updated 1/4/2011 11:58:11 AM ET 2011-01-04T16:58:11

Guest Host: Chris Hayes

Guests: David Frum, Rep. Eleanor Holmes Norton, Sen. Jeff Merkley, Dorian

Warren

CHRIS HAYES, GUEST HOST:  Good evening, Keith.  Thanks so much.

           

Rachel has got the night off and thus, here I am to steer the ship in her absence.

And tonight, it is a show with a whole lot of freight.

Congressman Darrell Issa sounds the alarm, which is something he‘s really, really good at.  The clock is ticking toward a once-in-a-generation moment in the U.S. Senate and Senator Jeff Merkley of Oregon will be here to explain that.

And for a guy from New Jersey, of New Jersey, and by New Jersey, Governor Christie spends a lot of time outside of New Jersey—where they dropped Snooki from the sky to ring in 2011.

Happy New Year and welcome to TRMS 2011.

We begin tonight with what is shaping up to be the political showdown of showdowns of this New Year.

(BEGIN VIDEO CLIPS)

DAVID GREGORY, MODERATOR, “MEET THE PRESS”:  And how will you vote on the debt ceiling?  Will you vote to raise it?

UNIDENTIFIED MALE:  Some Republicans are talking about making an issue out of the debt ceiling.

UNIDENTIFIED MALE:  There will be a vote eventually on raising the debt ceiling.  Will you vote to raise the debt ceiling?

(END VIDEO CLIPS)

HAYES:  OK.  This is admittedly not the sexiest phrase in American politics.  But if you‘re looking for the big political fight of early 2011, look no further.  As you probably heard at some point over the last few months, America is supposedly going broke.  We‘re spending more money than we‘re taking in—which means we have to borrow money to fund the government.

But as that clip alluded to, there is at any given moment a legal limit to the amount of money we can borrow.  There‘s a debt ceiling and we‘re about to hit it—and that means that very soon, Congress is going to have to decide whether to raise the debt ceiling or not; whether to allow the government to borrow more money or not.

And on this big political showdown to come, Republicans are now aggressively trying to stake out their position.

(BEGIN VIDEO CLIPS)

REP.-ELECT MIKE KELLY ®, PENNSYLVANIA:  Raising the debt ceiling to me is absolutely irresponsible.  We‘ve been spending money for so long that we don‘t have.

SEN. JIM DEMINT ®, SOUTH CAROLINA:  We need to have a showdown at this point and we‘re not going to increase our debt ceiling anymore.

REP. MICHELE BACHMANN ®, MINNESOTA:  And I am not in favor of raising the debt ceiling.  As a matter of fact, I have a petition that I‘m urging people to sign at MicheleBach.com to urge their member of Congress not to raise the debt ceiling.

(END VIDEO CLIPS)

HAYES:  Don‘t raise the debt ceiling.  That‘s what Republicans say their position is.  Don‘t let the government borrow any more money.

Well, we at THE RACHEL MADDOW SHOW are here to tell you this is a totally transparent, bald-faced bluff.  Republicans are bluffing through their teeth right now.  And at the moment, they seem to be getting away with it.

All these threats from Republicans about how they‘re not willing to budge on the debt ceiling have the White House ringing the fire alarm.

(BEGIN VIDEO CLIP)

AUSTAN GOOLSBEE, CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISERS: 

This is not a game.  You know, the debt ceiling is not something to toy with.  That‘s the—if we hit the debt ceiling, that‘s the essentially defaulting on our obligations, which is totally unprecedented in American history.  The impact on the economy would be catastrophic.

I don‘t see why anybody is talking about playing chicken with the debt ceiling.  If we get to the point where you‘ve damaged the full faith and credit of the United States, that would—that would be the first default in history caused purely by insanity.

(END VIDEO CLIP)

HAYES:  That was President Obama‘s chief economist, Austan Goolsbee, talking about the catastrophic consequences that would follow if Republicans actually vote against raising the debt ceiling.  Full disclosure, by the way, my wife works in the White House counsel‘s office.

OK.  So, here‘s why it‘s important to recognize that Republicans are bluffing on this.  Because if you elevate their threat as the White House is doing right now, then you give it more credibility and you empower Republicans to try to get whatever it is they want in exchange for their support.  You see how this works?

Republicans don‘t want to do this thing.  If they don‘t the results will be nothing short of economic Armageddon and therefore, we need to do everything we can to get Republicans onboard.  So, what do you guys want?

See, the White House is putting itself in a position where they‘re forced to give in.  If this game sounds familiar to you, it‘s because it‘s exactly the way the tax cuts deal worked out last month.  Republicans say, we won‘t vote for any tax cuts deal that doesn‘t include a tax cut for the richest Americans.  The White House says, well, if we don‘t get something passed it will be economic Armageddon and then presto-chango, the richest Americans get their tax cut.

Republicans played it perfectly because the White House never bothered to call their bluff.  The top Republican in the House, John Boehner, showed his hand ahead of time before the tax cut fight even got under way.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER ®, OHIO:  If the only option I have is to vote for some of those tax reductions, I‘ll vote for them.  If the only option I have is to vote for those at $250,000 and below, of course, I‘m going to do that.

(END VIDEO CLIP)

HAYES:  John Boehner says he won‘t actually hold middle class tax cuts hostage.  He admits Republicans are bluffing and the White House inexplicably folds anyway.

This time around, same deal.  Ask John Boehner about the debt ceiling and he essentially says, don‘t listen to what all these Republicans are saying.  We know we have to raise it.  Quote, “We are going to have to deal with it as adults, whether we like it or not.  The federal government has obligations and we have obligations on our part.”

