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'The Rachel Maddow Show' for Wednesday, August 3, 2011

Read the transcript to the Wednesday show

Guests: Jared Bernstein, Melissa Harris-Perry, Rep. Peter DeFazio


RACHEL MADDOW, HOST: You know, I am -- I have learned I can tie my
limbs into knots that I didn`t know I could tie them into. Did you fly
back on the red eye, too?

O`DONNELL: Of course, no. I had the pleasure of getting a 6:00 a.m.
-- oh, boy, I don`t know how I`d kept my eyes open.

MADDOW: It`s better to have a single 48-hour work day than it is to
fly at 6:00 a.m. I believe it.

O`DONNELL: Right.

MADDOW: Anyway, thank you, Lawrence. I appreciate it.

O`DONNELL: Good luck, Rachel.

MADDOW: Thank you.

Thanks to you at home for staying with us for the next hour -- which
ought to be fun and punchy because of the lack of sleep.

We do begin tonight with some terrific news, some terrific news for
some very specific people. Even in this terrible, horrible, no good, very
bad economy, there are some people in this great country of ours who are
really doing wonderfully, splendidly, terrifically, splendifically. We`re
going to need some new adverbs for this because American corporations are
setting new profit records right now.

Seriously, it`s raining money for the Microsofts and Apples and
Goodyears and Caterpillars and 3Ms of the world. They all set a record for
revenue in the last three months. The second quarter reports are coming
in. And so far, it`s rivers and lakes and oceans of money for the S&P 500.

After months of report profits already, they are doing better than
before, even better than expected.

And in the case of oil companies, they are doing a lot better. That`s
what happens when you can sell your product to a captive audience for
suddenly high prices. You get even richer than you were before and you
started off really rich.

Well, the news is really, really good for the gold-plated crowd of
people who own corporations. The news for everybody else, of course, is
not so good. We learned today that U.S. companies are planning layoffs at
a pace not seen since spring of last year. Planned layoffs are up nearly
2/3 from the month before and the level a year ago.

And while we have been watching government austerity shrink the public
job sector, the teachers and police officers of American who`ve been put
out of work, now, we`re seeing big layoffs at drug companies and retailers.
And even when government had been cutting jobs, these had been the sectors
providing some of the very few new jobs this lousy economy had been adding.
And now, they are cutting, too.

So, so much for the silver lining, I guess. So much for the theory
that what is good for the so-called job creators is necessarily good for
the job doers.

There`s a clear and painful disconnect right now between what`s
happening for the wealth of corporations and what`s happening for the rest
of the economy. Corporations making lots of profit does not equal jobs it
turns out. It just equals lots of corporate profit, the already rich get
much richer and the not rich get bupkus (ph).

At the end of this week, we will get a new report on jobs numbers.
This one will tell us the overall unemployment rate for the country and
also how many jobs got added or lost in July. The last report in June was
so bad it frankly caused cramping. For what it`s worth, the new one on
Friday is expected to show that we gained more jobs than we did in June but
don`t get your hopes up that it`s going to be good news.

Without getting too much into the nitty-gritty, this kind of reporting
is where small numbers come with big consequences. Like this small number,
for instance, from the Commerce Department this week telling us that
personal spending in this country dropped in June for the first time since
September 2009. That doesn`t look like much, right?

How about now? This is Wall Street reacting to the news of that tiny
little number. This is Wall Street reacting to that news about ordinary
Americans cutting back on their spending -- investors and companies and
economists all now legitimately freaking out and running for cover because
of news like that.

This slow motion, seemingly endless economic crisis we have been
slogging through for a few years now is not a Beltway spat. It is not an
election, it is not a fight. It is a really big American problem, and I`m
sorry to say that it is starting to get worse again -- so break out the
campaign bus.

That is the response from the Obama administration today, sending the
president on a listening tour in a campaign bus so we can hear about the
pain in the heartland and try to reconnect with American voters on this
issue. They`ll be doing that for three days. That is the Democratic
response today.

