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'The Rachel Maddow Show'for February 5, 2009

Read the transcript to the Thursday show

Guest: A.B. Stoddard, Ed Rendell, Elizabeth Warren, Will Bunch, Kent Jones

RACHEL MADDOW, HOST:  Thank you for staying with us for the next hour.

The nation‘s anxious eyes are on the Senate tonight as we all wait for an economic stimulus plan to save us from the increasingly depressiony-looking recession.  We have live reports from Capitol Hill coming up.

Governor Ed Rendell of Pennsylvania will join us.  Elizabeth Warren, in charge of overseeing the bank bailout, she‘ll be here.  She is a woman who has a disturbing habit of making sense—a lot of sense when she talks about the government trying to stop the next Great Depression.

And—in the name of super human coolness, we will hear Captain Sully Sullenberger‘s radio transmissions as he prepared to splash Flight 1549 down on to the Hudson River.  That is all coming up in the next hour.

But first, we‘ve got some breaking news tonight.  And it is that we won‘t have breaking news on a Senate vote on the economic stimulus plan any time soon.  Within the past few minutes, Majority Leader Harry Reid stopped work on the stimulus bill for the night, saying he is hopeful that the legislation will be ready to pass tomorrow.  We will go live to Capitol Hill for a report in a moment.

Today, the fight on the stimulus was really dramatic, in two totally different ways though.  On the one hand, it was a big “Who is winning” day?  Who is up, who is down?  People listen to Susan Collins now?  Oh, good one-liner, corny graphics print up on foam core, set up on tripods on the Senate floor.  There was this almost sort of gossipy tactical small ball drama today about what happened on the stimulus today.

On the other hand, there was, you know, the survival of the republic, the reason all this is happening.  Are we going to prevent the second Great Depression or aren‘t we?  That is what the stimulus debate is all about.  It‘s dramatic not only because of the people and the tactics involved, but also because the stakes are so high for the country.

To bring these two types of drama together, we have developed a stimulumeter—stimulometer I think, I think it would be stimulumeter.  Any way, it‘s a graphic representation of how today‘s tactics and rhetoric and political moves took the country closer to or further from the next Great Depression, from the soup line.  And the stimulometer—it was all over the place today, it was very dramatic.

When you woke in the morning and open the newspaper, President Barack Obama was op-ed columnist Barack Obama for the “Washington Post.”  Good get, “Washington Post.”  The president wrote, quote, “If nothing is done, this recession might linger for years.  Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.”

Urgency, in other words.  Don‘t forget what is at stake here.  Using the bully pulpit for the prospects of avoiding the national soup line—that was good.

That said, also in the morning paper, there was news that last night, about 90 percent of Senate Republicans voted to not do economic stimulus—

36 of 41 Republicans in the Senate voted for Senator Jim DeMint‘s big other idea, his idea to eliminate all spending from the plan in favor of all tax cuts, which means no stimulus bill at all, which means prospect for avoiding the soup line—bad.

Then, at about 11:20 a.m., Republican Senator Lindsey Graham fired the day‘s first proverbial shot at President Obama during an appearance on FOX News.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM, ® SOUTH CAROLINA:  It is a broken process and the president, as far as I‘m concerned, has been AWOL in providing leadership on something as important as this.  The president is giving TV interviews rather than getting people together, and I am very disappointed.

(END VIDEO CLIP)

MADDOW:  So, by AWOL he means inviting Democratic and Republican leaders to the White House to talk about the stimulus?  Personally visiting House Republicans and personally visiting Senate Republicans on Capitol Hill a week ago, holding a pair of cocktail parties at the White House to talk about the stimulus bill, calling individual senators about the bill, that‘s what AWOL means?  Really?

We can put this one down as a signal that the Republican opposition to the stimulus would continue to be fairly fact-free.  If there‘s no real good faith debate about how to save the country, that is bad for the prospect of us all avoiding the soup line.  But Mr. Graham wasn‘t done.  He then took his rage to the Senate floor at about 11:45.

(BEGIN VIDEO CLIP)

GRAHAM:  I think people are figuring pretty out quickly, this Congress

the old one and the new one—is making this up as we go.  And we‘re running out of goodwill.  We are running out of capital and we don‘t need anymore news conferences.  What we need is getting more than 16 people in a room.  We need to slow down, take a time-out and get it right.

(END VIDEO CLIP)

MADDOW:  Slow this rescue effort down, no more goodwill.  Yes.  Prospects for avoiding the soup line is now getting desperately bad, as you can see on the stimulometer.

And then came the noon hour, at about 12:15, change in fortunes.  President Obama was sounding more like old presidential candidate Obama, talking up the stimulus plan during a trip to the Energy Department.

(BEGIN VIDEO CLIP)

PRES. BARACK OBAMA, UNITED STATES OF AMERICA:  The time for talk is over, the time for action is now—because we know that if we do not act, a bad situation will become dramatically worse.  And I refuse to let that happen.  We can‘t delay and we can‘t go back to the same worn out ideas that led us here in the first place.

(END VIDEO CLIP)

MADDOW:  AWOL, huh?  Yes, right.

Prospects for avoiding the soup lines with rhetoric like that—good, and actually, yes, we can and all that.

At around the same time the momentum was starting to build again behind getting something good passed, Senate Majority Leader Harry Reid told reporters he thought Democrats had the votes they needed to get the stimulus passed.  That would be good, of course, for soup line avoidance.