In other words: we‘re bluffing.  Don‘t bother listening to our threats because we are bluffing.

Republicans are bluffing for a really good reason.  This debt ceiling fight puts into perfect relief as no other issue since the Wall Street bailout did two opposed wings of the Republican Party.  On one side, you have the Tea Party wing, and on the other side, you have the Wall Street wing of the party.

While the Tea Party folks hate the idea of raising the debt ceiling, it‘s the Wall Street folks who own much of that debt and will therefore feel the most pain if U.S. government decides to forfeit its full faith and credit.  Tea Party wing hates it.  Corporate interests need it.

And stuck in the middle are elected Republicans, forced to choose between the people they want to vote for them and the people who fund their campaigns.  Solution?  Bluff your way out of it.

The best outcome for Republicans right now is to convince everyone they‘re not going to raise the debt ceiling and then use that threat as a bargaining chip against the White House.  Get the White House to give in on something else so you can save face with the banking interest of your party as well as the Tea Party folks.

The strategy only works if the White House and Democrats let it, if they never bother to call Republicans‘ bluff.

Here‘s what happen in my—what would happen in my ideal world: Nancy Pelosi has a meeting with John Boehner and says, you know what?  We have taken the lesson of the mid-term elections to heart and I just want to let you know every single Democratic member of the House will be voting against raising the debt ceiling, so you go find the 218 votes necessary to get it passed in your caucus.

In reality, the White House seems to be setting itself up to capitulate on this in the same way they did on the tax cuts deal.  But there is a way out.  Make the Republicans walk the plank on this.

Joining us now is David Frum, economic—former economics speechwriter for George W. Bush, the editor of FrumForum.com.

David, hi.  How are you?

DAVID FRUM, FORMER BUSH SPEECHWRITER:  I‘m well.  Thank you.

HAYES:  Good to see you here in the studio.

FRUM:  Thank you.  Pleasure to be here.

HAYES:  OK.  So, am I right?  I mean, the Republicans are bluffing. 

Am I correct?

FRUM:  Everybody is bluffing.  And that is why—and that is why that performance by Austan Goolsbee was so terribly disgraceful.  I have to say, of all the low moments in this kabuki debate, that was the lowest, because if you want to say, don‘t play chicken with the threat of default, then you don‘t play chicken with the threat of default.  What he should have said—his answer to that question was this: the United States will meet its obligations.

HAYES:  Right.

FRUM:  We look forward to working with the new majority of the House of Representatives to put us on the long-term path to fiscal stability.  The United States will meet its obligations.  He did not say that.  He was sowing fear deliberately, too.

HAYES:  OK.  But in terms of sowing fear, I don‘t want to get into a “who started it.”  But the Republicans started it.  I mean, the fact of the matter is Mike Lee—

(CROSSTALK)

FRUM:  Wait, wait.  May I say, how—when this issue came up in 2006

--

           

HAYES:  Yes, I absolutely agree.

FRUM:  One Barack Obama voted against raising the debt ceiling.  So, this is not a game the Republicans invented.

HAYES:  But he voted against it.  Right.  So, let‘s stipulate both parties posture when in they‘re in the minority.  The difference here is the Republicans actually do have the majority, right?  Barack Obama knew that vote was essentially a meaningless vote.

The question is: is the House leadership going to actually try to kill the debt ceiling?  We have a little montage here I want to play just to show this isn‘t something invented by Austan Goolsbee.

Here, let‘s listen to this.

(BEGIN VIDEO CLIPS)

GREGORY:  Will you vote to increase the debt ceiling?

DEMINT:  No, I won‘t.

SEN.-ELECT MIKE LEE ®, UTAH:  I‘m going to vote against raising the national debt ceiling.  We simply can‘t continue to mortgage the future of our unborn children and grandchildren.  That‘s not fair.  It‘s not American.  It‘s a form of taxation without representation.

REP.-ELECT JEFF DENHAM ®, CALIFORNIA:  I just don‘t see the Congress raising the debt ceiling.  But it certainly is a challenge we‘re going to have to deal with.  I mean, there‘s a lot of things in play during this lame duck session.

UNIDENTIFIED MALE:  So, you think that‘s something that you‘ll probably vote against?

DENHAM:  Absolutely.

GEORGE STEPHANOPOULOS, ABC NEWS:  Will you filibuster any attempt to raise the debt limit?

SEN.-ELECT RAND PAUL ®, KENTUCKY:  I think exactly what tactics we‘ll use will have to be discussed and I do plan on working with others to see what the best strategy is.  You need some people with principle in Washington who will stand up and say, enough is enough.

(END VIDEO CLIPS)

HAYES:  But—so you‘re saying—you‘re telling me that this is—that this posturing fundamentally?

FRUM:  Remember, there are two houses of Congress and only one of which the Republicans have a majority.

HAYES:  Right.

FRUM:  And as you pointed out at the very beginning of the show, in that House, the leader has said, in effect, we‘re going to raise the debt ceiling if we have to.  That‘s what John Boehner said in November.  So, that‘s going to happen in the House.

Now, he may have to come up with some face-saving form to enable Republicans who said some hot-headed things earlier to calm down.  And in fact, we‘re beginning to see what that is.  He‘s going to promise them, the rumor is going, a vote on the balanced budget amendment to the Constitution, that they‘ll get he will schedule the vote and the thing will go off to limbo and that gives everyone a face-saving climb-down.

HAYES:  Right.

FRUM:  The people who took the strongest line were the people who were in the Senate, the minority, Like Barack Obama in 2006.

