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'The Last Word with Lawrence O'Donnell' for Tuesday, May 31st, 2011

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Guest Host: Chris Hayes

Guests: Jonathan Capehart, Ryan Lizza, Jennifer Granholm, Rep. Earl Blumenauer, Alex Wagner

           

CHRIS HAYES, GUEST HOST:  I‘m Chris Hayes, in for Lawrence O‘Donnell.

Poor Mitt Romney and Tim Pawlenty are desperately trying to get attention for their campaigns.  Romney even attacked a president in an NBC interview.  But Donald Trump, alas, knocked them away by simply having dinner tonight with Sarah Palin.

(BEGIN VIDEOTAPE)

(MUSIC)

UNIDENTIFIED FEMALE:  Right now, we‘ve got these shots of her.

UNIDENTIFIED MALE:  Sarah Palin is heading right for us.

CHRIS MATTHEWS, “HARDBALL” HOST:  Easy rider.

HAYES (voice-over):  The Sarah Palin spectacle rolls up the East Coast, sucking up all of the media attention.

UNIDENTIFIED MALE:  We‘re like media moths to a flame.

ANDREA MITCHELL, NBC NEWS:  On a non-campaign bus.

UNIDENTIFIED MALE:  Top the I-95.

SAVANNAH GUTHRIE, NBC NEWS:  Maybe it‘s like a hybrid politicization (ph) or something.  Kristen Walker—

CHUCK TODD, NBC NEWS:  Nicely put.

GUTHRIE:  Thank you.

KRISTEN WALKER, NBC NEWS:  Good for her.

She say this is not a campaign tour.  Running for president isn‘t like opening a lemonade stand on the corner.

UNIDENTIFIED MALE:  I really, really don‘t think she‘s going to run.

UNIDENTIFIED MALE:  A big fat weekend of nothing politically.

HAYES:  Palin‘s vacation comes at the expense of other Republicans.

MATTHEWS:  Romney, Huntsman, Pawlenty.

TODD:  The summer of speculation.

MIKE BRZEZINSKI, MSNBC ANCHOR:  Rudy Giuliani is hinting he may join.

GUTHRIE:  Mitt Romney will formally announce.

MITT ROMNEY ®, FORMER MASSACHUSETTES GOVERNOR:  I will repeal Obamacare.

HAYES:  Republicans‘ biggest problems may be governors from their own party.

UNIDENTIFIED MALE:  This whole wave of governors that came in last fall—

TODD:  Rick Perry deciding to listen again.

UNIDENTIFIED MALE:  Strickland, Kasich in Ohio now losing.

TODD:  President Obama is establishing his ground game in places like Florida.

UNIDENTIFIED FEMALE:  Rick Scott has the lowest approval rating of any governor.

HAYES:  Republicans in Washington aren‘t helping either.

MITCHELL:  This is kind of a way of trying to embarrass the president.

UNIDENTIFIED MALE:  A vote on raising the debt ceiling.

UNIDENTIFIED FEMALE:  On a bill to raise the debt ceiling.

UNIDENTIFIED MALE:  It‘s expected to fail.

UNIDENTIFIED FEMALE:  It isn‘t expected to pass.

TODD:  Doomed to fail today.

HAYES:  And the rest of Washington wastes a day obsessing over a crotch shot.

MITCHELL:  New York Congressman Anthony Weiner has now hired a lawyer.

UNIDENTIFIED FEMALE:  Weiner claims somehow hacked into his account.

MITCHELL:  A nude photo was sent from his Twitter account.

UNIDENTIFIED FEMALE:  A close up photo of a man in his underwear.

UNIDENTIFEID FEMALE:  You know, it is fairly easy to hack into a Twitter account.

MITCHELL:  Telling “Politico,” “The Weiner gags never get old, I guess.”

(END VIDEOTAPE)

HAYES:  Good evening from Washington.

Today marks Sarah Palin‘s third day of her personal publicity bus tour through America‘s federally-funded national historic sites.  So far, Palin and her family have visited the National Archives, turned a Memorial Day to raise awareness for POWs into a photo op of herself on a motorcycle, and learned about the war of 1812 at Fort McHenry, Maryland, from what appears to be a federal employee tour guide in a hat.

This is beyond red and blue if ever I‘ve seen it.

Today, the Palin toured the famous Civil War battlefield at Gettysburg and the Liberty Bell in Philadelphia.  Predictably, reporters are preposterously chasing Palin at every stop of her personal publicity tour as it rolls through the Northeast.

And just when the half-term governor‘s trolling of the media couldn‘t get anymore transparent, she has decided to have dinner with another presidential faker, Donald Trump.

Meanwhile, the media is literally driving right by a real development in the Republican presidential primary which is taking place right now in Trenton, New Jersey.  That‘s where a group of Iowa Republicans are trying to convince another brash half-term Republican governor, Chris Christie, to enter the presidential race.  GOP big money donor Bruce Rastetter delightfully described as a, quote, “Iowa hog and ethanol baron” by “The Des Moines Register,” along with a delegation of six other prominent Iowa businessmen flew in by private jet to have dinner with Christie at the governor‘s mansion.  While this amounts to a little more than a Hail Mary pass from Iowa Republican activists because Governor Christie has repeatedly said he is not running for president in 2012, it says a lot about the dissatisfaction Republicans have with the GOP field as it currently stands.