On the Republican side, their plan is, of course, to criticize the
president`s bus tour. That will make a difference. And also, Speaker John
Boehner broke from his August recess to tweet a link to the GOP blueprint
for jobs. Here, let me click on that for you.

Oh, hey, look, it`s the same report from a few months ago -- the one
with the enough gigantoloid type and clip art so it takes up 10 pages and
looks semi-credible even if one page, this one, is entirely clip art and
another page is, of course, just the cover.

The Republican big 10-page large font plan for creating jobs comes
down to making things even better than they already are for corporations,
for the only folks in this economy who are already doing great, doing
better than ever, having record-setting profits. But the GOP plan is that
they must have more. The GOP proposing to lower corporate tax rates so
corporations get more profit. They want to get rid of regulations that
might interfere with making more profit.

And, of course, then, just like that, by increasing corporate profit
even more, even more than they are at with their record levels right now,
somehow this time, that will make jobs?

The Republican plan to turn this economy of our nightmares into the
economy of our dreams is just to keep everything great for corporations and
the waters of prosperity will just find everybody else somehow.

While corporate profits are growing in double digits, even while they
are planning record layoffs, the Republican mindset is to cut spending on
everything else, no matter the cost to economy or jobs but to give
corporations more and more and more -- and that Republican mindset is
what`s winning now in Washington. That is the way our policy course has
been set.

Republicans in Congress just held the debt ceiling ransom for a deal
that stands to grievously wound the economy if the predictions are correct.
It`s more than $2 trillion in cuts. The deal is expected to whack another
323,000 jobs right out of the economy. It`s enough to slow economic growth
by 0.3 percent. If you factor in the stimulus plans the Democrats had said
they wanted in this deal but they gave up on in the negotiating, this deal
ends up costing 1.8 million jobs and 1.5 percent of GDP and economic growth
-- all the while, oil companies get to keep their subsidies. That`s on top
of their record profits, and anybody lucky enough to fly in a corporate jet
keeps getting taxpayer subsidies for that, too.

The deal on the debt ceiling keeps subsidies for oil companies and
private jets, but it ends, say, federal help for grad students` college
loans -- because, you know, those grad students, I hate how they caused the
recession. Or, you know, as if there`s enough skin we can take out of grad
students` hides to get us out of this recession.

This very hard time we are living through is sometimes called the
Great Recession. The Great Recession is a name meant to distinguish it
from but also relate it to an even harder time in our history, the Great
Depression of the 1930s. President Franklin Delano Roosevelt got elected
to save the country from a nightmare of soup kitchens and bread lines and
American kids without clothes to wear and families driven from their homes
into makeshift camps made of whatever they could find.

President Roosevelt responded with a plan designed to put Americans
back to work, building America. Quite literally, FDR`s stimulus program
built America -- they built roads, they built bridges, they built stuff and
cities, they built stuff and parks.

The next time you are in a state park, look for a plaque somewhere in
that state park that tells you when that lovely welcome center got built.
There`s a good chance it happened during the depression with workers paid
by the U.S. government trying to save the economy.

But in 1937, eight years into the Great Depression, FDR turned his
attention to cutting the nation`s deficit at the time. President Roosevelt
had been convinced by Republicans and by his own treasury secretary that
the nation could no longer afford his recovery efforts, that instead of
continuing to attack unemployment, they decided they needed to attack the
deficit. And, boy, did they attack the deficit. Great success there.

And great post for "The New York Times" economics blog this week.
Bruce Bartlett points out that they cut the deficit by 17 percent in two
years. So, yes, they attacked the deficit. But in so doing, they also
attacked the economy.

Growth had been strong in 1934, 1935, 1936 while the government was
spending. In 1937, that growth collapsed. And the next year, the economy
began to shrink again. The Great Depression had its own recession. Misery
wrapped in misery.

They did slay the deficit in 1937, they also slayed the economy.

It`s worth remembering that FDR`s predecessor, Herbert Hoover, drove
the U.S. economy from a downturn into the Great Depression in the first
place by freaking out over government spending in 1930. He was the early
20th century version of oh, my God, we`ve got to stop spending, we`ve got
to stop spending now. It`s why they named those American shanty towns
Hoovervilles.

