updated 5/8/2009 10:27:56 AM ET 2009-05-08T14:27:56

Guest: Frank Rich, Naomi Klein, Ana Marie Cox, Rajiv Chandrasekaran, Kent Jones

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

Frank Rich of “The New York Times” will join us this hour.  Ana Marie Cox will be here.  And, as Keith said, Naomi Klein will be here live—which is what explains the screaming, fainting fans lining the streets all around Rockefeller Center tonight.

But we start with the big day in capital “D” diplomacy at the White House.  For the past eight years, the indelible images of the American president on the international stage consists of things like the president trying to open doors that didn‘t open, the president massaging fellow world leaders who really did not want to be massaged, and, of course, the president having shoes thrown at him at great velocity.

In a bit of rather sober contrast today, President Obama welcomed to the White House the leaders of two countries that Americans have come to see as inextricably linked to our own national security and to the threat of international terrorism.  Afghanistan‘s president, Hamid Karzai, and Pakistan‘s president, Asif Ali Zardari, who met in Washington today with Secretary of State Hillary Clinton, and then, they did the big tripartite photo-op with the president himself.

It was really an effort to sell us—to sell the American people on why we‘re putting so much blood and treasure into this far away part of the world.  The latest round of spending that‘s winding its way through Congress allocates more U.S. tax dollars to Pakistan than what we‘re allocating to Iraq and Afghanistan.  And Afghanistan, of course, is getting U.S. troop increases, even after 7 ½ long years of a war there already.

So, today, we heard President Obama‘s explanation of why.

(BEGIN VIDEO CLIP)

PRES. BARACK OBAMA, UNITED STATES:  The United States has a stake in the future of these two countries.  We have learned time and again that our security is shared.  It is a lesson that we learned most painfully on 9/11, and it is a lesson we will not forget.

We meet today as three sovereign nations joined by a common goal: To disrupt, dismantle and defeat al Qaeda and its extremist allies in Pakistan and Afghanistan, and to prevent their ability to operate in either country in the future.

(END VIDEO CLIP)

MADDOW:  Even if you‘re not obsessed with foreign policy, this is one of those “How do we look to the rest of the world” moments.

Are we back to an era where the United States is once again seen as a uniter?  Are we back to Jimmy Carter bringing together Israel and Egypt in 1979?  Or Bill Clinton with Yitzhak Rabin and Yasser Arafat in 1993?  These iconic moments in D.C. that put America and the American presidency at the heart of the world‘s hardest diplomatic challenges?

Today, President Obama had his moment to bring together these two countries that blame each other for the terrorism and Taliban problems they both share.  They‘ve spent 43 freaking years unsuccessfully negotiating one lousy trade agreement.  Today was Obama‘s chance to create that same image of America in the middle, in a good way.

But at the same time, this wasn‘t just some abstract do-gooder exercise about us.  Everyone says that Pakistan is about to fall apart.  Swaths of that country are falling to the Taliban—in 2009.  And the country has dozens of nuclear weapons.  Afghanistan is worse off than when we arrived 7 ½ years ago, and that‘s with tens of thousands of American troops already there now.

These are big, concrete catastrophes that need figuring right now. 

And these are the guys we‘re going to fix them with?

In Afghanistan, President Hamid Karzai—Obama has a leader who‘s essentially powerless outside his nation‘s capital, Kabul, whose government is so corrupt that his brother is alleged to be one of that country‘s most prominent drug smugglers, who‘s government President Obama described as being detached from what‘s going on just three months ago to actively try to work around him, not with him.

And the other guy, Pakistani President Asif Ali Zardari—President Obama has a leader known more as a playboy than a politician, a man who earned the nickname “Mr. Ten Percent,” since that was his preferred personal cut out of any deal he was involved in, whose government has failed to keep large portions of it is own territory out of the hands of the Taliban, whose leadership has inspired such confidence that U.S.  officials are now cultivating ties with his rivals, and whose country has a bit of a history of overthrowing its leaders while they‘re out of town—which he is right now.  He‘s here.

I mean, it‘s still neat.  It still makes for a nice picture, right? 

Still important.

But President Obama is welcoming in a new age of diplomacy in the area

that he has identified as the most high profile, most important place for

American diplomacy in the world, with two really flawed, unstable leaders -

whose own power is an open question in their own countries.

               

Dealing with them is better than not dealing with them, but what‘s the possibility of success here?  What are America‘s objectives here?  And if these are the guys we have to go through, is there really any hope of getting there?

Joining us now is “Washington Post” reporter and associate editor, Rajiv Chandrasekaran.  He‘s “The Post” former Baghdad bureau chief.

Rajiv, thank you so much for joining us tonight.

RAJIV CHANDRASEKARAN, THE WASHINGTON POST:  Good to be with you, Rachel.

MADDOW:  Let‘s tackle this at its most, most, most basic level.  What does the U.S. want, say, from Pakistan?  What do we want Pakistan to do specifically?

CHANDRASEKARAN:  Well, we want President Zardari and his military and intelligence services to really redouble their efforts against the Taliban extremists that are seizing large swaths of Pakistani territory.  In fact, it‘s more than redoubled; it‘s really to engage in concerted actions against them.  The likes of which the Pakistani government really hasn‘t done up to this point.

There‘s been a lot of appeasement.  There have been some efforts in trying to sort of negotiate their way out of this—which have not worked very well, to say the least.  And so, what President Obama and his national security team were engaged in today were really trying to create a degree of new commitment on the part of the Pakistani leadership to go after these guys and to go after them in a far more meaningful way.

They also want the Pakistani government to do more than deal with the Taliban infiltration on the Afghan/Pakistani border.  Obviously, that‘s a huge problem for the U.S. troops that are in Afghanistan.  And they want President Zardari to more meaningfully engage with some of his political rivals who they think, you know, might be helpful in trying to, again, establish a coalition in Pakistan to go after the extremists.  And trying to convince Zardari that the real threat is not from Pakistan‘s archenemy, India, but from the Islamic fundamentalists that are metastasizing throughout his country.

MADDOW:  And it used to be that the Obama administration was talking about Pakistan because they considered Pakistan to be key to being able to defeat the Taliban in Afghanistan.  But now, it sort of seems like Afghanistan is a separate issue, that Pakistan has become its own stand-alone problem that the United States thinks it has a major issue in, and it seems like our ask-list for Afghanistan or our demands list for Afghanistan is almost a separate matter, doesn‘t it?

CHANDRASEKARAN:  It is.  You know, the things that‘s we‘re asking Hamid Karzai to do are a little less central to try to actually help out in Pakistan.  You know, we want Karzai to essentially allow free and fair elections to take place there later this summer.

Their presidential elections—Hamid Karzai is running for re-election.  Most people expect him to win.  But the Obama administration is very concerned about any efforts to try to tip the scales.  They want him to do his best to keep this a free and fair election.

And they want him, as you mentioned earlier, to take real steps to deal with corruption and the ineffective government that has characterized his tenure thus far.  There‘s awful lot of consternation at the White House and they want that addressed.

But, you know, what‘s happened here is that the Pakistan problem, which had been seen until recently as simply a necessary part of trying to stabilize Afghanistan, has now turned into its own challenge, and that was, you know, underscored by the fact that Secretary Hillary Clinton actually engaged in a bit of unscheduled diplomacy.  She drove out with her special envoy, Dick Holbrooke, to President Zardari‘s hotel for an hours‘ worth of meeting before the formal program actually began today.  That reflects the grave concern on the part of this administration about the situation in Pakistan.

MADDOW:  And, of course, the American people‘s concerns that even if we get these—we get these and buy into and we understand these goals of both of these questions, the great worry that the leaders of those countries may not be up to the task of delivering on them, even if they wanted to, the big picture here.

