updated 7/22/2009 11:05:25 AM ET 2009-07-22T15:05:25

Guests: Eugene Robinson, Jill Burke, Barney Frank, Dave Weigel, Kent Jones

RACHEL MADDOW, HOST:  Hey, David.  Thanks very much for that.

DAVID SHUSTER, MSNBC ANCHOR:  You‘re welcome.

MADDOW:  Appreciate it.

And thank you at home for sticking with us this hour.

Congressman Barney Frank will be joining us live this hour.

We‘re also going to get a live report from Alaska on the big ethics finding against Governor Sarah Palin tonight that was mysteriously leaked to “The Associated Press.”

Also, we have a science update.  We finally know what that big, miles-long blob of goo is that was found floating off Alaska‘s coast.

There‘s lots to come this hour—news from both inside and outside of Alaska.

But we begin with some news from C Street.  C Street, of course, is the residence for several members of Congress in Washington, D.C.  It‘s listed for tax purposes as a church and it‘s operated by a secretive religious organization called the Family.

Governor Mark Sanford of South Carolina says he sought counseling at C Street during his extramarital affair with a woman from Argentina.  Former Republican Congressman Chip Pickering‘s wife alleged in a lawsuit filed last week that Congressman Pickering actually engaged in his extramarital affair at the C Street house.  Senator John Ensign still lives at the C Street house, and other members of the Congress associated with the house admit to having known about Senator Ensign‘s extramarital affair months before it was ever forced into the public eye.

On June 16th of last month, Senator Ensign did go public about that affair, admitting to the country that he‘d been sleeping with a campaign staffer, who happened to be married to one of his Senate staffers.

Mr. Ensign, of course, had called for other lawmakers to resign when they‘d been caught having affairs.  But, so far, Mr. Ensign himself is showing no signs that he‘ll take his own advice and resign now.

But other shoes keep dropping in the Senator Ensign scandal—and we now have news that just eight days after the public announcement of his own affair, Senator Ensign gave a $5,000 contribution to one of his C Street housemates, Congressman Zach Wamp.  Ensign‘s political action committee made the contribution on June 24th.  Congressman Wamp‘s campaign committee accepted the contribution five days later, on June 29th.  So far, Congressman Wamp has not returned that money.

Zack Wamp, of course, is a conservative family values Republican.  He is campaigning for governor in Tennessee, in part on his enthusiasm for the sanctity of marriage.

When the John Ensign scandal broke, Mr. Wamp told “The Knoxville News Sentinel,” quote, “These are trying times, and obviously, with Senator Ensign and Governor Sanford, everybody is disappointed.  There‘s no doubt about that.”  Not so disappointed, of course, that they would turn down his money however.

He also said, quote, “I hate it that John Ensign lives in the house and this happened because it opens up all these kinds of questions.”  But, he also told the “News Sentinel” of Knoxville, quote, “I‘m not going to be the guy who goes out and talks.”

One of the major unanswered questions about the role of this secretive C Street group in the Ensign scandal is whether the other members of Congress who lived at C Street, who studied there, had a role in the funneling of nearly $100,000 in cash from Senator Ensign‘s parents to his mistress and her family.  The mistress‘s husband, Doug Hampton, says that the payments were suggested by and directed by the other members of Congress who were living at C Street.

So, did Congressman Wamp help come up with the plan to pay off Senator Ensign‘s mistress in this sex scandal?  And was the $5,000 he got from Senator Ensign barely a week later part of the same plan?

We called Congressman Wamp‘s office today with that question.  We also asked if he was supporting Senator Ensign‘s bid for re-election to the Senate.  So far, we‘ve had no word back.

Meanwhile, in Nevada, Senator Ensign himself is coming under increasing pressure due to the scandal.  “The Las Vegas Review Journal” newspaper commissioned a poll last week which revealed that Ensign‘s approval rating since the scandal broke has dropped 22 points.

And today, the other major newspaper in Las Vegas, “The Las Vegas Sun,” editorialized against Senator Ensign, on the basis of his association with C Street.

They said, quote, “Do the colleagues who live with Ensign on C Street exert influence over his decisions as a senator?  When Nevadans send someone to Congress, they are doing so with an expectation that the senator or House member will serve the state‘s interests first instead of those of a secretive group, religious or otherwise.  Government works best when it is transparent, but there has been nothing transparent about the way Ensign has handled himself since he revealed the affair.”

Beyond Senator Ensign, from Alabama to Arkansas to Tennessee, in local press across the country, members of Congress who are affiliated with C Street and the family are starting to get questioned about the secretive nature of this group and their ties to it.

In South Carolina today, one of the other C Street linked politicians in the news these days for a sex scandal faced the media for the first time since admitting to his affair.  He is, of course, South Carolina Governor Mark Sanford and he appeared before reporters in the apparent hope today of talking about the real I.D. program.  Instead, when he opened it up to questions, he faced a torrent of questions about his affair and about him covering it up.