These Iowa donors are not interested in full term Republican Governor Tim Pawlenty who announced his campaign in Iowa last Monday, or Republican front runner Mitt Romney, who not only served a full term as governor but who actually has a major accomplishment to show for it.

Romney‘s presidential campaign, which he will officially announce Thursday in New Hampshire, continues to be dogged by the health care reform law he signed into law in Massachusetts.

In an interview with the “Today” show, Romney defended the law which was the prototype for the national health care reform law signed by President Obama last year.

(BEGIN VIDEO CLIP)

MITT ROMNEY ®, FORMER MASSACHUSETTS GOVERNOR:  I understand that there are a lot of people who would just like me to get up and say it was a terrible idea.  A bone headed idea.  It‘s was just a terrible mistake.

We‘re all entitled to mistakes.  And there‘s only one problem with that, it wouldn‘t be honest.  What we did was to solve a very serious need that existed in our state.

(END VIDEO CLIP)

HAYES:  This issue will continue to dog Romney‘s campaign, because even when he offers up standard Obama-bashing red meat like this -- 

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Overall, give me a grade on his presidency.  How has he done?

ROMNEY:  Well, he‘s failed.

UNIDENTIFIED FEMALE:  An F?

ROMNEY:  Absolutely.

(END VIDEO CLIP)

HAYES:  The Democratic National Committee gleefully points us to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Three years into the Massachusetts health care reform experiment, former Governor Mitt Romney has high praise.

What would be the report card look like for you?

ROMNEY:  I‘d give it an A.

(END VIDEO CLIP)

HAYES:  It‘s worth remembering the Heritage Foundation worked with Romney on Massachusetts health care proposal and the individual mandate, now so anathema to conservatives, is a center right idea advocated by none other than liberal stalwart Richard Nixon and nursed in various right-wing think tanks.

Joining me now is an MSNBC contributor and editorial writer for “The Washington Post,” Jonathan Capehart.

Jonathan, thanks for being here.

JONATHAN CAPEHART, MSNBC CONTRIBUTOR:  Thanks for having me, Chris.

HAYES:  What do you make of this mad dash to find another candidate, to draft someone else, this sort of constantly casting one‘s eyes about and flying in private jets across the country?

CAPEHART:  Trying to convince people who have already said that that they would commit suicide in order to convince people in his own party that he does not want to be president.  That he doesn‘t think that he is ready to be president.  Incredible candor.  And yet, still, folks in the Republican Party are casting about.

HAYES:  But why is that?  Look, you have—I mean, it seems if you zoom out 1,000 miles and you view this as an alien from space and you were presented this—you know, Mitt Romney seems like a perfectly credible presidential candidate.  I guess, Tim Pawlenty, you know, he was elected.  He was a governor.

CAPEHART:  Twice.

HAYES:  Twice.  I mea, what‘s—why are they so unsatisfied?

CAPEHART:  I think—well, Mitt Romney‘s problem is that he was for one thing years ago and it was another thing in 2004, 2008 and now he‘s trying to be something else.  Tim Pawlenty is someone who people just—he‘s just not exciting.  He‘s not electric.  He‘s great on paper, but just not electric.

Sarah Palin is the one who keeps teasing everyone that she‘s going to run.  But we all know she‘s not going to run.

Michele Bachmann is going to run.  But we all know that she possibly knows that she can‘t win.  She could maybe win the nomination.  But she could never win the presidency from President Obama.  They are just—they are desperate.

And think about it, Democrats at this time, they had their candidates.  They were wildly excited about just about every Democrat who ran and, unfortunately, it‘s not the same with the Republicans.

HAYES:  I think this sort of obsession with Christie is particularly revealing for this reason, he‘s become—he‘s not only sort of this hero I think in conservative circles.  But there‘s also a sense that he‘s giving people what he wants and that his like tough bull in a china shop routine ware well and that‘s exactly what America‘s for.

And yet if you look out, the Fairleigh Dickinson University polled New Jersey voters taken earlier t this month found his net negative favorability rating 40 percent  view him favorably, but 45 percent have an unfavorable view.  This is the guy, the guy who is unfavorable view in his own state who doesn‘t want to run who they‘re going to.

What does that say about this sort of gap between the reality in internal Republican circles and what voters want?

CAPEHART:  I think what‘s going on with Christie is that people love the fact that he is not afraid to tell the truth.  He‘s not afraid to be candid.  He‘s not afraid to tell people, yell at people for yelling at him.

HAYES:  Right.

CAPEHART:  It‘s great.  It‘s refreshing in politics where everyone is so preprogrammed.

(CROSSTALK)

CAPEHART:  But, you know, I used—I worked for Mike Bloomberg on his first campaign for mayor, as a matter of disclosure.

This was a man who came into office who had to close a $6 billion budget gap.  He had to raise taxes.  He went after smoking.  His poll numbers plummeted.  Even said he was done.  He was over.