“Washington Post” reporter and associate editor, Rajiv Chandrasekaran

thank you so much for your time and your insight tonight.  Rajiv, nice to see you.

               

CHANDRASEKARAN:  Good to talk to you.

MADDOW:  We have fresh evidence that when the Bush administration defends itself against accusations like—oh, they ruthlessly sold us a bill of goods about invading Iraq, we should maybe start with the assumption that even in defending themselves, they are selling us another bill of goods.  “New York Times” columnist Frank Rich will be here next to talk about that.

But first, One More Thing on Afghanistan and its relationship with the west, specifically about swine flu, pigs and pork are both illegal in Afghanistan, because they don‘t have that whole separation of church and state thing that we‘ve done so handy over the years here.  One exception has been made, though, for a single pig—a very fit little fellow who lives in the Kabul zoo.  He‘s in with the deer and goats and that‘s where he grazes.  Or at least that‘s where he grazed until visitors started expressing concern that they might contract swine flu from Afghanistan‘s one pig.

So now, the pig has been put in solitary confinement.  The director of the Kabul zoo telling “Reuters,” quote, “For now, the pig is under quarantine.  We built it a room.”  The zoo director acknowledges that their pig is actually fine and nobody is going to get swine flu for him.  But they‘ve made the move anyway to assuage people‘s ill-informed concerns.  We don‘t know how long it will last.

You know, just being the only pig in all of Afghanistan wasn‘t a lonely enough proposition already?

(COMMERCIAL BREAK)

MADDOW:  This month marks the five-year anniversary of legalization of same-sex marriage in the state of Massachusetts.  And today, the great state of Maine enacted a law extending marriage rights to same-sex couples.  This makes Maine the fourth of New England‘s six states to legalize gay marriage, and it‘s the nation‘s fifth state overall, including Iowa.

Governor John Baldacci of Maine, a Democrat, had previously opposed gay marriage but upon signing the bill today, he said, quote, “In the past, I opposed gay marriage while supporting the idea of civil unions.  I have come to believe that this is a question of fairness and of equal protection under the law, and that a civil union is not equal to civil marriage.”

Now, the Democratic governor of New Hampshire, John Lynch, is deciding whether or not to sign a similar gay marriage bill that is sitting on his desk.  Our staff is at THE RACHEL MADDOW SHOW observatory is monitoring that situation closely and, of course, is on full alert to let you know as soon as the sky falls.

(COMMERCIAL BREAK)

MADDOW:  A special report tonight from our fake in-house bureau of embarrassingly debunked Bush administration talking points.  “The New York Times‘” David Barstow reported last year that during the Bush administration, the Pentagon ran a program that set up retired military officers to appear as analysts on TV and radio, essentially as secret PR reps for the Bush administration‘s war effort.

The right-wing reaction to Barstow‘s reporting and to the news that he was awarded a Pulitzer Prize for it last month was vociferous, particularly among those close to former Secretary of Defense Ronald Rumsfeld, under whose leadership the PR program was created.  For example, former Assistant Secretary of Defense Dorrance Smith said, quote, “Does the Pulitzer give prizes for works of fiction?  Perhaps they just got the wrong category.”

Awkwardly, of course, there is a Pulitzer for fiction.  This year it went to Elizabeth Strout for her collection of short stories set in small town Maine.  It was called “Olive Kitteridge” I don‘t think that‘s what he meant.

Mr. Rumsfeld‘s current spokesperson, among others, criticized “The Times” by citing a Pentagon inspector general report from this January, a report that refuted “The Times” reporting.  Quote, “Between ‘The New York Times‘ and the Pentagon‘s inspector general office, it‘s pretty clear which is a more credible and non-partisan source.”

Well, now, something really surprising has happened.  The Pentagon inspector general‘s report from January that the Rumsfeld folks have been using as their ammunition to defend Rumsfeld‘s program, that report that essentially exonerated the Pentagon‘s military analyst program—that report has been rescinded.  They even took it down off their Web site.  They sent out a memo about it yesterday, calling backsies, essentially, citing “inaccuracies:” and internal review which concluded that “the report did not meet accepted quality standards” and saying the methodology could not reasonably be expected to have yielded the results that the report claimed.

Despite the bold move of rescinding the report, the Pentagon is leaving one very loose end here.  They say since the Pentagon PR program died with Donald Rumsfeld‘s career, they‘re not planning on redoing a better investigation of the program to replace the bad one that they just rescinded.

Joining us now is a man who knows a lot about carefully-crafted

government PR campaigns, Frank Rich, “New York Times” columnist and author

of the book, “The Greatest Story Ever Sold,” about the propaganda war waged

by the Bush administration to promote the real war in Iraq.

               

Frank Rich, very nice to see you.  Thanks for coming on the show.

FRANK RICH, THE NEW YORK TIMES:  Nice to see you, Rachel.

MADDOW:  Where‘s Rumsfeld, do you think?  I mean, he‘s got like spokesmen and former deputies coming out in his defense.  Where is he in all of this?

RICH:  Well, he‘s writing that book to complete for the fiction Pulitzer.

(LAUGHTER)

RICH:  And, wasn‘t there a scene where he was like actually taking like a D.C. transit bus in Washington and being heckled by other senior citizens?

MADDOW:  He has been spotted on public transport that affords unnecessary ear shots for he‘s ego, I‘m sure.

(LAUGHTER)

MADDOW:  One of the reasons for—cited for withdrawing the original report is that, in trying to determine whether or not these retired military analysts had ties to defense contractors, the inspector general‘s office used searches of public Web sites.  That was their methodology.  So, like, their research arsenal is Google.

I wonder if the bigger thing to worry about here is that the inspector general at the Department of Defense was so lame.

RICH:  Well, here‘s the thing.  I—you know, knowing we were going to talk about this and given the events of today, I went and looked back at the history of the I.G., the inspector general‘s office in Pentagon, to refresh my memory of what went on during the Bush administration.  There were a lot of suspect reports.  In fact, they were routinely criticized by Republicans.  For instance, in 2005, John Warner, the ranking Republican in the armed services was incredulous at a Pentagon inspector general‘s report that cleared Rumsfeld and Paul Wolfowitz of knowing anything about the huge procurement scandal involving Boeing.

MADDOW:  All right.

RICH:  And then that inspector general then left and went to work for Blackwater.  There‘d been others since .

MADDOW:  I‘d forgotten—Ii know that and I‘d forgotten it.  Yes.

RICH:  There have been issues too about whether the inspector general should have stepped into a rape case, and again, I believe involving contractors in Iraq.  So forget about—I mean, David Barstow‘s superb story speaks for itself.  And whether that inspector general‘s report is reopen or not, we have to know what other suspect I.G. reports there were over the past five or six years during the war in Iraq.  There may be a much bigger story here.

MADDOW:  And yet, I guess I was sort of hinting toward that with the way I ended my introduction there, the way this withdrawal of this faulty report ends is: but, you know, the program doesn‘t exist anymore, Rumsfeld isn‘t around anymore, so we‘re just going to leave it be.

RICH:  Well, this is—unfortunately, this is sort of our attitude about everything involving Iraq.

MADDOW:  Yes.

RICH:  You know, whether it be towards torturing, you know, much more grave things than this.  But I think we have to get the facts out.

And if we have—people should understand, the inspector general‘s office is supposed to be this objective watchdog for the American people in a government agency.  If they‘re using Google to release reports, you have to wonder why they are.  They can‘t be doing it just for—you know, these are presumably people who want to have careers.  They‘re not idiots.  Maybe there are orders from above.  Who knows?