Thanks, Herbert. Look what you`ve done.

We have an economic stimulus in this Great Recession, this hard time
that`s got our name on it. We had a stimulus, one of them, in 2009, and
that`s over now.

The money President Obama managed to get through Congress is credited
with creating or saving more than 3 million jobs, real jobs, real people
spending real wages that make the economy grow. But that stimulus is over
now and there`s no talk of another one in Washington today.

Now, Republicans are telling us we have to make like Herbert Hoover
again or like FDR when he made his big mistake in 1937. They said what we
need to do now is crank down on the economy, show some disciplines -- as if
the deficit is the nation`s pressing problem right now, not 14 million
people out of work, as if what this out of control bonfire of jobs needs is
a bucket full of kerosene.

How big an economic mistake are we making right now? And do we have
any hope of going any other way, of doing anything else?

Joining us now is Jared Bernstein, former member of President Obama`s
economic team and former economic advisor to Vice President Biden. He`s
now a senior fellow at the Center on Budget and Policy Priorities and an
MSNBC contributor.

Jared Bernstein, it`s nice to see you. Thanks for being here.

JARED BERNSTEIN, MSNBC CONTRIBUTOR: My pleasure, Rachel.

MADDOW: You are the economist here, not me. So, tell me if it is not
apt to think about `37, to think about the risks of cranking down spending,
the risks of getting thrown back into a second recession.

BERNSTEIN: I can`t think of any more apt cautionary tale than the one
you just told and very thoroughly, by the way. Look, the deficit reduction
deal that was just passed, it doesn`t do the kind of harm that the 1937
problem did, at least in 2012. You mention the Bruce Bartlett statistic
that 17 percent contraction. That is definitely 1937-style self-inflicted
wound.

Now, we`ve been quite masterful at our own self-inflicted wounds. But
at least in 2012, it`s more like a scratch. It`s about $20 billion out of
the economy.

But the important point, Rachel is that it goes exactly the wrong way.
Not only did we just spend a number of months focusing on precisely the
wrong problem -- the budget deficit as opposed to the immediate jobs
deficit -- but in 2013l, those cuts really kick up.

Now, if you think this economy is going to be out of the woods by
then, it won`t be. I mean, the unemployment rate will still be way too
high. By 2013, we could be looking at cuts more in the neighborhood of
$100 billion.

So, it`s a very important caveat that you`re raising.

MADDOW: Do you think that -- I mean, you not only understand this
from an economic perspective, you have been there in the fights over this
in Washington and during this administration. Do you think that it is
possible to do things in the right direction right now, to do anything that
could stimulate the economy, that could have a meaningful effect on
unemployment? Is anything politically possible right now?

BERNSTEIN: I think a few things are politically possible. I have yet
to give up hope.

For one, you mention -- you had a little slide in there about job
losses that might occur if we fail to renew the payroll tax holiday and
unemployment insurance extension. Now, with such high and long-term
unemployment in the system, it`s important to realize that both of those
programs, the president has spoken to this, are in the economy right now.
They are in the 2011 economy.

If we take them out and they do expire at the end of the year, that
will be a big economic air pocket and will cost us a lot of jobs. We need
the government to continue to pick up some of the slack from a private
sector that is as down on the mat practically as it was during the
recession itself. I mean, you cited the consumer spending numbers the
other day. I mean, those are an economy in stall.

So, first thing, do no harm. Now, I`d like us to go further than that
and try to do something on the infrastructure front. I think that`s a good
way to get folks back to work and if you do it right, you can make that
happen relatively quickly.

That`s definitely a bigger political lift, though.

MADDOW: The consumer spending numbers that you just mentioned --
again, you`re the economist here, and I`m not. And what I saw there was s
consumer spending is down, that doesn`t seem like a good thing. But I
didn`t know how to interpret the ashen-faced slack-jawed freak out on Wall
Street and among economists about this.

Can you explain why that was so upsetting to people?

