updated 8/13/2010 11:39:40 AM ET 2010-08-13T15:39:40

Guests: Morgan Loew, Austan Goolsbee

           

RACHEL MADDOW, HOST:  What room were you and Aqua Buddha in?

OLBERMANN:  I wasn‘t with Aqua Buddha.  I just said I was in that room and could he check if there were any messages in the cubby hall.  I thought it was a natural question, Rachel.  You‘re going to give me a hard time at it.

MADDOW:  I just really want to know if there was a message for you.

OLBERMANN:  The message was: don‘t do another damn interview via Skype?  It‘s always the message.

MADDOW:  I could have—I could have helped you out with that one without the Buddha.

OLBERMANN:  Yes.  Yes, yes.

MADDOW:  Thank you, Keith.  Appreciate it.

OLBERMANN:  Thank you.

MADDOW:  And thanks to you at home for staying with us for the next hour.

Tonight, this hour, I got to tell you, a series of amazing debates—

Sharron Angle versus Sharron Angle on Social Security.  Sharron Angle plainly wins.

Also, the Republican Party versus math on tax cuts and deficits.

And Eric Cantor and friends versus the First Amendment on the proposed mosque in downtown Manhattan.  Everybody freak out!

All that plus a weird “don‘t ask, don‘t tell” update from our show last night.

And the most severely penalized company in American history.

That is all coming up this hour.

But, we begin tonight with this: If you have been watching any TV lately, if you have been following google trends at all, you are probably aware that there‘s a big manhunt going on across the country tonight.  Officials are searching for an escaped prisoner and his fiancee/cousin who apparently helped him escape from a prison in Arizona.  It‘s the sort of Bonnie and Clyde, but without the great acting getaway that has led to a cross-country police search.  And it has captivated a lot of people in the process.

Have you heard about this actually starting, though?  Have you heard about how this whole story that has sort of captivated the country, this nationwide manhunt, these escaped prisoners—have you heard how the prison break that started it all actually happened?

It was three guys in prison in Kingman, Arizona.  And here‘s how they broke out of that prison: they walked through an unlocked door at their cell block.  The door was unlocked.  It was supposed to have an alarm on it, but the alarm either wasn‘t there or it didn‘t work.  The alarm didn‘t go off.

Then the prisoners walked over to the perimeter fence of the prison, the fiancee/cousin of one of the prisoners had driven her car up to the fence.  Her car was plainly visible to the security cameras around the prison, but no one who worked at the prison seemed to notice when she drove right up next to that perimeter fence.

She then threw some wire cutters over the fence to the three prisoners who were standing inside, the prisoners used the wire cutters to cut through the fence.  That did set off an alarm, but no one who worked at the prison appeared to notice that alarm.  Let alone react to it.  The alarm just went off and staff just ignored it.

So, the dudes walked through the fence they just cut, they got in the car, and they drove off.  No one at the prison noticed the hole in the fence or the alarm going off or the car that drove up to the fence that was visible on the security cameras, or that the three prisoners were missing until 9:00 p.m. that night, five hours after these three prisoners were last seen by prison staff.

After the prison realized that it had had three of its prisoners

escape, they waited more than an hour before telling the local sheriff, who

I don‘t know—maybe might have been some help in apprehending the prisoners.  They waited more than 2 ½ hours before notifying the state corrections department.

           

At this point, two of the escaped prisoners have been captured.  But one of them, along with his fiancee/cousin/getaway driver/wire cutter thrower is still at large.

The head of the Department of Corrections in Arizona said of this incident, quote, “We have great concerns that there was laxness on the part of the security staff.”

OK, first of all, yes, you think?  Second of all, it‘s kind of amazing to hear that admission.  That is essentially an admission of guilt in a case like this coming from the head of the state Department of Corrections, right?

Actually, when you look at the details, it turns out it‘s not that amazing, because you should consider that the prison that these three guys just essentially walked out of is not run by the state.  Arizona has 15 prisons, 10 of them are run by the state -- 10 of them are run by the Department of Corrections, by the government, if you will.  But five of them are for-profit private enterprises.  They are run by private prison companies, including this one in Kingman, where this prison break last month happened—what they describe as a minimum to medium security prison, about 12 miles outside of Kingman, Arizona.  It‘s run by a company called MTC, Management and Training Corporation.

MTC brags on being the third largest private prison company in the country.  MTC, like many private prison companies, has a bit of a checkered past.  In the late 1990s, the company, which is based in Utah, brought on an executive named Lane McCotter.  Mr. McCotter took the job at MTC after having resigned, quite recently, as the top prison official for the state of Utah.  He resigned in the wake of a particularly brutal scandal involving a mentally ill man dying in custody after he was strapped into a restraint chair for 16 hours.