HAYES:  Right.

FRUM:  And now, they both declined to say they would filibuster.  Jim DeMint says he will vote no, like Barack Obama.  And Rand Paul will probably vote no, like Barack Obama.  But will they filibuster?  Even Rand Paul declined to say the answer to that question was yes.

HAYES:  So, the point though is that we‘re going to—there are two points here.  One is that we‘re in a similar situation, though, right, where there does have to be an affirmative action taken, right?  It‘s like the tax cuts deal, right?  The tax cuts deal—the tax cuts were expiring, right?  In order to be renewed, affirmatively, something had to be passed.

The same thing in the House, right?  You can‘t do nothing.  John Boehner has to go and find those votes.

Play out my scenario.  Just indulge me here.  If Nancy Pelosi says that John Boehner, is he able to go and get those votes in his own caucus?

FRUM:  He can get those votes.

HAYES:  He can get those votes.

FRUM:  The Republican Party is a much more disciplined and organized party than the Democratic Party is.  But he will have to find some way to give people some exit.  And he may not take every one of the votes.  Michele Bachmann may not give him the vote, but he will have—he will have enough votes.  But at the same time—

HAYES:  So, wait a second.  If you‘re Nancy Pelosi then, aren‘t I right that you want to make him go get the most amount of votes, right?  I mean, won‘t he do the maximum amount of political damage to the Republicans, the larger number of Republicans that have to vote for this in the House?

FRUM:  I thought the whole premise of this thing was the Republicans were acting like mad men.  The Republicans were being irresponsible.  And now, we‘re laying out a strategy for Nancy Pelosi to be the mad woman.

HAYES:  Yes.  I‘m talking about—I‘m just talking about pure negotiating position.  Because the reason that they‘re acting this way is clearly because they want to get these bargaining concessions.

FRUM:  And here‘s the thing Democrats need to keep in mind.  In the impossible, unimaginable, and not going to happen event of some kind of interruption—

HAYES:  Yes.

FRUM:  The flow of interest on the U.S. debt, something that didn‘t happen during the civil war, something that didn‘t happen or at any time since the foundation of the Constitution, the person who will be blamed will be the person whose name Americans know—and that is the president of the United States.

So, it can‘t happen.  Now, happily, it won‘t.  And I don‘t know why he is allowing his people to raise that prospect.  That the correct answer is the debt—interest on the debt will be paid, period.

HAYES:  In terms of—final question here—in terms of sort of who‘s going to bear the blame for this as we come down to the showdown—I mean, I agree with you.  I think we‘re in agreement fundamentally that this is going to—the debt ceiling is going to get passed, right?  The question is: what sort of pound of flesh the Republicans were able to extract and the pound of flesh they‘re able to extract is going to be one pound or a hundred pounds depending on how much they think there‘s a credible threat.

But I will say this—in terms of blame, there are a lot of people who look at the government shutdown the last time around in this merry-go-round, right, with Clinton and Gingrich, who say basically this hurt—this hurt the Republicans, rights?  That was the Waterloo for the Republicans in that—in that sort of confrontation.

FRUM:  Let me get in my 30 seconds of anti-Tea Partyism here because -

-

           

HAYES:  That‘s why we had you on, David.

FRUM:  That‘s why you had me on.  The question as ever for Republicans is: do you want a real pound of flesh or a symbolic pound of flesh?  This idea that you will take a vote on a balanced budget amendment to the Constitution, which is meaningless, as a way of telling Tea Party people that you‘re meeting some solution they have when in fact what you should be fighting for is a path toward a balanced budget at a lower level of spending.  And Republicans should be every day reminding people that Erskine Bowles, the chief of staff to a former Democratic president, said the task to balance the budget at 19 percent of GDP not at 23 percent.

And to put us on that path, to fight for Erskine Bowles‘ vision, which is—which is a very acceptable conservative vision and not to get distracted with the will-o‘-the wisps like the balanced budget amendment.

HAYES:  David Frum, message to Tea Party people, don‘t get played—I appreciate you coming on.

FRUM:  Thank you, Chris.

HAYES:  Thanks a lot.

David Frum, former economic speechwriter for President Bush, the editor of FrumForum.com.

OK.  If you have a car alarm, you may be more familiar with Congressman Darrell Issa than you realize.  Congressman Issa is the incoming chair of the House Oversight Committee.  Mr. Issa just called Team Obama, quote, “one of thee most corrupt administrations he has”—and he has the power of subpoena and not entirely clear he understands the definition of corrupt.

Stay tuned for the simultaneously threatening and ridiculous details -

next.

           

(COMMERCIAL BREAK)

HAYES:  In just two days, the Senate has a chance to rescue itself from the abyss of permanent partisan gridlock.  This is not a test.  There is a huge moment coming for the federal government—one that almost never comes.  We have a countdown clock and a certified United States senator—coming up.

(COMMERCIAL BREAK)

HAYES:  Until now, Congressman Darrell Issa of California was most famous for two things: spending $1.7 million of his own fortune to oust Gray Davis from the California governor‘s office only to tearfully abandon his own ambitions for the job when Arnold Schwarzenegger decided to run.  He was famous for that.

And he was famous for this:

(BEGIN VIDEO CLIPS)

VOICE:  Protected by Viper, stand back.

REP. DARRELL ISSA ®, CALIFORNIA:  Protected by Viper, stand back.

VOICE:  Protected by Viper.

(END VIDEO CLIPS)

HAYES:  Putting his own voice on his own company‘s Viper car alarm system.  That‘s what Mr. Issa was most famous for, especially on this show.

