Guests: Victor Fehrenbach, Katherine Miller, Michael Almy, Jonathan
Hopkins, Matt Taibbi, Nouriel Roubini
CHRIS HAYES, MSNBC CONTRIBUTOR: Rachel Maddow live from the 92nd Street Y is up next.
(BEGIN VIDEOTAPE)
LT. COL. VICTOR FEHRENBACH, U.S. AIR FORCE FIGHTER PILOT: In a short span of time, it was about 15, 20 minutes, we were able to employ all the weapons from my aircraft, and as well as I guided all the weapons from my wingman‘s aircraft while we were under, it was constant AAA fire, and I believe we were fired upon approximately eight times by surface-to-air missiles.
RACHEL MADDOW, HOST: And you took that enemy position completely?
FEHRENBACH: We took the entire position out and that night, the Army took Baghdad International Airport.
DAN CHOI, KNIGHTS OUT: 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 are violations of the Title X 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 we were taught at West Point with our honor code.
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: Thaddeus from Lansing, Michigan, asked: is the new administration going to get rid of the “don‘t ask, don‘t tell” policy?
Thaddeus, you don‘t hear a politician give a one-word answer much, but it‘s “Yes.”
ADM. MIKE MULLEN, CHAIRMAN OF THE JOINT CHIEFS OF STAFF: The word is not stifle change, it demands it. It does not make change harder, it facilitates it. I do not believe the stressors currently manifesting themselves in the lives of our troops and their families, lengthy deployments, suicides, and health care are rendered insurmountable or any graver by this single policy change.
UNIDENTIFIED FEMALE: In the past year alone, we‘ve lost over 600 personnel. We need to keep all the best and brightest. And as you‘ve covered in the past, we‘ve lost, you know, 10 percent of our foreign language speakers in Arabic and Farsi languages that we really need in fighting terrorism. We‘ve also lost over 800 personnel in mission critical areas—meaning they cannot be easily replaced.
MADDOW: If you could still serve, would you?
MICHAEL ALMY, FMR. AIR FORCE COMM. OFFICER: Absolutely. I will be one of the first people, if not the first person, to go back in. And there‘s no greater desire than I have right now to go back into the Air Force as an officer and a leader.
MADDOW: Breaking news from Capitol Hill, where the House of Representatives is expected imminently to vote on the defense authorization bill that would repeal “don‘t ask, don‘t tell” pending Pentagon review.
Today, Defense Secretary Bob Gates announced changes to the way that “don‘t ask, don‘t tell” will be implemented—changes he said are designed to make the enforcement of the current policy more fair.
Breaking news tonight, from Riverside, California, where a federal judge, a U.S. district court judge has just declared the military‘s “don‘t ask, don‘t tell policy” to be unconstitutional. If you want to know anything about how this part of civil rights in America goes, if you want to know how “don‘t ask, don‘t tell” is going to get struck down by the courts and that‘s how it‘s probably going to die, what the court told Judge Leighton was that he had to consider Margie Witt personally.
MAJ. MARGARET WITT, (RET.), AIR FORCE: I was aware that I wasn‘t going to tell, they weren‘t supposed to ask me, but I really wasn‘t aware that the third party could out me at any time.
MADDOW: Unless you believe that the United States Senate after this year‘s elections is going to do the right thing by gay service members, hah, then the decision by the Obama administration whether or not to appeal this ruling is likely a decision between killing this policy, now, and letting it survive probably forever. The White House keeps saying they expect that the Senate is going to repeal “don‘t ask, don‘t tell” after the elections. I find that impossible to imagine.
I think that a lot of people around the country are not exhaling until the end of this vote. This has felt like it was going to go away a lot of times before, and it seems like it really is this time, but until that vote is called, I think a lot of people will not be breathing.
LESTER HOLT, NBC NEWS ANCHOR: Good evening. A landmark vote on Capitol Hill today appears to signal a new era in gay rights in this country, while abolishing long-held military tradition and policy.
KYRA PHILLIPS, CNN ANCHOR: Some time this week, President Obama will sign the newly passed legislation that repeals the “don‘t ask, don‘t tell” policy. That means for the time being, gays and lesbians will be allowed to openly serve in the U.S. military.
(END VIDEOTAPE)
(CHEERS AND APPLAUSE)
MADDOW: They said it couldn‘t be done! They said it couldn‘t be done! They said it couldn‘t be done, and naturally, that was me, specifically, saying it couldn‘t be done. I was quite spectacularly over and over again, wrong.
(LAUGHTER)
MADDOW: It‘s done.
(CHEERS AND APPLAUSE)
MADDOW: “Don‘t ask, don‘t tell” lives 17 years and now, it shall be repealed.
Joining us now are four of the reasons why it is being repealed. Air Force Lieutenant Colonel Victor Fehrenbach. He is an F-15 fighter pilot facing discharge from the Air Force under “don‘t ask, don‘t tell,” after 19 ½ years of service and multiple combat deployments to both Iraq and Afghanistan. He has been decorated with nine Air medals, including one for heroism.