While Senate Majority Leader Harry Reid was speaking, Democratic Senator Claire McCaskill was Twittering.  Yes, a sitting U.S. senator tweeting about Senate business.

She said, quote, “Just came from meeting with moderate sens—senators—both D and R, optimistic that we are going to get this done and pass the essential recovery act.”  Twittered optimism from Claire McCaskill.  This was good for soup line avoidance.

Paychecks here we come—except that the meeting of so called “moderates” Senator McCaskill described in her Tweet, led by Republican Susan Collins and Democrat Ben Nelson—well, they were proposing slashing about $100 billion of stimulus spending out of the stimulus bill.  The biggest victim was reported to be education spending—because you know, how could education spending possibly be a good investment in our economy?  Bad news for soup line avoidance there.

All right.  As of about 1:30 p.m., the pendulum was swinging back towards—we are going to miss this chance to get it right, we‘re going to get a lousy, watered down bill.  “Roll Call” reported that the conservative blue dog Democrats were threatening to oppose the stimulus all together unless more, quote, “wasteful spending” was removed.  Soup line avoidance prospects here—again—bad.

And a few hours later, by around 4:00 p.m., anti-stimulus crusaders and known economic geniuses like John McCain were taking to the Senate floor to offer up their own alternate plans, more tax cut proposals, more railing about wasteful spending—soup lines here we come, bad news for the prospects of anything effective passing.

Then, at about 6:15 p.m., Senate Majority Leader Harry Reid headed back to the Senate floor.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D) SENATE MAJORITY LEADER:  Mr. President, this legislation is very important.  The reason we need to work through the night, I can‘t imagine what would happen to the financial markets tomorrow if this was a report that this bill would go down.  This bill is not only important to our great country, it‘s important to the world.

(END VIDEO CLIP)

MADDOW:  In other words, don‘t forget the stakes here.  Good for not ending up on the soup line, right?  Well, more good.

Tonight, the president made his case for the stimulus, speaking to Democrats who are meeting in Virginia.

(BEGIN VIDEO CLIP)

OBAMA:  Then you get the argument, “Well, this is not a stimulus bill, this is a spending bill.”  What do you think a stimulus is?

(LAUGHTER)

OBAMA:  That‘s the whole point.  No—seriously.  That‘s the point.

(LAUGHTER)

(END VIDEO CLIP)

MADDOW:  Right.  This isn‘t a campaign game.  This is a rescue package to actually save the actual biggest economy in the actual world—actually.  This is the real deal and spending is on purpose.  Good, in other words, paychecks here we come.

As you can see if you were keeping an eye on our stimulometer, our soup line to paychecks meter, this was a very dramatic day, it was a back-and-forth dramatic political day for our country‘s economic future.  So, where do our prospects stand right now?

Joining us live from Capitol Hill is A.B. Stoddard, associate editor of “The Hill.”

A.B., thank you so much for joining us tonight.

A.B. STODDARD, THE HILL:  Thanks, Rachel.

MADDOW:  Where do things stand right now?  We know that the Senate has threatened to stay in session all night.  They have not.  What‘s the status?

STODDARD:  They really have the stomach for those threatened sleepovers—just a tip for the future.  The leaders (ph) who are monitoring these ongoing negotiations which have been on the floor as well as in private that are furiously taking place all afternoon, say, “There is no vote tonight, there is no end in sight.”  One of them even said there is no bill.

The group called the “Jobs Squad” that Obama gave his blessing to, Senator Collins, a Republican, and Senator Nelson, Democrat, are still working and trying to get something together that will appeal to enough, all the Democrats and then, of course, obviously a few Republicans so that they can vote this out tomorrow.

MADDOW:  Majority Leader Harry Reid told reporters earlier today that he had the votes, that he just needed two Republicans of goodwill.  He was optimistic that was going to happen.  What happened between then and now?

STODDARD:  Actually, Democrats are getting increasingly nervous.  I mean, you heard that report earlier about blue dog Democrats in the House who want wasteful spending taken out.  You heard comments like Jim Webb, a senator from Virginia, saying they just started with a number and started filling it up.  There‘s at least $100 billion of wasteful spending here.

You have more and more nervous Democrats joining the Republican opposition.  And that‘s where we are.  That‘s why he couldn‘t pull the vote off tonight.  He didn‘t have the Democratic votes.

MADDOW:  In terms of Democrats who are supporting this versus Democrats who are not, what is the dividing line there?  Is it the size of the bill?  Is it specific spending that they feel will be demagogued as wasteful?  What is it?

STODDARD:  I think it is.  I mean, the things that you see these moderate and conservative Democrats who really want to see either spending that‘s truly, you know, investment in job-creating things like traditional infrastructure as well as, you know, combining with state aid.  They don‘t want to—they do want to see some tax relief, not as much as Republicans, but they really want to take computers out of the Department of Agriculture and all these other things that  they know are not critical to the emergency spending bill.  They are joining with Republicans in calling that wasteful.

So there is—there is a right and a left, but there is a strong middle that‘s very nervous and they‘re still fighting to keep state aid in and very traditionally, stimulative spending in but nothing else.