Within three years he was re-elected by the second highest margin in New York City history, just second to Fiorello LaGuardia.  I think people in the Republican Party are looking at Chris Christie and those poll numbers and saying, yes, yes, poll numbers are snapshot in time.  That‘s now.  Who knows where he could be this time next year.

I still don‘t think they‘ll convince him to get in.

HAYES:  I guess my final question here is about the kind of long-term trends, because it seems to me like the panic in some ways—as someone who, you know, spends a lot of time around Democrats and liberals, the worry there is about the economy.  And what‘s so strange about this sort of panic on the Republican side to find a new candidate is that the economic numbers are incredibly soft.  I mean, we have growth numbers out from the first quarter down to 1.6 percent.  It seems like that‘s going to be the thing that‘s going to determine ultimately this outcome.

CAPEHART:  Right.  It could be no matter who the Republicans put up, the president could give that person a run for his money simply because the American people either are not feeling the economic recovery as we see it now and maybe it‘s not a recovery a year from now.

HAYES:  Right.

CAPEHART:  Or, you know, the American people are, you know, we went for change in 2008.  It‘s time to change again in 2012 -- whether that‘s Romney or Pawlenty or Bachmann, who knows?

HAYES:  And we‘ve seen that restlessness in the last election.  2006, it was anti-incumbent.  2008 was anti-incumbent.  2010 was anti-incumbent.  And you‘ve seen this sort of serial discontent.  It‘s not implausible that‘s going to—

CAPEHART: Right.  I would actually argue that we have seen, the American electorate has been restless since 2000.

HAYES:  Yes.

CAPEHART:  Since the fight over the White House between Bush and Gore and they have been sending Congress back and forth between Republicans and Democrats and not so much the White House.  But with President Obama, they said we want change.  In the special elections in New Jersey, the Massachusetts Senate race, Virginia they said, not so much.

So, the American people are they‘re a little cranky.

HAYES:  Jonathan Capehart, MSNBC contributor, editorial writer for “The Washington Post”—appreciate it.

CAPEHART:  Thank you.

HAYES:  Joining me now is a Ryan Lizza, Washington correspondent for “The New Yorker” magazine.

Ryan, how are you doing?

RYAN LIZZA, THE NEW YORKER:  Good.  How are you, Chris?

HAYES:  You have a good piece this week‘s “New Yorker,” tracking how Romney‘s health care legislation, this sort of signature achievement, came about and how it influenced the White House.  And we see the White House applying this kind of death hug all the time to Romney over the health care bill.

I wonder—how much relationship do the two pieces of legislation actually bear to each other?

LIZZA:  Well, the main architecture is identical, right?  You have this idea that we should subsidize the poor to buy private insurance, right?  There are other ways you can expand health insurance coverage for people.

But the way that Romney did it and the way that Obama did it was they wanted private insurance, OK?  So, you give subsidies to the folks who can‘t afford it.

Well, if you do that, you‘ve got to fix the individual insurance market because it‘s very difficult to buy insurance on the individual market.  So, you set up something called an insurance exchange.  It‘s modeled on a stock market exchange or eBay or CarMax—a single place where it‘s easy to buy something.

OK.  Once you do those two things, you need to basically get everyone in the same insurance pool so insurance premiums aren‘t out of control, so you‘re not just getting sick to sign up.  So, you decide, you know what, we need a mandate to tell everyone that they have to carry health insurance.

So, that three-legged stool: subsidies, insurance exchange, mandate was first tried and frankly successfully in Massachusetts.  Nowhere else.

And the main people who helped Romney put that plan together became very influential in the Washington debate.  In essence, that model was exported from Boston to Washington.  Ted Kennedy, Jonathan Gruber, the economist who helped Romney with his plan, became the principal health care economist for the White House who did the modeling.  And folks like John Kingsdale who ran the implementation of Romneycare, became a very influential person for the White House and for the Hill in testifying and explaining how that plan worked in Massachusetts and how you could apply it nationally.

So, the linkage is very direct, Chris.

HAYES:  You‘ve got this scene in the magazine article in which Romney is making a huge pomp and circumstances of signing the bill.  And it was a sort of triumphant moment that was seen as a spring board to national political aspirations.  There‘s a great quote in the article, too, from Jim DeMint of all people—

LIZZA:  Yes.

HAYES:  -- basically saying, I think Romney would make a great president look at his compromise in Massachusetts with health care.

What has changed between that universe in which this was the top item on his resume to this universe in which it is the number one thing imperiling his shot at nomination?

LIZZA:  Yes, Jim DeMint ranks him as the most conservative Republican in the Senate, a hero to the Tea Party movement.  And look what‘s happened since 2006-2007 when this was seen as a successful piece of legislation by conservatives, Romney‘s health care bill, is a populist uprising, sort of libertarian surge in the Republican Party.

I think you could pinpoint the date almost in the wake of the financial crisis when the House of Representatives voted against the first Bush bank bailout bill.  I think ever since that moment, you had a cascading series of events that have pushed the Republican Party in a more libertarian anti-government direction.