Katie Miller, a former cadet sergeant at West Point, ranked ninth overall in her class of more than 1,100 West Point cadets, due to graduate in the spring of 2012. Katie transferred out of West Point because of the compromise of her integrity due to living under the “don‘t ask, don‘t tell” policy. She now attends Yale University.
Major Mike Almy, who was discharged from the Air Force under “don‘t ask, don‘t tell,” after the military searched his private e-mails while he was serving in Iraq during the height of the insurgency in 2005.
And Captain Jonathan Hopkins, a West Point graduate discharged from the Army after three combat deployments in both Iraq and Afghanistan where he earned three bronze stars, one with valor.
These special live shows here this week are supposed to be about leadership, so I thought of you guys. Thanks for being here, you guys.
(CHEERS AND APPLAUSE)
MADDOW: Let me ask you guys, first, down the line, your reaction to hearing this weekend that the Senate repeal of “don‘t ask, don‘t tell” finally happened. You saw this idiot on cable news there, over and over and over again, in that segment saying it could definitely never happen in this way.
How did you feel when you finally did happen?
FEHRENBACH: You know, the president told me over a year ago that he was going to get this done, and when he said it, I knew he was—he believed it. To be honest with you, up until last Thursday or so, I didn‘t believe it. I didn‘t think I would see this day until I was discharged or my retirement in September.
So, it wasn‘t until Thursday that I really believed it might happen. And then being there in the chamber, it still didn‘t hit me until actually I heard the voter of my senator from Iowa, Senator Voinovich, because there was talk of there being 60, 61 votes, and to have—I heard his voice give an “aye,” and I knew we were over 62 and that‘s when it really hit me. I‘ve still spent days here trying to grasp the gravity of it all.
So, I don‘t know when that‘s going to sink in fully, but it was an amazing day.
MADDOW: I still keep thinking that I‘m being wrong on television again, and it hasn‘t—
(CROSSTALK)
MADDOW: I like when I‘m wrong about stuff like this.
Katie, how‘d you feel?
FMR. CADET KATHERINE MILLER, RESIGNED FROM WEST POINT OVER DADT: I
was completely elated. Yes, there were times when I didn‘t think it was going to get repealed either, and, you know, especially after the first Senate vote. You know, I was at a pretty all-time low after that. So, when I heard the announcement, I was completely elated.
And it‘s not just a good decision for LGBT service members, it‘s a good decision for the military as well. So, I was exceedingly proud that our Congress people could do what was right.
MADDOW: How about you, Mike?
ALMY: Overwhelmed. Three‘s a charm. We had two failed votes in the Senate, and we got it right on the third attempt. And it‘s been such a rollercoaster of emotions this past year. We‘ve had some highs, we‘ve had some lows.
And I started to doubt it was going to happen in the lame duck just because of the calendar. We were running out of time. But we did it.
MADDOW: How about you, Jon?
JOTHANAN HOPKINS, FMR. U.S. ARMY CAPTAIN: I‘m excited for the tens of thousands of people who are gay and in the service, that they no longer have to go to work and feel like they‘re a criminal, because they could get fired for just who they are. I mean, I spent nine years in and knew the amount of pain that that caused. But secondly, I felt very, very proud for those 65 senators that, it‘s not too often that members of the Senate get to vote on something that really changes people‘s lives and reaffirms the certain—the very special American right to treat everyone the same. And it made me very proud.
(APPLAUSE)
MADDOW: Actually, Jonathan and Katie, you both have written about and spoken about the toll that it takes from a person to live under a policy that makes you lie. The stress, compromise to your integrity, as you wrote it in your resignation statement to West Point, depression, things that you‘ve written about since you were discharged.
It‘s been—real harm has been done here, to thousands of Americans, tens of thousands of Americans who have served around this policy. People who have lived through it, who have been done some harm maybe in this case right now, thinking about reenlisting, thinking about getting back in.
Do any of you guys have advice for people given the damage that has been done?
ALMY: I would say, look past it. There is so much good in the military. We—and I‘m sure I speak for all of us here, as well as the other 14,000 that have been affected by this and thrown out. We do it because of love of country.
And for the people, the men and women that we serve, the mission, “don‘t ask, don‘t tell” was absolutely horrible and it destroyed my career and darn near destroyed my life. And I come from a military family, and I just absolutely cannot wait to resume my career as an officer and a leader, because I love my country. This is what I was called to do.
“Don‘t ask, don‘t tell” was just one small aspect of that, which obviously had a tremendous impact on my entire life and career, but that‘s over with now. And now, the military needs positive role models of gay and lesbian officers and enlisted personnel, serving openly, honestly, with full integrity, right beside their straight counterparts, with zero detriment to the military.
(APPLAUSE)
HOPKINS: Something I always said, while I was part of the military and say today, one thing that makes me proud about it, it makes everyone better. It doesn‘t matter if you come from a good family or a bad family. When you go to the military, you have numerous moms and dads making you a better person, reinforcing certain values that make the military strong.
“Don‘t ask, don‘t tell” was the one exception to that. I mean, in the midst of making everybody stronger, it destroyed part of you inside and you couldn‘t talk to anybody about it. So—I mean, it‘s a wonderful organization and it does so much for all of us. People can go and do that proudly now.