MADDOW:  Right.  And that‘s—and that—I mean, I love the idea of the inspector generals.  And inspector generals have provided so much of the raw material that we‘ve needed to understand what‘s been going in the administration, precisely because they have been independent.  That the idea that they‘re—that it‘s at least worth looking into the independence of that office among—in different agencies under Bush, I think it‘s an important one.

But yet, we keep running up against the Obama administration‘s overall approach to all of these things, which is: we don‘t do it this way anymore.  We won‘t torture.  We won‘t do Pentagon propaganda.  But they‘re leaving the precedent in place by not really refuting this thing explicitly, aren‘t they?

RICH:  I agree.  I think, you know, there‘s—it doesn‘t have to be one extreme or the other.  It doesn‘t have to be extreme of having witch-hunts and going off half-cocked and vendettas against the previous administration, but the other extreme of sort of just hoping it will just all pass under the bridge and we‘ll forget about it and not know what really happened.  And there are lots of instances involving the war in Iraq beyond torture.  I don‘t think that slides.  I think we have to have the historical record.

And, by the way, the war is still going on, you know?  And so, even if this propaganda program has ended, the war in Iraq has not ended.

MADDOW:  And specifically, on the issue of propaganda—I mean, the military analyst program, that‘s the subject of this whole report and this whole discussion, that is shut down.  And Michelle Flournoy taking over in her ranking position at the Pentagon, announced very early on in her tenure that the overall Defense Department office that turned active duty public information officers into spin guys, that whole office is shut down.  And good riddance to those programs.

RICH:  Absolutely.

MADDOW:  But on the issue of propaganda specifically, is there the risk that this way of doing things comes back?

RICH:  There‘s always a risk because people in government bureaucracies, regardless of ideology or political party, want to defend themselves, they want to protect themselves, and when things go wrong, that‘s when propaganda happens.  And, of course, when people have a policy to sell, that‘s when it happens.

Obama, the president, has been very eloquent about not wanting this.  And when there was this little smidgen of propaganda, the strange Air Force One trip around Lower Manhattan, he got angry when he heard about it.  He ordered an investigation.

But I think internal vigilance is necessary to stamp out propaganda and ensure freedom to everything you say (ph).

MADDOW:  I look forward to being eternally vigilant on such subjects.

Frank Rich, “New York Times” columnist and author among many other books, of “The Greatest Story Ever Sold”—it‘s always a real pleasure to have you on the show.  Thanks, Frank.

RICH:  Thank you.

MADDOW:  Still to come on the show: Naomi Klein is here to talk

bailout and Ana Marie Cox will join us for another profile in spinelessness

sadly—in the Republican Party‘s search for meaning in the political minority.

               

(COMMERCIAL BREAK)

MADDOW:  Feeling beat down by the daily drubbing of bad economic numbers and gazillion dollar bailouts?  Can‘t really make sense of it all?  Well, get in line.

Coming up: A woman who has made a habit of making sense of stuff like this and freaking out the powers that be in the process—Naomi Klein will be joining us.

And, they just give away supposedly the best job on earth, our best job in the world correspondent, Kent Jones, has the story.

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

The human resources department at the Pentagon is about to be really, really busy.  One of the quieter but potentially really important changes going on in D.C. since the end of the Bush administration is a bipartisan, multi-pronged effort to have the Pentagon set fire to a slightly smaller number of tax dollars each year, to reform Pentagon spending so that a guy with a cigar in D.C. saying he‘s a defense contractor stops meaning exactly the same thing as a guy with a cigar in New Jersey saying he‘s in waste management.

Today, the Pentagon‘s number two official in charge of procurement told Congress that in order to get Pentagon spending back under control, in order to stop the rein of contractors that brought us everything from the Blackwater massacre to the KBR soldier electrocutions to a 22-year-old in Miami working with a masseuse getting $300 million to sell bullets to the Afghan army—in order to bring contracting back from the rabbit hole that it has been down during the Bush years, the Pentagon plans to convert 11,000 contractor jobs to government jobs.  It also plans to hire 9,000 new employees in auditing and oversight -- 9,000 people.

Just to give you an idea of the size of the problem here, they think it‘s going to take 9,000 people to fix it.

Finally, one of the more dramatic things that has ever happened on this show occurred during our live broadcast on Thursday, March 19.  Check it out.

(BEGIN VIDEO CLIP, MARCH 19)

LT. DAN CHOI, U.S. ARMY:  I am an infantry platoon leader in the New York Army National Guard, and by saying three words to you today, “I am gay,” those three words are a violation of title 10 of the U.S. Code.  It‘s a code that‘s polluted by the people who want us to lie.  And basically, they want us to lie about our identity.  And it‘s an immoral code.  And it goes up against every single thing that we were taught at West Point with our honor code.

(END VIDEO CLIP)

MADDOW:  And then right after he said that, the transmission went out. 

His audio got cut off.

We eventually were able to get Lieutenant Dan Choi back on the show the following night and he reiterated what he had said the previous night that, as infantryman, as a West Point grad, as an Iraq vet, he was no longer willing to lie about his sexual orientation.  Lieutenant Dan Choi founded a new group of openly gay West Point graduates.  And his appearance on this show apparently sparked quite a few new members and a lot of interest in the group.

Now, today, we have the perhaps inevitable, but still nevertheless shocking follow up to that story.  Lieutenant Choi, yesterday, received this letter from the Army, informing him that he is being kicked out of the military.

Quote, “This is to inform you that sufficient basis exists to initiate action for withdrawal of federal recognition in the Army National Guard for moral or professional dereliction.  Specifically, you admitted publicly that you are a homosexual, which constitutes homosexual conduct.”  Hmm.

“Your actions negatively affected the good order and discipline of the New York Army National Guard.”

Back when we spoke with him in March, I asked Lieutenant Choi about

the prospect that by

RACHEL MADDOW, HOST:  Back when we spoke with him in March, I asked Lt. Choi about the prospect that by admitting that he was gay publicly, he would get kicked of the Army. 

(BEGIN VIDEO CLIP)

MADDOW (on camera):  Is there a possibility that you could get lose your job, that you could be at risk of being kicked out of the service because you‘re doing this?

LT. DAN CHOI, FOUNDING MEMBER, KNIGHTS OUT:  Of course.  And just like the 12,500 soldier that have been kicked out since the 15 years of this law and policy, we really just find that, as a group of West Point graduates, it‘s more important to do the right thing. 

(END VIDEO CLIP)

MADDOW:  Lt. Choi will be joining us live here in studio tomorrow night for his first television interview after being kicked out of the military for being gay.  I think that interview is something you will not want to miss. 

(COMMERCIAL BREAK)

MADDOW:  Self-destruction happens in stages, especially among political parties.  The Republicans have, tonight, apparently reached the sad but nevertheless sort of entertaining fifth stage. 

Stage one, failed policies and practices as the party in power.  They got that one done and then some.  Stage two, embarrassing massive, massive losses in national elections.  Stage three, of course, is random, meaningless criticism of the party that beat you, as in, “Obama‘s a communist, Marxist, socialist, fascist who wasn‘t born in the United States.  And we hate teleprompters now.”  Stage four, naturally, listening tours.  And now, stage five is apparently the cat fight. 

Last August, the Associated Press reported that John McCain was seriously considering Congressman Eric Cantor of Virginia to be his vice presidential running mate.  The campaign had reportedly even asked for Mr.  Cantor‘s papers, resume, background and everything. 

Now, nine months later, not only are McCain insiders denying that rumor, they‘re claiming it was all made up by Cantor‘s own staff.  A source close to the campaign leadership telling “Rolling Stone” magazine, quote, “The notion that Eric Cantor was somehow a high-profile candidate for vice president is a complete and total joke.  He was never on the shortlist.  This was created by Cantor‘s PR people.  He‘s got a ton of them.” 

