updated 3/17/2009 10:05:57 AM ET 2009-03-17T14:05:57

Guest: Barney Frank, John Nagl, Paul Rieckhoff, Kent Jones

High: Interview with Barney Frank.

Spec: Politics; Policies; Government

RACHEL MADDOW, HOST:  And thank you at home for staying with us for the next hour.

In the next hour, we will connect the United Nations to “Battlestar Galactica.”  We will connect Kim Jong-il to pizza.  We will connect House Banking chairman, Barney Frank, to the bailout outrage to maybe end all bailout outrages.

Also, one of our regular guests spent the day today with President Obama.  He will be here to tell us about it.  That‘s all coming up this hour.

But, first, in the ongoing race to be the most infuriating villain in the financial crisis, we have a new leader, America.  It had been Citigroup for a while with their fleet of corporate jets and their lavish post-bailout executive offices remodeling.  Last week, of course, it was Bernie Madoff.  It has been Bank of America for—remember the lavish Super Bowl party?

But now, perennial contender, corporate behemoth AIG has pulled ahead of the pack once again, on news that it plans to hand out millions of dollars in bonus money to the actual, very same employees who helped run the company into the ground.

Now, AIG stands for American International Group.  American International Group—what is that?  An international group of Americans?  What does that mean?  “American International Group” sort of those corporate names that are so generic and so nebulous, it is almost impossible to keep a specific idea in your head about who they are and what they do.

So, for the record, this is AIG.  They used to be the biggest insurance company in the world.  And the reason AIG is important now, the reason they‘ve gotten their mitts on $170 billion public dollars, the reason the government thinks they matter so much that they need four bailouts and counting, is that AIG came to provide financial services to the financial services industry, specifically, they provided insurance to the financial services industry in a wildly irresponsible manner.

When other companies were trading all of these things that were totally unregulated, say, big combined piles of bad mortgages, which was a reckless thing to do, and ruined the world economy, AIG was the one insuring them.  AIG said—yes, bundle and trade those subprime loans and do those credit swaps.  We‘ve got your back.

They said that even though they totally didn‘t have anyone‘s back.  They weren‘t actually capable of making good on those insurance policies but they wrote them anyway.  At a moment when their function should have been to deter risky business, to say, hey, we can‘t insure these bad loans so you probably shouldn‘t make them, AIG didn‘t do that.  Instead, they endorsed the risky business by insuring it.

They made the crisis immeasurable worse than it would have been and they ensconced themselves so inextricably in everyone else‘s finances that if they went under, at least so the argument goes, if they went under, so would everybody they did significant business with.  And they did significant business with everyone.

The first AIG bailout was in September, to the tune of $85 billion.  That was the moment when the U.S. government took an 80 percent share in AIG.  And it was also the moment when it became clearest to the electorate that the Obama/McCain runoff was pretty much going to be all about the economy.  In other words, that‘s when Obama started running off with the election.

The week after AIG got bailed out, they sent their executives, you will recall, on a week-long, all-inclusive trip to a California resort, including $23,000 worth of spa treatments.  Since then, they have received three more colossal cash infusions and their iconic image as corporate wrongdoer has become all the more vivid.

While they were lobbying for bailout number two, AIG sent its executives on an $86,000 English hunting trip.  They have also used taxpayer money to hire four—count them—four PR firms to spin us, to make us like them better, including the terrifying, ethically-challenged firm Burson-Marsteller.

And now, AIG, with all of its top dollar PR advice, has decided to double down, telling the Treasury Department they have no choice—no choice—but to hand out $165 million in bonuses to the employees in their financial products unit.  That is the exact unit that did the wheeling and dealing when it came to insuring all of those ostentatiously bad deals.

AIG says not only is it contractually obligated to hand out those bonuses, it says if it doesn‘t, quote, “We cannot attract and retain the best and brightest talent.”

Really?  The best and the brightest?  The people who work at AIG?  Largest corporate loss in all of quarterly financial history last year—best and the brightest, really?  Huh!

Today, President Obama unleashed his version of fire and brimstone at AIG, lashing out against them.

(BEGIN VIDEO CLIP)

PRES. BARACK OBAMA, UNITED STATES:  This is a corporation that finds itself in financial distress due to recklessness and greed.  Under these circumstances, it‘s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay.  In the last six months, AIG has received substantial sums from the U.S. Treasury.  And I‘ve asked Secretary Geithner to use that leverage and pursue every single legal avenue to block these bonuses and make the American taxpayers whole.

(APPLAUSE)

(END VIDEO CLIP)

MADDOW:  The question, of course, is: Are there any legal avenues left to pursue to block these bonuses?  Or do we just have to watch AIG running off laughing with our money again?

Joining us now is Congressman Barney Frank, Democratic chairman of the House Financial Services Committee.

Chairman Frank, thank you for taking the time tonight.

REP. BARNEY FRANK, (D) HOUSE FINANCIAL SERVICES CMTE. CHAIR:  Glad to.

MADDOW:  Are there any legal options to stop these bonuses.

FRANK:  I hope there are.  The one thing I do want to say is this, and the decision to give the money to AIG, to lend it to them, last September, people should understand, it was not part of the congressionally voted rescue plan.  The Federal Reserve, there was a statute passed in 1932 under Herbert Hoover, during the Depression, which gives the Federal Reserve vast powers that hadn‘t been used for years.

