone a U.S. jail. Everybody thought it was essentially a speaking indictment to let the American public know what Mueller had found out about the behavior of these Russians. Nobody ever thought any of those defendants would ever even bother to enter a plea in conjunction with this case or otherwise engage with this case or the U.S. courts in anyway.

It thus came as something of a surprise when, in fact, Prigozhin`s companies hired U.S. lawyers and engaged on this case. They entered a not guilty plea in that criminal case. It seemed like a sort of legal oddity at first, but it soon became clear that the point of Prigozhin hiring American lawyers and contesting this case in court was to try to use the case and use those lawyers to challenge Robert Mueller, to challenge the special counsel`s investigation, to try to maybe even mess up Mueller`s inquiry.

He had probably seen coverage over the last two weeks about some of their tactics because they`re designed to get headlines. Their tactics include a whole bunch of increasingly snarky and propane court filings produced by Prigozhin`s lawyers in this case. They have quoted the movie "Animal House". They have quoted cartoon characters. They have used curse words. They had made increasingly florid allegations about the special counsel`s investigation more broadly and about Robert Mueller personally.

You might have seen reference in the last week or so to a sort of joking reference in a court filing to a nude selfie that may exist in the Mueller case. That came from one of the super snide, deliberately provocative filings from Prigozhin`s lawyers.

But all the attitude from Prigozhin`s lawyers and I think, admittedly, deliberately provocative nature of the way they argued this case for their Russian clients, doesn`t mean they aren`t doing something serious here. I mean, they have attempted to mount a serious challenge to Mueller`s authority. They`re trying to get the special counsel`s investigation shutdown.

Specifically, they have structured their defense strategy in this case to try to get something that the Russian government might want out of the special counsel`s investigation. They have structured their defense strategy in this case to try to obtain massive amounts of information about the operations of the U.S. government and specifically, the operations of the special counsel`s office. They have tried to use their role as a defendant in this case, to get information about what the special counsel`s office has turned up while it`s been looking into Russian interference in our election.

And, of course, the Russian government would love to get their hands on that information, right? So, there`s been a very serious litigation battle going on related to this case where Prigozhin`s lawyers have been arguing in federal court in Washington that they want to use the discovery process in this case to obtain tons of information, like decades worth of information about the operations of the U.S. government. They want to obtain decades worth of information about operations of U.S. foreign policy, U.S. military policy, U.S. intelligence agencies, U.S. operations overseas. They want to obtain as much information about as they can about the U.S. government, particularly as it pertains to Russia, and about the special counsel`s office and what Mueller`s investigation has turned up thus far.

And specifically, one of the things they have been fighting about in court is that they want to not only obtain that information as part of this court case, they want to then provide that information to Yevgeny Prigozhin, Putin`s chef, right? The oligarch back home.

And Prigozhin himself has no intention of coming to the United States and getting arrested and facing trial, but his lawyers are arguing that all of this information, all of this sensitive national security information, sensitive information about the investigation should be extracted from Mueller and extracted from the U.S. government and sent to Prigozhin in Russia. And that of course would be a serious thing, right? That would be just the same as sending all of that sensitive information correctly to the Kremlin.

So that`s what this litigation fight has been about. The national security division of the Justice Department is involved. Special counsel is involved. The U.S. attorney in D.C. is involved. It`s been interesting litigation.

But that`s what made it amazing today in federal court in D.C. when the federal judge who was presiding over this case, presiding over all of this legal wrangling basically decided to stick a pin through Prigozhin`s lawyers and pull the dude`s wings off. We got the transcript from today`s proceeding.

Quote, the judge: all right, I scheduled today`s status conference for several reasons. First, I would like to set a hearing date to hear argument on Concord`s motion for approval to disclose discovery. Concord is Prigozhin`s company. So, the defense council is representing Concord Management.

Second, I want to discuss the firewall counsel process to make sure that we`re on the same page. Finally, I want to discuss Concord`s pending motion to compel discovery which is now ripe. Due to the grand jury material that is the subject of the motion, I will address the merits of the motion in a sealed proceeding.