Now, MTC at that time—Management and Training Corporation at that

time, already had its own extensive track record of poor treatment of

inmates.  But regardless, soon after Mr. McCotter started his new gig at

MTC, he was hand picked by John Ashcroft‘s Justice Department to go to Iraq

to go over to Iraq in the months after the U.S. invaded that country.

           

Why send a private prison executive into a war zone?  Well, according to “The New York Times,” quote, “It was Mr. McCotter who first identified Abu Ghraib as the best site for America‘s main prison and who helped to rebuild the prison and train Iraqi guards.”

See, there‘s the private prison guy with the circle around him, the MTC guy.  He‘s at Abu Ghraib there, giving a tour to Deputy Defense Secretary Paul Wolfowitz.

After setting up the Abu Ghraib prison for American use, despite what Saddam Hussein had used it for, Lane McCotter left Iraq just before the Abu Ghraib prisoner abuse scandal broke.

But, meanwhile, the for-profit prison companies here at home were working their magic, including in Arizona.  In September 2007, two convicted murderers broke out of a private prison in Arizona using ladders that they‘d stolen from a maintenance building.

In 1997, a convicted murderer and a sex offender broke out of another Arizona private prison.

One year earlier, in 1996, three murderers and three other prisoners broke out of another Arizona private prison.

After this incredible record of achievement, after all of these prison escapes from private prisons, how did the state of Arizona decide to proceed with the issue of prison privatization?  Even as prison privatization declines around the country, even as state budget cuts make it so that many states are closing facilities or reducing their sentencing guidelines, so that fewer people are in prison altogether, how did the state of Arizona decide to proceed?

Last year, Arizona state officials moved legislation to try to privatize the whole state prison system.  Arizona planned to “seek bids from private companies for nine of the state‘s 10 prison complexes.”  It was the first effort by a state to put its entire prison system under private control.

Great news for the private prison companies, right?  Great news, in particular, for Corrections Corporation of America, which is the single largest private prison company in the country.  CCA already runs six detention facilities in Arizona.  They hold prisoners from other states at their facilities in Arizona.  They also hold the federal contract to hold federal detainees in the state.

So, you know what would be awesome for a company like that?  You know what would be awesome?  What would be really awesome for the shareholders and everybody if the state of Arizona started producing a whole lot more federal detainees—people detain on federal issues, federal issues like, I don‘t know, say, immigration violations.

Imagine the boon to the private for-profit prison company that has the contract to house federal detainees in Arizona, if Arizona came up with a whacky plan to arrest a lot more people for suspected immigration violations.  Imagine how awesome a law like S.B. 1070 would be for an industry like the for-profit private prison industry in Arizona.  Sure, it‘s an industry with an incredibly awful record in Arizona, but there is money to be made here—and it turns out that that industry, particularly, Corrections Corporation of America, which stands to benefit the most, that industry and that company in Arizona, they‘re really well connected.

The CBS affiliate in Phoenix, KPHO, did some investigating on this subject.  This is what they turned up.

(BEGIN VIDEO CLIP)

MORGAN LOEW, KPHO-TV REPORTER:  Our CBS 5 investigation found two of Governor Brewer‘s top advisers have connections to CCA: deputy chief of staff, Paul Senseman, was a lobbyist for the company.  His wife is still a registered lobbyist for CCA.  Brewer policy adviser, Chuck Coughlin, owns High Ground and Public Affairs, which also represents CCA.

Did Paul Senseman or Chuck Coughlin have any input with you on signing S.B. 1070 into law?

GOV. JAN BREWER ®, ARIZONA:  OK, we‘re done.

LOEW:  Are you aware that they are—they were lobbyists for Corrections Corporate of America?

UNIDENTIFIED FEMALE:  Sorry.

LOEW:  Governor, don‘t you think you should have disclosed that?

The governor did not answer those questions

(END VIDEO CLIP)

MADDOW:  After initially dodging those questions, Governor Brewer‘s office eventually got back to the CBS affiliate, telling them this, quote, “Paul Senseman does not advise the governor on these issues.”

Corrections Corporation of America released a statement saying, quote, “We did not lobby at any time anyone in Arizona on the immigration law.”

Then again, why would you need to lobby when two of the governor‘s top people are your lobbyists, your former lobbyists, and/or are married to your lobbyist?

Joining us now is the investigative reporter who broke this story, Morgan Loew, from CBS affiliate KPHO in Phoenix, Arizona.

Morgan, thanks very much for joining us tonight.

MORGAN LOWE, KPHO REPORTER:  Rachel, it‘s a pleasure to be here.

MADDOW:  Governor Brewer‘s office says that she did not talk about S.B. 1070 with one of the advisers that you mentioned in your piece, who has links to this private prison company that stands to benefit from the legislation.  What have you been able to find out, if anything, about the other adviser that your investigation turned up?

LOEW:  That other adviser‘s name is Chuck Coughlin, and he is really tied into the Brewer administration.  He‘s one of her policy advisers, as we said.  He‘s also a campaign chairman.