BERNSTEIN: I can explain that, I think. I think that Wall Street
woke up after this self-induced nightmare of the debt ceiling, looked
around and recognized this economy isn`t going anywhere. I mean,
basically, folks had been kind of this quiescent sleep telling themselves
the worst that can happen to the economy is, we fail to raise the debt
ceiling and we default.

Now, there`s a lot to that. I actually think it`s very good for the
economy not to have the default staring us in the face, just like, you
know, it wouldn`t be good for me to hit myself in the head with a heavy
object.

So, my point is that Wall Street, I think, looked around, saw two
things. GDP was kind of creeping along the bottom. Certainly, consumer
spending was just about a zero, at least in June, and there`s not -- and
the game in town right now is really fiscal policy.

Monetary policy, the kind of thing the Fed does to help lower interest
rates, it`s probably not going to be all that helpful now, borrowing costs
are already low, firms are sitting on a lot of cash that they could invest
if they wanted to.

So, I think one of the things the street is responding to is this
realization that the government, in terms of fiscal policy, in terms of
helping the economy with jobs, with the kind of programs you and I were
just talking about, is out of the picture. And that`s exactly the wrong
economics for this moment, just as it was in `37.

MADDOW: And the politics -- I mean, if you`re driven by the economic
need here, those politics have to be changed.

(CROSSTALK)

BERNSTEIN: The economy is telling us a very clear message, Rachel,
which is it needs some kind of fiscal help. The politics are completely
upside-down, telling us the opposite.

MADDOW: Jared Bernstein, senior fellow at the Center on Budget and
Policy Priorities, MSNBC contributor -- hitting the nail on the head with
the last comment there, Jared, thank you so much.

BERNSTEIN: Thank you.

MADDOW: Appreciate it.

All right. Still ahead, the shutdown of a major government agency for
fun and profit. What the heck is still going on with this thing with the
FAA? We`ve got details ahead.

(COMMERCIAL BREAK)

MADDOW: Sunday, February 6th of this year was one of the most
consequential days in the modern history of the great state of Wisconsin.
On Sunday, February 6th, the beloved, the adored, the one, the only, the
Green Bay Packers became Super Bowl champions. The Packers defeating the
Pittsburgh Steelers by a score of 31-25, the entire state of Wisconsin
transformed in an instant into an utter state of pro-Packer pandemonium.

(VIDEO CLIP PLAYS)

MADDOW: Packers, Packers, Packers.

Then the very next day on February 7th, Wisconsin`s new Republican
Governor Scott Walker who had been at the Super Bowl the night before
returned to his home state all fired up about the game, he convened his
staff at the governor`s mansion to give them a pep talk, to inspire them
about their work ahead. And what was the obvious example before him of
greatness that he had used to inspire his staff? The Packer`s big dramatic
Super Bowl victory the night before?

No, he actually chose to fire them up with a story of Ronald Reagan
firing the air traffic controllers.

(BEGIN AUDIO CLIP)

GOV. SCOTT WALKER (R), WISCONSIN: I stood up and I pulled out a
picture of Ronald Reagan, and I said, you know, this may seem a little
melodramatic, but 30 years ago, Ronald Reagan had one of the most defining
moments of his political career, not just his presidency, when he fired the
air traffic controllers. And I said this may not have as broad
implications, but in Wisconsin`s history -- little did I know how big it
would be nationally -- in Wisconsin`s history. I said this is our moment,
this is our time to change the course of history, and this is why it`s so
important that they were all there.

(END AUDIO CLIP)

MADDOW: This is the day after the Packers won the freaking Super
Bowl, and that was the pep talk Scott Walker says he gave to his cabinet.
Packers, smackers. Let`s go break some unions, you guys.

Sure enough, just a few days later, Scott Walker launches his
unprecedented assault on union rights in Wisconsin.

That Ronald Reagan moment of inspiration for Scott Walker actually
took place 30 years ago today. August 3rd, 1981, members of the nation`s
air traffic controllers union went on strike, demanding better wages and
better working conditions. Instead of sitting down and negotiating with
them, Ronald Reagan walked to the Rose Garden of the White House and
threatened them on national TV.