Now, that happens anyway when you have a Democratic president.  It happened with Clinton.  It happened with Carter.  It happened with Johnson.  It happened with Kennedy.

It‘s a fundamental fact of American politics.  When you have a Democratic Party, conservatives go way to the—president—the conservatives go way to the right.  But in addition to that, you had a liberal agenda that was pretty aggressive.  You had a bailout—you had TARP that, you know, Obama inherited.  You had a pretty aggressive health care plan, cap-and-trade—all things on the right‘s eyes were anathema.

HAYES:  The dreaded overreach.  Ryan Lizza of “The New Yorker,” his article about Romneycare is in this issue of “The New Yorker.”  You have to pick it up on the newsstands.  It is not available online.

Ryan, thanks a lot.

LIZZA:  Thanks, Chris.

HAYES:  Coming up, the growing voters‘ remorse over their election of Republican governors with sky high unpopularity in important states for GOP leaders.  Could it give President Obama‘s re-election bid a big boost?

And the disingenuous pseudo-debate over the debt ceiling reaches a sad and confusing new low tonight.  Why the Republicans allowed an up-or-down vote in the House with no strings attached.

(COMMERCIAL BREAK)

HAYES:  Will controversial Republican governors in critical battleground states helped paved the way for the re-election of President Obama?  Up next, former Michigan Governor Jennifer Granholm talks about the Republican overreach.

And later, the right-wing smear merchant Andrew Breitbart sets his sights on a new target, Congressman Anthony Weiner.  A brief tour of his latest lie job.

(COMMERCIAL BREAK)

HAYES:  The months leading up to the 2008 elections, Republican Congressman Tom Davis wrote, “The Republican brand is in the trash can.  If we were dog food, they would take us off the shelf.”

Five months after first term Republican governors from Florida to Ohio to Wisconsin were sworn in, new polls show signs of a similarity politically toxic atmosphere for Republicans—an extreme buyers‘ remorse following last fall‘s 2010 elections.

In Florida, Lex Luther look-alike and former health insurance executive, Governor Rick Scott, is winning the Republican governor‘s race to the bottom.  A recent poll shows his approval rating at 29 percent and his disapproval rating at 57 percent.  That‘s the lowest approval rating of any governor in the country.

While Florida‘s housing market craters and residents struggle with the ongoing jobs‘ crisis, Governor Scott signed a bill requiring welfare recipients to submit to drug tests.  He‘s also signed an executive order requiring random drug tests of many current state employees.

His laser-like focus on drug testing has raised suspicions that Scott is using his office as a way to funnel more money to a chain he founded to Solantic, the urgent care chain he founded that—yes, you guessed it—specializes in drug testing.

Here‘s the Electoral College map for the 2000 presidential race. 

You‘ll notice the importance, of course, of Florida‘s 29 electoral votes. 

Barack Obama won Florida by just three points in 2008.

Governor Rick Scott‘s approval ratings continue to tank, he‘ll almost certainly weigh down the prospects of the eventual Republican presidential nominee.  But even if Republicans lose Florida in 2012, they can still pull out a presidential victory by winning the state of Ohio.  But yikes!  There‘s Republican Governor John Kasich with 33 percent approval rating. 

His disapproval rating is at 56 percent.

Governor Kasich‘s biggest loss is among Republicans, a 23-point drop in just two months.  This trend continues.  His union-busting and spending cuts could cost Republicans Ohio‘s 18 electoral votes in the 2012 presidential race.

And that‘s just Florida and Ohio.  Public Policy Polling asked voters, if you could do last fall‘s election for governor over again, how would you vote?  Remarkably in seven out of eight races including Michigan, Pennsylvania, Wisconsin, Iowa and Georgia, the Democrat would win if the race were held today.

Joining me now is Jennifer Granholm, former governor of Michigan, and currently practitioner of law and public policy at the University of California, Berkeley.

Governor, thanks so much for joining us.

JENNIFER GRANHOLM (D), FORMER MICHIGAN GOVERNOR:  Yes, thanks, Chris. 

Thanks for having me on.

HAYES:  You‘re currently writing a book called “The Governor‘s Story,” which is about the lessons from Michigan‘s experience and what it could offer to America.  The current governor, Rick Snyder, has job approval ratings also quite low, 33 percent.  I wonder what you think the wrong lessons are that he took away.

GRANHOLM:  Well, I‘m not going to talk about him.  But I can tell you that I think what happened in November is that the Republicans were elected, took what they thought a lesson to America which is all about cutting.  And what the people I think voted for was change.  And those are not necessarily the same thing.

People wanted to see a governor focus on jobs and what you‘re seeing in many of these states is governors that are focused on cutting funding for Planned Parenthood or drug testing, things that are not going to salvage the economy.  And, frankly, Chris, you know, as a governor of a state what has been in an economic crisis for many, many years because of the meltdown in the auto industry, you know, governors are realizing in the same way that people are realizing that a governor does not have a magic wand and cannot do the things perhaps that they campaigned on like fixing the economy.