But today, Mr. Issa wants to become famous for something else, because he is going to be the new chairman of the House Oversight and Government Reform Committee.  And Congressman Issa wants to make sure that everybody knows it, making a whirl wind trip through the Sunday news shows this weekend.

(BEGIN VIDEO CLIPS)

ED HENRY, CNN:  You‘ve been wanting this gavel for a long time. 

You‘re about to get it.  What are you going to do with it?

ISSA:  I‘m going to try and make a real difference in Washington spending patterns.  When you hand out $1 trillion in TARP just before this president came in, most of it unspent, $1 trillion nearly in stimulus that this president asks for, plus this huge expansion in health care and government, it has a corrupting effect.  When I look at waste, fraud, and abuse in the bureaucracy and the government, this is like steroids to pump up the muscles of waste.

UNIDENTIFIED MALE:  You think the Obama administration is corrupt?

ISSA:  Time and time again what we‘ve seen with the Obama administration is they played fast and loose with the walking around money Congress gave them.

UNIDENTIFIED MALE:  With oversight, how much money do you think you can save taxpayers, say, over the next two years?

ISSA:  I‘m looking at about $200 billion as the amount that we can either identify and eliminate the waste or at least begin the process.

CHRIS WALLACE, FOX NEWS:  White House officials have already said that they‘re going to hire more lawyers to deal with all the oversight investigations, particularly coming from your committee.  Are they going to need them?

ISSA:  They‘re going to need more accountants.  And the sooner the administration figures out that the enemy is the bureaucracy and the wasteful spending, not the other party, the better off we‘ll be.

(END VIDEO CLIPS)

HAYES:  The attention grabbing that you just saw didn‘t stop on Sunday television.  Cue the headlines Monday morning.  “New GOP oversight chairman calls administration corrupt.”  “Darrell Issa pledges to find $200 billion in government waste.”  And “Darrell Issa is the GOP man with the plan for genuine congressional oversight.”

And what is said plan?  And what does he mean by corrupt exactly?  According to a series of tweets from the man himself, he intends to investigate Fannie and Freddie foreclosures, hyper-regulation—whatever that means—the failure of the Financial Crisis Inquiry Commission, WikiLeaks, the FDA, Afghanistan.  So, pretty much, Congressman Darrell Issa wants to investigate everything.

And by corrupt, he seems to mean—he seems to mean both actual corruption, for instance, contracting in Afghanistan, along with things that are better described as things I, Congressman Issa, don‘t like.  But more important than what he‘ll be investigating, it appears Mr. Issa wants to make sure that just about everyone knows that it will be Darrell Issa who will be doing it.

Stay away from the car.

Joining us now is Congresswoman Eleanor Holmes Norton, the Democratic delegate from D.C. who has served on the oversight committee for 10 terms.

Thanks so much for joining us, Congresswoman.

REP. ELEANOR HOLMES NORTON (D), WASHINGTON, D.C.:  Of course.

HAYES:  The soon to be ranking Democrat on the oversight committee, Congressman Elijah Cummings, has criticized Congressman Issa for his partisan tone.  How much of this do you think of this—how much of this do you think is bluster, attention-getting, and how much do you think we‘re going to be really seeing the committee used in a kind of hyper-partisan fashion?

NORTON:  Well, candidly, I was surprised to hear Darrell Issa use the word “corrupt” when applied to the president of the United States.  I mean, whatever you think about Barack Obama, he is seen as Mr. Clean Family Man.

And then, of course, he walked it back in a number of ways, now it‘s the administration that‘s corrupt—no, it‘s really all of this—all of this spending is inherently corrupt.

This is—Darrell Issa is a guy who is seen on the committee as tough, smart, and articulate.  Usually that kind of over-the-top language comes from the least articulate members of the committee.

(LAUGHTER)

NORTON:  Now, what he is trying to do on the other hand is to be credible.  So, why walk out—walk through your own credibility this way?  When I say he‘s trying to be credible, look, he says he‘s not going to call the top people in the agencies.  He wants to call the people who know something about what‘s really going on.  He says he‘s more interested in being an accountant.

It does look like, on the one hand, he has some sense that his own credibility as the chair is important and when he—when you face him with the cameras, he kind of loses his head.  He‘s not Darrell Issa anymore—at least not the Darrell Issa who was the ranking member who seemed to choose his words far more carefully.

HAYES:  That‘s an interesting point.  I mean, it does seem like just from interacting a little bit with their—the Darrell Issa press operation which is formidable, it does seem like they are concerned about the chairman‘s—the now chairman‘s reputation as sort of not a partisan hack.  And I think the reason for that, right, is because the last time we went through this, which was the era of this committee during the Clinton years with the Republican Congress, a time during which you served on the committee if I‘m not mistaken—

NORTON:  Indeed.

HAYES:  We had thousands of dollars and dozens of hours were spent dealing with subpoena from the Republican committee and we had what really amounted to an absurd, absurd witch hunt in which the committee devolved into.  Are you scared of that happening again?

NORTON:  Clearly, Mr. Issa is, because he wants to separate himself from that precedent and that precedent was just this awful.  This is how awful it was—after all of those investigations of cabinet member after cabinet member, with special counsel appointed to all of them, no one was found in violation.  That‘s what wasting government money is all about.

HAYES:  Exactly.

NORTON:  Now, Issa says I don‘t want to do that.  I want to look at real programs.

Well, if he looks at real programs let me tell him something—you know, Democrats kind of like investigations.

HAYES:  Right.