I‘m not sure what the governor expected here, but it is clear that reporters had more questions than he had answers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  You‘ve admitted lying to so many people.  How do you expect Collins or Lieberman or anyone to take you seriously on this issue?

GOV. MARK SANFORD ®, SOUTH CAROLINA:  I made a mistake in life.  I have apologized for that mistake.  I said all I‘m going to say on that one.

UNIDENTIFIED FEMALE:  Do you think your affair will always be a distraction?

SANFORD:  Life and the choices that we make begin each day anew.  And so, it‘s as much of a distraction as you want to make it.  I‘m going to move on with my life.  And the question is, will you?

UNIDENTIFIED FEMALE:  If it becomes apparent that it is always going to be a distraction, would you then consider resigning?

SANFORD:  Let me put it to you this way.  Have you made a mistake, large or small in your life?

UNIDENTIFIED FEMALE:  I‘m asking you.

SANFORD:  Well, I‘m asking you.

UNIDENTIFIED FEMALE:  I think so.

SANFORD:  I think we all do.  And I think, in other words, we‘ve all acknowledged that this has been painful, it‘s been what it is.

UNIDENTIFIED FEMALE:  Where‘s your ring?

SANFORD:  What‘s that?

UNIDENTIFIED MALE:  Where‘s your wedding ring?

UNIDENTIFIED MALE:  Governor, how will this scandal affect your race for president in 2012?

(END VIDEO CLIP)

MADDOW:  He thought he was going to get questions about the real I.D.  act.

Joining us now is Eugene Robinson, Pulitzer Prize-winning columnist and an associate editor for “The Washington Post.”  He‘s also an MSNBC political analyst.

Gene, it‘s really nice to see you.  Thanks for being here.

EUGENE ROBINSON, MSNBC POLITICAL ANALYST:  Great to see you, Rachel.

MADDOW:  OK.  “The Las Vegas Sun” is complaining that Senator Ensign belongs to a secretive group.  Other local press is starting to make the same noises.  They want to know if the Family exerts influence over the decisions of these members of Congress.

Do you feel like the secrecy is the core of the concern about C Street?

ROBINSON:  The secrecy, as far as I know, is the whole problem.  It— look, I know a few people around Washington who have been kind of associated with—not necessarily with the C Street house, with the larger fellowship called the Family.  And, you know, these are not sinister people.  I don‘t agree with them politically, in general, but—so I‘m not I don‘t know why this is sort of, you know, “girls keep out” clubhouse atmosphere about this whole thing that makes it seem more conspiratorial than I think it is, or certainly, more conspiratorial than I hope it is.           

But it suggests questions that you have to ask and that people have to answer.  I mean, this image.  You know, it‘s one thing for a congressperson to be consoled or counseled by a friend at a difficult time, making life decisions, as Mark Sanford says in his kind of new age speak.  But, you know, that‘s sort of one-on-one.  Everybody understands helping a friend out of a tough situation.

But when you get the image of these members of Congress all kind of sitting around together and deciding how to handle this affair or how to handle that affair, it‘s unseemly, to say the least, and a little weird, to say the rest of it.

MADDOW:  With Congressman Wamp, we now have a member of Congress who‘s very ambitious, who‘s running for governor in Tennessee.  He wants to be a rising star in the Republican Party.  And he told the local press in Tennessee that he doesn‘t think that belonging to this group will be a problem for him, because it‘s a Christian group—and having a religious affiliation, a Christian religious affiliation, for Tennessee voters isn‘t going to be an issue.

But it does seem to me like that there‘s a political liability to admit that you‘re a part of a group through which you learn about some other official members of Congress‘ misconduct, but you‘re bound by the secrecy of this group and by the loyalty you have to this group to not tell the public.  It seems like there may be an extent as to which people associated with this group are compromised by that affiliation.

ROBINSON:  Well, exactly.  And the problem, really, is the group aspect of it.

And, again, you can understand a friend not wanting to talk about private conversations he might have had, you know, with a good friend about marital troubles.  And now, whether or not it‘s legitimate for a congressman to fail to disclose that sort of stuff, it depends on the circumstances, but at least you can kind of understand it.

When the answer, on the other hand, is that, “Well, I‘m not going to tell you because I don‘t want to rat out the other members of my group and, you know, I don‘t want to be the guy who goes out and talks,” that sort of thing—then it certainly raises the issue of divided loyalties and, you know, we sent you to Congress to represent us, we didn‘t send you to represent whatever this group is.

I think that‘s a problem.  And I think it will be a problem even in a Bible belt state like Tennessee.  I think that‘s a problem.

MADDOW:  One of the reasons I wanted to talk to you about this, Gene, is I feel like you have a—you have a much better beltway antenna than I do.  You‘re sort of not a creature of the beltway, but understand it very well.

And one of the things I don‘t get about this is that Republican Party still hasn‘t commented on the fact that Senator Ensign put the teenage son of his mistress on the party‘s payroll last year, and then he apparently fired the kid once he stopped sleeping with the kid‘s mom.  It seems to me like that‘s the sort of thing the Republican Party would have to comment on.  But, yet, they haven‘t.