We‘ve learned that he did consult with the governor on whether to sign S.B. 1070 into law.  We don‘t know what he proposed to her, what he said to her.  We do know that this was a discussion that they had.  High Ground, his company, is one of the most popular, sought-after consulting—political consulting companies in the state of Arizona.  And they have contracts with all kinds of legislators and lawmakers here in Arizona.

So, very well-connected and he did talk to the governor about whether to sign S.B. 1070.

MADDOW:  Now, obviously, since S.B. 1070 has been signed, there‘s been a lot of further legal action limiting some of the potential impact of that legislation.  But in terms of the - there‘s being a potential financial boon for private prison companies.

What sort of impact would the full implementation of S.B. 1070 have had on them?

LOEW:  Well, that‘s a hard question to answer, and if you talk to the people at Corrections Corporation of America or if you hear from Chuck Coughlin, they‘ll say that Corrections Corporation of America has no plans to house any people caught in Arizona by local governments, illegal immigrants, that is.

But Maricopa County, the Phoenix Police Department, we don‘t deport illegal immigrants.  When someone‘s picked up on the side of the road or for a crime, they‘re taken to the jail.  At that point, their immigration status is determined.  If they‘re an illegal immigrant, they‘re reported to Immigration and Customs Enforcement.  Then their taken to one of these private prisons, Corrections Corporation of America.

So, you‘d have to do the math.  But if you increased the number of people who are picked up, illegal immigrants, increase the number that are sent over to ICE, you‘re likely going to increase the number that companies like Corrections Corporation of America are going to be housing.

Right now, they‘re—I think they‘re charging ICE here in Arizona about $11 million a month to have about a 5 percent vacancy rate that they keep sort of for big busts or that kind of thing.  So, obviously, that number would go up and they would have to make extra accommodations to handle more illegal immigrants.

MADDOW:  And given that the—as you explained, that the arrangement already is that people picked up in Arizona on immigration violations already go to CCA—CCA can fairly say, we‘re not pushing or lobbying to have these inmates, these detainees brought to us.  The fact remains that they just—that they just will be.

Morgan, last year, when Arizona pushed to privatize, potentially—essentially, its entire prison system, that made national headlines.  No state had ever tried to do that before.

What kind of influence does the private prison industry have on the legislature in Arizona?

LOEW:  We‘ve spent a lot of time looking into that in the last couple of weeks.  I mean, who would have thought that the private prison industry would have any kind of influence anywhere, but as you mentioned in your piece going in, they have facilities all over the state of Arizona.

What we found is they contribute money to state lawmakers, to the governor, to some of our other key lawmakers.  They engage the most powerful lobbying groups here in Arizona.  These are lobbying groups made up of former state lawmakers, former high-ranking public officials here, people who are close to the governor and other legislatures, pay them a lot of money.  Those lobbyists give money to these legislators.

In addition, in Arizona, we have a mindset among a couple of key legislators that privatizing the prison industry is a good thing.  As you mentioned, they tried to privatize the entire system last year.

The governor did veto that after the state corrections director sent her a letter saying, “Look, we can‘t imagine having death row inmates in private prison systems, and having death row inmates being taken care of by the lowest common bidder.”  They don‘t think that‘s a great idea.  Our state attorney general said he didn‘t think that was a good idea.

But that bill went down.  There are other bills that have moved forward.  We‘ve got a, what is it, a request for proposal out on the table right now for 5,000 additional beds for private prisons to come in here and take up.  That would double the number of inmates we currently have in the private prison system here in Arizona.

There are two sides in this debate here in Arizona, and they‘re sort of locking heads right now.  This escape from Kingman is certainly putting a new shine or a new view on the issue.

MADDOW:  It‘s remarkable that, I guess—I guess it‘s remarkable that even running death row for-profit at this point has to be proposed before people realize that it is a bridge too far.

I have one last question for you, Morgan.  And you mentioned the state attorney general.  I know that he‘s actually been quite outspoken on this issue.

Do you feel like, either with this escape in Kingman or with any of these other issues, that the public has a recognizable position on this issue?  Is it becoming a campaign issue at all, political issue for the state?

LOEW:  Well, looking at it from the outside, it‘s clear that it is becoming a campaign issue.  You have a governor with close ties to the private prison industry.  Her opponent, the attorney general, has been very outspoken against this.  He‘s calling for the state to stop putting any dangerous inmates in these private prison systems, account for all the dangerous inmates, and then re-evaluate whether we should move forward with this 5,000-bed request for proposal.

It‘s hard to tell right now whether the population here in Arizona thinks that private prisons are a key, you know, issue for this election coming up.  But I‘ll tell you, we‘ll find out in the next two months.

MADDOW:  Morgan Loew, investigative reporter for KPHO, CBS affiliate in Phoenix, Arizona, thanks for your reporting and thanks for sharing with us, Morgan.  I really appreciate it.