NORTON:  Even when we‘re in power, we kind of like it because we like government.  We like looking and seeing what‘s happened.  We‘ve had some investigations of our own administration.  So why not take us as partners rather than to repeat what looks like what could be the worst—if the word corrupt is seen as indicative—the worst indicators from the last time the Republicans controlled the committee?

I think he wants to avoid that and maybe since he walked the language back, maybe he really is trying there to say, wait a minute.  That wasn‘t me.  You all got—I was talking out of my head.  It‘s these cameras.  They do things to you.

That does surprise me because I think the cameras would be interested in everything that Issa said no matter what he said, because at this point there‘s very great interest in what kinds of investigations are the Republicans likely to do of the Obama administration.

HAYES:  Congresswoman Eleanor Holmes Norton, killing Darrell Issa with kindness this evening, the Democratic delegate from D.C., thanks so much for your time tonight.  I appreciate it.

NORTON:  My pleasure.

HAYES:  The sky is falling.  It‘s the end of the world and we have only our marshmallow peeps to save us.  Fear not, my friends.  There is “Debunktion” at the junction—coming up.

(COMMERCIAL BREAK)

HAYES:  “Debunktion Junction,” what is my function?

OK.  First question: True or false.  True or false, the sky is falling?  True or false?

(BUZZER)

HAYES:  OK.  False.  The sky is not falling.  Only—and I say this very sadly, the birds are falling from the sky.  Red-winged black birds fell by the thousands over Beebe, Arkansas on New Year‘s Eve, prompting certain strange corners of the Internet to break out the special font for “It‘s the end of the world and we‘re all going to die.”

And, OK, it‘s a little freaky to wake up to as many as 5,000 dead birds and people in hazmat gear collecting them.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  I‘ve been to Iraq and back and not seen nothing like this.  You know, my kids are out here playing and you don‘t know if it‘s safe or because, you know, they‘re all walking around in chemical suits picking them up with gas masks and everything.

(END VIDEO CLIP)

HAYES:  It does not appear that world is ending, even if we‘re still not sure exactly what happened to the red-winged black birds.  The Arkansas state veterinarian - Arkansas has a state veterinarian apparently - says the black birds appear to have been killed by trauma in mid air. 

It could be they were blasted out of the sky by the weather, by lightning and hail moving through the area.  Or by New Year‘s fireworks, in which case we‘ve got a few alternatives coming up in just a moment. 

Post script - the 100,000 fish in Arkansas that just turned up dead a few towns over - we may not know what killed those for several weeks.  So the sky is not falling, that I can report and the world is not ending.  I don‘t think that‘s more of an educated guess. 

OK.  Next question, true or false.  Health reform, which passed last year and goes into effect in parts this year, is dead on arrival. 

False.  Seriously, can we hit the buzzer again for emphasis?  Thank you.  Health reform is not dead on arrival.  That‘s not to say the Republicans in the House aren‘t trying to kill it.  They are. 

The House will vote on repealing what they are calling the job killing health care law next Wednesday, this January 12th.  And seriously, the sky will fall before Senate Democrats let that vote mean anything. 

In fact, a whole new round of health reform benefits kicked in on January 1st including a requirement that your insurance company spend at least 80 percent of your premiums on actually, you know, caring for you. 

OK.  Last question, true or false?  The pinnacle of reality TV, “Jersey Shore,” and North America‘s largest marsupials have something in common with each other and with fiber glass illuminated peeps. 

True.  Totally and literally true.  All three turned up in our nation‘s nuttier New Year‘s Eve celebrations, because who needs to watch a giant glittering ball dropped at midnight in Times Square when you can head down shore and watch them dropping Snooki?  Who?  You tell me.  Go ahead.  No, seriously, tell me. 

And America loves its possums, loves them.  They dropped a possum in brass town, North Carolina.  It‘s in that box there and a stuffed one in Tallapoosa, Georgia, because Snooki is not going to Tallapoosa, Georgia on New Year‘s Eve.  She is at the shore, silly, so you make do with the possum. 

While other American towns will settle for dropping a giant pickle or bag of potato chips or stick of bologna, not making this up, Bethlehem, Pennsylvania went all the way to a fiber glass illuminated peep, because that is where peeps are born and because they‘re so darned good for you and so indestructible in nature. 

Thanks for playing and watch out for falling peeps, also Snooki.

(COMMERCIAL BREAK)

HAYES:  There‘s a clock ticking in Washington and right here at the bottom of the screen.  It has nothing to do with the New Year.  When it‘s finally done ticking, oddly enough, one of those celebrating the most may be Supreme Court Chief Justice John Roberts. 

See, Justice Roberts is a wee bit vexed about all the federal judgeships that remain vacant, nearly 100 vacancies in total according to the Federal Judiciary‘s Web site.  In his annual report on the state of the federal judiciary, he blamed the partisan bickering on the part of both Democrats and Republicans for the holdup.

But when 19 of those nominees, such as Court of Appeals nominee, Goodwin Liu, haven‘t even reached an up or down vote, who or what is to blame?  We know who the culprit is.  It was Senate procedure in the backroom with the filibuster.  Case closed. 

The problem has gotten so out of hand the president had about the least controversial set of recess nominees in recent presidential history.  I mean, having to recess appoint Norman Eisen, the ambassador to the Czech Republic - come on, man. 

Given that the Republicans haven‘t started singing kumbaya, the dastardly filibuster might very well keep getting away with it if not for a few meddling senators and one quirky rule about one special day. 