But then the judge says this to Eric Dubelier, who is the lawyer for Concord Management, for Prigozhin`s company. The judge says this, quote: Mr. Dubelier, I will tell you now that I found your recent filings, particularly the reply brief that you filed on Friday to be unprofessional, inappropriate, and ineffective. In a few weeks, once Concord`s motion for approval to disclose sensitive discovery is ripe, I will again consider arguments that Concord previously raised about the scope of discovery that`s been provided to its officers and employees. I have issued several rulings on all of Concord`s pretrial motions and I hope to discuss the timing for trial date on this case at our next court date.

But, Mr. Dubelier, you will prevail on your motion for release of sensitive discovery if and only if the facts and the law are on your side. Meritless personal attacks on the special counsel, his attorneys, other members of the trial team and firewall counsel will play no role in my decision on your motion nor will inappropriate and what you clearly believe to be clever quotes from movies, cartoons, and elsewhere. Your strategy is ineffective. It is undermining your credibility in this courthouse. I will say it plain and simple, knock it off.

Direct quote from the judge. Knock it off.

And at that point in the proceeding, the judge goes into a sort of lengthy- ish back and forth with prosecutors about whether certain proceedings should happen in open court or whether they should happen with the courtroom cleared and under seal. After that back and forth, she then turns back to Eric Dubelier, the lawyer for Prigozhin`s company for Concord Management. The judge says, quote, Mr. Dubelier, why shouldn`t requests to share sensitive discovery with attorneys, paralegals, translators, and other individuals why should that not be litigated in open court?

Mr. Dubelier says, quote: Your honor, I`m not prepared to address this or any of the other issues you`ve raised without consulting with my client. You`ve accused me of being unprofessional and inappropriate.

The judge: And I think you have been.

Dubelier: All right. Well, that`s what you have accused me of. I need to go now and discuss with that my client and see if my client wants to continue to retain me to represent them in this matter, seeing as there appears to be a bias on the part of the court against me.

The judge: There`s no bias on the part of the court, Mr. Dubelier.

Dubelier: Well, when you personally say to someone in public that they`re unprofessional and inappropriate I take that --

The judge: and what have you been personally saying about the special counsel and the trial team in open court?

Mr. Dubelier: I have been telling the truth. Every pleading I have filed before this court, I have told the truth.

The judge: Mr. Dubelier, you have had many inappropriate remarks in your filings and you know it.

Dubelier: Your honor, that`s your opinion. That`s your opinion. I disagree with you. But that`s your opinion. You`re entitled to it.

What I am entitled to do is discuss that with my client before I can go any further.

The judge: You are certainly entitled to discuss that with your client but I`m going to direct you and the government to sit down and meet once you have spoken with your client and assuming you`re still representing your client and work through some of these issues with a protective order.

Mr. Dubelier: We tried to do that, your honor, early on and the governments answer to everything is no.

The judge: I`m directing them to sit down with you again and try to work through some of those issues pursuant to my order. Understood?

Mr. Dubelier: Yes, understood.

So at a very basic level, the way the whole oligarch thing works under Putin, if you`re the right kind of guy, it`s always guys. There`s no lady oligarchs, right? If you`re the right kind of guy, Putin will let you get rich, really rich, fabulously rich. He will happily and profoundly rip off the Russian people, rip off the Russian government, rip off the assets of the Russian nation to make you personally fabulously wealthy.

But then he owns you and you serve him. You, as a fabulously wealthy person serve the interests of Vladimir Putin and the interests of Russia and the Russian government as defined by Vladimir Putin. In the case of Yevgeny Prigozhin, a system was devised mostly involving Russian defense contracts that would make Yevgeny Prigozhin spectacularly wealthy, and he is.