LOEW:  My pleasure.

MADDOW:  So, for someone who everyone keeps saying is a real rising star in the Republican Party, I sort of expected more from Congressman Eric Cantor of Virginia.  He has now made his argument against a new mosque in downtown Manhattan and his argument is—and I quote, “Come on!”

That eloquent and well-reasoned smackdown of the First Amendment—coming up.

(COMMERCIAL BREAK)

MADDOW:  She may run away from reporters asking hard questions, but Nevada Republican Senate candidate Sharron Angle has stood her ground in the debate over Social Security.  Sharron Angle is not going to let Sharron Angle dismantle the program.  And Sharron Angle is not going to let Sharron Angle save it.

The great one-person debate is just ahead.  Spoiler alert: she wins.

(COMMERCIAL BREAK)

MADDOW:  Today, OSHA, the Occupational Safety and Health Administration got paid its largest fine in history, biggest one ever—a record $50.6 million.  The fine was paid for 270 safety violations at an industrial site in the United States.  It was at the same facility in Texas City, Texas, where 15 workers died five years ago in a massive explosion.  Fifteen people died, more than 170 workers were injured.

Now, an official investigation into that explosion concluded that the owner of the facility had failed to implement or follow numerous safety recommendations before the blast.  But these 270 safety violations, these violations that earned the record $50.6 million fine today—those violations happened at that same site, but they happened after the explosion, even after 15 people died, even after the company had already paid out a then-record $21 million fine to OSHA for the violations that led to the explosion, even after the company had also paid out $50 million in federal criminal charges related to that explosion, even after the company had put aside an estimated $2 billion, with a “B,” to pay the families of the victims of that explosion—even after all of that, they still did not improve safety conditions at the plant.

In total, OSHA‘s actually seeking $81 million right now, for more than 700 safety violations at the plant post-explosion.  The company‘s disputing about $30 million of the $80 million fine that OSHA is looking for.  But as of today, the company‘s agreed to pay about $50 million.  And again, that is an all-time record.

They also have to submit to what OSHA called an unprecedented level of oversight, including independent monitors stationed at the Texas City facility from here on out to try to keep the company from killing yet more of its workers, since apparently multi-million dollar fines and even multi-billion dollar payouts haven‘t been enough already to get the company to change its ways, let alone 15 of it employees dead.

The company‘s behavior in Texas City might be a useful reminder going forward of the kind of brute force that it takes to get a company like this to do the right thing.  The company that paid the largest fine ever, largest fine ever paid to OSHA ever, today, for all of this, the company is called BP.

(COMMERCIAL BREAK)

MADDOW:  A true confession about something you probably already know.  I think that Sharron Angle is the single most entertaining thing about the 2010 elections this year, at least so far.

Nevada‘s Republican Senate candidate might as well be the mascot of the entire 2010 political season.  And that‘s because Sharron Angle personifies the predicament faced by the American right wing, as it tries to rebuild from the presidency of George Bush and the defeat of presidential nominee, John McCain.

So far, the actual Republican Party establishment has had almost nothing to do with choosing the candidates at the top of their big tickets.  It‘s been more of the conservative movement making the decisions, and so, you get primary results like Sharron Angle beating Sue Lowden.  And, of course, Sharron Angle wasn‘t the establishment Republican candidate, but she was the candidate picked by Republican primary voters in Nevada.

And now, wowee—does the Republican Party have a rebranding challenge on its hand?

Before Sharron Angle was the Republican Party‘s problem, her campaign Web site looked like this.  It looked like something your John Birch Society cousin got from an instant Internet kit.

The same day that Sharron Angle won the primary, a fancy consulting firm came along and, behold—your new reasonable moderate Republican Senate candidate‘s Web site from Nevada, with neat little check boxes and spell check and Twitter and everything.

Before she was the Republican Party‘s problem, Sharron Angle frequently and repeatedly warned that if conservatives did not get their way in the next election, America should expect conservatives to turn to weapons, to turn to their guns to get what they want instead.

(BEGIN AUDIO CLIP)

SHARRON ANGLE ®, NEVADA SENATORIAL CANDIDATE:  You know, our Founding Fathers, they put that Second Amendment in there for a good reason, and that was for the people to protect themselves against a tyrannical government.  In fact, you know, Thomas Jefferson said it‘s good for a country to have a revolution every 20 years.  I hope that‘s not where we‘re going.

But, you know, if this Congress keeps going the way it is, people are really looking toward those Second Amendment remedies.  And they‘re saying, my goodness, what can we do to turn this country around?  And I‘ll tell you, the first thing we need to do is take Harry Reid out.

(END AUDIO CLIP)

MADDOW:  Just take Harry Reid out, one of those Second Amendment remedies.  That‘s the old Sharron Angle.

The new Sharron Angle, the Republican Party standard bearer in the state of Nevada no longer wants to talk about Second Amendment remedies.