HAYES:  Well, that brings me to the second point, which is that 49, I believe, of 50 states have state constitutions that bind them to balance their budgets every year, and that‘s obviously extremely difficult during the most acute recession since the Great Depression.  And so what we‘re seeing is sort of fiscal contraction in the states.  And we‘re seeing layoffs of state workers and stuff.

Do you think the federal government has sort of dropped the ball?  I mean, has it been insufficient support from the federal government?  Is that part of the problem here?

GRANHOLM:  Well, I think clearly the federal government must play a bigger role in economic growth in our country like the governments of other countries are doing.  I think that the old theory of laissez faire, hands off, a government shouldn‘t be involved in job growth or in the economy is completely anachronistic in a global economy, when we‘re competing with countries that are intervening to be able to save jobs.

And that‘s why I think the federal support pancaked on to state support for job providers to create jobs for ways that the U.S. can be more competitive.  That is what is necessary.  You need an active, strategic, smart government.  But hands off is not going to do it anymore, especially given that this is a structural change in our nation‘s economy.

HAYES:  But that‘s a long-term answer.  I want to sort of focus for a second about the short-term, because you‘re right.  I mean, clearly, there‘s a whole variety of things that need to be done in terms of long-term policy about how we create full employment and robust and equitably distribute growth.

But in the short-term, with the cratering of demand that we‘re seeing

particularly in the state of Michigan, which has been hit as hard as any state many the Union—what should we be doing?  I mean, how do we—what do we say to people on the unemployment lines?

           

GRANHOLM:  I mean, I can tell you that what—in 2010, Michigan‘s job growth was greater than any state in the country, even after we had been through this meltdown, because we had a partnership with the federal government for job creation both in the automotive sector, as well as in the clean energy sector.  One of the reasons why we saw such growth was because we had strategic public-private partnerships to be able to make that happen.

But what you‘re seeing in your short term in other ways like when these governors refuse to accept dollars for infrastructure building, for high speed rail, when—you know, when you think when Rick Scott turned that money back, that these other governors didn‘t step up and say, hey, I‘ll take that if it‘s going to create jobs in my state—that‘s the kind of partnership that we need both with the federal government and a partnership between the public sector and private sector if we‘re going to create jobs in this nation.

I mean, the mother of all potential markets, Chris, is this clean energy economy.  Other countries are stepping up and have jumped over the United States very readily.  We had a huge jump in China‘s investment.  Not just China, but the private sector investment in China because policy matters between China and Germany and other countries are leaping over us.  Why?  Because we‘re doing nothing.  And that‘s why we need to step up our game in this global economy to create jobs here.

HAYES:  Finally, I want to ask you a question about Governor Snyder‘s

what‘s been called a financial marshal law, which is signed into law in March.  It gives unelected civil servants the power to override local governments, wipeout union contracts.  What do you make of this?  There are a lot of people that look at this and find it grimly undemocratic.

           

GRANHOLM:  Yes.  I—you know, Chris, here‘s the challenges I have really publicly and repeatedly said, that I‘m not going to criticize by successor because it‘s kind of a bogus thing to do.  I‘m happy to criticize the governors in other states.

But I am.  I‘m totally happy to do that.

(CROSSTALK)

HAYES:  -- on Rick Scott next time here on the program.

GRANHOLM:  Happy to do that.  But I do think there is a huge amount of buyers‘ remorse going on across the country because I think citizens want to see a focus on job creation.  Not a focus on these other issues that don‘t mean anything to them, and they certainly don‘t want to see their health care benefits cut, and I think the backlash that‘s happening across the country from what they‘re doing on the federal level is also going to happen inside the statehouses.

HAYES:  A very gracious Jennifer Granholm, former governor of Michigan, thanks so much for your time tonight.

GRANHOLM:  You bet, Chris.  Thanks.

HAYES:  Coming up, tonight‘s Republican‘s stunt on the debt ceiling.  Everyone agrees the debt ceiling has to be raised.  But, first, a vote where everyone can vote against it.  Huh?

And later, the crisis in the real estate market.  Home prices falling to new lows again. And in absurd files, wait until you hear who Bank of America has to foreclose on.

(COMMERCIAL BREAK)

HAYES:  In the Spotlight tonight, as expected, the House of Representatives has just failed to pass a one and one-half page bill to raise the debt ceiling 2.4 trillion dollars without federal spending cuts attached.  The vote was 97 to 318.  Zero Republicans voted in favor of the bill. 

In other words, Republicans were in unanimous agreement that the bill to raise the debt ceiling should not pass, despite being in unanimous agreement that the U.S. government must raise the debt ceiling before the August second deadline. 

Back in January, House Speaker John Boehner explained high that must happen. 

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER ®, HOUSE SPEAKER:  That would be a financial disaster not only for our country, but for the worldwide economy. 

(END VIDEO CLIP)

HAYES:  That makes tonight‘s vote a joke, a stunt.  It was an attempt to put House Democrats on record for voting to raise the nation‘s debt ceiling without spending cuts attached, so Republicans can run campaign ads next election telling voters that Democratic incumbent so and so doesn‘t care about curbing the nation‘s deficit.