The apparent bag man who ran that operation for Prigozhin was allowed himself to skim off $150 million in cash over just two years. He is now sitting in a jail cell in North Carolina where prosecutors are pursuing him not only for the lurid double murder for hire plot that he apparently carried out against the guy he thought was shtupping his wife, they`re also going after him for the massive theft from the Russian people and the money laundering operation that followed that allowed him to accumulate such astronomical wealth and then try to stash and spend it in the United States.

The Russian government appears to be fine with that, but U.S. federal prosecutors are not. Now that they`ve got him, what threads does that guy`s case pull, right? Prigozhin for his part, in terms of his service to Vladimir Putin and the Russian government, he ran part of the election interference intelligence operation for the Russian government during 2016, according to Mueller`s prosecutors. He ran all the Internet Research Agency, all the social media stuff that targeted our election to try to swing it toward Trump.

Prigozhin has since tried to turn his own indictment in that case to the advantage of the Russian government by using the U.S. court system to try to extract sensitive national security information from the government and from the investigation of the special counsel. Well, this afternoon, a U.S. federal judge, a Trump appointee brushed that effort way back with a public dressing down and honestly, a public humiliation of the American lawyer who was trying to carry out that effort and make a public spectacle of it at the same time. Depending on what happens next here, it looks like that lawyer is maybe out and that may indicate even weirder turns to come in this case. This is already one of the weirder story lines in the whole Russia scandal, in the whole Mueller investigation.

That said, new weird stuff happens all the time. I`m sure we have not hit the bottom on weird. And for what it`s worth, the federal judiciary as a whole is due to run out of money in four days. As of the end of today, the federal government shutdown we are now enduring is the second longest one in U.S. history. If the shutdown persists through the end of the week, the U.S. federal court system announced the U.S. federal judiciary will be out of money and will have to start triaging it`s operations as of Friday this week If the shutdown persists beyond that, if it goes on through Saturday, that will make this the longest U.S. government shutdown in American history.

The consequences of the shutdown are becoming increasingly serious and expensive. As we head into our third week of this. That`s not just for federal workers and their families, that`s for whole swathes of the U.S. economy that basically crank down and stop working when the federal government does too. We have had government shutdowns before. But again, this is becoming one of the longest ones ever.

One of the things we are learning in this one is that it matters when there`s a shutdown whether or not the government is generally being well run or poorly run. That can make a difference as to how well the shutdown goes too. And that is why one particular White House proposal about the shutdown is putting a real shiver down people`s spines for how much worse this whole thing could get and quickly.

That story is next. Stay with us.

(COMMERCIAL BREAK)

MADDOW: As the government shutdown hits its 18th day as of midnight tonight, the president has announced he plans to give his first ever national address from the Oval Office at 9:00 p.m. Eastern Time tomorrow to talk about the border and the shutdown.

Welcome to 9:00 p.m. Eastern, Mr. President. Come on in. The water`s fine.

As we get ready for that, there`s rising concern that the president might decide that he might even use the speech to announce he`s declaring a national emergency to theoretically set the stage for him to try to reallocate existing resources from the Pentagon to try to rebuild the wall on the southern border, even if Congress won`t appropriate any money for that. Given the legal novelty of that kind approach, the controversy around that kind of approach if the president decides to go that way, what kind of a situation would that put the military in when it came to whether or not to cough up that money and whether or not to assign active duty soldiers to carry out orders related to that? If this emergency declaration from the president were ultimately considered to be illegal, would the actions of U.S. troops or officials who are ordered to carry it out also be illegal acts?

This potential dilemma arrives at a time when things between the White House and the military seem to be hard to figure out. In the immediate aftermath of the resignation of Defense Secretary James Mattis, it was not clear whether there might be an exodus at the Pentagon following him out the door.

Over the weekend, we learned that the chief of staff to Secretary Mattis was resigning, Pentagon chief of staff. But now, "The Wall Street Journal" is reporting that his resignation was not voluntarily. "The Journal" is reporting that Kevin Sweeney did not leave the Pentagon on his own accord. He was forced out.