MADDOW: Victor, let me ask you—just thinking about leadership. You initially decided, I know, that you weren‘t going to fight your discharge, that you wanted it over quietly and quickly and you just wanted it done with. What made you change your mind and decide to stand up and be counted and fight it?
FEHRENBACH: There were actually a couple of decision points I had to make there, not to use that term—I apologize.
MADDOW: Decision points, I think there‘s 13, specifically.
FEHRENBACH: And you‘re right, initially, I just—I didn‘t want anyone to know. I wasn‘t out to my family. I wasn‘t out to any friends. I had just a few friends to rely on that I could talk to, and Mike was one of them. As a matter of fact, the first person I told was Mike Almy about what I was going through.
And I just—I just wanted it to be quiet. I secured a job. I was going to move on. And the first major decision point was, I was at the lowest low. I mean, where I wanted to—I wanted to quit a lot of things, including life.
Then somebody said, you need to hear this story about Major Margaret Witt in Washington. She just won. She fought and she won a case. And this could apply to you somehow, so read about that. And I did.
And that was the first sign that I had of hope that somebody could actually fight and win. It was her will to fight and stick to it that was the first major decision point. I remember, I called Mike that day and I said, hey, do you think that this could be possible, the I could tell my story and it would have an impact and I could fight this and I could win, do you think that‘s even possible? And Mike and all my friends, “That‘s what we wanted to hear from you, not that you were going to give up and quit.” So, they had a lot to do with that.
There was another major point when we were—this was over a year later, I‘d been on the show and talked, and it was coming up to a decision about the legal battle, whether we were going to take that on. And so, again, I always knew it was the right thing to do, and I just wondered if I had the courage to do it, and I wasn‘t sure about that.
So, I was going to make the decision up to last Thanksgiving and we were talking to some law firms about it. And one of my concerns was: how was this going to impact my personal life? You know, was it going to be invasive and sort of take all my privacy away.
So, I talked to Margaret Witt about it, again, because she‘d gone through it. So, I was about to make the decision, but that was a big concern for me and for my family.
And I was sitting in my office one day and the phone rings and I picked it up and I picked it up, and it was an older gentleman and he said he was in his 80s. He said he‘d fought in the Korean War, he‘d been in the military for 20 years, and it was hard for him. And he spent all that time and it was just so difficult, and he said: what you‘re doing, you‘re helping people that you don‘t even realize. You‘re not just helping young people. You‘re helping veterans like me who have spent my whole life hiding and lying and in the shadows. So, he said, you have to keep fighting, for me.
And I was in tears in my office, I shut the door, and I called and I said, I‘m in. We‘re doing this. I have to do this. So—
MADDOW: Katie, let me ask you, as the youngest person here, and as the person who made this decision at the very beginning of your military career, at your time at West Point, are you worried about the military‘s capacity to make this change?
MILLER: Not in the slightest. I mean, we have to take into account that, you know, gay or lesbian, heterosexual or—it doesn‘t matter. We‘re service members first, we‘re professionals. We follow the law.
And the military has seen much more radical transitions with the racial integration, the integration of women, and now, we finally have a policy that, you know, 80 percent of the country supports, 70 percent of the service doesn‘t care one way or the other. The military is going to implement this policy beautifully. I have no doubt about that.
MADDOW: Lieutenant Colonel Victor Fehrenbach, Katie Miller, Major Mike Almy, Captain Jonathan Hopkins, it‘s a real honor to have you guys here. Thanks for being here. I really appreciate it. Congratulations.
(CHEERS AND APPLAUSE)
MADDOW: As you may be able to tell from that sound, this is a live broadcast in front of a big, beautiful audience at the 92nd Street Y in New York City.
We have so much more to come this hour. “Rolling Stone‘s” Matt Taibbi is here to talk about shame and the Senate and the art of getting stuff done in politics.
Lots to come. Please stay with us.
(COMMERCIAL BREAK)
MADDOW: Tonight, tomorrow, and Wednesday, THE RACHEL MADDOW SHOW is live from the 92nd Street Y in New York City, because, why not?!
(CHEERS AND APPLAUSE)
MADDOW: The audience which I can see with my own eyes, which is totally terrifying.
Later on the show, I‘ll speak with one lonely (INAUDIBLE) person who saw the entire economic meltdown of 2008 coming way before it happened. He said it out loud at the time. He faced derision for it, but he was right. What he thinks coming up next is next.
(COMMERCIAL BREAK)
(CHEERS AND APPLAUSE)
ANNOUNCER: Live from the 92nd Street Y in New York City, this is a RACHEL MADDOW SHOW special event, “Leadership in America.”
MADDOW: The bill to provide health care for 9/11 first responders has been pending in Congress for more than a year. What‘s the rush, right? The bill is paid for, it is not deficit spending. In fact, as it‘s currently written, the proposal to care for the rescue workers and volunteer who dove into this plume of toxic smoke and ash, it actually cuts the deficit by $57 million. That‘s according to the Congressional Budget Office, which is nonpartisan.