MADDOW:  It is one thing to think about this as the minority Republicans trying to block something that they don‘t really have the votes to stop mathematically.  It‘s another thing to think that the Republicans have now changed this debate so that the Democrats are not even unified around it.  We are seeing President Obama using the bully pulpit more, not just with that op-ed, but speaking out very forcefully tonight.

If he—do you think he‘s going to be able to bring Democrats together?  He seems to be getting much more aggressive on this?

STODDARD:  He is.  I actually haven‘t seen that Barack Obama in many months, and he‘s taking the campaign mode, taking a clue from the Republicans who have been in campaign mode now against his bill for 10 days, two weeks.  It might be a little too late, but I think that, you know, to coin a phrase they use at graduations, the Senate vote is not an end, it is a beginning.

This remains very fluid.  They hope to change it in conference. 

President Obama is telling his own party that, let‘s make some changes. 

Keep it around $800 billion.

I think he wants everyone onboard but I still think he wants Republicans.  That‘s why—no matter what comes out of the Senate and I expect it to be quite a partisan vote, you‘re still going to see this bill change a lot in the days to come.

MADDOW:  A.B. Stoddard, associate editor of “The Hill”—thank you for your time tonight.  Great to have you there.

STODDARD:  Thanks, Rachel.

MADDOW:  Last night on the show, economist Paul Krugman said that despite the hundreds of billions of dollars we have spent on bailing out the banks, there is more of that to come as well.  Mr. Krugman has that whole Nobel Prize thing and all, so that kind got me worried.  The woman who knows more about that subject than anyone else, Elizabeth Warren, chair of the congressional oversight panel for TARP, one of the most provocative we‘ve ever had on the show, will be joining us again tonight for Scrub, Rinse, Repeat.  That‘s coming up in just a few minutes.

And next, Pennsylvania Governor Ed Rendell, the man who 12 million Pennsylvanians are hoping is going to steer their state through this economic crisis and the political fight that surrounds it, he joins to holler back up to Washington about what is going on with this all important stimulus fight.

But first, one more thing, the commander-in-chief made his maiden voyage aboard Air Force One as president today.  The destination:

Williamsburg, Virginia, a quick 37 minutes away.  Some sort of a test-drive really.  He met with House Democrats there to talk about the stimulus bill as you just saw.

We are told that the short flight included a meal, a cheeseburger and fries along with a few other perks like this skimpy new Air Force One jacket the president is sporting, embroidered with his name.  That‘s when you know you‘ve really arrived.  We also now know that Air Force One has a mini-hospital onboard, just in case the cheeseburger doesn‘t agree with him.  No word about whether there‘s some sort of fashion hospital or a sartorial emergencies like he just displayed on film (ph).

(COMMERCIAL BREAK)

MADDOW:  A sad and important note from today‘s news.  Supreme Court Justice Ruth Bader Ginsburg has undergone surgery for pancreatic cancer in New York City.  Ginsburg is 75 years old.  She is one of the most progressive justices on the court and she is the court‘s only woman.

Despite their miles wide political differences, Justice Ginsburg is known to enjoy watching opera with her good friend ultra-conservative Justice Antonin Scalia.  Justice Ginsburg was treated for colon cancer you will recall about 10 years ago.  Remarkably at that time, she did not miss a day on the bench.

Now, pancreatic cancer is a very big deal, medically speaking, but doctors fortunately say hers was detected in the early stages.  We all wish Justice Ginsburg, of course, a very speedy and complete recovery.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  We can‘t embrace the losing formula that says only tax cuts will work for every problem we face; that ignores critical challenges like our addiction to foreign oil or the soaring cost of healthcare or falling schools and crumbling bridges and roads and levees.  I don‘t care whether you‘re driving a hybrid or an SUV, if you‘re headed for a cliff, you got to change direction.

(END VIDEO CLIP)

MADDOW:  The president speaking in Williamsburg, Virginia, tonight, speaking to assembled Democrats there, sort of hitting the nail on the head about the whole problem with the ongoing stimulus debate in Washington.  Let me elaborate on that by getting really simple here for a second.

The economy is in crisis because people aren‘t buying enough stuff.  There is supply, right?  People make stuff that is to be sold and then there‘s demand.  Demand is buying.

Right now, there‘s not enough buying.  So, what they teach you in the very easiest semester of the very easiest economics class, because it‘s really easy to understand even if you are a total dunderhead about more completed macroeconomics stuff, what they teach is that the government can turn around an economic crisis that‘s caused by not enough demand—by making demand.  Stimulating demand, they call it—economic stimulus.

On the continuum between rocket science and duh, understanding the concept of economic stimulus is closer to duh.  It is not the most complicated policy idea.  If no one else has anything to spend and the economy is collapsing because of it, the government should spend and it should try to spend in a way that gets everybody else spending, too.  That‘s the whole kitten caboodle, that‘s the whole idea.

Last night, 90 percent of Senate Republicans voted for something they called an economic stimulus that had zero government spending in it.  That‘s like calling a rack of lamb a fruit cocktail.  That‘s a big meat tax cut there you, guys.  But how about we get back to the idea of economic stimulus, you know, to save ourselves from having to eat cat food while we live in our cars for the rest or our lives?

It is reality check time here.  Economic stimulus, most efficiently, is government spending.  The most purely stimulative spending would probably be just to give envelopes full of cash to the poorest people in the country.  Statistically, they‘d be the most likely to spend it.