Quote: The chief of staff for the Pentagon has been forced out of his post by the defense department`s new acting head, said multiple U.S. officials. Sweeney had worked alongside Mattis at several points during his career. Quote: The bond was a source of concern to the White House, U.S. officials said, adding that the appointment of Pat Shanahan as acting secretary by President Trump last month was seen as an opportunity to remove Mr. Sweeney.

Quote: Sweeney had expressed a desire to stay on at the Pentagon as recently as last week. As recently as last week, and they pushed him out. We all expected or anticipated or at least wondered if one of Mattis leaving would be that officers and senior civilian staffers who are running things under Mattis might go in his wake as well.

And we have seen some high level departure since Mattis left but if that`s not the full story, if part of what`s happening now is the White House and the new Trump appointing acting defense secretary, they`re instead going off and picking off people at the Pentagon who are Mattis-like and getting them out of the Pentagon behind Mattis` departure, well, that`s kind of an entirely different dynamic, isn`t it?

Joining us is Congressman Adam Smith, chairman of the House Armed Services Committee.

Congressman Smith, Mr. Chairman, thank you very much for being with us. It`s nice to see you.

REP. ADAM SMITH (D-WA), CHAIRMAN, HOUSE ARMED SERVICES COMMITTEE: Thanks for the chance, Rachel. I appreciate it.

MADDOW: So, "The Wall Street Journal" reports that the Pentagon chief of staff didn`t resign. He was pushed. I wanted to ask your response to that and if you`re at all concerned about senior staffing at the Pentagon in the wake of Secretary Mattis` resignation?

SMITH: Well, I am because I`m concerned about Secretary Mattis departing because -- I mean, we`ve all read the story. He was the adult in the room, right? He could check some of the president`s worst impulses, obviously not all of them, but Secretary Mattis had so much credibility with the military and our national security and just as a person that his word carried a lot of weight. He has a lot of allies and friends in the Pentagon.

And when Secretary Mattis resigned, he says he could no longer work for President Trump, because he didn`t -- not only not agree with his decisions. So, I think the more important part is he didn`t agree with the way the president made them in such a chaotic, off the top of his head way that were not well thought out and didn`t seem to have any plan behind them.

So the last table people that are at the Pentagon, the more nervous we should all be. Secretary Mattis leaving is a huge blow. But we need to keep as many people there as possible to understand the way things are supposed to work. Clearly, the president does not.

MADDOW: With the government shutdown now becoming the second longest ever and no real end in sight, the president has announced this primetime address to the nation as first from the Oval Office tomorrow night. How serious do you take the sort of crescendo of discussion we`re hearing about the president considering a declaration of an emergency so he can take funds from the Pentagon and essentially use those funds to build his wall or do whatever else he wants to do without Congress appropriating the money to do so?

SMITH: Well, I take it very seriously, precisely because this president is so unpredictable. I mean, he changes his mind depending on who talked to him last or what story is done on Fox News. So, the fact that he might want to do this is a distinct possibility and I think it would be a colossal waste of money for one thing. The building a wall is not even going to help with border security and we don`t have a border security crisis.

So, we`re talking about $5 billion, $6 billion in this dispute that the president has shutdown the government over. But if he`s actually going to build this wall he keeps muttering about, it`s going to cost between $20 billion and $30 billion and if you take that much money out of the Pentagon, and it comes specifically, the emergency clause that he`s referencing would come specifically out of the military construction budget in the Pentagon. This would undermine the readiness of our national security. It would take money away from building the facilities that our troops need to be equipped and prepare for the mission we want to send them on and spend it on the wall.

And I think the president, you know, we`ve seen, he makes decisions like this all the time. There`s a risk that he could do it and it would be a huge waste of money. Now, I think he`d be subject to a court challenge very quickly. As I understand it, this authority has been used to build things in Iraq and Afghanistan.