So, what reason could there possibly be on God‘s tiny blue earth for opposing this, for saying to “no” to health care for 9/11 heroes and to cutting the deficit at the same time? Well, Senator Jon Kyl says he‘s got a very good reason. He‘s got several, in fact.
Starting, I think, with jingle bells.
(LAUGHTER)
(BEGIN VIDEO CLIP)
SEN. JON KYL ®, ARIZONA: It is impossible to do all of the things that the majority leader laid out, without doing—frankly, without disrespecting the institution and without disrespecting one of the two holiest of holidays for Christians.
(END VIDEO CLIP)
MADDOW: So that‘s Jon Kyl, very good reason, number one: It‘s Christmas, you guys!
(LAUGHTER)
MADDOW: Jon Kyl very good reason, numero dos—
(BEGIN VIDEO CLIP)
KYL: I have no idea how this thing would work. So, they‘ve reduced it $7 billion to $6 billion. I have no idea whether $6 billion is a reasonable figure. Why do they need $6 billion?
(END VIDEO CLIP)
MADDOW: I mean, hey, 9/11 was almost a decade ago now. If we wait longer for more of these people to die, maybe the price for carrying them will go down? Maybe we can re-import their oncology drugs from Canada or something? Why do we have to spend money on this?
That‘s Jon Kyl, very good reason number two.
There‘s also Jon Kyl very good reason numero three.
(BEGIN VIDEO CLIP)
KYL: It‘s one thing to make an emotional appeal to say we need to care for someone who did something good. It‘s another to do it in a sensible way.
(END VIDEO CLIP)
MADDOW: But Jon Kyl would rather just not get it done at all.
So, one, it‘s Christmas. Two, it‘s money. And three, everyone is so inappropriately emotional about these 9/11 hero people.
Republican reasons for stopping the 9/11 first responders bill have been a little thin. Anything that isn‘t an argument for delaying the bill is a complaint that the bill is too late. It‘s delay, delay, delay, hey, quit rushing us!
Same deal with the nukes treaty. It has been in the works for 20 months. If it were a human, it would be almost out of the crib and ready for a big bed by now.
(LAUGHTER)
MADDOW: Democrats all support it. At Republicans‘ request, they have delayed the vote on it 13 times already. They have spent six days debating it with more on way. But somehow, that‘s not long enough. Also, magically, it‘s too long.
(BEGIN VIDEO CLIPS)
SEN. LINDSEY GRAHAM ®, SOUTH CAROLINA: There‘s been no real serious debate on START. I don‘t think you can have a serious debate between now and January 4th.
SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: Rushing it right before Christmas strikes me as trying to jam us.
(END VIDEO CLIPS)
MADDOW: Quit rushing us! We want to go slower! Hey, now, we went too slow. It‘s too late.
This whole month is the one that contains Christmas, and then next month, there‘s another month right after that contains Christmas.
(LAUGHTER)
(BEGIN VIDEO CLIP)
SEN. JOHN KERRY (D-MA), FOREIGN RELATIONS CMTE. CHAIR: Republicans asked us to delay it. We wanted to hold this vote before the election. And what was the argument then by our friends on the other side of the aisle? Oh, no, please don‘t do that. That will politicize the treaty.
Having accommodated their interests, they now come back and turn around and say, oh, you guys are terrible. You‘re bringing this treaty up at the last minute. I mean, is there no shame ever with respect to the arguments that are made sometimes on the floor of the United States Senate?
(END VIDEO CLIP)
(LAUGHTER)
MADDOW: I know, I know! I know the answer to that one. Is there no shame? Ever?
Republicans have been clamoring for all this time to debate START, right? To debate the nukes treaty. Do you want to know what they‘ve been doing with that time now that they‘ve got it?
(BEGIN VIDEO CLIPS)
SEN. MIKE ENZI ®, WYOMING: The call to let me know I was a grandpa came from 3-year-old Megan Riley McGrady, who enthusiastically said, “I‘m a big sister.”
SEN. JAMES INHOFE ®, OKLAHOMA: before my friend leaves the floor, my friend from Wyoming, let me just say that I can identify with the things he has said. I—to prove that, let me put this up here. These are my 20 kids and grandkids. And while he maybe—he has his names, that they have given him, my name is Popeye. Now, “I” is for Inhofe, so it‘s momi and popi (ph). Is that OK?
(END VIDEO CLIPS)
MADDOW: Yes, of course, that‘s OK, Senator Inhofe.
(LAUGHTER)
MADDOW: No worries, you get around to the nuclear treaty with Russia when you feel like you‘ve got the time! We can wait! Russia‘s fine!
Joining us now is Matt Taibbi, contributing editor at “Rolling Stone” magazine and the author most recently of “Griftopia.”
Mr. Taibbi!
(CHEERS AND APPLAUSE)
MADDOW: Great to see you. I was like, where‘s Matt coming from. Oh, he‘s over there.
MATT TAIBBI, ROLLING STONE: This is cool. This is very inside the actor studio here.
MADDOW: It‘s like a cross between inside the actor studio and daytime TV for people who are home cooking.