Ouch.  Actually, more appropriately, meow.  That‘s not the only PR snafu facing Mr. Cantor right now.  He has had to backtrack on the whole purpose of his latest Republican high-profile Republican re-branding project, the National Council for a New America. 

At its official unveiling at the Pie-tanza Pizza Parlor in Virginia on Saturday, Congressman Cantor took great pains to emphasize that the goal of this council, the goal of the whole GO Pizza Party idea was to travel around America, listening to people.  Listening to people.  Listening to people.  That is until a talk show host named Rush Limbaugh said he disagreed with that.  

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR ®, CONGRESSMAN FROM VIRGINIA:  Get back to listening to the people.  Listening.  Listening to the people.  Back to listening to the people. 

RUSH LIMBAUGH, CONSERVATIVE RADIO TALK SHOW HOST:  We do not need a listening tour.  We need a teaching tour.  

CANTOR:  This is not a listening tour. 

(END VIDEO CLIP) 

MADDOW:  It took about 40 hours, but when it happened it was precise and perfect - 180 degrees. 

Joining us now is Ana Marie Cox, national correspondent for Air America and contributor to “The Daily Beast.”  Ana Marie, thank you so much for coming on the show.  

ANA MARIE COX, NATIONAL CORRESPONDENT, AIR AMERICA:  Always, always good to be here, Rachel.  

MADDOW:  All right.  I have to ask you about this apparent scrap between Eric Cantor and John McCain.  I thought they sort of got along. 

COX:  Yes, they do, actually.  I talked to several people at McCain‘s office today.  And at first, I can to clarify, that Cantor was not on the shortlist back, you know, in the day, nine months ago.  It was actually pretty well-known among those who were covering the campaign. 

And I wouldn‘t say they were angry about it.  You remember that scene in “Anchorman” where Will Ferrell‘s character comes home and finds out that his dog has pooped in the refrigerator and eaten an entire wheel of cheese.  And he says, “I‘m not even angry, Baxter.  I‘m impressed.” 

I think that‘s sort of how they felt about it.  You know, they weren‘t angry.  It took some cojones on Cantor‘s part to really - to say that, you know, kind of out of nowhere that this very junior congressman from Virginia would be on the shortlist of McCain‘s vice presidential picks. 

And they do get along now.  They both are involved in this somewhat ludicrous but incredibly optimistic, you know, campaign to re-brand the GOP.  They talk a lot.  I‘m told that he talks to Cantor and takes meetings with Cantor, at least a couple of times a week.  And I think they have some affection for each other in part perhaps because McCain admires the people with the cojones.  

MADDOW:  Well, but at the same time, though, to make the decision to call “Rolling Stone” and put on record that that was completely made up, they‘re completely overreaching - I mean, that‘s sort of a smack.  

COX:  Well, yes.  I don‘t want to cast aspersions on anyone.  But my understanding of that “Rolling Stone” blog post was that it was not concurrent reporting but perhaps something that was recycled from back nine months ago.  Because again, I think among those of us that were covering the VIP(sic) pick, it was not a secret that the McCain campaign found it a little amusing that Cantor had placed himself on that shortlist.  

MADDOW:  As all of these different figures in the Republican Party are figuring out how to relate to each other, how to relate to their various factions that are dividing one another.  They‘re speaking out against one another, either using staff or themselves, there looms continually this figure of Rush Limbaugh. 

And I think Mr. Cantor is the sixth Republican elected official who has had to make some sort of dramatic turnaround after facing criticism from Limbaugh just in the past few months.  What‘s going on? 

COX:  Well, I just want to say that I‘m glad that they‘re not on a listening tour because I think that the 21 percent of Americans that still identify as Republicans are probably not the people they should be listening to.  They should probably be listening to the vast majority of Americans who do not identify themselves as Republicans anymore. 

And I just don‘t think the kind of people that showed up at the pizza party are probably those people.  They‘re probably the people that still identify as Republicans and therefore may not be offering the most useful criticism to a party that really wants to grow. 

I think that in some ways, it‘s kind of too bad, though, of course that Cantor sort of crumbled so quickly under Limbaugh‘s scrutiny.  Because I think that the one thing that they do have to learn from all of these back-and-forth with Limbaugh is that he may be a very popular entertainer but he is not going to help them get elected.  In fact, he did not help anyone get elected in 2008. 

And I think, actually, Cantor, you know - he‘s from Virginia.  He‘s actually a very savvy, savvy young man.  I mean, you can say nothing else about him.  If you say nothing else about him, you can say that. 

I think he recognizes having Virginia go blue, go for Obama in 2008 that the GOP has to change.  You know, he‘s one of the very few people in the GOP that voted for the clawback of the AIG bonuses, which I think is a sign that he recognizes there are some fundamental problems, not just in the way that the GOP talks about its message but in the actual, you know, message itself, in the actual policies that they put forward. 

MADDOW:  Last question -

COX:  So don‘t listen to Limbaugh, I‘m telling you.  Of all of those listening tours that could go on, do not listen to Limbaugh.  

MADDOW:  Even in the car on the way there.  Just don‘t.  Just -

COX:  Well, you know, maybe - yes, you know.  He‘s diverting.  That‘s true.  

MADDOW:  Last question for you is about a report in “The Washington Times” today that says that RNC Chairman Michael Steele has signed a secret agreement for controls and restraints on how he spends party funds.  A, do you believe it?  And B, do you have any idea what‘s going on with Michael Steele as chairman? 

COX:  Well, a secret agreement for control and restraint certainly sounds exciting but I‘m not sure if I quite believe it.  You know, it‘s true that the people who have control over the RNC - one of the few things they have control over is funding.  It‘s the congressional and senatorial committees that really do a lot of the candidate recruitment and do a lot of the decision-making about where those funds go. 

The fact that this report leaked out at all and whether or not it‘s true does suggest there‘s obviously some infighting within the RNC.  I think it has to do with the fact that the RNC membership itself, the people who are on that committee, the 168 of them, are far more conservative and far more doctrinaire than most of the people that at least used to identify themselves as Republicans and the people they need to get to if they‘re going to have successful candidates. 

I think this is a sign that they are trying to rein Michael Steele in, which I think is too bad.  I think you and I discussed some of the things that Michael Steele says actually sound to me like things that the GOP should probably be talking about. 

Of course, he didn‘t take it all back, which is unhelpful.  But I hope they don‘t get rid of him.  He is, by far, one of the most entertaining Republicans, you know, on the scene.  So if nothing else, I would like to see him continue to be at least a lot on “Morning Joe” and talking about hats.  

MADDOW:  Ana Marie Cox, national correspondent for Air America, contributor to “The Daily Beast,” always great to see you.  Thank you. 

COX:  Thank you. 

MADDOW:  Coming up next, Naomi Klein, author of “The Shock Doctrine” will be joining us live in the studio.  We‘re all very excited. 

(COMMERCIAL BREAK)

MADDOW:  As the Republican Party searches for meaning in the political minority, its members are increasingly turning to a not very novel but still surprising approach.  They‘re thinking about quitting the whole thing and starting over on their own and presto becoming the new majority in a new country where everything‘s better. 

According to the latest research 2000 poll, 12 percent of Republicans surveyed think whatever state they live in would be better off as an independent nation outside the United States.  Twenty-six percent say they‘re not sure if their state should remain within the United States of America. 

Asked if they would approve or disapprove of their state leaving the union, nine percent said they would approve secession and a whopping 28 percent said they were not sure. 

For a party that virtually copyrighted the word patriotism and bludgeoned everybody else with it for a really, really long, really, really bad time, seceding from the union maybe isn‘t the best political talking point. 