Democrats knew that was the Republican strategy.  That‘s why only 97 of the 192 Democrats in the House voted in favor of the bill.  House Minority Whip Steny Hoyer told reporters before a caucus meeting on the vote, “I‘m going to advise my members that they should not subject themselves to the demagoguery that would surely follow.” 

Just to make sure that this Republican joke did not result in, to borrow Boehner‘s words, worldwide financial disaster, Republicans held the vote after the markets had closed and warned Wall Street that they would vote down the bill.  An executive for the Chamber of Commerce told “the New York Times” today, “Wall Street is in on the joke.” 

You know, if you had to come up with an epitaph for this sorry corrupt age, I think “Wall Street is in on the joke” would do just about as well as any. 

Joining me now is Oregon Democratic Congressman Earl Blumenauer, who voted for tonight‘s debt ceiling bill.  Thank you for joining me, congressman. 

REP. EARL BLUMENAUER (D), OREGON:  My pleasure.

HAYES:  I guess my first question is why did you choose to vote for the bill despite the fact that Steny Hoyer warned you of the demagoguery that would surely follow and it had no chance of passing? 

BLUMENAUER:  Well, I think it‘s important to sort of lay down a marker.  I and actually more than 100 Democrats offered to Speaker Boehner to be able to provide enough votes for a clean increase in the debt ceiling, so he wouldn‘t be held hostage to the extreme right-wing ideologues in his caucus. 

They made a decision that they‘re going to try and use taking the debt ceiling hostage to be able to jam through more tax cuts and eliminating the protection of the Medicare guarantee for senior citizens as their price. 

I think it‘s wrong.  I think people will see through it.  We already saw an indication last week, a week ago tonight in New York, upstate New York in the congressional race, that people are not that eviscerating Medicare and tax cuts for people who don‘t need them. 

I think in this charade is going to wear thin. 

HAYES:  Let‘s listen—speaking of this proposed hostage exchange of Medicare cuts for the debt ceiling bill, let‘s listen to Senate Minority Leader Mitch McConnell on Sunday. 

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL ®, HOUSE MINORITY LEADER:  I can assure you, David, that to get my vote to raise the debt ceiling, for whatever that‘s worth, my one vote, Medicare will be a part of it.  The details of that are yet to be negotiated. 

DAVID GREGORY, MODERATOR, “MEET THE PRESS”:  Do you have to keep the basis of the Medicare—

(END VIDEO CLIP)

HAYES:  OK.  So congressman, here‘s my question.  They‘ve set it up as a hostage exchange.  They say you give us Medicare cuts or the debt ceiling vote gets it.  Of course, if they pull the trigger on that, Wall Street‘s going to go bonkers. 

BLUMENAUER:  Right. 

HAYES:  If everybody knows that, why not just make them call the bluff.  Literally, why not go in and say OK, you need to pass the debt ceiling.  Do your best. 

BLUMENAUER:  As I said, doing it cleanly, directly, straight up I think is the responsible thing to do.  What you have just described is the scene out of “Blazing Saddles” where the sheriff puts the gun to his head and says, one more step and I shoot the sheriff. 

They can‘t do this.  We should empower them.  We should hold firm that we‘re not going to participate in legislative hostage taking.  I hope the president carries that message when he comes to Capitol Hill tomorrow to meet with the Republicans and later with the Democrats. 

We need to put a stop to it.  It will only continue.  These are the people that were willing to shut down the government in order to take away money from Planned Parenthood and Big Bird.  And we‘re going to be facing this again and again.  We ought to call a halt to it. 

HAYES:  I want to talk finally about the politics of this.  One of the things that‘s been a little disturbing throughout this entire debt ceiling debate from the very beginning of January is that polling has consistently shown a majority—a robust majority of Americans opposed voting to raise the debt ceiling, which is why this political threat of this empty vote today had consequences. 

How did we get here?  We have a recent “Washington Post” poll.  More Americans are concerned with the consequences of raising the debt ceiling than not raising the debt ceiling, 48 to 35 percent margin.  How did we get here politically?  And how do you educate voters back in your district about what this vote means? 

BLUMENAUER:  First of all, we got to this point because we haven‘t had any honest conversation about what it means to honor our commitments.  If we were to fail to pay our debts, it would have catastrophic effects for the entire economy, in a global sense. 

The fact is that the Republican budget actually will require us to borrow trillions more, even if we do their Draconian cuts to Medicare, because they‘re insisting on tax cuts to reduce revenues. 

You just have to deal with it straight up.  I‘m happy to look anybody in the eye and explain what the facts are.  Sometimes you can‘t put your finger to the wind. 

But I will tell you between now and next November, what‘s going to be much more significant than a spring vote on the debt ceiling is going to be what they propose to do to slash Medicare, to raise taxes for people that don‘t need it, to increase the national debt, and to do things that are contrary to what Americans want. 

That is where we‘re going.  I think that‘s the message that‘s going to be predominant. 

HAYES:  Thank you, congressman.  Finally just one last little question, which is are you confident that the White House is going to toe the line on this?  Which is to say, are you confident—or have you received assurances from the White  House that they are not going to bargain away some Medicare cuts to Mitch McConnell in exchange for a yes vote? 