TAIBBI: Right. Right, exactly.
(LAUGHTER)
MADDOW: Except no food.
Is the United States Senate capable of addressing American problems?
TAIBBI: Well, I mean, sometimes you‘d have to say no, especially after today, with this 9/11 thing, which is really, I think, a new low. You know, the answer—another one of the answers the Republicans gave today for not doing this is that they—they‘re not going to approve this until they‘re sure the tax cut is completely through. And when you‘re saying that you can‘t pay the medical bills of the 9/11 cleanup workers until the ink is dry on Jamie Dimon‘s tax cut, that‘s like a notch morally below pimp, you know?
(LAUGHTER)
(CHEERS AND APPLAUSE)
MADDOW: And yet, and yet, sometimes, the Senate takes action that even hard-boiled cynics think they are not capable of with 9/11 repeal. They did pass a piece of health care legislation, although there‘s criticism for it.
TAIBBI: Right.
MADDOW: And so, this has been the year of both, I think, horror at American political institutions, and also occasional pleasant surprise of what they‘re capable of. Is there a way to look at it, though, systemically, to say, to the extent that the institution is broken, here‘s who benefits.
TAIBBI: Well, the Senate is, and the Congress in general, they‘re remarkably efficient at what their true job is, which is to deliver things for their campaign contributors. You know, whether it‘s subsidies or selective deregulation or government contracts or whatever it is, they do that job remarkably well.
And to the extent that whatever‘s left over, they can give something to the voters, they do that as well, too. But the system doesn‘t really work for the people—for the actual people, for the people who vote for these elected members. It the does work very well for the campaign contributors.
MADDOW: In “Griftopia,” you paint this incredibly amusing but incredibly scary portrait, which is your specialty, of politics essentially as culture war entertainment. Politics as sort of a reality show that‘s just about keeping people sort of divided, red and blue, and starts selling products, and keeping money moving, but really the governing happens offstage. If that‘s true, then how much say do we have even nominally in the big, important governing stuff, like regulation of the economy?
TAIBBI: Well, not a whole lot. I mean, that‘s kind of the point I was—I was trying to make in the book. Obviously, there are places where the people have a say in important issues. Health care is one. But there are an awful lot of issues where I don‘t think it‘s a coincidence that a lot of the issues that the candidates from both parties spend all their time debating—immigration, gay rights, abortion. These are all things that Wall Street doesn‘t care about.
The real nitty-gritty issues, the stuff that the people who pay for these elections, that they really care about, both of the parties largely agree on most of those issues. And they almost never come up in the campaigns. And I know, I covered, you know, the last two presidential elections, and I never heard anything about how to regulate the commodities market or mortgages or any of these things. It‘s just simply not talked about.
And ordinary people don‘t have real choices when it comes to a lot of those issues.
MADDOW: That gets explained away as—oh, it‘s too hard to make politics out of, it‘s too complicated. You don‘t buy that?
TAIBBI: But that is politics. I mean, the whole question of who gets what, that‘s what politics is. And these hard-core economic issues, this is at the heart of what—you know, our country‘s future is going to be. And we just don‘t talk about it.
These are all things that are decided, essentially, in back rooms and in private discussions. They‘re hashed out in deal-making sessions. For instance, in the Dodd/Frank bill, there are so many things that didn‘t happen in public. They were—they were done in private, in committee hearings between the committee chairmen.
And the public didn‘t really know anything about it. And if they did know, they probably wouldn‘t have understood. And that‘s really a problem.
MADDOW: Yes.
(LAUGHTER)
MADDOW: Matt Taibbi, contributing editor at “Rolling Stone” magazine and the author most recently of “Griftopia,” which is really excellent.
TAIBBI: A depressing book.
MADDOW: It‘s depressing. You know, I‘ve read all your books. It is the most—it is the most illuminating and the sharpest and the most hard to put down, and that‘s speaking with tough competition, because your other books are good, too.
TAIBBI: Well, thank you.
MADDOW: Thanks a lot.
TAIBBI: Thanks a lot, Rachel.
MADDOW: Good to see you.
(CHEERS AND APPLAUSE)
MADDOW: Tonight on our “Leadership in America” edition of “The Interview,” the man called Dr. Doom, because he was right when almost nobody else was when he predicted the financial crisis at the end of the Bush administration, you know, the one that ate the future.
We are live at the 92nd street Y here in New York City. Please stay with us.
(CHEERS AND APPLAUSE)
(COMMERCIAL BREAK)
MADDOW: I know you have been through something really, really brutally bad when the guy who accurately predicted how bad it was going to be has the nickname Dr. Doom.
When the history of the Obama presidency is written, and not the gossipy, anonymous he said/she said invented dialogue chat books that pass as journalistic history now, but when the actual history, when the long-term history of this presidency is written, the defining issue, the defining context will be how he started, the massive financial crisis that was still exploding when this new president took over.
The Dr. Doom who predicted the housing collapse and the financial crisis and the us-almost-having-a-second-great-depression, all before it happened, is Nouriel Roubini.