Why is that?

ROBINSON:  It‘s not your antenna, Rachel, because I don‘t get it either.

I mean, look—look, Ensign lost me at the $96,000 in hush money, OK?  That—that is where I got off that train.  I mean, I—and I don‘t understand why that‘s not in the headlines and being commented on by Republicans and Democrats every day.  That seems like an outrageous thing to me.  I don‘t know if any specific law was broken, but I would sure like to find out.

And I—you know, I suppose the son on the—on the payroll, well, you know, it‘s not a governmental organization, per se, but you would think that Republicans—Republican donors who gave to the committee would be concerned about that, would want to know that their money was being used not to employ the offspring of mistresses.

MADDOW:  Shocking—that could be a new rule, maybe.

(LAUGHTER)

ROBINSON:  It‘s just, you know.

(CROSSTALK)

ROBINSON:  I mean, call me old-fashioned—call me old-fashioned, Rachel, but hush money, you know, nepotism.

MADDOW:  Yes.

ROBINSON:  . it‘s just kind of a little weird.

MADDOW:  Eugene Robinson, Pulitzer Prize-winning columnist and an old-fashioned associate editor for “The Washington Post”—Gene, thank you so much.  It‘s great to have you on the show tonight.

ROBINSON:  Great to talk to you, Rachel.

MADDOW:  OK.  Just when we were genuinely ready to stop discussing her political career, almost-not-Alaska-governor-anymore Sarah Palin is now literally having an ethics problem about her ethics problems.  You can tell your last hold-out relative who thinks Sarah Palin is a viable political candidate that really, really, really is over.  It‘s breaking news.  We‘ll explain in just a moment.

(COMMERCIAL BREAK)

MADDOW:  Eight days ago, THE RACHEL MADDOW SHOW just sort of declared ourselves done talking about Sarah Palin, except in cases of genuinely important news, or irony so thick it must be cut with tonic to digest.  Now would be a good time to go find some tonic.

We declared ourselves on this show to be done because Governor Palin appeared to be done politically.  The bottom line of her resignation as Alaskan governor was that even in just half of a single term, her run as governor was increasingly becoming a disaster.  She did not appear to have the savvy to deal with either the responsibilities of governing or the criticism that, inevitably, comes with the responsibilities of governing.

Even in these few weeks of post-resignation interregnum in Alaska, Governor Palin has handled her critics ham-handedly.  Yesterday, in response to a brand-new ethics complaint filed by an Alaska Republican, the governor tweeted this: quote, “In violation of ethics acts, more allegations were filed today by serial complainer, gave to press before we could respond; ridiculous, wasteful.”

You know, defensive, expertly abbreviated social networking like that wasn‘t even news enough to bring Sarah Palin back out of THE RACHEL MADDOW SHOW mothballs we had put her in.

For that, we had to wait for the late-breaking news this afternoon that an investigator hired by the Alaska State Personnel Board found against her in the most serious of all the ethics complaints that are still pending against the governor.  In a report that was supposed to be confidential, but mysteriously found its way to “The Associated Press,” the investigator concludes, quote, “that there is probable cause to believe that Governor Palin used, or attempted to use, her official position for personal gain, in violation of Alaska Statute 39.52.120, (a).”

Essentially, it‘s against Alaska state law for a public official to use that public office to raise money for themselves.

When Sarah Palin gave her OK to set up a fund to pay her legal fees and told the group setting up that fund that they could call the fund the official legal fund for Sarah Palin, and when she gave them her picture to put on the Web site, she broke Alaska law—or at least she will break Alaska law if she ever actually collects any of the money that is being raised by that fund in her name.  That is the finding of the report that was leaked to “The Associated Press” today.

Now, the governor is a private citizen again as of Sunday.  Apparently, though, she is still adding to her value as a political target, right up until the finish line.

Joining us now is Jill Burke.  She‘s a reporter for NBC affiliate KTUU.  She joins us on the phone from Anchorage, Alaska.

Jill Burke, thanks very much for joining us.  We really appreciate it.

JILL BURKE, KTUU REPORTER (via telephone):  Sure thing.

MADDOW:  Did I summarize these findings accurately?  The investigator says the governor‘s fund created to pay legal bills associated with ethics violations is itself actually an ethics violation?  Is that right?

BURKE:  That‘s what I took from it when I read it earlier today.  There seemed to be two main points out of it.  One, is the creation of it, first of all.  And then, secondly, would be the receipt of funds, if and when there were to ever happen.

MADDOW:  And the reason that it is an ethical violation is because the governor is using her status as governor in order to set up a conduit through which she can be given money, essentially.  Is that right?

BURKE:  Correct.  A personal gain, wealth that she otherwise would not have access to without using her official capacity as office to raise that money.

MADDOW:  Now, as far as I understand it, I‘m not an ethics on these types of ethics laws, but I know that lots of politicians have legal defense funds for various types of legal imbroglios that they get themselves involved in.  Federally, certainly, that there are—there are rules that allow politicians at the federal level to have these types of legal defense funds.