And frankly, people have forgotten they were there.  It was under that grant of authority from 1932 that the Federal Reserve in September of last year informed us, they didn‘t ask us, they didn‘t consult with us, and so, they told us they were going to advance $85 billion to AIG.

The reason I say it is this: when we voted on these things, both last time and more recently, we have put rules in place so this could not happen now with new recipients of the money.  The problem was, when the Federal Reserve did this last fall, they did not include any such restrictions.  And I just want to assure people that we have at least figured out how to stop this from happening again.

In addition, by the way, and equally important, maybe more important, we will soon be passing rules that will stop this financial razzle-dazzle, that will stop people doing these things and that they should back out.  We will put some specific tough regulation in place.

But that still leaves us with your question.  Yes, I think there is an avenue to be pursued and it‘s a little bit complex.  But, as you pointed, we own 80 percent of the company.  We are told that, as the federal government which advanced them the money, which the Federal Reserve did on its own authority last fall, we cannot order the two parties, the company and the employees, to break the contract because the Federal Reserve didn‘t say that at the outset.

But I think we have more power, if we don‘t act as the federal government which lent them money, talking to two other parties, but if we assert our ownership rights.  We own the company.  We are the majority owners.

I think the federal government should now step in as the owner and say to these employers, our employees—bonus my foot, you messed up this company and whatever your account has said, it can‘t be interpreted to me and they were going to reward you for losing money.

You made a very good point, Rachel when he—and now, and I suspect Mr. Liddy‘s argument for this reason.  He said, well, there were two reasons.  One, they have good contracts.  Two, we want to retain them.

Well, no.  I don‘t want to retain them.  And as a matter of fact, if you are trying to undo mistakes, it‘s very often not a good idea to keep the people who made the mistakes in there.  So, I am urging the treasury, we‘re having a hearing on this on Wednesday morning, I‘ve been talking to them, I want the American government to assert its right of ownership in this company.  We own 80 percent.  We should run the company.

I want us as a party in effect to those contracts to say—no, we are not rewarding you, our employees, for having screwed up so badly.

MADDOW:  Will the White House support you on that do you think? 

President Obama seemed pretty firm in his attacks on AIG today.

FRANK:  Yes.  I do.  Look, this is totally outrageous and irresponsible behavior on their part.  And, in fairness to the president, he‘s getting blamed for the mistakes of a prior administration.  This was being done by the Federal Reserve last September without any congressional input.

We are in a situation now where to get out from under the current crisis, there may need to be more funds made available.

By the way, again, I want to assure people, with the Obama administration working with us in Congress, we‘ve been tough.  In fact, I‘m very pleased—there was an article in the “New York Times” last week, in the first page, complaining that we‘ve have been so tough on these banks that have received the TARP money that they want to give it back.  My answer is: Thank you, pleased do.  Here‘s the basket.  Just please deposit it.

And what I was saying is, and here‘s the problem.  We have learned how to be tough.  The Obama people are ready to be tough.  It‘s not that we aren‘t.  I‘m afraid that the ability of the Obama administration to get the funding with the proper safeguards to help us get out of this will be hindered politically because of the failures last year to do it right.

MADDOW:  I think politically, that‘s absolutely the case.  People are feeling like the money has gone out with no strings.  And it‘s hard to figure out, just from a lay man‘s perspective who‘s lent what money under what circumstances.  I mean, just comparing what the financial services sector has gone through compared to the auto industry, I mean, autoworkers are told they need to make all those concessions and take pay cuts.

FRANK:  Yes.

MADDOW:  And the people working in the financial industry felt like there was a double standard.

FRANK:  Absolutely, right.  AIG—I made that point back then, when some of my Republican colleagues wanted the AIG people to not take a cut, although they are now complaining about bonuses.  We weren‘t telling them to take a cut.  And they were saying that foreign auto companies ought to set the wages for American workers.  So, it‘s a terrible double standard.

And the answer (ph) is, we do know how to be tough and are being tough.  We do have this past situation.

But I think the president—I know the president is correct.  He is a pretty good lawyer.  And again, it‘s one thing for the federal government as the lender to say to two people who want to make a contract you got to break it.

But we‘re the owners here.  And I think we have a right to say, you know, as I said—he said, well, he‘s worried about retention.  Look, if this was high school, they would be getting detention not retention.  And the time has come to step in.

And, by the way, I want to look at who‘ve made the deal to give these people this kind of bonuses.  That‘s another thing we‘re going to do, Rachel.

When we enact legislation here with the risks (ph) -- these bonuses are unfortunately indicative, symbolic of a kind—let me say representative, it‘s the best word, it‘s great—representative of a pattern in which chief executives and others are given very perverse incentives.  They get bonuses which if they make—if a deal makes money for the company, they make extra money.  But if it loses money they don‘t lose anything.  If I tell you, take the risk, and if it pays off, you make money, and if it blows up in your face, you don‘t lose any money, you‘ll take too many risks.

So, we have to change that whole incentives structure.

MADDOW:  Congressman Barney Frank, chair of the House Financial Services Committee—it is late, you have had a very long day.  Thanks for taking time with us.