After being coronated as the guy who got it right because of that foresight, Professor Roubini gave an interview in the summer of last year that, honestly, when I read it, improved my mood for months.
Despite the whole Dr. Doom thing, he was generally positive about the way we were coming out of the crisis and, in particular, about the way that Tim Geithner and the rest of the president‘s economic team were understanding and responding to the problem.
That was last summer. Now, a little bit more than a year later, he‘s back to doom. Professor Roubini telling the “New York Times” this month that we are staring down the barrel right now of another housing collapse, another $1 trillion in housing losses.
He said, quote, “The real estate market, for sure, is double dipping.” Remember what happened to the rest of the economy after the first dip, after the first housing dip? Now we are having a second one? Are things about to go south again? Hard and fast? And if so, does anything else in politics matter?
Why even bother tracking legislation and polls and candidates up and down if all of that will be rendered moot in the next presidential election? Because I don‘t care for Tom Brady and the vote is for who should be patriots quarterback.
I don‘t care if you are cauliflower and the vote is for palest cruciferous vegetable. I don‘t care if you are snow and the election is for what‘s cold. If the economy goes south again, it does not matter what else happens in politics. No one gets reelected to anything if unemployment is at 15 percent.
Joining us now is Nouriel Roubini, chairman and cofounder of Roubini Global Economics and professor of economics at NYU‘s Stern School of Business. Dr. Roubini, thank you so much.
(APPLAUSE)
NOURIEL ROUBINI, CHAIRMAN AND CO-FOUNDER, ROUBINI GLOBAL ECONOMICS:
Thank you. Glad to be here.
MADDOW: Are you bummed out by people with the Dr. Doom thing? Do you feel like you have to put on a sunny visage to counteract that?
ROUBINI: No, I‘m just myself.
MADDOW: It‘s very scary to see you, the way I think about that.
(LAUGHTER)
MADDOW: How sick are we still? Can you diagnose the state of the recovery, sort of post-financial crisis?
ROUBINI: Well, I would say there are some good news and there are some bad news. The good news is the recession is over. There‘s an economic recovery. And next year, growth might be around three percent. So it‘s sustaining a recovery.
But there are several downside risks. The first one is that in spite of growth, firms are not hiring. Unemployment rates are still at 10 percent, almost, including, of course, workers who are partially employed at 17 percent.
So firms find ways of producing more by having less workers, so this growth is not leading to reduction of the unemployment rate. This is a becoming a real issue.
The second issue is that the housing market is double dipping. Quantities are falling. Home prices are falling again. We artificially stimulated the demand for a few months through this tax credit. As soon as it expired, home sales collapsed again.
The third problem is that state and local governments are semi bankrupt. You know, Europe is Greece and Ireland, the U.S. - Arizona, Nevada, Florida, California, Illinois, even New York is in trouble. So there‘s a risk of the state governments to (UNINTELLIGIBLE) fiscal problems.
And at the federal level, we‘re kicking the can down the road. You know, we have just passed this tax stimulus. This is going to add another $900 billion to the deficit over the next two(ph) years. So things are improving, but there are also a number of downside risks.
MADDOW: On the issue of how best to respond, one thing that I don‘t understand about the way a number of countries are responding, and I think some states are sort of moving in this direction too, is the idea that the way out of this mess is through austerity, by dialing back quite sharply on spending.
I understand why that helps with debt and why that‘s, therefore, important. But doesn‘t that also completely choke off the possibility of any economic growth?
ROUBINI: It the does. The difficult trade-off that most countries are facing is that there are huge budget deficits. The (UNINTELLIGIBLE) of public debt is rising, but the recovery is still anemic.
So in the short-term, you need a stimulus, because the government has not recovered. But if you run in large deficits forever, you might eventually end up with a train wreck like in Ireland, like in Greece.
To me the way to square the circle is by having a short-term stimulus, because the economy is still recovering in a weak way. Demand is not strong. But then, commit today to raising taxes, not today, but over in the future, gradually, and committing today about cutting some forms of spending over time.
But you backload all those spending cuts and increases in the revenues, and you maintain a stimulus in the short-term. So if you can credibly commit to have some light at the end of the tunnel with discipline over the next five, 10 years, then you need a stimulus in the short run.
The bond market vigilantes aren‘t going to wake up and punish you. But right now, in the U.S., I think we‘re doing the short-term stimulus, but this means a lot of it is going to people who don‘t need it, like the very rich. And we‘re not doing anything about the medium-term fiscal so it‘s a bit of a mess.
MADDOW: And we have to take a quick break. When we come back, I want to talk a little bit about the political realities, about what you think might be the best thing to do, and whether those things are going to be more or less politically possible with the new Congress.
Thank you for being with us, Professor Roubini. We‘ll have more with my special guest, Nouriel Roubini, next. We‘re live at the 92nd Street Y here in New York City. Please stay with us.
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MADDOW: The funding for the federal government expires at 11:59 p.m. tomorrow. So if you‘re staying up late to see the lunar eclipse tonight and looking for an excuse tomorrow, there you go.