In the absence of a political reality, that would make something like that possible, an almost ideal strategy is government spending, say, on infrastructure of which the American Society of Civil Engineers just said we could use $2.2 trillion worth.  It‘s good jobs that can‘t be outsourced, immediately, that have the long-term benefit of dragging our country into the 21st century in terms of our ability to compete economically with the rest of the world.

As they said—duh.  Not complicated.  Ask your friendly neighborhood governors.  They will tell you.

Joining us is Democratic Pennsylvania Governor Ed Rendell.

Governor Rendell, thank you very much for joining us tonight.

GOV. ED RENDELL, (D) PENNSYLVANIA:  That was brilliant, Rachel.  It reminds me of the old saying, KISS, “Keep it simple, stupid.”  And that‘s what this is all about.  No question about it.

MADDOW:  Well, do you think that Pennsylvania is going to end up getting the federal help that it needs from the stimulus?  Are you optimistic?

RENDELL:  Well, first, I would have liked to have seen more a little bit more in infrastructure spending because you are right.  That‘s not only the one that employees people the fastest but it puts money into the economy, money going to steel factories, concrete, asphalt, lumber—factories that employee working Americans.  That would have been the best way.

And there is $100 billion of stimulus—of infrastructure in the stimulus.  I would have liked to seen a little more for roads and highways and mass transit.  But it was a good, excellent start.

And what bugs me and, I think, bugs all of my fellow governors, Governor Crist of Florida, Governor Schwarzenegger, good Republican governors, is this obsession about keeping to spend down—when, in fact, economists, including Martin Feldstein, have said, “We‘ve got to spend a lot of money to influence the economy because we have such a significant GDP.  We‘ve got to make a dent in it.”

Today, the Collins group wants to cut $90 billion.  I think—I don‘t mean to be negative, but some of that money should be cut.  But a lot of it, aid to the states.  They say, “Well, the states don‘t need the stabilization money.”

Well, yesterday, I delivered my budget speech.  $1 billion in cuts in state programs, $215 million in revenue enhancements and if they cut the $25 billion that‘s in the stabilization fund, I‘ll have to make $500 million more in cuts and that will mean over 3,000 or 4,000 layoffs in our educational institutions—both K-12, higher ed—and our state work force.  It will mean business tax cuts.  All of the things that they don‘t want.

How is it stimulating the economy to force additional layoffs of working people?  The whole thing is backwards.  We ought to be content to spend and spend a significant amount, but spend it on the right things like infrastructure.  Get rid of the stuff in the original bill that was clearly ridiculous—no question about that.  And spend it on things that protect jobs and create jobs.  It is as simple as that.

MADDOW:  In terms of the debate over what is actually in the bill, there are very few Republicans who will say that they think that infrastructure spending is a bad thing, specifically, they won‘t criticize that as a type of spending, at least most of them won‘t.  They will, as you say though, criticize the overall size of the bill or the idea that there has to be spending at all.

Do you think that it is—the fact that we haven‘t ended up with enough infrastructure spending; we probably ended up with a good enough bill at all even if they have voted on it tonight—is it a product of economic ignorance or is this just being politically outmaneuvered?

RENDELL:  Yes, I think when I heard Mr. Boehner say on some TV show about 10 days ago, “This is a chance for us as a party to establish our identity.”  Meaning, their identity as guardians of the federal treasury, an identity they did everything opposite of for eight years.

But if they want to establish their identity, not now.  This nation is in deep, deep trouble.  People are hurting at levels that I don‘t know if these men and women understand.

It‘s no time for politics, it‘s no time for establishing your identity.  It‘s time to get money into the economy, as you said, and that comes from spending.  It should be spending that has a laudable goal and that also puts people to work.

I would be much more content when the Republicans pass their bill, in addition to tax cuts, if they had a big, expanded infrastructure program.  But this is all about ideology.  It‘s all about politics.  It‘s not about getting it right for America.

And it makes me angry just as a citizen, forget as a governor.  It makes me angry.

MADDOW:  If the Senate comes back to work tomorrow, they are not going to pass anything tonight, if they come back to work tomorrow and it looks, politically, they‘re in shambles, they don‘t have anything to work with—do you think that they ought to just scrap it and start over—say, “All right, let‘s triple what we are talking about for infrastructure—since nobody is arguing against that—start with $300 billion worth of infrastructure, add whatever else we can agree to on top of it until we get to $1 trillion, and start all over, call it a day”?

RENDELL:  Well, if that could be done quickly.  The problem here is twofold.  You‘re absolutely right.  We need to get spending into the economy but we need to get it into the economy quickly.

MADDOW:  Yes.

RENDELL:  And that‘s the point that President Obama has made.  And it doesn‘t seem to me that anybody is listening.  And—OK, if we want to do a better bill, let‘s take four days off, do a better bill, vote on it Wednesday, get it to the House, House votes on it, get it to conference committee, and do it before we recess.  But understand—there is a need for speed.

This economy gets worse every day.  Every day across my desk, another Pennsylvania firm, a hardwood firm with 700 workers, a structurally-sound firm closes down because there are no orders and there‘s no way to get credit.  It‘s got to stop and it‘s got to stop soon.

MADDOW:  Pennsylvania Governor Ed Rendell—thank you, sir. 

Appreciate your time.

RENDELL:  Thanks, Rachel.