FRANK:  Yes, next time, connect me to pizza not the bailout.

MADDOW:  I will, indeed.

FRANK:  Thank you, Rachel.

MADDOW:  Thank you.

There are certainly been a lot of sound from prominent Republicans in the last day or two about the economy, sometimes evoking some giggles.  Did you hear what Michael Steele is putting in his office?  Did you?  Oh, God.

There‘s also been more than a little fury.  Did you hear what Dick Cheney said about the economy?

In a second, the sum of all of it.  Here‘s a hint.  The Republican with the party‘s one remaining shred of power in Washington says he does not have a better budget plan than the one he is committed to opposing this year.  That‘s coming up next.

But, first, One More Thing about AIG.  They had a really bad public relations day despite their armies of outsourced PR advisers.  However, I have to tell you, they did have a great day on the stock market.  AIG stock went up 66 percent in one day.  It reached its highest level since February 13th.  A share of AIG stock now costs 83 cents.

I‘ll take two.  And my 34 cents change, you can call that a bonus.

(COMMERCIAL BREAK)

MADDOW:  Senator John McCain is taking a firm stand on AIG—again—on the other side of it this time.  Or the same side as he took two stands ago or something.

Candidate McCain came out against rescuing AIG when news first broke that the company was on the verge of collapse.  Then 24 hours later, still during the campaign, he reversed course, saying that the bailout was necessary because too many people would be affected if AIG collapsed.

Now, according to Senator McCain‘s Twitter feed, he is against it again, quote, “If we hadn‘t bailed out AIG equals no bonuses for greedy execs.”  Well, at least we now know where the senator stands—depending on where he stands and when he stands there.

(COMMERCIAL BREAK)

(MUSIC)

MADDOW:  The Republican Party‘s path to the very furthest outskirts of the backyards of the suburbs of the lost lonely cities of American political power has a lot to do with the American public‘s perception that Republicans are not smart about the economy.  In December 2007, it probably did not help matters when the man who became the Republican‘s standard bearer in the presidential election, John McCain, told reporter Jill Zuckman, quote, “The issue of economics is something that I‘ve really never understood as well as I should—I‘ve never been involved in the financial stuff, the financial workings of the country.”

As Republicans try to find their way back into power, how are they doing now on the financial stuff?  Well, just from the last day or two, let‘s start with the chairman of the party.  “Roll Call” reports that long-suffering RNC chairman, Michael Steele, is spending what you have to presume as scarce Republican Party resources to redecorate his office, taking his cues from the bailed out banks.  How much did your trash can cost?

The redecorations include, reportedly, new wallpaper and a $2,000-ish dollar Bowflex Machine.  You could do laundry on those abs.  Call before midnight tonight.

Then yesterday, we heard from former Vice President Dick Cheney, who appears to be totally, personally unconstrained by the protocol followed by other recent presidents and vice presidents, who have, at least, waited a few years before criticizing the new administration that came after them.  Mr. Cheney was asked on CNN about his administration‘s atrocious economic record, including unemployment, and poverty, and the number of uninsured people, and the budget deficit, all falling off a cliff, the full blown financial collapse underway by the time the new president was sworn in.  Mr. Cheney‘s response?

(BEGIN VIDEO CLIP)

RICHARD CHENEY, FORMER U.S. VICE PRESIDENT:  Stuff happens.

(END VIDEO CLIP)

MADDOW:  Did you seriously just say that?  Stuff happens?  You know, stuff.

The one place where Republicans do still have sort of a modicum of power is in the Senate, where Democrats do not have a filibuster-proof majority.  So, constrained by some small responsibility for governing, with the nation wondering about what the Republicans really have to offer on the economy, what is the Senate Republican economic plan?

(BEGIN VIDEO CLIP)

GEORGE STEPHANOPOULOS, ABC NEWS ANCHOR:  So will you have a budget, and are you worried about that attack?

SEN. MITCH MCCONNELL, ® SENATE MINORITY LEADER:  No, we are going to offer a number of amendments to the Democratic proposal.

STEPHANOPOULOS:  But no comprehensive budget?

MCCONNELL:  Well, it will—it will reframe what the Democrats recommend for America over the next five and 10 years.

(END VIDEO CLIP)

MADDOW:  We prefer the reframing to the actual policy.  Policy, we don‘t need no stinking policy.

Joining us now is Lawrence O‘Donnell, a former senior staffer on the Senate Finance Committee, and an MSNBC political analyst.

It‘s good to see you, Lawrence.  Thanks for joining us.

LAWRENCE O‘DONNELL, MSNBC POLITICAL ANALYST:  Good to be here, Rachel.

MADDOW:  How do you go after a president on the economy and his budget if you are not proposing your own?

O‘DONNELL:  Well, the minority party in the Congress usually does not propose a budget.  First of all, writing a budget is not easy.  It takes a lot of people and takes a lot of expertise.  And it puts—it really puts you on the line because to govern is to choose.  And the choices are never easy.  And it puts—it really puts you on the line because to govern is to choose and the choices are never easy.  The budget is the place where you make those choices.