(BEGIN VIDEO CLIPS)

REPORTER:  Ms. Angle, what do you mean you mean Second Amendment remedies?  Second Amendment remedies, anything?

REPORTER:  Why won‘t you answer what Second Amendment remedies mean? 

Nothing at all?  It‘s a simple question.

(END VIDEO CLIPS)

MADDOW:  What do you mean, Ms. Angle?  Please?  But Sharron Angle‘s vanishing act on Second Amendment remedies that she used to bring up unprompted, people wouldn‘t ask her about that.  She would suggest it as part of her regular stump speech, part of her regular interviewing riff.

She used to bring it up on her own.  Now, she won‘t answer questions about it.  That, however, is nothing compared to the presto-change-o she is trying on social security.  On this one, Sharron Angle is going full tilt.  In this case, check out the new Sharron Angle.  Check out her new ad first. 

(BEGIN VIDEO CLIP)

SHARRON ANGLE ®, NEVADA SENATORIAL CANDIDATE:  The real social security solutions are to stop Harry Reid from raiding the social security trust fund.  He needs that money for his own pet projects. 

We have a contract with our seniors who have put into social security in good faith.  I‘d like to save social security by locking the lockbox and putting the money back into the trust fund so the government can no longer raid our retirement. 

(END VIDEO CLIP)

MADDOW:  We have a contract with our seniors who have put into social security in good faith.  I‘d like to save social security.  “I‘d like to save social security.”  It‘s the new Sharron Angle.  Boiler plate Republican, channeling the Republican National Committee, “I‘d like to save social security.”

The problem for Sharron Angle‘s revisionist tendencies is that there‘s another lockbox.  It‘s called the internet and it holds a lot of videotape, including videotape of the old pre-make-me-see-more-moderate-makeover Sharron Angle. 

(BEGIN VIDEO CLIP)

ANGLE:  We need to phase Medicare and Social Security out in favor

something privatized.  We know that the government never gives it -

UNIDENTIFIED MALE:  So don‘t fix it?  You‘re saying don‘t do anything

-

ANGLE:  I‘m saying it cannot be fixed.  It‘s broken. 

(END VIDEO CLIP)

MADDOW:   It can‘t be fixed.  It‘s broken.  Phase it out.  Totally broken.  Can‘t be fixed.  Kind of like Sharron Angle‘s campaign to erase her record and put on the moderate Republican suit that someone knitted for her in Washington.  I‘m telling you, the midterms are going to be fun this year.  Very, very fun.

(COMMERCIAL BREAK)

MADDOW:  The bush tax cuts were a 10-year deal.  Year 10 is upon us and they are due to expire at the end of the year.  Republicans now are in a mad dash to convince America that we need those tax cuts to stay in order to stay afloat in this fragile economy. 

Democrats in the White House have said they plan to keep all of the Bush tax cuts in place, except for those in the top tax bracket, for whom the U.S. income tax rate would rise from 35 percent to 39.5 percent. 

What‘s the horrible, terrible impact of that going to be?  Quote, “Taxpayers with income of more than $1 million for 2011 would still receive on average a tax cut of about $6,300 compared to what they would have paid under rates in effect until 2001.  It‘s only a bummer for the rich people when compared to the roughly $100,000 average tax cut provided by the Bush plan to households with more than $1 million in income per year.”

In other words, when the Bush tax cuts were just a twinkle in some Republican policymaker‘s eye during the Clinton administration, people weren‘t making more than $1 million a year were doing just fine.  And remember how fine rich people were doing in the go-go ‘90s?  I don‘t think I knew any personally, but they appeared to be doing very well. 

Yesterday, a nonpartisan analysis requested by the House Ways and Means Committee indicated that the Republican plan to extend the Bush tax cuts in full to everybody, even the richest Americans, that would add more than $36 billion to the federal deficit next year. 

And it would, of course, give those benefits to the richest among us.  Forget, for a moment, that both plans keep in place a ton of tax cuts that are the biggest deficit inflater that we have as a country.  You just take that off the table for a minute. 

Ezra Klein, our friend at “The Washington Post” took a look at what the Democratic and Republican plans for the Bush tax cuts actually do for average Americans.  And he breaks it down by income.  If you make between $20,000 and $30,000 per year, the average tax cut would be $771 per year under the Democrats and the Republicans would save you $769, almost exactly even.

A $2 difference, right?  Seems pretty fair.  If you‘re making a better living - let‘s say you‘re making between $75,000 and $100,000 a year.  The difference in money saved is only slightly bigger, but still really narrow - $29 between the two plans.  No real indication of inordinate favor. 

But if you are lucky enough to be in that top tax bracket that we talked about earlier, if you‘re doing really, really well for yourself, if you‘re making more than $1 million per year, look at the difference. 