On the first day that a new Senate convenes, the rules can be changed by a simple majority which of course the Democrats still have.  And since every returning Senate Democrat signed a letter calling for the filibuster reform, that senators like Tom Udall of New Mexico and our guest tonight, Jeff Merkley of Oregon, have proposed that reform seems likely to actually happen. 

Sounds awesome, right?  No more filibuster, at least as we come to know it.  Well, there is a pretty long catch.  The clock here may not run out on Wednesday after all.  That doesn‘t mean filibuster reform is doomed. 

Joining us to explain why is Sen. Jeff Merkley of Oregon who has been at the forefront of Democrats‘ efforts to reform this filibuster.  Senator, thanks for joining me.  I really appreciate it. 

SEN. JEFF MERKLEY (D-OR):  Thank you. 

HAYES:  OK.  So I saw the news today that they‘re talking about a vote on this sometime in later January and my first feeling was that my heart sunk because I thought, no.  Should my heart have been sinking? 

MERKLEY:  No, no. 

HAYES:  Why are we doing - why is this happening? 

MERKLEY:  Not to worry.  Right now, the Senate majority leader is planning for us to come in just for a single day this Wednesday and then come back in on the 23rd or 24th

So the key is that we extend the organizing period and utilize that time period between the first day and when we come back in to help create the national debate over the dysfunction and brokenness of the U.S.  Senate so we can come back in and have more momentum to change the rules. 

HAYES:  Explain to me how it‘s possible that you can do that.  If the rules say that it‘s on the first day the Senate has to pass its rules, how is it the case that you can then not do it on the first day? 

MERKLEY:  The story is even more complicated.  According to the Constitution, the majority can set up the Senate.  They can do that any time.  But according to precedent, it‘s been done at the start of a two-year cycle. 

Now, sometimes that first legislative day has been extended for a

week or two so the debate can continue.  So if you recess or have some

other way of guarding your privilege to address the rules -

HAYES:  But not adjourn?

MERKLEY:  Not adjourn.  Then you‘re staying within essentially the principle of the organizing period for the Senate. 

HAYES:  I see.  So now, this is actually interesting.  I realize I

misunderstood something.  So what you‘re saying is that what is prompting

the push for this on the first day of the new Congress is precedent, is

Senate precedent -

MERKLEY:  Yes. 

HAYES:  Rather than some sort of Constitutional mandate that it must be done on the first day. 

MERKLEY:  Absolutely.  Absolutely. 

HAYES:  The Constitution only says each House shall -  

MERKLEY:  Yes.  A Constitutional scholar will tell you they can mend the rules with 51 at any point.  But by precedent, by tradition, which weighs heavily in the Senate, and by a certain common sense logic, at the start of a two-year period, you set your rules out at the beginning. 

HAYES:  OK.  So I‘m trying to - I guess I‘m hedging against my hopes being dashed.  So tell me that I‘m - I think this - that the letter really surprised me, actually.  I thought I talked to you and talked to Sen. Udall quite a bit about this issue. 

I was surprised.  How did that letter come about and what does that indicate?  Or is that kind of - how strongly should we take that letter? 

MERKLEY:  Well, that letter says that there are members, a sizable number, majority of the Senate, that is very disturbed with the abuse of the filibuster and quite frankly also thinks that we need to do some other things, such as the Republicans complain about not being able to offer amendments. 

When they can‘t offer amendments, the Democrats can‘t offer amendments either.  It‘s frozen out of both sides.  So there is dissatisfaction about the quality of debate on both sides of the aisle.  But that letter says that enough folks are concerned.  They were willing to put that concern in writing and back up the majority leader. 

HAYES:  So is there momentum growing for this?  I‘ve seen - I feel like I‘ve seen stuff and there is a “New York Times” editorial, right, on supporting some filibuster reform.  There is an op-ed from former Sen.

Walter Mondale in the paper this weekend -

MERKLEY:  Yes. 

HAYES:  Supporting it as well.  Do you feel like this is becoming something that people are more aware of? 

MERKLEY:  Yes.  And I think they‘ll become more aware over the next few weeks, because, quite frankly, at the end of the last session, we were dealing with “Don‘t Ask, Don‘t Tell”.  We were dealing with the START treaty and then the holidays came. 

It‘s very hard to get people paying attention to something as important as this.  The first thing that people have to know - they may say, well, you passed some important legislation.  Is the Senate really broken? 

Well, yes it is.  We had - you talked about Mondale.  Well, in ‘75, when he sought to change the level of the filibuster from 67 to 60 senators they had had 44 filibusters during the previous two-year periods. 

We had more than three times that in the last two years, so three times the dysfunction, if you will, that drove the last major reform effort.  Not a single appropriations bill completed.  No budget. 

A huge backlog of nominations, both for the judiciary and for executive branch which essentially means the Senate is abusing its advise-and-consent function to attack and undermine the other branches of government, certainly not consistent with our constitutional responsibilities. 

That gives you some flavor.  And then hundreds of House bills never, never taken up because they‘ll never be able to get time on the floor. 

HAYES:  Sen. Jeff Merkley of Oregon, who is spearheading the effort to reform the filibuster, I really appreciate you coming on tonight.  It‘s great to be with you.  Thanks a lot. 

MERKLEY:  Great to be here.  Happy New Year. 

HAYES:  Coming up on “THE LAST WORD,” Lawrence O‘Donnell will talk to incoming Republican Congressman Joe Walsh who says he will actually turn down his own government-funded health care. 

And on this show, will a rising Republican star be thwarted by Mickey, Minnie, and Goofy?  Snow versus Snow White, next.