(COMMERCIAL BREAK)

MADDOW:  A couple of years ago, Naomi Klein published a book called “The Shock Doctrine: The Rise of Disaster Capitalism.”  It is a book that really rattled the intellectual cage of what counts as the left in American politics. 

The basic thesis is that governments and corporate interests use disasters, either natural or man-made disasters, as opportunities to reengineer societies in ways those societies would otherwise resist. 

So after the hurricane, perfectly inhabitable, undamaged public housing must be torn down.  After the military invasion and the toppling of the government, the oil fields must be open to foreign oil companies.  After the tsunami, those wrecked fishing villages should become private beaches owned by the developers of resorts. 

Don‘t you want to know what the author of “Shock Doctrine” thinks about the bailout right now and all of its “how are they getting way with this” glory? 

Joining us now is Naomi Klein, author of “The Shock Doctrine: The Rise of Disaster Capitalism.”  She‘s a columnist for “The Nation” magazine.  Naomi, it‘s really nice to have you hear in person.  Thanks for coming in. 

NAOMI KLEIN, AUTHOR, “THE SHOCK DOCTRINE”:  So glad to be here, Rachel.  

MADDOW:  On the eve of the stress test results for the financial industry which are expected to show that a lot of the banks are sort of fine now -ish, I think a lot of Americans are going to be torn between being livid about the bailout, livid about all the tax dollars that went to Wall Street, but also sort of happy that maybe it‘s working, we still have a banking system.  How do you feel about it? 

KLEIN:  Well, I mean, it still feels like they‘re playing with the numbers, that they‘re trying to delay the moment of truth.  And I think that that‘s why that confidence is really, really tentative.  And there‘s still - and I think that when we look at the bailout that started under Paulson and now is being continued under Geithner, you really see an absolutely seamless approach, you know.

And it was bipartisan under Bush.  It was, you know, the Democrats standing together with Republicans to sell this thing.  And there hasn‘t really been a shift.  And I think it really does fit the thesis of “The Shock Doctrine” because in New Orleans, it was the public housing that was handed over to developers after the shock of the flooding of the city. 

Here, we have just this transfer, this massive transfer of public wealth into private hands.  And that‘s continuing.  And it‘s much, much larger, just on a much larger scale than any of the investments in the public sphere that we‘re seeing through the stimulus or the budget. 

I mean, it‘s $11.5 trillion to bail out the financial sector.  And, you know, it‘s less than $1 trillion to stimulate the economy and a lot of that is tax cuts.  So you know, even if it is working, you know, I do think - you know, even if we look at Bank of America and their response to the fact that they are short, you know, $30-plus billion, it‘s just a play with the numbers. 

That‘s not the kind of thing that actually instills confidence.  My real concern is - my concern from day one is that the crisis on Wall Street created by deregulated capitalism is not actually being solved. 

It‘s being moved.  A private sector crisis is being turned into a public

sector crisis.  So all of this mismanagement in the bailout, and even if it

does work by propping up these banks, it‘s still a budgetary -

MADDOW:  It‘s still a public sector liability.  

KLEIN:  Right.  And so who pays for this?  And you know, we‘ve seen some of that in, I think, the scale of the stimulus package.  It‘s smaller than it should be if we believe people like Paul Krugman.  He thinks it needs to be three times as large. 

You know, we‘ve seen - you‘ve talked about this extensively on the show.  Why isn‘t there more public in public transits?  They‘re already cutting corners.  And now, we‘re seeing things like AIDS funding in Africa being cut by $6.6 billion. 

So who is paying for this?  And this is, I think, where the unfairness of it really becomes very clear, that, you know, it is a bailout.  But it‘s the very poorest and most vulnerable and weakest people in the world who are being asked to bail out the wealthiest and most powerful. 

MADDOW:  And in “Shock Doctrine,” you talk about the impunity of the elite.  And I guess this fits that as well.  If the crisis is in unregulated financial markets, unregulated capitalism of this specific kind that caused this specific crisis, if the cost would of that would have been borne by the people who are players in that part of the financial world, those are the elites. 

And so their impunity, not only in terms of being blamed, but also in terms of absorbing their own risks is something that - they should never be expected to have to endure that.  It gets put off on others. 

KLEIN:  Exactly.  And actually, this is something that‘s happened over and over again in the history of this economic model which takes away the rules and says, you know, have a free-for-all.  It is a crisis creation machine and we‘ve seen this in other parts of the world. 

And the U.S. has sort of deferred this crisis by deferring it to other locations.  But I track it in the book starting in Chile where you have the first experiment in this Wild West form of capitalism in the ‘70s.  And it ended with Pinochet having to nationalize the banks because they had accumulated so much debt. 

So really all that is different here is one, that it has come home, and two, the scale.  I mean, the scale is absolutely unprecedented.  And I do believe - you know, I hate to say this because people are feeling a little bit optimistic - that I really do think this will go down - the bailout will go down as the greatest heist in monetary history. 

And I don‘t see - you know, I like a lot of the things the Obama administration is doing.  But what worries me is this idea that you can be Keynesian, you know, when it comes to the stimulus package.  But you can maintain this edifice of crony capitalism in the financial sector.  And you can have these two tracks that are completely different when really what we would optimally need in a moment of crisis like this is a banking sector that was working hand-in-hand with the social priorities.

MADDOW:  Right.

KLEIN:  So it would be helping homeowners, not having public money go to lobbyist to successfully defeat measures that would help those homeowners.  So we have all of these contradictions because of this idea that you can keep the market happy by throwing it more of what it wants which is frankly crony capitalism, which is more handouts, no strings attached.

But, yes, we can also invest in the real economy.  And the scale of that bailout is too large for that to actually happen. 

MADDOW:  Yes.  And even if we‘re just looking for mitigating factors, the re-regulation of Wall Street, which they keep promising ...

KLEIN:  Yes.

MADDOW:  Still to come, still to hope for, but not going hand-in-hand with the bailout money.  It‘s the bailout money all comes first and the re-regulation thereafter. 

(CROSS TALK)

KLEIN:  This is shocking.  I mean, this is really shocking if you think about FDR.  He used the public anger, you know, the rage at - that these CEOs are not paying taxes, the rage at the double standard.  And got Glass-Steagall, the law that prevented investment banks from also being commercial banks two days after those shocking revelations came out in the (UNINTELLIGIBLE). 

MADDOW:  Right.

KLEIN:  He didn‘t wait.  What I worry about is that there all of this free-floating rage.  If it isn‘t channeled constructively into that re-regulation, if the money that‘s being given to the financial sector isn‘t tied to the restructure ...

MADDOW:  Yes, right.

KLEIN:  ... then what is going to happen with the rage?  One, it gets channeled somewhere ...

MADDOW:  Yes.

KLEIN:  ... immigrants, whoever.  But then, we also haven‘t used the leverage, right?  I mean, if the international - you know, I was saying, you know, International Monetary Fund is a great example of this.  When countries are broke, they need a loan from the IMF.  They go to the IMF.  They say, “Bail us out.  We‘re in trouble.”  The IMF says, “Sure, we‘ll bail you out.  But here is a list of things you have to do to get money.” 

MADDOW:  Yes.

KLEIN:  It‘s called structural adjustments. 

MADDOW:  We could be an IMF for Wall Street. 

KLEIN:  Exactly.

MADDOW:  Naomi Klein, I could talk to you all evening.  I hope you will come back. 

KLEIN:  I would love to.  Thank you, Rachel.

MADDOW:  Naomi Klein is the author of “The Shock Doctrine: The Rise of Disaster Capitalism,” one of the most influential thinkers anywhere over the last 10 years.  It‘s sort of mandatory reading - “The Shock Doctrine:

The Rise of Disaster Capitalism.” 