(BEGIN VIDEO CLIP)

RONALD REAGAN, FORMER U.S. PRESIDENT: I must tell those who fail to
report to duty this morning, they are in violation of the law and if they
do not report to work within 48 hours, they have forfeited their jobs and
will be terminated.

(END VIDEO CLIP)

MADDOW: Forty-eight hours later, Mr. Reagan fired more than 11,000
air traffic controllers across the country.

Now, 30 years later to the day, President Obama, today, is dealing
with his own airline union crisis, a crisis marked, again, by Republicans
trying to break the backs of American unions. The Federal Aviation
Administration right now is shut down -- congressional Republicans refusing
to reauthorize the FAA unless Democrats concede to their demand to strip
union rights for people who work for airlines or railroads. Crush the
airline unions or the FAA gets it.

The FAA has been reauthorized 27 separate times over the last four
years in the short little temporary reauthorizations. Even when they can`t
agree on the big thing, at least they can agree to keep it going.

But this year, because Democrats have not given in to this Republicans
union-busting demand, this year at the Republican`s hands, the FAA got it.
The FAA shutdown is having real live consequences for the U.S. economy, in
an economy already reeling from horrible unemployment, this shutdown means
that 4,000 FAA employees have been put out of work immediately, another
70,000 construction workers who had been working on FAA projects are out of
work as well. Every week the shut down continues, the government loses
$200 million in lost revenue from airline ticket fees -- a total that will
reach $1 billion if Congress does not come back before the end of their
recess to try to fix this thing.

Today, President Obama implored the Republicans to stop playing
political games with the FAA, as did his transportation secretary, Ray
LaHood.

(BEGIN VIDEO CLIP)

RAY LAHOOD, TRANSPORTATION SECRETARY: I`m focusing my attention like
a laser beam on Congress. We need both houses. End your vacation for a
couple of days, get off the beach, get out of your mobile homes or whatever
you`re traveling in, come back, pass a bill.

(END VIDEO CLIP)

MADDOW: This at its core is a fight about union rights. That is
what`s holding this whole thing up. Republicans insisting that Democrats
must cave on union rights or they will not release the FAA from this death
grip.

Democrats, for their part, appear to be standing firm so far. The
Democrats House Campaign Committee now reportedly targeting 50 House
Republicans in their home district on this issue. The head of the
Democratic National Committee, Debbie Wasserman Schultz, now is accusing
the, quote, "extreme House GOP of playing partisan politics with the FAA."

And the White House has said that President Obama will veto any bill
that does pass the House and Senate if it includes the union-stripping
provision.

When Scott Walker, who was so moved by Ronald Reagan firing all those
people, when Scott Walker enacted his own radical union-stripping agenda in
Wisconsin, he had not campaign on it, he just did it when he was governor,
apparently thinking that people would rally to his cause.

People did rally, of course, but not for him, not with him, but rather
against him. Tens of thousands people in the streets of the state capitol.

And the Wisconsin state Democrats who stood up to Scott Walker on this
are the ones who have reaped the political war so far from what Scott
Walker did. Remember the way they were greeted when they returned to
Wisconsin after they fled to Illinois to stop Walker from moving ahead with
this thing?

(VIDEO CLIP PLAYS)

MADDOW: The "thank you" parade. The "thank you" parade -- a parade
in the streets for standing up to Scott Walker`s union-stripping agenda.

When`s the last time you saw a parade in the streets to thank
Democrats from taking a stand on something?

But that was the political reward that awaited Democrats willing to
stand up for the rights of people who work for a living in the great state
of Wisconsin.

Nationwide, the percentage of people who took the Democrat`s side in
that fight over union rights in Wisconsin was 77 percent.

Questions remain in this latest fight: do we as a country get our FAA
back? Do those hardworking people get to go back to work? Will Democrats
keep refusing to cave on the union-stripping demands from the Republicans
on this?

But third and most broadly, will the Democrats take this as an
opportunity to go on offense? Will Democrats, if they do not cave on this,
actually choose to thump their chests on this a little bit, to speak up
about what they are doing? Will national Democrats take a lesson from
Wisconsin Democrats and tell everybody the reason they are standing up to
Republicans on this is because this is a right for union rights and union
rights are important and worth fighting for and Democrats can be counted on
to do it?