(COMMERCIAL BREAK)

HAYES:  Woody Allen famously said that 90 percent of life is just showing up.  Let me add this amendment, “and not going to Disney World while your state is being buried by two feet of snow.”  New Jersey Governor Chris Christie‘s “being there” problem, next. 

(COMMERCIAL BREAK)

HAYES:  A bright light in the heavens don‘t - a glowing orb that was once on the rise is falling to earth, but don‘t panic.  We‘re not talking giant meteorite hurtling at us from space causing catastrophic devastation, ending life on earth as we know it. 

This is a metaphorical star in the Republican sky.  And while he is not exactly crashing yet, his orbit is showing some signs of a wobble.  New Jersey Governor Chris Christie has been one of the Republican Party‘s bright spots since November, 2009, when pundits hailed his victory as beginning the current spate of Republican wins. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  I want to introduce to you now, I think, one the great rising stars - actually already a star - of the conservative movement in the United States of America.  He is a great governor.  He has not only just talked the talk but he has walked the walk.  He is the new governor of the State of New Jersey. 

UNIDENTIFIED FEMALE:  Back now, at 8:19, with the rising star of the

Republican Party, New Jersey‘s tough talking governor -  

UNIDENTIFIED MALE:  A YouTube sensation and a Republican rock star. 

UNIDENTIFIED FEMALE:  Rookie governor widely viewed as a rising Republican star. 

UNIDENTIFIED MALE:  Who is the rock star on the right, right now? 

UNIDENTIFIED MALE:  Right now, I would say Chris Christie being a

governor -  

SEAN HANNITY, HOST, “HANNITY”:  And joining us now, the one and only YouTube sensation, the great governor of the State of New Jersey, Gov.  Christie. 

(END VIDEO CLIP)

HAYES:  So in a party short of stars whose names don‘t rhyme with Sarah Palin, Christie deployed in 15 states a cycle to campaign for Republican candidates, reportedly raising more than $8 million often in Democratic strongholds. 

And a side benefit of all that travel?  It has put him in the deliciously awkward position of having to constantly deny any interest in the constant rumors that he is being short-listed for the big prize, the 2012 ticket. 

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R-NJ):  Why would I want a less powerful job than the one I have now? 

(END VIDEO CLIP)

HAYES:  What a good guy, that Chris Christie, choosing the voters of his state over the glory of the national ticket.  But how do those New Jersey voters actually feel about him? 

Well, after hovering at about 50 percent approval for most of his first year as governor, the latest Quinnipiac poll has Gov. Christie at 46 percent.  And that was before he had to deal with the spectacularly bad optics of his current political headache, the post-Christmas blizzard that happened in his state while he was far, far away on vacation at Disney World. 

In typical Christie fashion, he refused to apologize for leaving his state in other hands using his own kids as political cover. 

(BEGIN VIDEO CLIP)

CHRISTIE:  I‘d made a promise to my children that at the end of my first year as governor that I was going to take them to Disney World the week between Christmas and New Year‘s. 

And you know, my first and most important responsibility in my view is as a husband and a father.  And I was not going to rescind my child‘s Christmas gift. 

(END VIDEO CLIP)

HAYES:  Christie‘s vacation, to which he was certainly entitled, is providing ammunition for his growing number of critics who really, really enjoy pointing out all the important state stuff Chris Christie has missed while on his national journey of awesomeness. 

All of that is helpfully collated on a Web site created by the Progressive Change Campaign Committee and called, fittingly enough, “Where is Christie?”

This may explain why today, after telling New Jerseyans he is not

sorry he left them all alone in the snow, Chris Christie is busy trying to

re-hang his star in the Republican firmament for his real constituents,

making the rounds today of conservative talk radio show, some like Sean Hannity and Steve Malzberg with natural reach. 

But Chris Christie‘s problem isn‘t a lack of ardor from the national conservative grassroots.  It‘s with the voters of State of New Jersey.  Something tells me he hasn‘t quite learned his lesson.  We‘ll be right back.

(COMMERCIAL BREAK)

HAYES:  If you live in a state in these United States of America, the chance that your state has reported budget shortfall in the last couple of years is - well, let‘s just say it‘s pretty high. 

Just one state hasn‘t predicted a budget shortfall, just one - North Dakota, population 650,000.  In this year alone, states are looking at $100 billion shortfall after some very much needed pitching in from the federal government. 

In other words, there‘s not a lot of balance on state balance sheets so.  And so states are in a truly bad situation, a $100 billion bad situation that is a direct result of the hordes of overpaid, shiftless pensioners, public sector workers who are sucking the lifeblood out of the body politic. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  It‘s a conspiracy between government and unions that‘s bankrupting America? 

UNIDENTIFIED MALE:  Well, I would say public sector unions.  What we have seen, first of all, is this tremendous growth of public sector union wages and benefits to the point now where our states can‘t afford them. 

We have $3 trillion in promises that we‘ve made to public sector workers for retirement and health benefits. 

GOV. TIM PAWLENTY (R-MN):  Now, you have certain unions, specifically public employee unions, in many cases, exploiting and abusing taxpayers.  And so you have public employees making more than their private sector counterparts. 

Their post-retirement benefits and salaries and pensions are really one of the driving forces of the financial troubles of cities and counties and school districts in states all across this country. 

CHRISTIE:  The fight is about who is going to run public education in New Jersey.  The parents and the people they elect were the mindless, faceless union leaders. 

(END VIDEO CLIP)

HAYES:  The mindless, faceless union leaders are mostly teachers, firefighters, trash collectors, all with faces.  And if public sector unions are a cause of the shortage, you‘d expect conservative states with weak or non-existent public sector unions to be in fine fiscal shape. 