But, as I understand it, Alaska doesn‘t have those types of laws.  And that‘s why it‘s specifically illegal in Alaska.  Does the report make recommendations about that?  And is that, in fact, the discrepancy that makes this, potentially, an illegal act?

BURKE:  That‘s the discrepancy that this independent investigator highlighted.  He pointed that out.  He noted that the Alaska fund trust on its Web site likens itself to other federally set up defense funds—but also states in Alaska law, there‘s no framework by which to enact something like that.

So, he offers this remedy to kind of address the situation, which is to say, “Look, Palin, you know rejects the money from the fund, don‘t take it, dissolve the relationship to the fund, ask the state to reimburse you for those complaints which were dismissed, and then maybe have Alaska state legislature take a look at its ethics laws and rewrite them so that office-holders aren‘t subject to having to pay for frivolous complaints out of their personal pocket.

MADDOW:  Those are the recommendations on how to sort of remedy this.  But there is this funding that she‘s used or attempted to use her official position for personal gain.  Now, Governor Palin‘s spokesperson issued a response to this tonight, saying there‘s no final report.  The investigator is still confidentially reviewing this matter.  It appears suspect that in the final days of the governor‘s term, someone would again violate the law and announce a supposed conclusion before it is reached.

I‘ve seen the report.  It is, in fact, marked confidential on it.  I got this tingly feeling that makes me sense, oh, I don‘t think I‘m supposed to be reading this while I‘m reading it.  Do we know about how this did end up getting delivered to “The Associated Press”?  How it got leaked?

BURKE:  Boy, you know, that‘s a great question.  I‘m going to say, they have better contacts than I do and I hate to admit that on air.  But I tried today.  I did talk to a couple of people who did have the report.  None of them refused to provide it to us.  So, we‘d have to ask “The Associated Press” on that.

But everybody, to me, gave the same answer.  That this remains confidential, it‘s pending.  The normal procedure would be for the board members to go into session, maybe in September, when their next regularly scheduled meeting is and to discuss it, discuss further action and wait until it‘s truly finalized in their process before anything is made public.

MADDOW:  Jill Burke, reporter for KTUU in Anchorage, Alaska—it‘s been really helpful to have you on the show to help us sort this out.  Thanks very much, Jill.

BURKE:  Thanks.

MADDOW:  Coming up: President Dwight D. Eisenhower finally gets what he wants from Congress, 50 years after he asked.  Congressman Barney Frank will be here to talk about that.

And, do you want to buy the Watergate Hotel?  If you said no, you‘re in good company, with everyone else on the face of the Earth.  Important and sad real estate news—just ahead.

Stay with us.

(COMMERCIAL BREAK)

MADDOW:  Spectacle correspondent Kent Jones will have that story.

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

It is back on in Iran.  Despite a ban on public gatherings, hundreds of people marched in the streets of Tehran today.  A power protest was also planned for this evening.  Iranians were organizing today to turn off all appliances at a designated time and then switch them back on five minutes later, trying to cause a power surge.  There were some unconfirmed reports of power outages in three Tehran districts.

On Friday, of course, much larger protests in the streets coincided with an appearance from Iran‘s reformist former president at official Friday prayers.

But the turmoil isn‘t just on the ground and in the streets, it‘s also, apparently, inside the regime itself.

Because he is the newly, spuriously reelected president, Mahmoud Ahmadinejad gets to create his government.  He gets to appoint vice presidents and advisers all on his own—without the involvement of the supreme leader, Ayatollah Khamenei, who is, in theory, supposedly above politics.  That‘s in theory, but in practice, the supreme leader is kiboshing Ahmadinejad‘s choice for his vice president.  Khamenei writing Ahmadinejad a letter demanding that his choice for vice resigns.

In other words, there‘s a crisis for the separation of mosque and state—which is not weird in a country that‘s full name starts with phrase “The Islamic Republic of.”  The real question is whether this means this split between Khamenei and Ahmadinejad means that Ahmadinejad might be in trouble, that he might be losing the support of the clerical regime that actually runs the show in Iran.

The other big question is whether this will be yet another jolt in the arm for the green uprising in the streets of Iran that still seems ready to pour into the streets to try to get rid of their government at any moment.

Also today, it turns that the Nixon scandal-related real estate market is not so hot.  Back in April, you might remember that apartment number 310 at Watergate West went on the market.  It was the apartment once owned by Fred LaRue.  Fred LaRue is the man who, in that apartment, distributed hush money to keep the original Watergate break-in secret.

Remarkably, the Watergate tells us now that the Fred LaRue piece of Watergate history apartment is still vacant, still for sale, never sold.

That said, if you were in the market for a piece of Watergate history, the whole Watergate Hotel went up for auction today.  The hotel‘s current owner defaulted on a $40 million loan.  So, the whole 12-story kit and caboodle went up for sale to the highest bidder.