The normal minority tactic which you see Mitch McConnell basically saying he‘s going to do is to try to pick apart the budget that the president offers and that the Democrats bring to a vote in the Senate.  And that tactically is normally the way to go—because when—if the Republicans were to come up with their own budget, just as an example, there would probably be zero beside the words “healthcare reform.”  In fact, the words healthcare reform would not be in the budget.

And so, they would set themselves up for being criticized for not taking on healthcare reform, not trying to do anything about the affordability of healthcare in the United States.  And that would leave them open to that criticism.  Instead, what they want to do is just take pot shots here and there, at elements of the budget that they think they will be able to label as unpopular, and, you know, they might have some successes here and there with that.

MADDOW:  Well, one counter example does not a rule break.  But, don‘t I remember that during Bush‘s first year in office, the Senate Democrats presented an alternative budget?  Didn‘t they do that when Bush first took office?

O‘DONNELL:  Well, you know, it wasn‘t that much of an alternative.  Bush wanted a $1 trillion in tax cuts, and the kind of Daschle alternative to that was, how about $750 billion in tax cuts?

(LAUGHTER)

O‘DONNELL:  So, everybody kind of got swept up in the Bush direction and, you know, Bush settling for what he got was really a win.  And so, you rarely see a complete alternative budget submitted by the minority party against a president.  It‘s a very rare thing to see happen.

MADDOW:  In recent polling, we have seen an enormous gap, like 25, 30, 35-point gap in terms of who voters trust on the economy.  They trust the Democrats over the Republicans on the economy.  That seems to me like such a deep hole for the Republicans, that they can‘t just hope that the shine is going to fade on the Democrats, they can‘t hope that taking sort of pot shots at the other guy‘s policies will be enough.

Don‘t they have to offer some sort of clear, positive alternative?

O‘DONNELL:  Well, you know, the standard playbook in the Senate has very few plays in it, Rachel.  And this is—you know, it‘s like you are saying to the Republicans, is this the time for you to think up a new playbook—if it was.

Who in the Senate would do that?  Certainly not John McCain.  Mitch McConnell is not the type to come up with a whole new way of strategizing Republicans to success.  They are just playing for failure.  They don‘t have a success play of their own at this point.

This is a popular president.  This is Democrats op a roll two elections in a row: 2006, 2008 in the Senate.  This is something none of them—none of them on the Republican side in the Senate have ever seen before.  That when Al Franken takes his seat, which he surely will, it‘s going to be 59 Democrats.  They haven‘t had to deal with that.

So, I, in a way, pity the strategic position Senate Republicans are in.  I don‘t have a good suggestion for them on how to handle this.

MADDOW:  Well, let me ask you about Dick Cheney then.  Perhaps you have a suggestion for him.  I do not remember other former presidents, former vice presidents criticizing the new administration that replaced them this soon after they left office.

Am I forgetting?  Do other people do this?  Do other people behave like this?

O‘DONNELL:  We don‘t—we don‘t normally see—I can‘t think of a case where we‘ve seen it.  One reason why Dick Cheney and George Bush should stay off of TV and stay out of the public dialogue for a while is that their poll numbers are so low.

If Cheney were to stay absolutely quiet for a year, the only thing that can happen to his poll number is it will go up.  It has to.  It has to go up a couple of points, at least, just by staying quiet.  By coming out and doing this kind of thing, he‘s reminding people why, electorally, the Republicans were run out of town in this last election.

MADDOW:  Lawrence O‘Donnell, MSNBC political analyst—your expertise invaluable this evening.  Nice to see you, Lawrence.

O‘DONNELL:  Thanks, Rachel.

MADDOW:  Coming up: President Obama is spending part of his Thursday night this week where Keith Olbermann is spending part of his Wednesday night—on Jay Leno‘s couch.  Hmph!

And North Korean dictator, Kim Jong-il, is a headline-making machine.  And tonight‘s headline—has to do with pizza.  I‘m not kidding.  Stay where you are.

(COMMERCIAL BREAK)

MADDOW:  I spent the weekend curled up with the Marine Corps and Army counterinsurgency field manual—because that‘s how I roll on the weekends.  Also, because I‘m trying to be prepared for the big speech that President Obama is due to give soon, about what he is going to do about the war that we have already been in for seven years and counting.

Coming up next: We will introduce you to one of the nation‘s premier counterinsurgents.  He will try to Talk Me Down.

First, though, it‘s time for a couple of holy mackerel stories in today‘s news.

There‘s some strange news today about the paranoid, secretive, tiny little leader of North Korea, Kim Jong-il, the man who just won reelection with an astounding and suspicious 100 percent of the votes.  The irrational isolationist dictator, he has done very little to ease the suffering of the millions of North Koreans suffering from extreme poverty and sometimes, even this threat of starvation.

That guy has now made the announcement that an exhaustive 10-year search is finally over.  After a full decade or more, Kim Jong-il says has finally found the perfect pizza.  North Korea is completely cut off from the rest of the world, so this is a stock photograph of pizza.  But I imagine, maybe, Mr. Kim‘s pizza looks something like this, if he‘s lucky.

Anyway, the North Korean leader‘s food obsession is legendary.  In the late 1990s, he brought in a team of Italian chefs to train North Korean army officers in the fine art of pizza making.  Upon arrival, the Italians were reportedly given x-rays, brain scans, and they had to provide blood and urine samples.  What that has to do with making pizza?  Hopefully nothing.