Coming up on “COUNTDOWN,” Keith takes on Dick Cheney‘s latest claim that he sticks up for the little guy.  Next on this show, my friend Kent Jones with the best job in the world.  

(COMMERCIAL BREAK)

MADDOW:  We now turn to our best job in the world correspondent, Kent Jones.  Hi, Kent.

KENT JONES, POP CULTURIST:  Hi, Rachel.  I‘ve got some big job news for you from Australia. 

MADDOW:  OK.

JONES:  Check it out. 

(BEGIN VIDEOTAPE)

(voice-over):  So what is the best job in the world? 

UNIDENTIFIED MALE:  Hold on.  Hold on.  Judge is in session. 

JONES:  Apparently, this guy now has it.  A Brit named Ben Southall won a contest and now gets to be the caretaker of a gorgeous Australian tropical island, travel around the Great Barrier Reef, blog, take pictures, soak up the sun and pocket $110,000 besides. 

Yes.  OK.  That does sound good.  But is that really the best job in the world?  Is it a better job than AIG executive where you get to drive the economy to the brink of collapse and the government will punish you with billions of dollars, plus $454 million in bonuses last year?  Last year?  Do those benefits come with a gym membership? 

And is it a better job than say dictator of North Korea?  Kim Jong Il is definitely living large, parades, devoted countrymen dancing on his birthday, frequent displays of military belligerence, and aside from the hair, the clothes and the contempt of the rest of the planet, the man is set. 

What about this job?  Ex-vice president.  Dick Cheney gets to sit on the sidelines and snipe at the sitting president after failing miserably for eight years and still get a government pension and secret service protection.  No accountability for the American people, but all the visibility he wants.  Never seen this job listed on “Monster.com.”  Trust me.  I‘ve looked. 

So what is the best job in the world?  I think that‘s pretty obvious. 

(END VIDEOTAPE)

MADDOW:  Huh? 

JONES:  Right here.  Right here. 

MADDOW:  Yay!

JONES:  Right here.  Right here.  Yes. 

MADDOW:  We could fight it out.  Thank you, Kent.  I have a quick cocktail moment for you. 

JONES:  OK.

MADDOW:  First Lady Michelle Obama was at an event at the United Nations last night and she revealed the best thing she has done so far in the White House. 

JONES:  And? 

MADDOW:  Going on Sesame Street. 

JONES:  Oh.

MADDOW:  Here‘s a picture of her with the talking cabbage. 

JONES:  Yes, I get it.

MADDOW:  “COUNTDOWN” Keith Olbermann starts right now.  admitting that he was gay publicly, he would get kicked out of the Army.

(BEGIN VIDEO CLIP)

MADDOW:  Is there a possibility that you could lose your job?  That you could be at risk of getting kicked out of the—kicked out of the service because you‘re doing this?

CHOI:  Of course.  And just like the 12,500 soldier that‘s have been kicked out since the 15 years of this law and policy, we really just find that as a group of West Point graduates, it‘s more important to do the right thing.

(END VIDEO CLIP)

MADDOW:  Lt. Choi will be joining us live here in studio tomorrow night for his first television interview after being kicked out of the military for being gay.  I think that interview is something you will not want to miss. 

(COMMERCIAL BREAK)

MADDOW:  Self-destruction happens in stages, especially among political parties.  The Republicans have, tonight, apparently reached the sad but nevertheless sort of entertaining fifth stage. 

Stage one, failed policies and practices as the party in power.  They got that one done and then some.  Stage two, embarrassing massive, massive losses in national elections.  Stage three, of course, is random, meaningless criticism of the party that beat you, as in, “Obama‘s a communist, Marxist, socialist, fascist who wasn‘t born in the United States.  And we hate teleprompters now.”  Stage four, naturally, listening tours.  And now, stage five is apparently the cat fight. 

Last August, the Associated Press reported that John McCain was seriously considering Congressman Eric Cantor of Virginia to be his vice presidential running mate.  The campaign had reportedly even asked for Mr.  Cantor‘s papers, resume, background and everything. 

Now, nine months later, not only are McCain insiders denying that rumor, they‘re claiming it was all made up by Cantor‘s own staff.  A source close to the campaign leadership telling “Rolling Stone” magazine, quote, “The notion that Eric Cantor was somehow a high-profile candidate for vice president is a complete and total joke.  He was never on the shortlist.  This was created by Cantor‘s PR people.  He‘s got a ton of them.” 

Ouch.  Actually, more appropriately, meow.  That‘s not the only PR snafu facing Mr. Cantor right now.  He has had to backtrack on the whole purpose of his latest Republican high-profile Republican re-branding project, the National Council for a New America. 

At its official unveiling at the Pie-tanza Pizza Parlor in Virginia on Saturday, Congressman Cantor took great pains to emphasize that the goal of this council, the goal of the whole GO Pizza Party idea was to travel around America, listening to people.  Listening to people.  Listening to people.  That is until a talk show host named Rush Limbaugh said he disagreed with that.  

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR ®, CONGRESSMAN FROM VIRGINIA:  Get back to listening to the people.  Listening.  Listening to the people.  Back to listening to the people. 

RUSH LIMBAUGH, CONSERVATIVE RADIO TALK SHOW HOST:  We do not need a listening tour.  We need a teaching tour.  

CANTOR:  This is not a listening tour. 

(END VIDEO CLIP) 

MADDOW:  It took about 40 hours, but when it happened it was precise and perfect - 180 degrees. 

Joining us now is Ana Marie Cox, national correspondent for Air America and contributor to “The Daily Beast.”  Ana Marie, thank you so much for coming on the show.  

ANA MARIE COX, NATIONAL CORRESPONDENT, AIR AMERICA:  Always, always good to be here, Rachel.  

MADDOW:  All right.  I have to ask you about this apparent scrap between Eric Cantor and John McCain.  I thought they sort of got along. 

COX:  Yes, they do, actually.  I talked to several people at McCain‘s office today.  And at first, I can to clarify, that Cantor was not on the shortlist back, you know, in the day, nine months ago.  It was actually pretty well-known among those who were covering the campaign. 

And I wouldn‘t say they were angry about it.  You remember that scene in “Anchorman” where Will Ferrell‘s character comes home and finds out that his dog has pooped in the refrigerator and eaten an entire wheel of cheese.  And he says, “I‘m not even angry, Baxter.  I‘m impressed.” 

I think that‘s sort of how they felt about it.  You know, they weren‘t angry.  It took some cojones on Cantor‘s part to really - to say that, you know, kind of out of nowhere that this very junior congressman from Virginia would be on the shortlist of McCain‘s vice presidential picks. 

And they do get along now.  They both are involved in this somewhat ludicrous but incredibly optimistic, you know, campaign to re-brand the GOP.  They talk a lot.  I‘m told that he talks to Cantor and takes meetings with Cantor, at least a couple of times a week.  And I think they have some affection for each other in part perhaps because McCain admires the people with the cojones.  

MADDOW:  Well, but at the same time, though, to make the decision to call “Rolling Stone” and put on record that that was completely made up, they‘re completely overreaching - I mean, that‘s sort of a smack.  

COX:  Well, yes.  I don‘t want to cast aspersions on anyone.  But my understanding of that “Rolling Stone” blog post was that it was not concurrent reporting but perhaps something that was recycled from back nine months ago.  Because again, I think among those of us that were covering the VIP(sic) pick, it was not a secret that the McCain campaign found it a little amusing that Cantor had placed himself on that shortlist.  