MADDOW:  National airport in Washington, D.C. is now named Ronald Reagan Airport.  Republicans think that Ronald Reagan should be on Mount Rushmore, too.  Why?  Of course, yes, Reagan revolutionized American government by making it so much smaller and by consistently lowering taxes, right?  Except—he totally didn‘t do either of those things.

Mr. Reagan, “Tear Down this Myth.”  “Tear down this myth” is the title of Will Bunch‘s new book about the Reagan legacy project.  He is here in just a few minutes.

(COMMERCIAL BREAK)

MADDOW:  A little later on in the show, “Scrub, Rinse Repeat.”  Elizabeth Warren chair of the oversight panel for the bank bailout will be here explain as only she can, seriously, how banks are still drowning even after we threw them a $700 billion life preserver. 

First, though, it‘s time for a couple of holy mackerel stories in today‘s news.  Captain Chesley “Sully” Sullenberger achieves - better said, earned hero status after he successfully landed U.S. Air flight 1549 on the Hudson River on January 15th.  Then he searched the cabin for passengers at least twice before exiting the sinking jet. 

Now, we get to hear heroism in action as the FAA releases the cockpit to tower audio communications that took place as Sully was saving the day.  Heroism and my secret desire to be an air traffic controller - they sound like this. 

(BEGIN AUDIO CLIP)

CAPTAIN CHESLEY “SULLY” SULLENBERGER, PILOT, U.S. AIRWAYS FLIGHT 1549: 

This is cactus 1539.  Hit birds.  We lost thrust in both engines, we‘re turning towards La Guardia.

AIR TRAFFIC CONTROLLER:  OK.  Yes.  You need to return to La Guardia. 

Turn left heading of two, two, zero. 

SULLENBERGER:  Two, two, zero.

AIR TRAFFIC CONTROLLER:  Tower, stop your departures.  Got an emergency returning. 

LA GUARDIA AIRPORT:  Who is it? 

AIR TRAFFIC CONTROLLER:  It‘s 1529.  He - bird strike.  He lost all engines.  He lost the thrust in the engines.  He is returning immediately.

LA GUARDIA AIRPORT:  Cactus 1529, which engines. 

AIR TRAFFIC CONTROLLER:  He lost thrust in both engines he said.

LA GUARDIA AIRPORT:  Got it.

AIR TRAFFIC CONTROLLER:  Cactus 1529, if we get it to you, do you want to try to land runway one three? 

SULLENBERGER:  We‘re unable.  We may end up in the Hudson. 

AIR TRAFFIC CONTROLLER:  All right.  Cactus 1549, it‘s going to be left traffic to runway three one.

SULLENBERGER:  Unable.

AIR TRAFFIC CONTROLLER:  OK.  What do you need to land?  Cactus 1549, runaway tour is available if you want to make left traffic to runway four?

SULLENBERGER:  I am not sure if we can make any runway.  Oh, what‘s over to our right?  Anything in New Jersey, maybe Teterboro? 

AIR TRAFFIC CONTROLLER:  OK.  Yes.  Off to your right side, it‘s Teterboro Airport.  Do you want to try and go to Teterboro? 

SULLENBERGER:  Yes.

AIR TRAFFIC CONTROLLER:  Teterboro.  Empire.  Actually, La Guardia departure got an emergency inbound. 

TETERBORO AIRPORT:  OK.  Go ahead.

AIR TRAFFIC CONTROLLER:  Cactus 1529 over the George Washington Bridge, wants to the airport right now.

TETERBORO AIRPORT:  He wants to go to our airport.  Check.  Does he need any assistance?

AIR TRAFFIC CONTROLLER:  Ah, yes.  He was a bird strike.  Can I get him in for runway one?

TETERBORO AIRPORT:  Runway one, that‘s good.

AIR TRAFFIC CONTROLLER:  Cactus 1529, turn right to eight zero.  You can land runway one at Teterboro.

SULLENBERGER:  We can‘t do it.

AIR TRAFFIC CONTROLLER:  OK.  Which runway would you like at Teterboro?

SULLENBERGER:  We‘re going to be in Hudson.

(END AUDIO CLIP)

MADDOW:  “We‘re going to be in the Hudson,” and on to the frigid Hudson they landed.  The NTSB confirmed yesterday that bird remains, including this damning feather were found in both engines.  Whatever we achieve in our lives, who among us does not hope we could be that cool, calm, collected and competent in a crisis with or without the alliteration? 

Finally, one last story in today‘s news about all that so-called wasteful government spending on that big liberal boondoggle that is, you know, electricity, roads, bridges, schools - infrastructure. 

Last month, a winter storm knocked out power as you know to something like 1.7 million Americans.  More than a week after the storm, 157,000 homes in Kentucky still have no power. 

The Associated Press reports in Mayfield, Kentucky, folks used to having lights and furnaces and ovens and refrigerators all powered by electricity are getting a helping hand from some of their neighbors who are used to living without these things. 

They are, of course, the Amish.  There are about 8,500 Amish Kentuckians, some of whom have volunteered their counsel and their hot coffee and their lanterns and their no-electricity, fix-it know-how to their newly powerless neighbors. 

One National Guard spokesman says, quote, “Those folks are very good at sustaining themselves.”  Although I am quite sure that none of them will hear me say it on the TV machine, and especially not on a podcast, I still feel compelled to say a big neighborly thank you to Kentucky‘s Amish for helping out and for reminding us that when a country doesn‘t repair and improve its infrastructure, we are all basically one winter storm away from living in the 19th century - well, 19th century plus zippers.       