Basically, once money is obligated within the Pentagon, the president can`t decide to change it, unless he declares an emergency. So in Iraq and Afghanistan, a few times, the presidents did that because they needed to build something in those places in light of our troop presence there but to do it for a wall on the southern border, where`s the emergency? I think the courts would overturn this quickly except, of course, for the fact that as we all know, the Supreme Court is a rubber stamp for Trump`s agenda and they have forgotten about the fact that they`re supposed to be a judicial branch.

So, there`s a risk they would let him get away with it and a distinct risk that he would do it.

MADDOW: Congressman Adam Smith, new chairman of the House Armed Services Committee -- sir, you have a big weight on your shoulders and a huge responsibility with that new job. Thanks for talking to us tonight. I hope you`ll come back in weeks and months ahead. I know you`ll have a lot on your plate.

SMITH: Anytime. Thanks, Rachel.

MADDOW: Thanks very much. All right. Much more ahead tonight. Stay with us.

(COMMERCIAL BREAK)

MADDOW: So, this isn`t getting at ton of attention yet, but I think that probably cannot last. For the past couple of -- I know we`re just out of the holiday and everything, but this is important.

For the past couple of weeks, including over the holiday, we have been watching what looks like a concerted effort by the Democratic leaders that now control the U.S. House of Representatives, a concerted effort by them to overturn a bit of conventional wisdom. I`m not sure if people are picking up on the importance of this yet. But I think it`s clear what`s going on, what they`re trying to do.

Leading Democrats in key positions of the new Congress are actively trying to disabuse us the public of the notion that a sitting president cannot be indicted. On this show last month, Congressman Jerrold Nadler, who`s the chair of the Judiciary Committee, he told us on this show that he doesn`t believe that Justice Department guidance on that question is correct. That`s a big deal, right? He`s the guy that would take the lead on any impeachment proceeding. He runs the Judiciary Committee.

And he`s saying publicly, no, no, no, the president doesn`t have to be impeached. That`s not the only remedy. The president absolutely can be indicted.

Then, just last week, the new Democratic speaker of the House, backed Jerry Nadler up on that. Nancy Pelosi telling NBC News in an interview that whether a president can be indicted is, quote, an open discussion in terms of the law, saying that the OLC memos from the Justice Department that say that a president can`t be indicted, she does not believe those are conclusive.

I mean, this is something people have been treating as a settled issue, right? Justice Department rules say a president can`t be indicted, but the new speaker of the House, the new head of the Judiciary Committee, they`re both saying that they disagree.

And now, another top Democrat has joined them.

(BEGIN VIDEO CLIP)

JAKE TAPPER, CNN ANCHOR: There`s an Office of Legal Counsel memo in the Department of Justice, I think it dates back to the Nixon years but maybe I`m wrong. But it states that a sitting president shouldn`t be indicted. That`s not a rule. That`s not a law. But it`s a suggestion from the Justice Department.

REP. ADAM SCHIFF (D-CA), CHAIRMAN, INTELLIGENCE COMMITTEE: I think actually when you look at the OLC opinions, there`s a powerful case being made that you can indict a sitting president. It`s more difficult to make the case that they should be tried while they`re in office because that would be disruptive of the president`s responsibilities, but the only argument and it was not the focus of attention in those prior OLC opinions, the only argument was that it was stigmatize the president.

Well, the Justice Department already crossed that when they said individual number one, the president was implicated in these two crimes. So, that has already -- that bar has already been passed.

(END VIDEO CLIP)

MADDOW: Congressman Adam Schiff is the chair of the Intelligence Committee is speaking there about those two crimes. That`s the two campaign finance felonies to which the president`s long time lawyer pled guilty last year, in which federal prosecutors said in court filings, President Trump directed him to commit. Congressman Schiff went on to say that if prosecutors have a solid case against the president on those felonies, not only can the president be indicted but prosecutors by rights should go ahead and indict him now to make sure he doesn`t run out the clock on the statute of limitations of any crimes he has been charged with while he is in office.