MADDOW:  As all of these different figures in the Republican Party are figuring out how to relate to each other, how to relate to their various factions that are dividing one another.  They‘re speaking out against one another, either using staff or themselves, there looms continually this figure of Rush Limbaugh. 

And I think Mr. Cantor is the sixth Republican elected official who has had to make some sort of dramatic turnaround after facing criticism from Limbaugh just in the past few months.  What‘s going on? 

COX:  Well, I just want to say that I‘m glad that they‘re not on a listening tour because I think that the 21 percent of Americans that still identify as Republicans are probably not the people they should be listening to.  They should probably be listening to the vast majority of Americans who do not identify themselves as Republicans anymore. 

And I just don‘t think the kind of people that showed up at the pizza party are probably those people.  They‘re probably the people that still identify as Republicans and therefore may not be offering the most useful criticism to a party that really wants to grow. 

I think that in some ways, it‘s kind of too bad, though, of course that Cantor sort of crumbled so quickly under Limbaugh‘s scrutiny.  Because I think that the one thing that they do have to learn from all of these back-and-forth with Limbaugh is that he may be a very popular entertainer but he is not going to help them get elected.  In fact, he did not help anyone get elected in 2008. 

And I think, actually, Cantor, you know - he‘s from Virginia.  He‘s actually a very savvy, savvy young man.  I mean, you can say nothing else about him.  If you say nothing else about him, you can say that. 

I think he recognizes having Virginia go blue, go for Obama in 2008 that the GOP has to change.  You know, he‘s one of the very few people in the GOP that voted for the clawback of the AIG bonuses, which I think is a sign that he recognizes there are some fundamental problems, not just in the way that the GOP talks about its message but in the actual, you know, message itself, in the actual policies that they put forward. 

MADDOW:  Last question -

COX:  So don‘t listen to Limbaugh, I‘m telling you.  Of all of those listening tours that could go on, do not listen to Limbaugh.  

MADDOW:  Even in the car on the way there.  Just don‘t.  Just -

COX:  Well, you know, maybe - yes, you know.  He‘s diverting.  That‘s true.  

MADDOW:  Last question for you is about a report in “The Washington Times” today that says that RNC Chairman Michael Steele has signed a secret agreement for controls and restraints on how he spends party funds.  A, do you believe it?  And B, do you have any idea what‘s going on with Michael Steele as chairman? 

COX:  Well, a secret agreement for control and restraint certainly sounds exciting but I‘m not sure if I quite believe it.  You know, it‘s true that the people who have control over the RNC - one of the few things they have control over is funding.  It‘s the congressional and senatorial committees that really do a lot of the candidate recruitment and do a lot of the decision-making about where those funds go. 

The fact that this report leaked out at all and whether or not it‘s true does suggest there‘s obviously some infighting within the RNC.  I think it has to do with the fact that the RNC membership itself, the people who are on that committee, the 168 of them, are far more conservative and far more doctrinaire than most of the people that at least used to identify themselves as Republicans and the people they need to get to if they‘re going to have successful candidates. 

I think this is a sign that they are trying to rein Michael Steele in, which I think is too bad.  I think you and I discussed some of the things that Michael Steele says actually sound to me like things that the GOP should probably be talking about. 

Of course, he didn‘t take it all back, which is unhelpful.  But I hope they don‘t get rid of him.  He is, by far, one of the most entertaining Republicans, you know, on the scene.  So if nothing else, I would like to see him continue to be at least a lot on “Morning Joe” and talking about hats.  

MADDOW:  Ana Marie Cox, national correspondent for Air America, contributor to “The Daily Beast,” always great to see you.  Thank you. 

COX:  Thank you. 

MADDOW:  Coming up next, Naomi Klein, author of “The Shock Doctrine” will be joining us live in the studio.  We‘re all very excited. 

(COMMERCIAL BREAK)

MADDOW:  As the Republican Party searches for meaning in the political minority, its members are increasingly turning to a not very novel but still surprising approach.  They‘re thinking about quitting the whole thing and starting over on their own and presto becoming the new majority in a new country where everything‘s better. 

According to the latest research 2000 poll, 12 percent of Republicans surveyed think whatever state they live in would be better off as an independent nation outside the United States.  Twenty-six percent say they‘re not sure if their state should remain within the United States of America. 

Asked if they would approve or disapprove of their state leaving the union, nine percent said they would approve secession and a whopping 28 percent said they were not sure. 

For a party that virtually copyrighted the word patriotism and bludgeoned everybody else with it for a really, really long, really, really bad time, seceding from the union maybe isn‘t the best political talking point. 

(COMMERCIAL BREAK)

MADDOW:  A couple of years ago, Naomi Klein published a book called “The Shock Doctrine: The Rise of Disaster Capitalism.”  It is a book that really rattled the intellectual cage of what counts as the left in American politics. 

The basic thesis is that governments and corporate interests use disasters, either natural or man-made disasters, as opportunities to reengineer societies in ways those societies would otherwise resist. 

So after the hurricane, perfectly inhabitable, undamaged public housing must be torn down.  After the military invasion and the toppling of the government, the oil fields must be open to foreign oil companies.  After the tsunami, those wrecked fishing villages should become private beaches owned by the developers of resorts. 

Don‘t you want to know what the author of “Shock Doctrine” thinks about the bailout right now and all of its “how are they getting way with this” glory? 

Joining us now is Naomi Klein, author of “The Shock Doctrine: The Rise of Disaster Capitalism.”  She‘s a columnist for “The Nation” magazine.  Naomi, it‘s really nice to have you hear in person.  Thanks for coming in. 

NAOMI KLEIN, AUTHOR, “THE SHOCK DOCTRINE”:  So glad to be here, Rachel.  

MADDOW:  On the eve of the stress test results for the financial industry which are expected to show that a lot of the banks are sort of fine now -ish, I think a lot of Americans are going to be torn between being livid about the bailout, livid about all the tax dollars that went to Wall Street, but also sort of happy that maybe it‘s working, we still have a banking system.  How do you feel about it? 

KLEIN:  Well, I mean, it still feels like they‘re playing with the numbers, that they‘re trying to delay the moment of truth.  And I think that that‘s why that confidence is really, really tentative.  And there‘s still - and I think that when we look at the bailout that started under Paulson and now is being continued under Geithner, you really see an absolutely seamless approach, you know.

And it was bipartisan under Bush.  It was, you know, the Democrats standing together with Republicans to sell this thing.  And there hasn‘t really been a shift.  And I think it really does fit the thesis of “The Shock Doctrine” because in New Orleans, it was the public housing that was handed over to developers after the shock of the flooding of the city. 

Here, we have just this transfer, this massive transfer of public wealth into private hands.  And that‘s continuing.  And it‘s much, much larger, just on a much larger scale than any of the investments in the public sphere that we‘re seeing through the stimulus or the budget. 

I mean, it‘s $11.5 trillion to bail out the financial sector.  And, you know, it‘s less than $1 trillion to stimulate the economy and a lot of that is tax cuts.  So you know, even if it is working, you know, I do think - you know, even if we look at Bank of America and their response to the fact that they are short, you know, $30-plus billion, it‘s just a play with the numbers. 

That‘s not the kind of thing that actually instills confidence.  My real concern is - my concern from day one is that the crisis on Wall Street created by deregulated capitalism is not actually being solved. 

It‘s being moved.  A private sector crisis is being turned into a public

sector crisis.  So all of this mismanagement in the bailout, and even if it

does work by propping up these banks, it‘s still a budgetary -

MADDOW:  It‘s still a public sector liability.  

KLEIN:  Right.  And so who pays for this?  And you know, we‘ve seen some of that in, I think, the scale of the stimulus package.  It‘s smaller than it should be if we believe people like Paul Krugman.  He thinks it needs to be three times as large. 