The highest bidder, however, never showed.  Neither did the lowest bidder, for that matter.  The hotel—the Watergate Hotel failed to attract a single bid today.

For the record, THE RACHEL MADDOW SHOW would like to offer 15 bucks for all the ashtrays.

And finally, science update.  We reported last week that off the Alaska coast, there floats a big, gnarly blob of goo.  It‘s in the Chukchi Sea.  That‘s the sea between Alaska and Russia.

Now, this blob reportedly stretches for more than 10 miles.  Officials say it‘s been hanging off ice and kind of sucking stuff into it like jelly fish and fish-fish.  Someone even turned it into the local wildlife department the remains of a dead goose that did not survive the blob in very good condition.  It was just a skeleton and a bunch of feathers.

Well now, testing on samples of the big blob of goo has been completed, and according to the Alaska State Department of Environmental Conservation, the blob is algae.  Now, algae blooms are usually green or yellow or red.  This stuff is black and it‘s hairy.

But researchers say that the color probably just means that it‘s rotting and the hair just means that it‘s filamentous algae, stringy, hairy algae.  Algae, your hair smells terrific.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  Every dollar of waste in our defense budget is a dollar we can‘t spend to support our troops or prepare for future threats or protect the American people.  Our budget is a zero sum game. 

(END VIDEO CLIP)

MADDOW:  Something happened today in Washington that defies the common wisdom of 50 years of American politics.  In raw mathematical terms, what happened today was $2 billion got dropped out of a plan to spend $700 billion. 

That means it was almost literally a drop in the bucket.  But this particular drop was such a totally unexpected, “no, no way, it can never be dropped” drop in the bucket that D.C. common wisdom might never recover. 

What happened is that the Senate voted to not pay for more of a specific kind of plane that‘s called the F-22.  The F-22 was a great idea when what we thought war would be like would be having “Top Gun” pilots having aerial dogfights with similarly armed “Top Gun” pilots who were from the Soviet Union. 

The Soviet Union never had time to come up with anything like the F-22, though, before they went kaput.  And since then, the F-22 has essentially been the vestigial third nipple of the defense budget.  It‘s pointless, but it‘s still there.  Here‘s why. 

(BEGIN VIDEO CLIP)

ROBERT GATES, SECRETARY OF DEFENSE:  I arrived in Washington 43 years ago this summer.  Of all people, I am well aware of the realities of Washington and know that things do not change overnight.  After all, the influence of politics and parochial interests in defense matters is as old as the republic itself. 

Henry Knox, the first secretary of war, was charged with building the first American fleet, and to get the support of Congress, Knox eventually ended up with six frigates being built in six different shipyards in six different states. 

(END VIDEO CLIP)

MADDOW:  Why would he do that?  See, because then you would get the members of Congress from those six different states all to be political allies for building those frigates.  Well, that was revolutionary days. 

Same goes for the F-22.  When Lockheed Martin set out to make them 30 years ago, they planned from the beginning to have parts for these planes made in 40 different states, so members of Congress from those 40 different states would have reason to support building more of the planes, just for the sake of local interests, just for the sake of jobs, regardless of the usefulness of the planes. 

And bingo, we ended up in a situation where the Soviet Union hasn‘t existed for 20 years.  Every F-22 costs $350 million to build.  They‘re not useful for our current conflicts.  No F-22 has flown a single mission in Iraq or Afghanistan. 

The military does not even want f-22s.  They‘ve been known to trap their pilots inside them.  They take over 30 hours of maintenance for every hour they‘re in the air.  But for some reason, we keep building more of them.  And even the biggest, hawkiest hawks in the defense world know that this is dumb. 

(BEGIN VIDEO CLIP)

GATES:  With regard to something like the F-22, regardless of whether the number of aircraft at issue is 12 or 200, if we can‘t bring ourselves to make this tough but straightforward decision, reflecting the judgment of two very different presidents, two secretaries of defense, two chairman of the joint chiefs-of-staff and the current Air Force secretary and chief-of-staff, where do we draw the line?  And if not now, when?  If we can‘t get this right, what on earth can we get right?         

SEN. JOHN MCCAIN (R-AZ), ARMED SERVICES COMMITTEE:  I would only add to President Eisenhower‘s farewell address to the nation, which is compelling in many ways.  That it should be changed - the words should be changed from military industrial to military industrial congressional complex. 

(END VIDEO CLIP)

MADDOW:  Sen. John McCain, joining those who spoke out against funding the F-22 before it was voted down today in the U.S. Senate. 

The “military industrial congressional complex,” of course, is John McCain‘s reference to Eisenhower‘s 50-year-old warning, that us creating a huge domestic industry that needs war and preparation for war to be profitable also creates huge permanent incentives for war over peace, and for the defense budget above everything else we spend money on. 

(BEGIN VIDEO CLIP)

DWIGHT EISENHOWER, FORMER UNITED STATES PRESIDENT:  We must not fail to comprehend its grave implications.  Our toil, resources, and livelihood are all involved.  So is the very structure of our society. 