Congress will try to put together another stopgap spending bill to avert a big government shutdown. And if you look down the road, where the funding of the government has been kicked, you may be able to see the debt ceiling down there that‘s also looming down that road. Congress votes every year to raise the debt ceiling so the U.S. does not break its promise to pay back its loans.
Republicans this year are suggesting that the government should just break its promise to pay back its loans. They are threatening to vote no on the debt ceiling rise.
And if you were counting on the fed, the Federal Reserve, to be able to jigger the money supply to respond to another economic calamity it if happens next year, I have two words for you, Ron Paul, who will head up oversight of the Fed in the new Congress, and whose attitude toward the Fed is that he would like to please not exist.
Back with us now is Nouriel Roubini, chairman and co-founder of Roubini Global Economics and professor of economics at NYU‘s Stern School of Business. He is famous for calling the last financial crisis before it happened.
Dr. Roubini, are you worried about political constraints ahead in the next Congress, that they will be even worse than the current political constraints?
ROUBINI: Yes, I do very much worry about it, because we have total gridlock right now in Washington. The two parties are completely divided. The Republicans think that they won during the last election, takes the House.
They believe that Obama could be a one-term president, so they won‘t have a strong incentive to collaborate on anything. They‘re following this Leninist approach, the worse, the better is right for them.
If the economy gets worse, if there‘s no achievement of any sort, Obama might be a one-term president. So I suggest gridlock, the two parties divided as much as they‘ve ever been.
MADDOW: Do you think if the Republicans recognize a political incentive to actually do economic harm to the country, because it politically benefits them?
ROUBINI: Effectively, yes. The elections are based on the economy. If the economy does well, then usually the incumbent party and the president gets re-elected. If not, it‘s the economy, stupid. We know it, right? So, so far, if there‘s any economic recovery, it could do many things. It can go off track because of the deficit, because of state and local government, because of the unemployment rate and many other things.
And the two parties are completely divided right now. I think the parties have moved sharply to the right. I think the Democrats are not realizing fully that they‘ll have to make sacrifices, cut some entitled spending.
You know, we have to cut spending in order to raise revenues. About 10 percent of GDP budget deficit eventually is unsustainable. We could end up like in Europe, but we‘re not doing anything about it.
MADDOW: Looking ahead to an impending skirmish, if not fight over the debt ceiling, if the U.S. ends up not voting to raise its debt ceiling, in laymen‘s terms, what does that do to our economic position in the world?
ROUBINI: Well, there could be nervousness in the markets. You know, the markets wonder the investors around the world what‘s going on in the United States? The two parties are so divided they cannot even agree on raising this debt limit. So I think the risk is there‘s going to be financial turmoil, and that‘s playing with fire, I would say.
MADDOW: If you could wave a magic wand and be economic dictator for a day, if you could - if you wanted to target unemployment, for example, specifically, if you thought that was something that needed more attention than anything else, all political constraints were off the table, you could do anything, what would you do?
ROUBINI: Several things. You know, I proposed a few months ago that we should have a temporary cut of the payroll tax, not just for employees, like was decided, but also for employers, for two years, maybe shouldn‘t be paying their tax. That‘s going to reduce their labor costs by six percent and induce them to hire more workers.
That‘s the first thing that will have a boost in terms of job hiring because they‘re flush with cash, trillions of dollars. They‘re not spending. They‘re not hiring workers. That‘s really a problem.
And it‘s a vicious circle. They‘re not hiring workers because they say there‘s no demand, but there‘s not going to be demand if people don‘t have jobs and income and they cannot spend. So we‘re in this vicious circle.
So that‘s the first thing. The second thing is that, you know, many of these people are unemployed. At this point, they‘re going to lose their skills, their human capital and the stigma of not having a job for a year or two.
So anything we can do to increase skills, education, retain them, make them employable, together with a tax cut that induces firms to hire them is going to jump-start job creation. And it‘s critical. If we‘re going to do it, we‘ll have an army of unemployed people forever.
MADDOW: And it‘s worth the spending to do that?
ROUBINI: Yes.
MADDOW: Nouriel Roubini is chairman and co-founder of Roubini Global Economics. He‘s professor of Economics at NYU‘s Stern School of Business and somebody who‘s both worrying and comforting at the same time. Thank you, sir. Appreciate your time.
(APPLAUSE)
Coming up right after this show on MSNBC, on “THE LAST WORD,” Lawrence talks with Congressman Dennis Kucinich to get his take on President Obama‘s compromise deal with Republicans.
On this show, one 2012 hopeful proves definitively that he will not be the Republican nominee for president in the next election, not unless there‘s another civil war in this country. We are live from the 92nd Street Y in New York City. Please stay with us.
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(COMMERCIAL BREAK)
MADDOW: What did Mississippi Governor Haley Barbour say that caused the NAACP to respond with the terms “beyond disturbing and offensive”? Let your imaginations run wild. I will return with the answer in just a moment. This is a special edition of THE RACHEL MADDOW SHOW live at the 92nd Street Y in New York.