You know, we‘ve seen - you‘ve talked about this extensively on the show.  Why isn‘t there more public in public transits?  They‘re already cutting corners.  And now, we‘re seeing things like AIDS funding in Africa being cut by $6.6 billion. 

So who is paying for this?  And this is, I think, where the unfairness of it really becomes very clear, that, you know, it is a bailout.  But it‘s the very poorest and most vulnerable and weakest people in the world who are being asked to bail out the wealthiest and most powerful. 

MADDOW:  And in “Shock Doctrine,” you talk about the impunity of the elite.  And I guess this fits that as well.  If the crisis is in unregulated financial markets, unregulated capitalism of this specific kind that caused this specific crisis, if the cost would of that would have been borne by the people who are players in that part of the financial world, those are the elites. 

And so their impunity, not only in terms of being blamed, but also in terms of absorbing their own risks is something that - they should never be expected to have to endure that.  It gets put off on others. 

KLEIN:  Exactly.  And actually, this is something that‘s happened over and over again in the history of this economic model which takes away the rules and says, you know, have a free-for-all.  It is a crisis creation machine and we‘ve seen this in other parts of the world. 

And the U.S. has sort of deferred this crisis by deferring it to other locations.  But I track it in the book starting in Chile where you have the first experiment in this Wild West form of capitalism in the ‘70s.  And it ended with Pinochet having to nationalize the banks because they had accumulated so much debt. 

So really all that is different here is one, that it has come home, and two, the scale.  I mean, the scale is absolutely unprecedented.  And I do believe - you know, I hate to say this because people are feeling a little bit optimistic - that I really do think this will go down - the bailout will go down as the greatest heist in monetary history. 

And I don‘t see - you know, I like a lot of the things the Obama administration is doing.  But what worries me is this idea that you can be Keynesian, you know, when it comes to the stimulus package.  But you can maintain this edifice of crony capitalism in the financial sector.  And you can have these two tracks that are completely different when really what we would optimally need in a moment of crisis like this is a banking sector that was working hand-in-hand with the social priorities.

MADDOW:  Right.

KLEIN:  So it would be helping homeowners, not having public money go to lobbyist to successfully defeat measures that would help those homeowners.  So we have all of these contradictions because of this idea that you can keep the market happy by throwing it more of what it wants which is frankly crony capitalism, which is more handouts, no strings attached.

But, yes, we can also invest in the real economy.  And the scale of that bailout is too large for that to actually happen. 

MADDOW:  Yes.  And even if we‘re just looking for mitigating factors, the re-regulation of Wall Street, which they keep promising ...

KLEIN:  Yes.

MADDOW:  Still to come, still to hope for, but not going hand-in-hand with the bailout money.  It‘s the bailout money all comes first and the re-regulation thereafter. 

(CROSS TALK)

KLEIN:  This is shocking.  I mean, this is really shocking if you think about FDR.  He used the public anger, you know, the rage at - that these CEOs are not paying taxes, the rage at the double standard.  And got Glass-Steagall, the law that prevented investment banks from also being commercial banks two days after those shocking revelations came out in the (UNINTELLIGIBLE). 

MADDOW:  Right.

KLEIN:  He didn‘t wait.  What I worry about is that there all of this free-floating rage.  If it isn‘t channeled constructively into that re-regulation, if the money that‘s being given to the financial sector isn‘t tied to the restructure ...

MADDOW:  Yes, right.

KLEIN:  ... then what is going to happen with the rage?  One, it gets channeled somewhere ...

MADDOW:  Yes.

KLEIN:  ... immigrants, whoever.  But then, we also haven‘t used the leverage, right?  I mean, if the international - you know, I was saying, you know, International Monetary Fund is a great example of this.  When countries are broke, they need a loan from the IMF.  They go to the IMF.  They say, “Bail us out.  We‘re in trouble.”  The IMF says, “Sure, we‘ll bail you out.  But here is a list of things you have to do to get money.” 

MADDOW:  Yes.

KLEIN:  It‘s called structural adjustments. 

MADDOW:  We could be an IMF for Wall Street. 

KLEIN:  Exactly.

MADDOW:  Naomi Klein, I could talk to you all evening.  I hope you will come back. 

KLEIN:  I would love to.  Thank you, Rachel.

MADDOW:  Naomi Klein is the author of “The Shock Doctrine: The Rise of Disaster Capitalism,” one of the most influential thinkers anywhere over the last 10 years.  It‘s sort of mandatory reading - “The Shock Doctrine:

The Rise of Disaster Capitalism.” 

Coming up on “COUNTDOWN,” Keith takes on Dick Cheney‘s latest claim that he sticks up for the little guy.  Next on this show, my friend Kent Jones with the best job in the world.  

(COMMERCIAL BREAK)

MADDOW:  We now turn to our best job in the world correspondent, Kent Jones.  Hi, Kent.

KENT JONES, POP CULTURIST:  Hi, Rachel.  I‘ve got some big job news for you from Australia. 

MADDOW:  OK.

JONES:  Check it out. 

(BEGIN VIDEOTAPE)

(voice-over):  So what is the best job in the world? 

UNIDENTIFIED MALE:  Hold on.  Hold on.  Judge is in session. 

JONES:  Apparently, this guy now has it.  A Brit named Ben Southall won a contest and now gets to be the caretaker of a gorgeous Australian tropical island, travel around the Great Barrier Reef, blog, take pictures, soak up the sun and pocket $110,000 besides. 

Yes.  OK.  That does sound good.  But is that really the best job in the world?  Is it a better job than AIG executive where you get to drive the economy to the brink of collapse and the government will punish you with billions of dollars, plus $454 million in bonuses last year?  Last year?  Do those benefits come with a gym membership? 

And is it a better job than say dictator of North Korea?  Kim Jong Il is definitely living large, parades, devoted countrymen dancing on his birthday, frequent displays of military belligerence, and aside from the hair, the clothes and the contempt of the rest of the planet, the man is set. 

What about this job?  Ex-vice president.  Dick Cheney gets to sit on the sidelines and snipe at the sitting president after failing miserably for eight years and still get a government pension and secret service protection.  No accountability for the American people, but all the visibility he wants.  Never seen this job listed on “Monster.com.”  Trust me.  I‘ve looked. 

So what is the best job in the world?  I think that‘s pretty obvious. 

(END VIDEOTAPE)

MADDOW:  Huh? 

JONES:  Right here.  Right here. 

MADDOW:  Yay!

JONES:  Right here.  Right here.  Yes. 

MADDOW:  We could fight it out.  Thank you, Kent.  I have a quick cocktail moment for you. 

JONES:  OK.

MADDOW:  First Lady Michelle Obama was at an event at the United Nations last night and she revealed the best thing she has done so far in the White House. 

JONES:  And? 

MADDOW:  Going on Sesame Street. 

JONES:  Oh.

MADDOW:  Here‘s a picture of her with the talking cabbage. 

JONES:  Yes, I get it.

MADDOW:  “COUNTDOWN” Keith Olbermann starts right now. 

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

END   

Transcription Copyright 2009 CQ Transcriptions, LLC ALL RIGHTS  RESERVED.

No license is granted to the user of this material other than for research.

User may not reproduce or redistribute the material except for user‘s

personal or internal use and, in such case, only one copy may be printed,

nor shall user use any material for commercial purposes or in any fashion

that may infringe upon MSNBC and CQ Transcriptions, LLC‘s copyright or

other proprietary rights or interests in the material. This is not a legal

transcript for purposes of litigation.>

WATCH 'THE RACHEL MADDOW SHOW' WEEKDAYS AT 9:00 P.M. ON MSNBC.

Discuss:

Discussion comments

,