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. 

(END VIDEO CLIP)

MADDOW:  It took 50 years, but maybe this decision today in Washington means we‘re finally, 50 years later, listening to Ike? 

Joining us now is Congressman Barney Frank, chair of the House Financial Services Committee.  He has opposed funding for the F-22.  Mr.  Chairman, thanks very much for coming back on the show tonight. 

REP. BARNEY FRANK (D-MA), CHAIRMAN, HOUSE FINANCIAL SERVICES

COMMITTEE:  I‘m glad to be here, Rachel.  It‘s a very important issue. 

MADDOW:  Do you think it‘s true that this plane is still being made today after all these years because of domestic politics and not because of its usefulness? 

FRANK:  Oh, without question.  Actually, you know, we‘ve been having this debate about whether or not we need a second stimulus, and people have missed the point.  My conservative colleagues have a second stimulus, it‘s the F-22. 

They don‘t even pretend that it‘s a military mission.  It‘s extraordinary.  These are the people who said, “Don‘t do an economic recovery bill.  The government can‘t create jobs.  Any government spending detracts from jobs,” except for weapons. 

It‘s kind of armed Keynesianism.  They find somehow spending money on the military a power to create jobs that doesn‘t exist elsewhere.  And you‘re quite right that they try to spread this out. 

That‘s why today‘s victory was a very important one, but it‘s not the last one.  The committees, the Armed Services Committees in the House and the Senate and the Military Appropriations Subcommittees are still for this plane.  They‘re composed of my colleagues who really feel these things are very important. 

So next week, we‘re going to have another vote, because the appropriations bill on defense will come to the floor and I‘m dying to be able to tell people, please, write your representative. 

The Senate‘s done its job, but there‘s going to be an effort to have this plane rise from the ashes of this defeat.  And we will be offering an amendment next week when the Defense Appropriations Bill comes to the floor of the House to kill it. 

Let me add one other thing.  It‘s very important - I was glad to hear what Secretary Gates said.  We‘re being told that we can‘t afford to do with health care, that we can‘t afford to do housing, et cetera. 

Well, the military budget is the main reason we can‘t afford it.  If we had not fought that foolish and destructive war in Iraq, we would have had the money to pay for health care.  That whole debate wouldn‘t have happened. 

Going forward, if we don‘t begin to curtail military spending excesses, then we will be in that bind.  If we‘d lost this fight - I give the president a great deal of credit for rallying after we lost the first round - then all bets would have been off and we would have an ever-increasing military budget, almost literally eating everybody else‘s lunch. 

MADDOW:  How is it and why is it that defense spending gets considered in a different way than all other kinds of spending?  You‘ve said in the past that people who support the F-22 assume that the defense budget is essentially paid with Monopoly money.  Why is it that defense spending isn‘t thought of as something that‘s finite?  It‘s thought of something you can just add to infinitely.

FRANK:  Well, it‘s probably cultural lag.  There was this fear of the Soviet Union and there was a real military problem.  This is a plane, of course, that has never fired a shot in hangar and never will almost certainly. 

But military spending - I guess, for conservatives, that‘s a way to show you‘re tough and you‘re patriotic.  It‘s wholly illogical.  And I guess I‘m not as good as explaining in logic as maybe I should be in my line of work. 

But as I said, it‘s probably cultural lag.  Well, we‘ve got to be strong.  People will say, “Look, our people are fighting in Afghanistan and Iraq.  We need the F-22.”  As you pointed out, it is wholly irrelevant to that. 

The other thing is that the military contractors have been very clever about putting their people there.  And I guess part of this is, some liberal Democrats will vote for this.  There‘s a very good union, the machinist union that does a lot of good work and they‘re a socially responsible group.  And some of those people will be laid off. 

And that will bother me and I would be glad to have national policies in place that deal with people who get laid off.  So you get the conservatives who are ready to spend on the military, unquestioningly.  And then you get some liberals who have union ties and don‘t like to see people out of work for any reason.  That‘s been the coalition. 

But, again, I give the president credit.  Frankly, a couple weeks ago when the House Armed Services Committee did this, I tried to offer an amendment on the floor, and I couldn‘t even get the Democratic leadership to allow me to offer the amendment. 

But we kept up the fight and that‘s why I think this is very important.  And as Gates said, if we can‘t win this fight - I guess listening to Secretary Gates‘ channel - oh, well, (UNINTELLIGIBLE) which is kind of interesting.  If not now, when? 

If we had lost this fight, our ability to begin to curtail the military budget would be over.  As of now, if the president follows through on this - let‘s be very clear, without endangering one iota of the security of the United States, we stop spending on Cold War weapons.  We don‘t do anymore foolish and destructive wars like Iraq. 

We could bring down the military budget projection over time.  That would pay for health care.  We wouldn‘t be in the bind that we‘re in, trying to figure out how to do both. 

MADDOW:  Congressman Barney Frank, chair of the House Financial Services Committee, it‘s a pleasure to have you on the show tonight, sir.  Thanks for joining us. 