BLUMENAUER:  I don‘t know.  I would hope that the president would stand firm on this, on tax cuts, on the budget.  Because we‘ve seen that the Republicans keep moving the goal post.  They‘re not going to be satisfied. 

We already have a program to reduce Medicare spending.  It‘s the health care reform we passed last session.  It will save over a trillion dollars.  What we ought to be doing is accelerating those savings rather than screwing around with taking away the protections for older Americans. 

HAYES:  Well said, Oregon Democratic Congressman Earl Blumenauer. 

Thanks so much for your time tonight.  I really appreciate it. 

BLUMENAUER:  My pleasure. 

HAYES:  Coming up, an apparent Internet hack involving Anthony Weiner results in conservative blogger Andrew Breitbart‘s claim on national television that the congressman likes young girls, direct quote.  Breitbart‘s smear tactics coming up. 

And the foreclosure crisis has gotten so bad that we can‘t even joke about it anymore.  That‘s coming up.

(COMMERCIAL BREAK)

HAYES:  Those of us in news love a great headline, even when they‘re not real.  Of course, the undisputed champion of the genre is “The Onion.”  Back in 1988, when it seemed like there was a new Starbucks opening on every other block of every other city in America, “The Onion” ran this headline, “New Starbucks Opens in Restroom of Existing Starbucks.” 

I thought of that fake news article today when I stumbled across a headline that seemed just as absurd, though, of course, this one was the real deal.  From “the Wall Street Journal‘s” website, “Bank of America Forecloses on Itself.” 

Short entry pointed me to a story from the “South Florida Business Journal” that chose the more straightforward headline, “Bank of America Foreclosing on Building with Branch Office.” 

The branch is the anchor for a strip mall in Boyton Beach, Florida, just south of West Palm Beach.  It also states the company who owns the property being foreclosed on owes 7.5 million dollars on the mortgage. 

So there it‘s happened.  Officially, the foreclosure crisis in this country, as acute and destructive as it‘s ever been, has gotten so bad, it is beyond satire. 

Take the new housing numbers just out today.  Single family home prices fell 3.6 percent in March when compared to March of last year.  That index fell to a historic low in April of 2009.  There‘s a rebound that started late 2009 and lasted through last year, thanks largely to the First Time Home Buyers‘ Tax Credit, and now back down again, leading the a dreaded double dip in the housing market. 

Numbers are down in cities across the country, with Minneapolis hit the hardest.  It‘s the only city to see a double digit drop in home prices, down 10 percent in just one year.  The first quarter of this year, 28 percent -- 28 percent of the mortgages on single family homes in this country were still underwater. 

That means borrowers owed more on the loan than the house was worth.  Still, remarkably, infuriatingly, no one in the federal government really seems to care enough to do anything about it. 

There‘s a very simple chain of causation here.  The economy won‘t recover until the housing market stabilizes.  The housing market won‘t stabilize so long as there‘s an epidemic of foreclosures and millions of unaffordable mortgages. 

The way out of the mess is painfully clear.  The president can use the power he‘s been granted by the original Tarp legislation to mandate real mortgage modifications.  Congress can pass a bill to reform our bankruptcy law so judges can restructure mortgages on primary residences, as they are currently able to do on vacation homes and, yes, yachts. 

None of this is happening, however.  Even a Democratic Congress couldn‘t pass bankruptcy reform.  And the administration‘s loan modification program, HAMP, is a grotesque embarrassment.  Everyone in Washington seems content to pretend the problem will go away. 

But today‘s housing numbers show, once again, that there‘s no way to sever the fate of the economy from the fate of the housing market.  Incumbent politicians, up to and including the president, should remember there‘s no way to sever their individual reelection chances from the state of the economy. 

If enough people are kicked out of their homes, you‘re likely to find yourself kicked out of office.  In other words, if Bank of America can be foreclosed on, then so, metaphorically at least, can you. 

Coming up, bizarre story surrounding Congressman Anthony Weiner gets Andrew Breitbart frothing at the mouth.  Up next, the Breitbart strategy of attack first, ask questions later.

(COMMERCIAL BREAK)

HAYES:  Conservative character Assassin Andrew Breitbart, best known for his involvement in the Shirley Sherrod fiasco, is at it again.  This time his website is going after Democratic Congressman Anthony Weiner of New York.  He began on Saturday, when Breitbart posted a lewd photo sent through Weiner‘s Twitter page to a 21-year-old woman in Seattle who follows the congressman‘s account. 

Weiner says he was the victim of a hacker and the picture was quickly deleted.  He‘s hired an attorney to investigate.  The intended recipient, Janette Cordova (ph), issued a statement saying, in part, “I have never met Congressman Weiner.  Though I am a fan, there have never been any inappropriate exchanges between Anthony Weiner and myself, including the Tweet picture in question, which had apparently been deleted before it reached me.  I also do not have a clear understanding as to how or why exactly I am involved in this fiasco.” 

We‘re all wondering the same thing.  Yet, this afternoon, CNN invited Andrew Breitbart to appear live on its air to explain how he learned of the Twitter message and the photo.  Breitbart says they were forwarded to him by another conservative blogger, Dan Wolf (ph).  But Breitbart didn‘t stop there. 