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MADDOW: “Suggested by an exchange between the candidate and an aide that complained that there would be, quote, ‘coons‘ at a campaign stop at the state fair. Embarrassed that a reporter had heard this, Mr. Barbour warned that if the aide persisted in racist remarks, he would be reincarnated as a watermelon and placed at the mercy of blacks.”
Ben Smith at “Politico” dug that up - dug up that gem today from Haley Barbour‘s past that has never really passed. Haley Barbour is one of a handful of Republican politicians whose star is now rising toward 2012.
Most of the media attention, of course, has been on the Fox News candidates - Sarah Palin, Mike Huckabee, Newt Gingrich - most of whom seem to me to be trying to best monetize any hopeful, self-stoked chatter that they might win.
But the serious people in Republican politics, the real powers that be, the ones who dismiss Sarah Palin, have their hearts set on a few Republicans who they consider to be heavyweights.
Gov. Mitch Daniels of Indiana, for example. Gov. Chris Christie of New Jersey. Theoretically, Sen. John Thune of South Dakota, but - really? Also, Gov. Haley Barbour of Mississippi.
The conservative magazine, “The Weekly Standard,” just published a 7,000-word glowing profile of Haley Barbour, clearly intended to elevate him as the future of the GOP. The profile is called “The Boy from Yazoo City.”
Now, one of the reasons why Haley Barbour, I think, will not be president is because in trying to sell himself as the boy from Yazoo City, he‘s doing the worst whitewashing job ever of Yazoo City and what it was like in Mississippi in the 1950s and 1960s.
For instance, here‘s what Haley Barbour told another conservative magazine in the summer.
(BEGIN VIDEO CLIP)
GOV. HALEY BARBOUR (R-MS): The people that led the change of parties in the south, just as I mentioned earlier, was my generation, my generation, who went to integrated schools. I went to an integrated college. Never thought twice about it.
(END VIDEO CLIP)
MADDOW: Haley Barbour did not go to integrated schools. Yazoo City High School was not integrated until after he graduated. And his college, Ole Miss, was 99.3 percent white by the time he finished there.
But now, Haley Barbour wants you to know something else. Anything you might have heard about racism in Mississippi the ‘50s and ‘60s, that‘s a northern myth.
Quoting from this “Weekly Standard” profile, quote, “Yazoo City was perhaps the only municipality in Mississippi that managed to integrate the schools without violence. I asked Haley Barbour why he thought that was so. Quote, ‘Because the business community wouldn‘t stand for it,‘ he said. ‘You heard of the Citizens Councils? Up north, they think it was like the KKK. Where I come from, it was an organization of town leaders.”
Citizens Councils was an organization of town leaders who paved the way for integration. That‘s Haley Barbour‘s telling of it. Here‘s what we found today, indexed under Citizens Councils in the NBC News archives.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: What direction is your movement going into? What do you see in the future?
JOHN KASPER, SEABOARD WHITE CITIZENS COUNCIL: I see a political organization based on racial nationalism.
UNIDENTIFIED MALE: A third party?
KASPER: A third party based on race.
UNIDENTIFIED MALE: And you would lead it?
KASPER: No, I wouldn‘t. I helped to organize, along with other people who have been in this fight for many years.
(END VIDEO CLIP)
MADDOW: A third party based on race, the white race. Where would we northern liberals ever get the idea that White Citizens Council had anything to do with race? The Citizens Council had their own newspaper that was published in Haley Barbour‘s Mississippi.
Here‘s an excerpt from October 1955, quote, “There‘s a rainbow of hope in the dark integration skies. Citizens Councils have sprung up to prevent this tragedy from being visited on the schools now and in the future. We will exhaust every legal resource available in resisting the intent of a Marxist conscious Supreme Court to bring about mongrelization of the white race by judicial ruling.”
People - just town leaders. Another issue of that newspaper featured this article, “Racial Equality is a ‘Scientific Hoax.‘” Shortly after founded, the White Citizens Council which Haley Barbour now glowingly speaks of, put out a pamphlet that summed up its reason for existence.
Quote, “The Citizens Council is the south‘s answer to the mongrelizers. We will not be integrated. We are proud of our white blood and our white heritage.”
Haley Barbour wants to be president. He also wants you to believe the Citizens Councils he grew up around in Mississippi were organizations of town leaders that smoothed the way for racial integration.
Looking back on Mississippi being forced against its will to stop segregating Americans by race, Haley Barbour now says this, quote, “I just don‘t remember it being that bad.”
Who knows, maybe it will be Haley Barbour versus Barack Obama in 2012. Maybe the Republican Party will nominate him and maybe the south will secede again. Good luck with that. We will be right back.
(CHEERS AND APPLAUSE)
MADDOW: So the good news is we‘re going to do another live show tomorrow right back here at the 92nd Street Y New York.
(CHEERS AND APPLAUSE)
We‘ll be joined by Andrea Mitchell and former Bush White Communications director Nicole Wallace. (UNINTELLIGIBLE) Republican.
Whoo! And Michael Moore
For now, thanks to our guests. Thanks to our beautiful audience right here (UNINTELLIGIBLE). “THE LAST WORD” with Lawrence O‘Donnell starts right now.
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