Whoa!  Only a difference just over $97,000 between the Democratic plan and the Republican plan.  You still get a tax break under the Democratic plan, but look at what you get from the Republicans. 

Take a look at the full picture as it appeared in Ezra‘s column today.  Look at when they show all the income brackets.  Started even, even, even - oh, that‘s not even - ah!  What‘s that? 

Republican plan looks totally like the Democratic plan until you get down to really, really, really rich people.  And then it‘s like - well, it‘s like a big fat-bottomed snowman or something.  That graph should be fun to campaign on. 

Joining us now for the interview tonight is Austan Goolsbee, chief economist of the president‘s Economic Recovery Advisory Board and a member of the Council of Economic Advisers.  Mr. Goolsbee, thank you very much for joining us.  Appreciate your time. 

AUSTAN GOOLSBEE, CHIEF ECONOMIST, ECONOMIC RECOVERY ADVISORY BOARD OF

PRESIDENT OBAMA:  Good to see you, Rachel. 

MADDOW:  First of all, let me ask you for your reaction to the data that we‘ve presented.  Do you agree that that‘s the difference in tax policy that is being offered by the two parties right now? 

GOOLSBEE:  Yes.  I think it‘s a pretty good description, you know.  And you look at that and you say, “Boy, how do you get in one of those categories?  That‘s a big, fat round thing down there.” 

And I think that‘s a pretty fair characterization, as the only difference now we‘re talking about, as the president said, let‘s extend the tax cuts for the 98 percent of ordinary Americans that were in a very tough spot. 

And the - it appears that the leadership of the Republicans are saying, “Well, let‘s hold even those hostage.  Unless we can get these $100,000 a person tax cuts for folks making more than $1 million, then we‘re not going to be for anything.”  I don‘t think it makes any sense. 

MADDOW:  But let me ask you about the Democratic plan as presented.  I mean, you - the administration is proposing to let the Bush tax cuts expire on the richest Americans, but the cuts would remain for everybody else, for 98 percent of Americans, including the middle class and working people. 

That only alleviates a little bit of the tax cut‘s effect on the deficit.  So how does the White House - how do you reconcile that strategy with the fact that letting 98 percent of these tax cuts expire will still be a huge hit to the deficit? 

GOOLSBEE:  Well, I‘m not disputing that that will cost money.  But I think when you‘re in the deepest hole since 1929, that‘s really not the moment that you want to go tighten the belt. 

The president campaigned on and made clear that he thought we should extend these tax cuts.  We shouldn‘t try to balance the budget on the back of ordinary Americans.  And that‘s where - that‘s the position you would be in here if you tried to do that.  It would be a very substantial tax increase. 

If you exclude off the high income part of it, however, all the nonpartisan people that have looked at that to ask what would be the impact on the economy, have pointed out that, by far, the lowest bang for the buck in terms of just stimulating and getting the economy to grow, of all the forms of stimulus you could have, the worst is giving massive tax cuts to extremely high-income people. 

That if you‘re opposing unemployment insurance, extending unemployment insurance benefits, if you‘re opposing middle class tax cuts in favor of these, you‘re really - you‘re barking up a tree that is totally in the wrong space. 

MADDOW:  I mean, in general, as I understand it, there‘s less stimulative effect, in general, from tax cuts as opposed to well-targeted stimulus spending.  But just to be clear, you‘re arguing that among tax cuts, which are less stimulative, the worst ones are for rich people.  Better ones are for people who are making less money? 

GOOLSBEE:  Well, yes, and we can talk about the evidence of what kind of tax cuts are most stimulative.  But everybody agrees, they‘ve ranked every possible form of stimulus by the Congressional Budget Office, and the high-income tax cuts rank dead last of all of them. 

I think the question I would ask for the people saying that we need to massively cut taxes for people, billionaires or millionaires, is if that was some magic elixir, what happened?  I mean, we did that.  We cut those taxes more than they‘ve ever been cut from 2001 to 2008.  And that really didn‘t work.  I mean, look out the window.  That‘s - here‘s where we are. 

MADDOW:  But we do have the greatest economic inequality since the ‘20s, so it worked in that sense, I guess. 

GOOLSBEE:  At least they were expensive. 

MADDOW:  Austan Goolsbee, the chief economist of the president‘s Economic Recovery Advisory Board and member of the Council of Economic Advisors, thanks very much for your time tonight. 

GOOLSBEE:  Thank you. 

MADDOW:  So Congressman Eric Cantor‘s genius logic for barring a mosque from downtown Manhattan is, quoting once again, “Come on.”  That‘s his argument.  Eric Cantor versus the First Amendment of the Constitution of the United States, coming up in just a moment. 

If I were a gambler, I would take the Constitution and give the points.  Hold on to those betting slips and stay tuned to see who wins.

(COMMERCIAL BREAK)

MADDOW:  On this show, last night, I interviewed Lt. Col. Victor Fehrenbach, a 19-year Air Force veteran who had just filed a lawsuit to stop his discharge under the Pentagon‘s Don‘t Ask, Don‘t Tell policy. 