Joining us now is Democratic Congressman Peter DeFazio of Oregon.
He`s a long-time member of the House Transportation Committee.

Congressman DeFazio, thanks very much for your time tonight, sir.
It`s nice to have you here.

REP. PETER DEFAZIO (D), OREGON: Thanks, Rachel.

MADDOW: President Obama said today his expectation is this FAA issue
will be resolved by the end of the week. Do you see that as possible?

DEFAZIO: It could be resolved very quickly, just agree to a clean
extension of the bill as has been done historically, unanimous consent on
both sides, move forward, and put the 80,000 to 90,000 private sector
workers back to work and continue these critical safety and security
projects.

I mean, the Republicans are sacrificing not only private sector jobs,
small business jobs, things that they supposedly worship -- but also the
safety and security of the American traveling public on the altar of
extremist anti-labor legislation.

You know, it`s pretty funny. We checked out what would have happened,
the rule they want to apply is that in an organizing election, if you don`t
vote, it counts as a no, that`s what the Republicans want?

If we use that same rule in the House of Representatives, if you had
to have a majority of all eligible voters voting and voting for you, there
would not be one single elected member of the House of Representatives even
from the most partisan districts. I mean -- and they want to say this is
somehow fair for working people when they, themselves wouldn`t be in
Congress? We might be better off if we had that rule for Congress.

MADDOW: I understand why federal officials, so far, have been
stressing that safety and security are still assured in our air travel
industry despite the fact the FAA`s shut down. I understand they don`t
want to spook people and hurt the industry more than it might otherwise be
hurt by this shutdown.

But do you really think that there are safety and security
implications of this shut down?

DEFAZIO: Well, there certainly are 40 airport inspectors have lost
their jobs and their federal travel privileges. They are being asked to
use their credit cards to fly around the country and inspect violations or
potential violations and problems at airports and pay for their own lodging
and everything else.

How long can they keep that up? You know, a month would be pretty
tough on the kind of salary these men and women collect.

And -- I mean, there are critical security projects, critical safety
projects that probably won`t get done this year. I`ve got an instrument-
lighting landing system in my district. It`s likely if we`re delayed for a
month, it won`t be put in before winter, which means minimally
inconvenience, maximally, some really bad things could happen to people out
there.

And it`s like that all across the country. This is not a casual thing
the Republicans are doing there.

MADDOW: Congressman DeFazio, one of the reasons that I`ve invited you
to be a guest on the show so many times, and I`m always really happy to
have you is that I feel that you are a very blunt-speaking, candid member
of Congress. And in those terms, what do you think about the assertion
that I made in this introduction, that there is political capital to be
gained here for making this a fight about union rights?

So far, when Democrats have been talking about this issue, nationally,
both at the DNC and the DCCC level, they`ve been talking about
inconvenience and the jobs lost here. They`ve not been saying we`re
fighting to save these union rights.

Do you think they ought to?

DEFAZIO: Yes, absolutely. I think the American people would think
it`s pretty unfair that if you have an election and people don`t vote, they
all count as no votes. Basically this would preclude unions from
representing airlines in the future if this if this sort of rule was
adopted.

So, I`m absolutely comfortable making that, and I especially like to
make that point by saying, you know, if we applied the same rules to
Congress, nobody would be elected -- it kind of gets people`s attention.

MADDOW: Democratic Congressman Peter DeFazio of Oregon, thank you
very much for your time tonight, sir. I really appreciate it.

DEFAZIO: Thank you, Rachel. You`re doing a great job.

MADDOW: Thank you.

All right. Melissa Harris-Perry, who I know you love, fresh off her
triumphant guest hosting gig her last week, Melissa will join us here in
just a moment. Please stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MADDOW: Now in terms of the disruption to the neighborhood, you`re
trying to do this under living, breathing New York. Obviously, this lunch
box that we`re in, which is going to be the 96th Street station is a huge
cavern. It goes all the way up to street level here -- just above our
heads here, the ceiling here is street level. And this is a huge
underground room. This had to have been painful for the neighborhood.