FRANK:  Thank you, Rachel. 

MADDOW:  CNN‘s Lou Dobbs has decided that he is a birther, too, that he stands with the most entertaining conspiracy theorists of the Obama era, the ones that maintain that President Obama secretly isn‘t actually president.  That‘s next.  Stay with us. 

(COMMERCIAL BREAK)

MADDOW:  Tonight‘s moment of geek is something that happens only once in a hundred years - a total eclipse of the sun visible from India across China and into Japan.  The moon‘s shadow traveling 9,415 miles across the earth, a journey of nearly 3 ½ hours. 

The reason that‘s important is because that makes it the longest solar eclipse this century.  At its peak, just about an hour ago, the total eclipse in some places lasted six minutes and 39 seconds. 

The reason today‘s eclipse was so long is that the earth is nearly as far away from the sun as it gets right now and the moon is nearly as close to earth as it gets.  So if you think about the shadow, big moon plus small sun equals long, long, long shadow, equals long, long, long, long eclipse.  Neat. 

(COMMERCIAL BREAK)

JOHN CAMPBELL (R-CA):  The proposal is not crazy.  The proposal is just looking forward, and I want to get to that.  But wouldn‘t you like to put all this to rest?  That‘s what this proposal is about. 

(END VIDEO CLIP)

MADDOW:  Republican Congressman John Campbell of California appeared on “HARDBALL” with my colleague, Chris Matthews, earlier tonight, proving that this is turning out to be landmark week for the conspiracy theorists known as the birthers. 

Birthers argue that President Obama secretly isn‘t actually president, because he secretly wasn‘t actually born in the United States.  This despite the fact that the president has posted his “born in Hawaii” birth certificate online.  Little-known fact here, Hawaii, U.S. state. 

It‘s now 10 House Republicans who are cosponsoring a “provide the birth certificate” bill authored by Congressman Bill Posey, a Republican who says he doesn‘t know whether or not President Obama is actually an American citizen. 

As we highlighted last night, the birthers are hard at work trying to get their message out.  In addition to the 10 sponsors of that bill, all Republicans, Republican Congressman Mike Castle of Delaware found his June 30th town hall meeting momentarily taken over by someone aggressively heckling him on the birther issue. 

He was then booed roundly for saying that the president is a citizen.  Of course, the home run for conspiracists(sic) of any stripe is when their ideas can leave the lunatic fringe and enter the mainstream. 

Enter CNN anchor Lou Dobbs over on our competing network, that anchor Campbell Brown says is the only one still doing journalism.  Mr.  Dobbs is using the platform of his CNN show to advance the birther conspiracy. 

(BEGIN VIDEO CLIP)

LOU DOBBS, CNN ANCHOR:  There are a lot of questions remaining.  And seemingly, the questions won‘t go away, because they haven‘t been dealt with, it seems possible, too straightforwardly and quickly. 

(END VIDEO CLIP)

MADDOW:  Mr. Dobbs then went even further than that on his radio show. 

(BEGIN AUDIO CLIP)

DOBBS:  Well, guess what, folks?  There are some issues here that should be really resolved.  What is crazy about this is all the president of the United States has to do is produce a birth certificate.  We have a document issue.  You suppose he‘s - no I won‘t even use the word “undocumented.”  It wouldn‘t be right. 

(END AUDIO CLIP)

MADDOW:  Get it?  He‘s undocumented.  The president is an - so says Lou Dobbs.  Journalism. 

Joining us now is a reporter who has done a lot of national legwork on this story, the phenomenon of the birthers, Dave Weigel, who writes for the “Washington Independent.”  Mr. Weigel, thanks very much for joining us.

DAVE WEIGEL, REPORTER, “WASHINGTON INDEPENDENT”:  Thank you very for having me, Rachel. 

MADDOW:  So what is the claim here?  The claim here is that producing the birth certificate from Hawaii with the raised seal visible in the signature and everything - that just isn‘t enough?  They want footage of the birthing room or something? 

WEIGEL:  I don‘t know what they want anymore, because every time Hawaii verifies something or a reporter verifies something or a witness verifies something, that witness, that state, that reporter is lying and their evidence must be thrown aside. 

We‘ve seen Lou Dobbs do this before four years ago with these claims about leprosy running rampant in America because of illegal immigration.  It‘s still really disappointing to see him go down this path.  This is - calling Hawaii and getting this thing verified should be enough for any sane person to put this to bed. 

MADDOW:  But what are the origins of this story.  One of the things you‘ve been able to do is really trace it very specifically to where this theory came from. 

WEIGEL:  Well, it started with the Obama campaign.  There were rumors a year ago, a year in change, that Obama‘s real birth certificate contains a different middle name.  Actually, the rumor was his middle name is Muhammad(ph) and he changed it to Hussein, because Hussein plays better in Iowa, I guess. 