(COMMERCIAL BREAK)

MADDOW:  So last night, something happened on this show that sort of freaked me out.  I lay awake at night when I was supposed to be sleeping last night, thinking about this. 

(BEGIN VIDEO CLIP)

(on camera):  (UNINTELLIGIBLE) that could screw up that plan.  What should be next on the agenda, in your opinion?

PAUL KRUGMAN, NOBEL PRIZE-WINNING ECONOMIST:  Well, financial rescue.  That is the other thing.  We do - we are busy constraining the paychecks to executives but we actually meanwhile have a failing banking system. 

And, you know, the new administration has not been very good at coming out with a plan that makes sense to anybody and they need to do that. 

(END VIDEO CLIP)

MADDOW:  That was Nobel Prize-winning economist Paul Krugman talking last night.  That wasn‘t, like last October.  That was last night, telling us that we are not done bailing out banks yet, thus freaking me out. 

We‘ve all been very focused on the stimulus bill that‘s being debated right now.  Sure, the economic news keeps getting worse and worse and worse.  But ever with all of the hundreds of billions of dollars already handed over to the banks, we still need to be thinking about the fact that they are still in a mess.  They need more help.

I had sort of hoped we would be $700 billion worth of done with that by now.  The last time we spoke with Elizabeth Warren, who heads up the congressional oversight panel for the bailout money, she said her job was to figure out, forensically almost, what the bailout money was supposed to be for, what it was actually spent on, and whether or not it was working. 

And yes, the fact that the questions that she was asking

were so basic, why are we doing this, for example.  The question that

the fact that those questions were so basic freaked everybody out, not just me. 

Nobody likes the bailout.  Nobody likes the idea of having to do it.  Some people think we should not have done it at all, but we have done it.  We are still paying for it and we are about to start talking about the need, possibly, for another one. 

And we don‘t even yet know if the second half of the $700 billion that they‘ve already agreed to spend will be handled any better under Obama‘s Treasury Secretary than the first half was handled under Bush‘s Treasury Secretary.  This is very worrying. 

Joining us now is Elizabeth Warren, chair of the

Congressional Oversight Panel for TARP and professor at Harvard Law School.  Professor Warren, thank you so much for joining us again. 

PROF. ELIZABETH WARREN, CHAIR, CONGRESSIONAL OVERSIGHT PANEL FOR TARP: 

It‘s good to be here. 

MADDOW:  Do you have any answers yet to the “what‘s it for,” “s it working,” basic questions that you were asking last time we spoke?

WARREN:  Well, you remember when we spoke in December, one of the questions we had was, are we getting a fair deal when we are putting the money into these banks?  That was the fifth question. 

And when we got the letter back from Secretary Paulson, he told us these transactions where we‘re putting money into banks we are getting a fair deal.  It is called a par deal.  That means for every $100 we‘re putting in, we are getting about $100 back in the same direction. 

And you know, that sounds like a pretty fair deal.  But we decided to make an independent investigation and make sure that that was right.  And so, we did a big valuation study and got some other academics to help us out and a big accounting firm to look at this - evaluation firm to look at this. 

And what the numbers show is that when we were putting money into these banks and taking something in return - stocks and warrants, it‘s called - for every $100 we put in on average, we got about $66 back in value. 

Now, there may be good reasons that we think we need to push this extra money into the banks.  But we‘re kind of back to the same message here that we‘ve been on before.  The first thing is you can‘t tell us one thing and do another.  There‘s transparency problems.  There‘s accountability problems and we still have the problem of, you‘ve got to decide and explain what the overall structure here is.  This is getting to be a lot of money ...

MADDOW:  Yes. 

WARREN:  ... that we‘re talking about.  So we are still in here punching on this same set of questions. 

MADDOW:  So are you saying, though, that they knew that they were paying $100 for every $66 worth of value?  Do we know if they knew and just lied to us about it?  Or is it not clear they even checked? 

WARREN:  You know, I don‘t know which one scares me more.  I don‘t know which one to hope for.  The point is that Secretary Paulson said this very clearly.  He said these are par transactions, which means $100 for $100 - you know, come on, within $1 or $2, plus or minus. 

These things are way off from being par transactions and we‘ve now got the data to be able to prove that.  So what it really means is we‘ve got to have a new relationship with our Treasury Department.  And you know, it is time to get serious here. 

You‘ve got to be straightforward with us.  You‘ve got to tell us the truth.  You‘ve got to be completely transparent.  You‘ve got to be completely accountable on these dollars.  And the Treasury Department has to do that as well as the banks who ultimately received the money. 

And most of all we need a plan.  Paul Krugman had it right last night, where‘s the plan?

MADDOW:  Looking ahead at what is going happen with the rest of this money - I mean, I‘m no expert on this stuff.  But the prospect that we are going to need to do more of this, that even the second half of the original bailout arrangement might not be enough.  There might even need to be more. 

The fact that we still got hundreds of billion dollars that we promised to spend for this - I mean, there is a real need if the government‘s going to have to take these actions and we‘re going to believe them that it is necessary.  There is a real need for the public to believe in this. 

WARREN:  Yes. 