Now, after a decade of pizza practice, Kim Jong-il says he has finally authorized the first Italian restaurant in North Korea.  We don‘t know what the restaurant is called, but I‘m going to go ahead and take out trademark words (ph) on “dear leader Jong‘s” or the “democratic people‘s republic of Pizza Hut,” maybe?

Finally, even with the Iraq war and Katrina and the financial meltdown and 9/11 and secret prisons and torture and North Korea getting nukes and the Department of Justice becoming a wing of the Republican Party.  Even with all the worst of the Bush administration, George W. Bush made a concerted effort at the end of his administration to make sure that his international AIDS program was part of his legacy, a positive part of his legacy. 

And while there is certainly much quibbling to be done about that international AIDS funding, President Bush did increase America‘s contributions to trying to fight HIV around the globe. 

Now, candidate Obama suggested that he would continue President Bush‘s international AIDS work but he said he would also turn his attention to the much-neglected HIV epidemic here at home.  Now that Mr. Obama has moved to Washington, D.C., his new hometown could frankly really use that attention. 

This is going to blow your minds.  A new report from D.C. health authorities says three percent of the population of our nation‘s capital has tested positive for HIV.  Three percent. 

To put this in perspective, an epidemic, as defined by health experts, is one percent of the population being infected.  The rate of HIV and AIDS in Washington is three times that.  That puts our nation‘s capital on par with the HIV rates in countries like Uganda and parts of Kenya.  Attention, desperately needed.  

(COMMERCIAL BREAK)

MADDOW:  Last week, on Thursday, we reported the buzz that the U.S.  troops had shot down a drone over Iraq, a drone that they said was Iranian.  Well, the U.S. Military just today confirmed that the drone shoot-down did, in fact, happen. 

So that means Iran is flying unmanned, presumably remote-controlled planes over our troops‘ positions in Iraq, the country that is their friendly little neighbor to the west.  And we are shooting down those planes.  What could possibly go wrong? 

The U.S. Military also confirmed that an American soldier was killed in combat operations in Baghdad today - that‘s an addition to four U.S. troops killed in eastern Afghanistan yesterday by a roadside bomb. 

Also in Afghanistan, the mayor of Kandahar was very nearly assassinated yesterday morning and two suicide bombs today, one in Kandahar and one just out of Kabul, killed another 13 people. 

This week is the sixth year anniversary of when we invaded Iraq.  We are already well into year eight in Afghanistan.  And this week, we are awaiting word from the new president, who did not start those wars, about what his plan is for Afghanistan. 

That said, unnamed Pentagon officials keep telling the press that Obama is about to announce his Afghanistan plan and it hasn‘t happened yet, so don‘t get too excited.  But we think it might.  The stars seem to be aligning with frequent reports that the president is onboard with the counterinsurgents. 

The “counterinsurgents” is not only the best unused band name in America.  It‘s also something worth-understanding if you want to know if we are going to be in the wars that George W. Bush started when President Obama leaves office. 

The modern doctrine of counterinsurgency is attractive to the Obama folks for a lot of obvious reasons.  It is elegant.  It is hard-headed.  It is tough.  It has been developed and articulated by the scholar warriors, these highly educated, very experienced military minds from General Petraeus on down - these thinkers who have become sort of intellectual rock gods in the security world. 

And it is probably helpful to grasp that had the counterinsurgents had been in charged, we probably would not have gone to war in Iraq in the first place at all.  And if we had gone to war in Afghanistan, it would have been done very differently. 

That is true of both of the counterinsurgents, and it is also true of Barack Obama himself.  So you can see the attraction here, right?  President Obama now has the job of figuring out how Afghanistan fits into our overall national interest, what resources we should be devoting there. 

The counterinsurgents do not have that same job.  Their job is to figure out how to win - how to win this war.  And to win, unlike Les Gelb, who we had in the show on Friday, who says we ought to get our troops out of Afghanistan within three years, the counterinsurgents say, essentially, settle in. 

This is going to be a long war yet and it‘s going to take huge numbers of forces, potentially.  According to the counterinsurgency field manual for the Marine corps and the U.S. Army, you need 20 to 25 counterinsurgent forces for every 1,000 people in the local population, in terms of being able to protect that population. 

Afghanistan has 30 million people.  So that would be 600,000 to 750,000 counterinsurgent forces.  That means take the size of the Afghan army now and the western troops that are in Afghanistan now and start putting new zeros on the end of those numbers. 

If the brightest military minds in our country have figured out that after eight years in Afghanistan the only way we can win the war there is to double, triple, quadruple down, to spend years more, to spend tens of billions more and tens or maybe even hundreds of thousands more troops there. 

At some point do we say, OK, we recognize that from a military‘s perspective, that‘s what it would take to call this a win.  But it has been eight years already and we cannot afford that kind of a win.  I need a talking down here.

Joining us now to try to talk me down is Dr. John Nagl, a veteran of both Gulf Wars.  He retired as a lieutenant colonel from the Army.  He is now president of the Center for a New American Security.  He is also a co-author along with Gen. David Petraeus and Lt. Gen. James Amos of the “U.S. Army and Marine Corps Counterinsurgency Field Manual.”  Lt. Col. John Nagl, thank you so much for coming on the show. 