And the campaign said, “OK.  We‘ll do what no one has ever done.  We‘ll do what McCain didn‘t do, Bush didn‘t, Hillary didn‘t do.  We will put his birth certificate from the state online.  Anyone can look at it.”

That immediately, instead of settling this, created a cottage industry of people trying to prove this is forged.  And then, after Hawaii has said, “No it‘s not forged.  This came from us.  We have a different copy on record that says the same stuff,” then Hawaii was lying. 

Basically, the White House doesn‘t talk about this.  The Democratic National Committee doesn‘t talk about this because when they do, it just sends this train down the track a little further.  This is more evidence that there is a great conspiracy.  It‘s how conspiracies work.

MADDOW:  Well, who in the media or the political world is helping this to cross over from the fringe into the mainstream?  I mean, one of the things I love about American politics and Americans in general is that we are enthusiastic about conspiracy theories.  I find it entertaining. 

But the sort of the holy grail is to, you know, make CNN, to make the mainstream media to be talked about as if you‘ve got some sort of credible idea. 

WEIGEL:  Right.  Even hearing yourself debunked on CNN as a kiddie program who was hosting for the Lou Dobbs and I did, that is still coverage.  Having Orly Taitz and Alan Keyes on TV to ramble about this - that‘s coverage.  That‘s a breakthrough. 

I think it‘s the conservative base that goes to town hall meetings, calls members of Congress and get them to give a little on this issue.  They‘re pushing this into the mainstream. 

Members of the Congress, John Campbell on “HARDBALL” today, looked like he was auditioning for the Jack Lemmon role on “Glengarry Glen Ross.”  He was really embarrassed.  Some of these guys who have endorsed this bill like him really do want it to go away. 

Bill Posey, who wrote it, I think has indulged these people.  And he‘ll say one thing to a news reporter in Florida.  Then, he‘ll go to one of these fringe conservative Web sites or radio shows and say - if I can quote him - I know he doesn‘t produce it, “The only people I know who don‘t want to take drug tests are people who use drugs.”  I‘m paraphrasing him this much. 

So there are a few Republicans who push this forward.  That‘s all it needs.  Once it‘s in the media‘s bloodstream, then we have to cover it.  And then, Rush Limbaugh can talk about it.  And World Net Daily can brag that Rush Limbaugh talked about it.  And it just keeps on rolling like that.

MADDOW:  Of course, one way to cover it is to say this is totally false and the people propounding it are kooks.  But not everybody feels that way, I guess.  David Weigel from “Washington Independent,” your reporting on this has been really helpful for understanding it.  Thanks a lot for joining us.

WEIGEL:  Thank you so much, Rachel.

MADDOW:  Coming up on “COUNTDOWN,” the CIA in big legal trouble after allegedly violating the State Secrets Act and then trying to cover it up. 

Next on this show, my friend, Kent Jones, reviews the upcoming literary masterpiece that is Carrie Prejean‘s memoir. 

(COMMERCIAL BREAK)

MADDOW:  We turn now to our literary and grooming correspondent, Kent Jones.  Hi, Kent.

KENT JONES, POP CULTURIST:  Hi, Rachel.  And grooming - yes. 

MADDOW:  Literary and grooming -

JONES:  That‘s about it.  Dethroned Miss California and defender of marriage, Carrie Prejean, has just signed a deal to write a tell-all memoir to be called “Still Standing.”  And I did not make that up.  It comes out in November, but I can‘t wait that long. 

(BEGIN VIDEOTAPE)

(voice-over):  In the tradition of Che‘s “Motorcycle Diaries” and the autobiography of Malcolm X, Regnery Publishers is proud to present a triumphant new memoir of an American rebel, Carrie Prejean, “Still Standing,” a true story of resistance and courage. 

While a timid nation buckled under the tyranny of political correctness, a voice emerged from the wilderness.

CARRIE PREJEAN, FORMER MISS CALIFORNIA 2009:  In my country and in my family, I think that I believe that a marriage should be between a man and a woman. 

JONES:  And a legend was born.  Caroline Michelle Prejean was born into a world that despised her.  Look at her.  What kind of a chance does a woman like this have in a society like ours? 

But through sheer determination, Carrie Prejean overcame so many trials to defend the institution of marriage for all of us.  That our champion should be an unmarried 22-year-old makes her story all the more remarkable. 

“Still Standing” by Carrie Prejean coming in November, from Regnery, the publishers that brought you such challenging conservative master works as “Real Change” by Newt Gingrich, “The Darwin Myth” and “Green Hell.”  It‘s an inspiring story for anyone who ever had a dream of stopping other people‘s dreams. 

(END VIDEOTAPE)

MADDOW:  You very much, Kent. 

JONES:  We can‘t wait now, can we?

MADDOW:  I have to say I‘m a little tempted by “Green Hell” after that. 

JONES:  Yes.

MADDOW:  Well, thank you very much, Kent.  I appreciate that.  Thank you at home for watching tonight.  We‘ll see you again tomorrow night.  “COUNTDOWN” starts right now.  Have a great evening. 

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

END   

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