MADDOW:  There is a real need - otherwise, there is going to be a revolt and the public aren‘t going to take it.  I wonder if you think that Timothy Geithner and President Obama see that. 

WARREN:  Well, I have to say, there are some very encouraging signs.  You know, after all, Secretary Geithner‘s just been there - just barely more than a minute and a half, OK?  He has just gotten in the door.  Now, he knew about the problems but he‘s just gotten there. 

He‘s already said something about executive composition.  That is very heartening.  He‘s already said we are going to be transparent.  We‘re going to put these documents so you can see the contracts with the various banks.  We are going to put those on the Web so people can see them.  He is already working with other - the inspector general said that they‘re tracking money more closely than they had before. 

Now, that doesn‘t mean I‘m going to stop doing my job.  My job stays exactly the same.  I keep asking those questions.  I keep hammering and looking for those answers.  But the good news is, there are sounds coming back.  It sounds like there is someone on the other side.  And it sounds like there‘s someone other side who gets the message that we all need to be part of this decision-making process. 

You know, this is something you and I have talked about before and I feel so strongly about.  It cannot be the case that the masters of the universe go off by themselves and decide what they think the right answer is and come to the rest of us and just tell us how big the check needs to be. 

MADDOW:  Right.

WARREN:  If the American people follow this, if they pay attention to this, if they demand transparency, accountability, a coherent story about what is going on, then the decisions themselves will be different.  They will be decisions that will be good for this economy.  They will be good for families and that‘s what we need. 

MADDOW:  These decisions need to be good for the country.  That is why they‘re doing it with public money, not just good for the guys who sort of feel like they are getting away with it. 

Elizabeth Warren, chair of the congressional oversight panel on TARP.  I hope that you see this as an important part of your job because I really do, because you helped me understand it better and I think our viewers, too.  Thank you so much.

WARREN:  Thank you. 

MADDOW:  Coming up, I will be joined by Will Bunch, author of a new book, “How the Reagan Legacy Has Distorted Our Politics and Haunts Our Future: Tear Down This Myth.”  We‘ll talk about how the Reagan legacy has distorted our politics and haunts our future, because it has, you know, and it does.

(COMMERCIAL BREAK)

MADDOW:  So what were you doing in 1982?  I was 9 at sort of little risk of being laid off as factories closed.  I was at no risk of an unaffordable loan with interest rates going sky high.  The oncoming economic threat at that point from Asia was from Japan.  The Milwaukee Brewers won the American league. 

It was a very long time ago.  That long time ago is the last time we had unemployment figures as bad as today‘s.  New jobless claims jumped to over 626,000.  The president in 1982 was, of course, Ronald Reagan.  And in a very big way, he remains a player, a spectral presence almost, in the Republican Party that they search for meaning in the minority, the GOP in exile.  

(MUSIC)

Senate Republicans spent today‘s debate over the economic stimulus bill one after another, slamming the Democratic plan, “It is big government getting bigger.  It‘s the end of the American economy.  It‘s the road of the economic abyss.” 

Can we go back and actually show Senator Hatch again, go back that picture?  Do you see the sign behind him there?  He says that‘s the Republican plan to fix an economy careening towards Great Depression - in big letters there. 

What will stave off the Depression?  Lower corporate tax rates and lower capital gains tax rates.  Really?  That would help?  No, actually, that wouldn‘t help.  Let‘s get out of this horrible recession. 

But pshaw!  The Republican gospel most commonly and curiously credited to Ronald Reagan is tax cuts, tax cuts, tax cuts and smaller government.  Those will solve everything this side of the common cold. 

Our current president is fighting a quarter-century old battle against this weighty ghost.  And today, he practically paraphrased Ronald Reagan‘s famous refrain.  There you go again.

(BEGIN VIDEO CLIP)

BARACK OBAMA, UNITED STATES PRESIDENT:  We‘ve seen proposals arise from some in Congress that you may not have read but you‘d be very familiar with because you‘ve been hearing them from the last 10 years, maybe longer.  They are rooted in the idea that tax cuts alone can solve all our problems, that government doesn‘t have a role to play.  Let me be clear, those ideas have been tested and they have failed. 

(END VIDEO CLIP)

MADDOW:  Even if he‘s right, even though he‘s right, President Obama is undertaking a difficult fight.  How do you beat back a quarter century of the same repeated strategy whose leading advocate is the ghost of the now iconic president?

Joining us now is Will Bunch, author “Tear Down This Myth: How the Reagan Legacy Has Distorted Our Politics and Haunts Our Future.”  Will, it‘s great to see you.  

WILL BUNCH, AUTHOR, “TEAR DOWN THIS MYTH”:  It‘s great to see you, Rachel.  

MADDOW:  Are you seeing the ghost of Ronald Reagan in our current economic fights?

BUNCH:  Absolutely.  I was amazed to hear President Obama tonight say that we need to move beyond the era when the solution to every problem that America faces is just another tax cut.  What he was talking about - he was talking about the myth of Ronald Reagan exactly. 

MADDOW:  Right.

BUNCH:  You know, six weeks ago, we had a jobs plan that was going to create jobs by spending money, frankly, on things that had been neglected since the era of Ronald Reagan - on infrastructure, on mass transit, on alternative energy programs, which were slashed by Ronald Reagan who took the solar panels off the roof of the White House. 