But Texas‘ budget is among the worst in the nation with a projected shortfall of $25 billion over the next two years.  Also, state worker incomes haven‘t outpaced the rate of inflation by much. 

And according to the Center for Economic Policy Research, quote, “When workers are matched by age and education, state and local workers actually earn four percent less on average than their private sector counterparts.” 

OK.  So there hasn‘t been some enormous expansion in private sector, and public sector employees don‘t make much more than their private sector pals which means the $100 billion shortfall in state budgets isn‘t only the result of suddenly spending too much on state employees.

It‘s a result of taking in too little - far, far way too little, a glass of water for an entire field of crops.  One pat of butter for a whole loaf of bread. 

When the Wall Street-enabled $8 trillion housing bubble popped, thanks to things like deregulation, derivatives and Alan Greenspan, the housing bubble became the $8 trillion housing crisis, which is why we ended up with the worst recession since the Great Depression and 10 percent unemployment. 

It‘s not the teachers and firefighters and the guys who pick up your trash.  It‘s not their astronomical salaries which don‘t exist.  It‘s not even state pension contributions that have driven state budgets into the very, very deep crimson red.

Take the state of New Jersey, for example, where Republican Governor Chris Christie has become the hero du jour of the right for taking on the public sector unions. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Gov. Christie focused on the real economic problems.  He also stood up to public sector unions.  He battled the teachers‘ union. 

(END VIDEO CLIP)

HAYES:  But Gov. Christie didn‘t just battle teachers‘ union.  He‘s also done what New Jersey governors have been doing since 1992.  He has shortchanged the pension system.  Since 2004 alone, the state has skipped $14 billion in so-called required payments to the pension fund. 

In other words, the state has effectively borrowed from the state workers and is now not only paying them back, but is demanding they take pay cuts for the privilege. 

Joining us now is Dorian Warren, assistant professor of International and Public Affairs at Columbia University.  Professor Warren, thank you so much for joining me tonight. 

DORIAN WARREN, ASSISTANT PROFESSOR OF INTERNATIONAL AND PUBLIC

AFFAIRS, COLUMBIA UNIVERSITY:  Thanks for having me, Chris. 

HAYES:  OK.  So I guess the first question is, is this about policy? 

Is this about balancing the budgets?  Or is this politics? 

WARREN:  No, this is pure and simple politics.  I think Jonathan Cohn(ph) said it right.  Public sector workers are the new welfare queens in American politics.  They‘re the easy scapegoats that distract us from the sources of the real problems that are affecting state and local governments. 

When we focus on public sector workers, we don‘t look at who the real villains are.  We don‘t look at Wall Street.  We don‘t look at the banks.  We don‘t even look at the promises politicians made to these workers over decades. 

It‘s all of a sudden the teachers and the firefighters that are the cause of all of our economic problems which is just flatly wrong.  And it‘s a set of myths that are masquerading as facts.  It‘s really problematic. 

HAYES:  And one of the things, I think, that‘s interesting about this

is - there seems to be a strategy here to divide the actual - I mean, I

thought “faceless” was such an interesting adjective for Christie to use,

because it seems like they are trying to divide the actual living human

beings who are basically teachers, police officers from the sort of -  

WARREN:  Our neighbors.  Right. 

HAYES:  Right, our neighbors from bureaucrats or union members.  Do you think there‘s political benefit there?  Why do they think it‘s a right political target? 

WARREN: Well, I think as soon as you dehumanize people and you disassociate them from real, living beings, then, it makes it easy to create a villain to attack.  And I think as we can see from both parties, this isn‘t just a Republican attack on public sector unions.

Gov. Cuomo of New York is also launching his attacks on the public sector here in this state.  I think this is a convenient attack instead of focusing on the real villains of our economic crises, of bankers, of Wall Street, of actual people that made decisions that put us where we are today.

It‘s much easier to create new villains out of public sector workers, out of teachers and firefighters and police officers who are our neighbors, our friends, our relatives. 

HAYES:  Do you think there‘s also a component to this in which - you know, you mentioned Cuomo announcing apparently a one-year freeze - Gov.  Cuomo on state workers‘ salary.  Do you think there is a genuine kind of resentment there? 

WARREN:  Absolutely. 

HAYES:  And what I mean by that is that you‘ve seen a divergence in both private sector unionization and public sector unionization over the last two decades. 

WARREN:  That‘s right.

HAYES:  And also in the kind of benefit for private sector workers debt which get worse and worse and worse. 

WARREN:  That‘s right.

HAYES:  So there‘s a sort of race to the bottom in which the public sector is somehow seen as the laggard, right? 

WARREN:  That‘s right.  The real question we should be asking is, why have private sector workers, over the last 30 years, seen their incomes stay flat? 

And in the case of public sector workers, they‘ve actually - it‘s not that they make more, as you pointed out.  They actually make less than their private sector counterparts.  They just were made promises around pension obligations that their politicians have been refusing to heed. 

So in fact we need to be focusing on what‘s happened the last 30 years with the private sector in terms of increasing income inequality that the top one percent has been taking instead. 

HAYES:  Dorian Warren is assistant professor of International and Public Affairs at Columbia University and my guest tonight.  I really appreciate it. 

WARREN:  Thanks, Chris.  Thanks for having me.

HAYES:  All right.  That does it for us tonight.  We will see you again tomorrow night.  Now, it‘s time for “THE LAST WORD” with Lawrence O‘Donnell.  Good evening, Lawrence.  How are you?

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