Meanwhile, another Intelligence Committee Democrat, Congressman Eric Swalwell of California, he has been saying in recent days that he thinks it`s possible that prosecutors in the Southern District of New York may have already indicted the president and it is a sealed indictment.

So, top Democrats are going out of their way to signal that when it comes to the criminal investigation surrounding the president, you shouldn`t rule out an indictment for President Trump while he is still serving as president. Among other things, that could have major implications as to whether House Democrats are planning on ever starting impeachment proceedings against him.

I mean, if Democratic leaders have decided that indicting the president is possible after all, is that effectively a way of getting impeachment questions off the table. Are we seeing the Democrats punt to the special counsel and federal prosecutors to let them handle this issue instead? If so, is that a good idea?

Hold on, more coming.

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MADDOW: Quote: The United States has never had a president as demonstrably unfit for the office as Trump. And it is becoming clear that 2019 is likely to be dominated by a single question. What are we going to do about it?

"New York Times" editorial page went big, 3,000 words big this weekend with a long and potent argument from the columnist David Leonhardt making the case that the president`s, as he argues, unfitness for office, should call to question now as to how the president should be removed from office, now.

Quote: The easy answer is to wait to allow the various investigations of Trump to run their course and ask voters to deliver a verdict in 2020. That answer has one great advantage that would avoid the national trauma of overturning an election result. Ultimately, however, waiting is too dangerous. The cost of removing a president from office is smaller than the cost of allowing this president to remain.

Joining us now is David Leonhardt, columnist for "The New York Times".

David, thank you very much for being here.

DAVID LEONHARDT, COLUMNIST, THE NEW YORK TIMES: Thank you for having me, Rachel.

MADDOW: This is provocative and powerful as an argument. I felt like I sort of had heard every argument about the damage that could be done from this president remaining, and you have put this out there very potently. I wanted to ask you, why now? What makes you feel like you need to break glass in case of this kind of emergency?

LEONHARDT: I feel like the last two months, since the midterms of 2018, we started to see more of the risks, what feel like the beginning of the tail end risks of the Trump presidency come to the fore. I mean, you shut down the government essentially because some cable TV news hosts, and nothing against cable TV news hosts but they shouldn`t be running the government.

MADDOW: If I ever tell anybody to shutdown the government, feel free to ignore me.

LEONHARDT: Fair enough, basically told them to, right? And he has pulled the United States troops out of Syria and beginning to do so because of Turkish autocrats suggested he do so. And we`ve seen Jim Mattis, his defense secretary, who is kind of seen as one of the last bastion of sanity leave and criticize the president on the way out.

And so, I think the risk of the damages that he can do are growing. And so, I`m not suggesting that we may talk about this, impeach him now. I think we need to come to terms with the fact that we should do anything we can to get him out of this very important job.

MADDOW: Do you think that -- when you talk about these tail end consequences that we can see, do you think that some of the danger that you`re describing there, some of the increased danger is because of the president`s increased liability of the investigations that surround him.

LEONHARDT: Yes.

MADDOW: Because they lead him to more desperate situations.

LEONHARDT: Yes, and I think there was this fiction that existed for awhile. It was sort of -- it was unprovable there was fiction until the midterms, that he was politically invulnerable, that somehow he had a magic sauce, right, and he would defy the polls. And then we saw the midterms and he got trounced.

I mean, the Senate is tricky, look, because so many of the races were on Republican soil. But in the House, the Democrats won the national house by 9 percentage points. He got trounced.

And so, I think what you`re starting to see if he realizes he has some vulnerability. Republicans have some vulnerability. And Mueller seems to be to one degree or another closing in. And so, what I worry about are one, as Mueller continues to close in or as he fights for his re-election, he could do many worse things.

I also think we are not paying attention to the possibility that something terrible external happens -- war, a financial crisis, a terrorist attack, a terrible national --

MADDOW: A non-self-inflicted externality.