And then, the Reagan myth machine kicked in.  It was talk radio.  It was the echo chamber that - no, as Republicans, we need to stick to the Ronald Reagan playbook.  And the Ronald Reagan playbook is only tax cuts.  And not even just tax cuts, but tax cuts that are targeted towards the wealthy - tax cuts on capital gains, and more tax cuts for corporation.  That‘s the plan the Republicans are pushing now.  

MADDOW:  What you write about in “Tear Down This Myth” is that the idea that Ronald Reagan was a consistent tax cutter or even that he made government smaller - that is the mythology of him, but it‘s not actually the way he governed?

BUNCH:  No.  He spent the first six months of his presidency pushing one big tax cut that had the biggest impact on the wealthiest taxpayers by reducing the marginal rates dramatically. 

After that, he raised taxes almost every year of his presidency.  In 1982, Ronald Reagan passed the biggest tax increase at that time in American history because he had gone too far the first time, basically.  

MADDOW:  And he added a cabinet position.  He increased the size of the Federal Government.

BUNCH:  Right.

MADDOW:  But he railed against the size of government even while he was increasing it.  

BUNCH:  Absolutely.  I think we went from 2.8 million jobs to 3 million.  Ironically, the Bill Clinton administration successfully cut the number of jobs in the government with a task force that was led by Al Gore.  But you don‘t hear Bill Clinton getting credit for that.  

MADDOW:  So we end up with a distance between the ideology that is attributed to Reagan and the way that he actually governed.  What explains the distance between those two things?

BUNCH:  Well, I think it was a very conscious effort that was undertaken in the middle of the Clinton presidency when things were going very well in this country, when you had low unemployment and you had a situation where we were finally getting rid of budget deficits for the first time, and we‘ve been moving into a budget surplus. 

The conservative moment was really kind of bankrupt of ideas.  And in 1997, Governor Crist and some other neoconservatives started something called the Ronald Reagan legacy project with the idea of associating greatness with the presidency of Ronald Reagan.  

MADDOW:  So they decided that this was going to be - they were going to tell a great story about him, even if they couldn‘t tell a great history of him.  Yes. 

Will Bunch, it‘s so nice to see you.  Congratulations on the book.

BUNCH:  Oh, thanks, Rachel.  I really appreciate it.

MADDOW:  It is called, “Tear Down This Myth: How the Reagan Legacy Has Distorted Our Politics and Haunts Our Future.”  It‘s great to see you.  

BUNCH:  Great to see you, too.  

MADDOW:  Coming up on “COUNTDOWN,” Keith‘s special comment on the resurfacing of Dick Cheney.  

Next on this show, I get just enough pop culture from my friend, Kent Jones.  Tonight, Barack Obama Elementary School.  Not Reagan.  Too much Reagan.  No more Reagan.

(COMMERCIAL BREAK)

MADDOW:  Now it‘s time for “Just Enough” with my friend, Kent Jones. 

Hi, Kent.  What have you got?

KENT JONES, POP CULTURIST:  Good evening, Rachel.  Well, here‘s the first.  A school in Hempstead, Long Island has been renamed Barack Obama Elementary School.  Nicely done, everyone. 

But what do you bet, there‘s already some little wiseacre from another school out there saying, “Oh, so you go to the B.O. School.  Get it?”

Next, do you know the video game, “Guitar Hero?”  All hail, 14-year-old Texan Danny Johnson who set the record for the highest score ever on GH with 973,954 points on the toughest level.  Rock out, swell hand.  This just in - he is now dating Sheryl Crow. 

Next, New Line Cinema announced there will be a sequel to last year‘s hit dramedy, “Sex and the City.”  Rumor has it that the next installment will reflect the current downturn. 

So Carrie, Samantha, Charlotte and Miranda will go to the Manolo Blahnik store and just look.  They can‘t buy anything. 

So finally, by now, everybody knows that unlike his predecessor, President Obama likes to work in the Oval Office without a jacket. 

Well, Andy Card, chief of staff for George W. Bush has turned into a fashion cop, telling “Inside Edition,” quote, “The Oval Office symbolizes the Constitution, the hopes, the dreams and I‘m going to say democracy.  And when you have a dress code in the Supreme Court, and a dress code on the floor of the Senate and the floor of the House, I think it‘s appropriate that there be a dress code that respects the Office of the President.” 

You know what?  If it helps Obama get the economy going again, he can wear a Batman costume for all I care, Viking helmet, togas - I don‘t care.  Wear what you want.  Be comfortable, man.

MADDOW:  I like the idea that we‘re getting lectured by Bush‘s chief-of-staff on what symbolizes the Constitution.

JONES:  Oh, yes.  Yes.  Lots of important work done in a jacket. 

MADDOW:  You know what else symbolizes the Constitution?

JONES:  Yes?

MADDOW:  Closing Guantanamo.  Yes, that symbolizes the Constitution.

JONES:  For me, it‘s the Constitution.  

MADDOW:  Yes, that‘s a nice idea. 

JONES:  Exactly.

MADDOW:  Thank you, Kent.  And thank you for watching tonight.  We will see you here tomorrow night.  Until then, you can E-mail us, rachel@msnbc.com.  Check out our podcast.   Go to iTunes or Rachel.MSNBC.com.  You can also hear me coast to coast on Air America Radio.  “COUNTDOWN” with Keith Olbermann starts right now.  Good night. 

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

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