Col. Fehrenbach filed that lawsuit because his lawyers had learned that his case had gone from a review board to the secretary of the Air Force. 

(BEGIN VIDEO CLIP)

(on camera):  Col. Fehrenbach, let me start with you.  I know you received word last Wednesday that your case had been sent to the secretary of the Air Force with a recommendation.  Is it your understanding that that means the recommendation is almost surely that you should be separated from the military? 

FEHRENBACH:  That is our understanding, Rachel, because the way the regulation reads, if the personnel review board decided to retain me, then there would be no reason for my case to be forwarded to the secretary of the Air Force.  The only reason it would be forwarded to the secretary was if the recommendation was for a discharge. 

(END VIDEO CLIP)

MADDOW:  The information from colonel Fehrenbach‘s lawyer that his case gone to the secretary of the Air Force was also reported in the “New York Times” last night.  They wrote, quote, “An Air Force spokesman, Capt.  Derek White, said that Col. Fehrenbach‘s case is under final review by the Air Force Secretary Michael B. Donley, and that until a final decision was reached, the Air Force would have no comment.” 

Today, though, weirdly, the Air Force is disputing its own statement saying in a press release, quote, “Several media counts have inaccurately reported that Michael Donley, secretary of the Air Force is reviewing Col. Fehrenbach‘s case.  This is not accurate.  The case is still undergoing review at the Air Force Review Boards Agency.” 

OK, Air Force. Now, you say the Air Force secretary isn‘t reviewing Col. Fehrenbach‘s case.  But if our reports about that were inaccurate, it‘s your fault, because that‘s what you told us on the record. 

So now, apparently, after a lot of inconsistent and weirdly blustery communication from the Air Force, where things stand is this, they want us to believe that the clock is not ticking on Col. Fehrenbach‘s dismissal from the military, that a 10-day window has not yet opened within which the secretary of the Air Force must make a decision about whether or not Col. Fehrenbach will be fired. 

They say the window hasn‘t opened.  Time hasn‘t started.  That process is not under way.  And so we‘re back to not knowing whether he will be fired or when he will be fired. 

We‘re back to wondering how much more time he and his six combat deployments and his nine air medals, including one for heroism, will twist in the wind while an uncertain, unhurried process in Washington determines if the Don‘t Ask, Don‘t Tell policy will be ended before Victor Fehrenbach‘s career.  We will keep you posted as soon as we know more. 

(COMMERCIAL BREAK)

MADDOW:  America, please forgive me in advance.  I am going to talk about the mother of all birthers, Orly Taitz.  Because there has been a development, a development, in the legal battle to which she has dedicated so very much of her time and our time. 

Orly Taitz, to refresh your memory, is the California dentist, lawyer, realtor and former Republican candidate for California‘s Secretary of State who made herself famous on the Internet by crusading to prove that President Obama is secretly foreign and therefore not really the president. 

The result of one of her many, many, many, many, many legal filings on the subject was that a federal district court fined her for, quote, “wasting judicial resources.

Orly Taitz does not want to pay that fine, so she appealed it to the next level up, a federal court.  She got levied the fine by the district court.  She appealed it to the circuit court of appeals. 

The circuit court of appeals said, “Yes, you‘re going to have to go ahead and pay that fine.”  So Orly Taitz then appealed that ruling, the circuit court ruling, up to the next level in the American court system.  And what‘s the next level?  The Supreme Court. 

Yes, that Supreme Court.  And the way these things work is you can actually write to an individual member of the Supreme Court and ask them to consider your case.  Orly Taitz picked - come on, who do you think she picked?  Any guesses? 

She picked John Paul Stevens.  No, she didn‘t.  Tell me you didn‘t fall for that.  Of course, she picked Clarence Thomas.  She wrote to Justice Thomas on July 8th.  It took him one week to write her back and say, “Orly, you have to pay the fine.” 

So what did Orly Taitz do?  Well, first - this is the best thing about this story - she appealed to have Clarence Thomas‘ signature verified.  Because if there‘s one true thing we know about Orly Taitz, it‘s that she does not take any official government document at face value. 

Having been somehow satisfied the real Clarence Thomas was not interested in hearing her case, Orly Taitz moved on to another Supreme Court justice.  This time, she chose to write to, I guess, her second choice Supreme Court justice. 

She wrote to Samuel Alito and she asked Samuel Alito if he please would make it so that she wouldn‘t have to pay her fine.  “The Ledger Inquirer” newspaper in Georgia reports after Clarence Thomas rejected this request, Samuel Alito actually didn‘t reject it. 

Samuel Alito referred it to the full Supreme Court so it would be considered.  Wow, right?  No.  According to people who know about these things, according to Supreme Court experts on these things, once an applicant, no matter how much time they spend vacationing in conspiracy-ville, once an applicant has tried not once but twice to get a justice to refer their case to the full court, the second justice will just do it. 