LT. COL. JOHN NAGL (RET.), PRESIDENT, CENTER FOR A NEW AMERICAN

SECURITY:  It‘s a pleasure, Rachel. 

MADDOW:  So here is your chance to talk me down.  Tell me that when the next president is inaugurated, we are not going to be talking about prospects for year 16 of the war in Afghanistan. 

NAGL:  I‘d like to be able to tell you that, Rachel.  I‘m afraid American interests in Afghanistan are going to remain.  I hope that over the next eight years, we‘re able to do a whole lot better in Afghanistan than we have over the preceding eight.  I‘m actually pretty confident that that is going be the case. 

MADDOW:  Do you think that over the next eight years, even if we have a continued intensive involvement in Afghanistan, it might be something that we wouldn‘t call a war? 

NAGL:  I think it is going to look increasingly like a war as time goes on after an initial move probably in what you are going to perceive to be the wrong direction.  Quite frankly, we haven‘t had enough forces on the ground in Afghanistan and most importantly, we haven‘t put enough resources into building an Afghan army so that the Afghans can secure their own country as we need to. 

And while we‘ve really taken our eye off the ball a little bit, the Taliban have gained a march on us.  So it is going to take us a little while to dig ourselves out of this hole wherein - implements a new counterinsurgency strategy and policies and build an Afghan army that can protect this country from the Taliban who are trying to take it over. 

MADDOW:  What do you think we need to do in order to keep the Taliban from take over Afghanistan again, in order to win the war?  Would it be better if we were just starting right now or starting some time in the last year?  Were the past seven years in Afghanistan more harm than they were good? 

NAGL:  We‘ve done some good things in Afghanistan.  We had some of the first democratic elections the country has ever seen.  We elected a very popular president.  We built some institutions. 

But then, we sort of lost steam.  We didn‘t put enough resources into the fight.  We really took our eye off the ball.  And meanwhile, the Taliban grew stronger. 

So we‘re not exactly starting from ground zero.  But we‘re certainly not where we ought to be, given that we are this far into the war.  We‘ve got an awful lot of work to do in front of us - I‘m afraid more in front of us than behind us in this war in Afghanistan. 

MADDOW:  What do you think that the president is going to propose that we do in Afghanistan?  I know you are not part of the administration and I don‘t ask you to speak for them, but just your well-informed opinion about what you think he‘s going to propose.

NAGL:  The advice I have given to some people who are in fact in the administration is that we need more American troops right now.  He has agreed to send 17,000 immediately even before the strategic review is over. 

I think another 20,000 to 30,000 in addition to that over the course of the next year are probably going to be required.  But about half of those extra 30,000 that I advocate should be devoted to building that Afghan army that I talked about. 

Currently, the Afghan National Army is less than 100,000.  It needs to be above 200,000, 250,000.  By the time the Afghan army is that big and the Afghan police are that big, both are better trained and have American advisers with them, have the equipment they need, at that point, the Afghans are going to be able to protect their country themselves and we can start to draw down and pull back.  Before we get to that point, it is going to take some more work for us, I‘m afraid, at the front end of this effort.

MADDOW:  Sorry to have interrupted you there.  I guess I feel like I‘m trying to understand more about military strategists‘ way of thinking at Afghanistan.  I feel like I heard you understand something about the way that politicians think about problems like Afghanistan. 

And what I‘m worried about is that you and the other sort of leading lights of counterinsurgency theory have come up with a really compelling way to argue for how to win the war in Afghanistan, how to call something a win. 

But politically, the cost that it would cost us, just in terms of additional investment, just in terms of money, just in terms of manpower, just in terms of how exhausted we already are by all of the war-fighting that we have done since 2001, it seems politically like too high a cost to bear.  Do you see that as part of your remit as a strategic thinker about this or are you just focused on how to win? 

NAGL:  We live in a democracy and the American people have a vote in all of this.  And so I absolutely think it is the responsibility of people like me and people who call themselves strategists to weigh the costs against the benefits. 

And there are certainly huge benefits to an Afghanistan that can secure itself where the people don‘t live under the threat of terror, the reprisal suffered by those who fight against the Taliban, where girls can go to school without being worried about having acid shot into their faces. 

But leave all that aside, all those good things aside, the costs of failure in Afghanistan are very, very high.  A secure Afghanistan, a stable Afghanistan does not mean that Pakistan is secure.  But an unstable Afghanistan does mean that Pakistan is insecure. 

As we saw over the weekend, Pakistan is already not the most stable place in the world.  It‘s afflicted by a weak democracy, the Taliban, al-Qaeda central and nuclear weapons that frankly aren‘t as secure as we would like them to be. 

So anything we can do to make Pakistan more secure, no matter how much it costs us, almost, is a very real investment in America‘s security. 

So I understand how high the costs are.  I understand better than most how high the costs are of continuing to fight in Afghanistan but I also understand what the costs of failure in Afghanistan are.  And I‘m very concerned about those. 

I think it is my responsibility as a strategist, as a national security professional to talk to the American people about what we give up if we don‘t try really hard to succeed in Afghanistan. 