LEONHARDT: Yes. And, look, I`m not the biggest fan of George W. Bush`s presidency, but George W. Bush remained a competent president to the end and he had none of the ethical issues that Trump does. And if you think about what Bush did in his last two years, he managed the disaster in Iraq responsibly and he managed the financial crisis extremely responsibly.

I`m not saying that he doesn`t deserve blame for what happened before but imagine Donald Trump trying to manage a natural disaster or a war or a financial crisis. I find it frightening and I worry we would look back and say, how did we not get rid of him beforehand?

MADDOW: There`s one element of how this is or may be proceeding that I want to ask you about which is I think a new spin on how the prospect of impeachment and the prospect of indictment are interacting with each other? Can you hold on and have that discussion when we come back?

LEONHARDT: Of course.

MADDOW: We`ll have that discussion when we come back.

David Leonhardt is here for "The New York Times". We`ll be right back.

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MADDOW: Joining us once again is David Leonhardt, "New York Times" columnist who wrote this column, "The People Versus Donald J. Trump" in Sunday`s paper. It`s a 3,000-word argument about the urgency of the need to remove this president from office.

And in part, David, I think you`re trying to change the common wisdom a little bit about whether or not Republicans would ever support the removal of this president from office.

LEONHARDT: Yes.

MADDOW: You think that`s something that is sort of ticking in the direction of removal?

LEONHARDT: Potentially, right? I think there`s a lot of conventional wisdom that Donald Trump`s approval rating is 40 percent. It`s never gone below that roughly, and it`s not going below that.

And I think that`s wrong. I think if you look at the history -- I mean, look, you know the history of Spiro Agnew better than anyone at this point.

MADDOW: "Bag Man", yes.

LEONHARDT: If you look at Agnew, if you look at Nixon, they had unbelievably solid support in `73 and then it went away. So I think as more allegations and more revelations come out, I think it`s possible that Republicans will decide it is no longer in their own personal political interest to support Trump. I wish I thought they would do it on the merits. I think that`s probably unlikely, but I do think it`s possible that they`ll look at this and they`ll say this is a bad deal for us.

MADDOW: So, you`re describing a couple of different times just since we have been talking, describing continued revolutions from the Mueller investigation, from other criminal probes as potentially being an engine driving broader political considerations around the president. That whatever the investigation can do in it`s own terms, when it exposes potential wrongdoing by the president, that will change the political realities on the ground.

There`s a really serious question, though, as to whether or not the investigation itself might produce some sort of actionable eject button from this president. Whether the president could be indicted, whether or not the president has been indicted already under seal, as Congressman Swalwell from the intelligence committee is now suggesting.

What do you take that dynamic as Democrats in positions of leadership increasingly highlight their view that apparently they think the Justice Department policy precluding an indictment might be soft, might be overturnable?

LEONHARDT: I mean, I guess I`m a little small C conservative on that, because I think there`s enough debate about whether a sitting president can be indicted. I don`t think there`s any good substantive debate about whether Donald Trump is fit to be president. I think he is not, right?

So I guess I would rather see the attention focused on the things he has done wrong. The ways he has violated his constitutional oath and broken the law and I think pressure needs to be put on Republicans to eventually get rid of him, and I`m then open to the question of whether a sitting president could be indicted or whether he could be indicted when he left office. But I guess I worry a little bit, his sins have been so bad, I would rather keep attention on that rather than on the procedural questions of what do we do about the terrible things that President Trump has done?

MADDOW: David Leonhardt, columnist at "The New York Times", calling the question on this in a very eloquent way. Thank you for being here. Appreciate it.

LEONHARDT: Thank you, Rachel.

MADDOW: All right. We`ll be right back. Stay with us.

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MADDOW: That does it for us tonight. Thank you for being with us.

We will see you again right here at this time tomorrow. But keep in mind, the president, 9:00 p.m. Eastern tomorrow is going to be giving his first address to the nation from the Oval Office. You will want to be here with us for that.

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

Good evening, Lawrence.

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