It‘s considered to be almost pro forma because if they don‘t refer the case to the full court, the applicant, an applicant like Orly Taitz at least, will probably just keep on making requests of every last one of the individual justices and that would be super annoying. 

So they go ahead and they refer it to the full court and the full court smacks it down.  And then it is well and truly over and they don‘t have to open Orly Taitz‘ mail anymore. 

I don‘t normally make predictions because I‘m very bad at predictions.  I‘m usually wrong.  But I will personally buy Orly Taitz a beer or Shirley Temple or even a gin fizz if the Supreme Court of the United States ultimately gets her out of paying that $20,000 fine for wasting another court‘s time.  One drink.  I do give Orly Taitz credit, though.  She literally goes all the way, every single time.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR (R-VA):  Anyone looking at that with any common sense would say what in the world would we be doing, you know, fostering some type of system that allows this to happen. 

You know, everybody knows America‘s built on the rights of free expression, the rights to practice your faith, but come on. 

(END VIDEO CLIP)

MADDOW:  That‘s his argument.  That‘s Congressman Eric Cantor‘s argument against a mosque being built near the site of the 9/11 attacks in lower Manhattan, “Everybody knows America‘s built on the rights of free expression, the rights to practice your faith.” 

That part of the argument makes sense so far, right?  America‘s built on freedom of expression, and religious freedom so First Amendment, right, over there.  This makes sense so far. 

“Everybody knows America‘s built on freedom of expression and religious freedom,” and then here comes Eric Cantor‘s argument against allowing people to exercise that right.  Ready?  The argument is, and I quote, “but come on.”  That‘s the argument. 

(BEGIN VIDEO CLIP)

CANTOR:  Everybody knows America is built on the rights of free expression, the rights to practice your faith, but come on. 

(END VIDEO CLIP)

MADDOW:  But come on.  Congressman Eric Cantor is the number two Republican in the House.  He‘s often described as one of the smart guys, one of the bright lights of the Republican caucus in Washington. 

In adding his two cents to the reasoning against a mosque being built in lower Manhattan, Congressman Cantor is perhaps choosing to keep his bright light under a bushel because “come on” is not that great an argument. 

The Anti-Defamation League surprised everyone this month when it made essentially the same “come on” argument against the downtown mosque.  Quote, “Proponents of the Islamic center may have every right to build at this site, but ultimately, this is not a question of rights.” 

The Anti-Defamation League, which has a record in the past of

defending religious freedom for all sorts of people, has decided, in this

case, that even if they have to grudgingly concede that Muslims may have a

religious freedom to build a house of worship in New York City, the ADL

says they do not want Muslims to exercise that right.  In other words -

(BEGIN VIDEO CLIP)

CANTOR:  Everybody knows America‘s built on the rights of free expression, the rights to practice your faith, but come on. 

(END VIDEO CLIP)

MADDOW:  But come on.  We talked a lot about what constitutes a right on this show recently when California‘s same sex marriage ban was struck down by a federal judge as unconstitutional, as a rights violation even though a majority of California voters had voted for that ban. 

The thing about rights is you don‘t get to vote on them.  They‘re not a popularity contest, that‘s why they‘re constitutionally protected.  We don‘t only protect the right to equal protection under the law for equal treatment that a majority votes yes on.  We don‘t only protect speech or religious observances that everyone feels comfortable with. 

Rights are inalienable.  They have a rock solid protection in American law, specifically to protect from infringement the rights that we have that (UNINTELLIGIBLE) other people out. 

That means that First Amendment protections like the American - First Amendment protectionists like the American Civil Liberties Union, they protect that right for everyone from Neo-Nazis wanting to march through a Jewish Chicago suburb in 1977 to the Colorado state senator who last year said he wanted to get an “ACLU sucks” license plate because he hated the ACLU just that much. 

The ACLU offered to represent him if the state gave him any hassle about that.  Our country was founded by people fleeing religious persecution, by people whose religious beliefs and practices (UNINTELLIGIBLE) out the majority of other people and governments, and the places they had been run out of. 

Because of that, the Founding Fathers set up this genius, rock-solid system in which the government would stay out of people‘s religious practice, neither helping nor hurting, it‘s your own private business and religion would stay out of government, “Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof.” 

If you are an American, that means your religious practice, whatever it is, is your own business to be freely pursued on your own terms as long as it doesn‘t impinge on anyone else‘s rights.  And I‘m sorry, but no one has the right to be protected from feeling (UNINTELLIGIBLE) out. 

(BEGIN VIDEO CLIP)

CANTOR:  But come on. 

(END VIDEO CLIP)

MADDOW:  Come on.  That does it for us tonight.  “COUNTDOWN WITH KEITH OLBERMANN” - come on - starts right now.

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

END   

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