MADDOW:  Well, see, I now have to have you back a second time to talk to you about whether or not having 100,000 American troops in Afghanistan would be good or bad for Pakistan‘s stability.  But I think that has to be for a second visit if you‘d be willing to come back. 

NAGL:  And if Afghanistan is hard and it is, Pakistan is even harder. 

So you may have to book me twice for that one. 

MADDOW:  Fair enough.  Dr. John Nagl, Retired Army Lieutenant Colonel, president of the Center for New American Security, thank you so much for your time tonight, Sir. 

NAGL:  Thank you, Rachel. 

MADDOW:  Coming up next, one of my friends, a frequent guest on this show, spent the day in the White House with the president.  Not kidding.  That is change that I‘m believing in right now. 

(COMMERCIAL BREAK)

MADDOW:  Did you know Afghanistan has its own version of “American Idol.”  I‘m not kidding.  Their “American Idol” is called “Afghan Star.”  It is a singing contest reality show and as of right now, it is officially down one host. 

In January, host Daoud Sediqi went to the Sundance Film Festival in Utah to view a documentary about the show and he never came back.  How is that for a quality of life indicator?  He presented with an opportunity to flee the country in which he is a bona fide star.  Afghanistan‘s own Ryan Seacrest took it and ran. 

(COMMERCIAL BREAK)

MADDOW:  Yesterday marked the 20th anniversary of the Department of Veterans‘ Affairs becoming a cabinet-level agency.  And today, President Obama spoke to VA employees.  The president intends to increase the VA‘s funding by $25 billion over the next five years.  That puts the administration‘s money where its mouth is on the issue. 

However - and it‘s kind of a big however, the Obama administration is also considering a change to one element of veterans‘ care, one element of veteran‘s care that actually sort of works. 

For all (UNINTELLIGIBLE) in America about that bogeyman known as government-provided healthcare, the VA provides healthcare for veterans and it basically works.  The scandal at Walter Reed was not the VA.  It was the Department of Defense. 

VA healthcare is not perfect by any stretch of the imagination, but it is not broken and it is government-provided healthcare.  Despite that, the Obama administration and VA Secretary Shinseki are now reportedly considering what is known as third-party insurance which would allow the VA health care system to bill a veteran‘s private insurance for care and treatment for things that happen to them in the line of duty. 

Does that mean they are thinking about privatizing the VA?  Are you kidding? 

Our next guest, Paul Rieckhoff, is the executive director of Iraq and Afghanistan Veterans of America.  He met with the president earlier today at the White House.  Paul, nice to see you.  Thanks for being here.  

PAUL RIECKHOFF, EXECUTIVE DIRECTOR, IRAQ AND AFGHANISTAN VETERANS OF

AMERICA:  My pleasure, Rachel.  

MADDOW:  You sent a letter to the president about this third-party insurance thing that said this, “This proposal ignores the solemn obligation that this country has to care for those men and women who have served this country with distinction and were left with the wounds and scars of that service.”  Tell me why you feel so strongly about that.

RIECKHOFF:  Well, IAVA was joined by 11 other leading veterans‘ organization.  We feel that this is a bad policy that hurts veterans, that hurts the VA.  And I think, ultimately, it‘s going to hurt the president‘s relationship with generations of veterans. 

It basically pushes the sacred trust that exists between veterans and the government.  It outsources or pushes off third-party payments for disabled veterans.  So basically, if you loose a limb in Afghanistan, and you come home and you have private health insurance and you go VA, the coverage for that wound is going to be pushed off to the private health insurance, not the VA. 

It is really a controversial proposal.  It‘s been opposed by every leading veteran‘s organization in the country, by Congress - a lot of folks in Congress - and by (UNINTELLIGIBLE), the VA union. 

So he‘s really up against a huge opposition here.  We hope he drops it, he‘ll listen today, and we hope he‘ll change his position quickly.  

MADDOW:  When listened to that, you were at the white House there meeting with the president in person.  Was his response specific enough?  Was it direct enough to satisfy you? 

RIECKHOFF:  No.  We wanted to see him drop it.  We wanted to see him come out today and say, “I will drop this proposal.”  He‘s considering it.  We‘re going to have meetings later this week.  I think he‘s going to get considerable pressure from every major veterans‘ group. 

And Sen. Patty Murray has already said this is dead on arrival. 

So it is a nonpartisan issue.  He‘s going to get hit from all sides here.  And we hope that he drops it and we can, you know, focus on this record increase of the VA budget, the new GI bill, the great work Michelle Obama is doing.  This is a speed bump that he doesn‘t need.  

MADDOW:  Yes.  There are so many positive things about the Obama administration. 

RIECKHOFF:  Yes.  Absolutely.  He deserves tremendous credit for a lot of other things.  But this is the third rail for Veteran‘s Affairs and he hit it.  And he‘s got to back off now and listen to the veterans‘ groups, listen to military community and let‘s focus on taking care of all the folks who are going to come home as he draws down Iraq.  

MADDOW:  Now, I said in the introduction VA care is not perfect, but it is not broken.  Is that an - I‘ve never had VA care.  Is that an accurate assessment? 