(END VIDEO CLIP)

MADDOW: Last year our answer on this show to "Shark Week" was
something we called "Geek Week," which frankly had no chance at all of
competing to the American juggernaut that is "Shark Week." But still we
tried. It was very fun and I got to see the tunnel boring machine working
on the new subway line on the east side of Manhattan. Since then, that
massive construction project rumbling under the feet of the Upper East Side
has not gotten any quieter.

But now, one construction worker working on that project is doing his
best to make it up to the people who that construction sound has been
annoying, and the adorable way he`s doing it is "The Best New Thing in the
World Today." It`s really cool. It`s coming right up at the end of the
show.

(COMMERCIAL BREAK)

MADDOW: Back when the great big union rights fight had just begun in
Wisconsin, when Republican Governor Scott Walker was trying to get his bill
through the legislature and a big chunk of Wisconsin was taking to the
streets in protest of that idea, way back then, the national Republican
Party was on team Scott Walker. The national Republicans were all over
this union-busting thing.

Back in February, going to the national Republican Party`s Web site
would flip you over to something called help "Stop Obama and His Union
Bosses." When you clicked on that, it would take you to a page titled "A
Fight We Must Win," nationalizing the Scott Walker fight against unions,
making out like he was big eagle, and trying to turn the whole thing into
donations for the Republican Party.

Now that Democrats have a shot at turning the Senate back into
Democratic control by recalling Republican senators in elections next week,
the Republican party`s national chairman, who is from Wisconsin, was asked
about the national connection to the story. He was asked this morning by
political reporters, hey, you made a big deal about those Wisconsin
political fights -- the Wisconsin political fights over unions back when
they were happening in the spring, what do you make of the Wisconsin
political recalls now that they are happening this summer?

National Republican Party chairman responded by saying, Wisconsin,
what? Scott who?

"Talking Points Memo" quoting Republican Party Chairman Reince Priebus
saying today, quote, "I don`t think it`s a test run." Quote, "The
localized nature of it doesn`t allow it to be analogous to the 2012
election."

This is a great insight in the political tactics 101. When you think
some local issue was going your way, it means the whole world, right? But
when you think some local issue is going your opponent`s way, then just
some local issue, why are you guys focusing on that?

As we steam towards the Wisconsin elections on Tuesday given polling
numbers out last week, given internal polling numbers cited by the
Democratic Party this week, the Democrats at least seem to be in good shape
to maybe take back the Senate in that state. As Republicans at the
national level run as far away as they can get from this, just in case,
there is a real question here about how Democrats at the national level are
dealing with it, whether Democrats are looking at what`s happening in
Wisconsin as a lesson for their party, too.

As I talked about earlier in the show with Congressman Peter DeFazio,
there is a substantive question in terms of whether or not Democrats
recognize political advantage that they can get for standing overtly and
pounding their chest a little bit over the fact that they support union
rights the way the Wisconsin Democrats did.

But more broadly, there`s also the issue of whether or not Democrats
value the Democratic base, whether or not Democrats are going to try to
court Democratic voters.

The recall of the Republican majority in the state Senate in Wisconsin
is not a Republican phenomenon. This is a Democratic phenomenon.
Republicans did stuff in office that outraged people in Wisconsin, the
Democrats in office in Wisconsin stood up and fought against them tooth and
nail, unanimously, and the Democratic electorate, as a consequence, let up
like a Christmas tree in Wisconsin. They collected a record number of
signatures to set of an unheard of recall election. They raised huge
amounts of money and now, they may very well take back the Senate next
week. The Wisconsin Democrats, the base awaits.

So, what are D.C. Democrats trying to do to enthuse their base around
the country? Pointing at the Republicans and going, ew, you don`t like
them, do you?

That doesn`t really count. Where are Democrats taking a stand? Where
are they refusing to back down? Where are they saying they are going to
fight tooth and nail and not give in?