(BEGIN VIDEO CLIP)

ANDREW BREITBART, CONSERVATIVE BLOGGER:  He‘s been monitoring Rep.  Weiner for quite some time now, because according to his theory—and I don‘t know him that well—he‘s been monitoring relationships that Congressman Weiner has been having with woman, young woman who claim to have relationships with him. 

I‘m not saying what type of relationships, but people that Rep Weiner follows, girls that are quite young, younger than the girl in question here, talk openly about Rep. Weiner, who he follows these girls. 

(END VIDEO CLIP)

HAYES:  Girls that are quite young.  I know a guy who says these things about relationships.  Without any evidence, Breitbart just implied Anthony Weiner is an adulterer.  And far,  far worse, the fact that Breitbart was able to smear Weiner with a baseless attack on live TV was not lost on CNN‘s own senior legal analyst, Jeffrey Toobin. 

(BEGIN VIDEO CLIP)

JEFFREY TOOBIN, CNN SENIOR LEGAL ANALYST:  What Andrew Breitbart was insinuating about him with young girls and stuff is outrageous.  Frankly, it‘s too bad that he got to say that stuff on CNN. 

(END VIDEO CLIP)

HAYES:  I agree.  Joining me now, MSNBC contributor Alex Wagner of the “Huffington Post.”  Alex, how are you? 

ALEX WAGNER, “THE HUFFINGTON POST”:  I‘m great, Chris.  How are you? 

HAYES:  Alex, when I see clips like this, I want to give up.  Seriously, I am like—it‘s so preposterous.  Am I wrong in my level of outrage that this person who‘s been so discredited so many times, is such a serial manipulator of the media is allowed to just come on and spout off like this? 

WAGNER:  It‘s true.  I mean, Andrew Breitbart is not known to be the most self-reflective, remorseful person.  I think in that same interview, he talked about Shirley Sherrod story being a liberal attack on him and the media using that to cut him up and attack him, and then said that there was some sort of redemptive arc that everybody happened to be missing in the Shirley Sherrod story. 

Look, I think that Andrew Breitbart as a source has been largely discredited.  I would say—as you know, I‘m not a sort of opposition researcher for the conservative wing of the Republican party, but, you know, Weiner did have an informal press gaggle today and refused to answer the question about whether he sent this Tweet, whether he was following a 21-year-old undergraduate on his Twitter account, and if so why. 

And I‘m not saying that he has relations with these women.  But it does beg the question why are you following these young women that have nothing to do with your political career. 

HAYES:  Does it beg that question?  I saw the same exchange with Dana Bash.  They put out these statements.  And they said absolutely categorically the account was hacked.  This was a prank.  We‘re moving on, et cetera.  OK. 

I don‘t know anything about the what actual substance of what happened was.  It just seems to me like there has to be a standard.  Now we‘re going to move into day two of this invented scandal in which it‘s these meta-questions about him not answering the questions. 

WAGNER:  I think you‘re correct.  I think this idea that we‘re already putting this guy on trial without having any evidence that any wrong doing has occurred is legit.  But at the same time, Weiner is a savvy guy.  He understands how the media works. 

To some extent, you wonder, if you don‘t want this to be a distraction, then why don‘t you just put—put a nail in the coffin.  Answer the questions directly and move on. 

But the fact that he keeps going back to this I will not answer; it‘s a distraction over and over again—I think it leaves the American public scratching their heads, thinking maybe there is something here, which is highly unfortunate. 

HAYES:  Wait.  I want to make sure that I‘m clear on the facts here. 

WAGNER:  I don‘t think anybody‘s clear on the facts. 

HAYES:  Clearly, we‘re not clear on the bottom—the base principal fundamental fact, which is who sent this photo, which—how are we talking about this photo. 

WAGNER:  I will say this: in the day and age of Chris Lee and Facebook and you have you know, you know, a string—a litany of Republican sexual harassment and questionable sexual acts. 

HAYES:  We have to get the shot up.  There we go. 

WAGNER:  You have Chris Lee.  You have John Ensign fresh in our collective memory.  To some degree, I think there‘s concern that this is part of Andrew Breitbart‘s larger agenda to balance the ledger.  You know. 

The Republicans have a lot of sex scandals on their side.  Maybe the Dems do to.  So there‘s that.  And obviously that leads to its own media frenzy.  I think congressman like Anthony Weiner are conducting business over social media.  And they are public figures.  They‘ve chosen to get involved in Internet phenomenon like Twitter.

And as such, there‘s inevitably going to be some questioning when things like this happen. 

(CROSS TALK)

HAYES:  I agree there will be questioning.  I think girls—quite young girls on the national airways sprayed about for everybody to hear.  Alex Wagner of the “Huffington Post,” thanks so much for joining me. 

WAGNER:  Thanks, Chris. 

HAYES:  That is the end of our show here tonight.  You can check out more of my work at TheNation.com.  My Twitter handle is ChrisLHayes.  Up next is “THE RACHEL MADDOW SHOW.”

END   

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