RIECKHOFF:  The quality of VA healthcare is very good.  Access is the problem in rural areas, utilizing technology, dealing with new injuries like traumatic brain injury, Women‘s issues - these are all areas where we can reform the VA.  And George Shinseki and President have a tremendous opportunity to use the VA as an example for how you can transform government and make it work. 

MADDOW:  Yes.

RIECKHOFF:  But he‘s got to layoff this issue and let‘s move on to bigger things.  

MADDOW:  Their argument for doing this is that it will be cost-saving? 

RIECKHOFF:  That‘s what we hear.  I mean, it‘s about $500 million.  So we‘re talking about a VA budget over $100 billion.  So if we‘re looking to save money, look at AIG, don‘t look at the VA.  

MADDOW:  Yes.  Paul Rieckhoff, executive director of Iraq and Afghanistan Veterans of America, meeting with the president, keeping after advocacy, coming on to you to talk about what he‘s not doing right, even though he is doing something right.  You‘re doing a very good job at your job today, Paul.  

RIECKHOFF:  Thank you.  You are, too, Rachel.

MADDOW:  Well, I try to.

RIECKHOFF:  Nagl was great.  Great conversation.  

MADDOW:  Yes.  I know.  Thank you.

               

RIECKHOFF:  Excellent. 

MADDOW:  Coming up on “COUNTDOWN,” Keith Olbermann talks to Janeane Garofalo to see how she feels about making it on to Bernie Goldberg‘s five worst offenders in the mainstream media list.  Go Janeane, go. 

Next on this show, I get just enough pop culture from my friend, Kent Jones.  Plus, a cocktail moment, sci-fi style.

(COMMERCIAL BREAK)

MADDOW:  Hi, Kent.  How are you? 

KENT JONES, POP CULTURIST:  I‘m doing very well, Rachel.  It‘s on.  

MADDOW:  What? 

JONES:  March madness - 65 teams have been picked for the NCAA men‘s basketball tournament.  Let the national decline in productivity begin.  Now, the four top seeds for March madness are Louisville, Pittsburgh, UConn and North Carolina.  The finals are April 6th in Detroit.  Rachel, you‘ve been studying the bracket.

MADDOW:  Yes.

JONES:  What are your picks? 

MADDOW:  My, albeit somewhat intuitive, not fact-based picks are Louisville, Memphis, Xavier and Gonzaga.  

JONES:  Wow.  Nice.  A four-seed - Gonzaga.  Here are mine - in the Midwest region, I‘ve also picked Louisville.  In the west, Missouri, of course.  In the East, I‘m liking Duke and in the south, North Carolina, which I think will make for a bloody, bloody final between the two of them.  

MADDOW:  Yes.  Metaphorically speaking, of course.  

JONES:  It will be delicious, metaphorically.

MADDOW:  Yes. 

JONES:  Pure competition.

MADDOW:  Excellent.

JONES:  Next up, a few weeks ago, I told you about a hacker who reprogrammed highway signs in Austin to warn us about zombies, remember that? 

MADDOW:  Oh, yes. 

JONES:  Evidently, the punking trend has reached East 4th St. and Broadway here in New York City, “New York is dying.”  Wow, that seems kind of negative.  Couldn‘t we do it this way?  (Sign reads: “New York is resting.”) 

You know, finally, Latvia is going through the same economic crisis as everybody else and people were understandably like, what, when the Latvian finance minister described this meltdown as, quote, “nothing special.”  

MADDOW:  What? 

JONES:  So these guys formed a band called Nothing Special and dressed like this because penguins have to huddle together for warmth.  And here we are.  Yes.  Latvian penguin rock.  Finally.

MADDOW:  Latvian penguin protest rock.

JONES:  Protest rock. 

MADDOW:  I‘m strangely moved by that. 

JONES:  It doesn‘t get better than that.  Really. 

MADDOW:  No, that‘s brilliant.   Kent, I have a cocktail moment for you. 

JONES:  Very nice.

MADDOW:  All right.  The executive producer of our show, as you know, is Bill Wolf.  Bill Wolf is friends with a guy named David Eick.   David Eick is the executive producer of “Battlestar Galactica.” 

JONES:  Ah, excellent.

MADDOW:  Very cool, right?  “Battlestar Galactica‘s” has been on for four seasons (UNINTELLIGIBLE). 

JONES:  Sure.  Oh, yes.

MADDOW:  David Eick made Bill Wolf very jealous this weekend by telling him that his plans for this week include addressing the United Nations.  

JONES:  What?  OK.  The producer of “Battlestar Galactica” addressing the United Nations.  I‘m getting that straight in my head.  

MADDOW:  David Eick and the other executive producer who‘s name is Ronald Moore and then two of the stars Edward James Olmos and Mary McDonnell tomorrow are addressing the United Nations. 

JONES:  Think galactically.  Act locally.  

MADDOW:  Also, we now have to come up with some way to impress Bill. 

JONES:  OK.  Good luck with that. 

MADDOW:  I know he‘s been showing up in front of his friends.  All right.  We‘ll work on it.  Thanks, Kent. 

Thank you for watching tonight.  We will see you here tomorrow night.  Until then, you can E-mail us rachel@msnbc.com.  You can check out our podcasts at 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.

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