They were last spotted debating on the question of how we should let
the Republicans destroy the economy. The crowning achievement of that
fight?

(BEGIN VIDEO CLIPS)

CHRIS JANSING, NBC NEWS: You have been quoted coming out of your
caucus as calling this agreement a sugar-coated Satan sandwich. Was that,
indeed, your quote? Is that how you feel about this deal?

REP. EMANUEL CLEAVER (D), MISSOURI: It`s a very accurate quote. What
I`m saying is that if you lift the bun, what you see is antithetical to
everything the great religions of the world teach, which is: take care of
the poor, take care of the aged. It looks like a Satan sandwich.

REP. RAUL GRIJALVA (D), ARIZONA: The narrative got defined for the
president, he bought into it, and then you could see the trajectory of
these whole negotiations. Yet, we were going to end up a deal that was not
going to have any revenue generation in it, that we were going to end up
with a deal based on spending cuts to discretionary programs, and that deal
was going to be hard to swallow.

CHRIS HAYES, MSNBC CONTRIBUTOR: So you voted against this bill today.
What was the deciding factor for you?

REP. JAN SCHAKOWSKY (D), ILLINOIS: All of the cuts come from people
who have already sacrificed so much, middle class people, our senior
citizens, poor people, all the people that we should be protecting and not
a hair from the head of a millionaire or billionaire.

WOLF BLITZER, CNN ANCHOR: There are a lot of disappointed
progressives out there, a lot of liberals who are disappointed the way the
president handled this. Do you think anyone is going to emerge and
challenge him for the Democratic presidential nomination?

SEN. BERNIE SANDERS (I), VERMONT: I have no idea. But I do believe
that, you know, the president should be held accountable. You know, when
you say something in a campaign and you don`t do what you said you would
do, I think that it`s fair to raise those issues.

(END VIDEO CLIPS)

MADDOW: Even elected Democrats, to say nothing of the base, say they
are disgusted and disappointed by the deal the president just signed on the
debt ceiling disaster, after being pushed into it by the Republicans.

The question is: is the Democrats message to the base here, "Sorry,
you guys, just swallow it and get over it," or are Democrats going to have
to make it up to their base somehow?

Joining us now is the inimitable Melissa Harris-Perry, professor of
political science at Tulane, MSNBC contributor, and an amazing guest host
last week while I was away.

Thank you so much for doing such a great job.

MELISSA HARRIS-PERRY, MSNBC CONTRIBUTOR: I know. But this is -- I`d
much rather be sitting here right now.

(LAUGHTER)

MADDOW: Well, you`re welcome back any time you want, because it would
mean a vacation for me. It would be wonderful.

We`ve got -- we saw representatives there from the Progressive Caucus,
from the Black Caucus, the independent socialist in the Senate, Bernie
Sanders, Jan Schakowsky, a lot of the sort of the leading lights of the
liberals congressional -- the liberals among Democrats in Congress, saying
that debt deal was a Satan sandwich and worse. Is there a Democratic base
problem for Democratic elected politicians and the president right now?

HARRIS-PERRY: No. And I know it would be nice if it were, you know?
And I know that we`d like to be able to say, OK, now, because of this,
they`ll be held accountable. But, look, a couple of things have happened
here. The president, in cutting this deal, allowed the few progressives
that exist in the Democratic Party in the U.S. House of Representatives, to
vote against the Satan sandwich. When they go to stand up for reelection,
they will be able to say, Lord Voldemort, and I, you know, was one of the
people standing against him.

That`s exactly what a president is meant to do. He provided exactly
the cover that was necessary for the -- now, I think, let me be clear, it`s
a lousy deal. I hate the debt ceiling deal. There needed to be no debt
ceiling deal. There needed to be a clean vote to raise the debt ceiling,
then we need to have this budget discussion.

But with it done, these folks all can stand against it, yell against
it, rail against it, that gets them reelected in their districts. The
moderates, blue dogs, all of them that come from state like mine in
Louisiana, they can now sort of take cover underneath it and, look, we went
along with what the Republicans did.

I mean, the fact is, it`s a pretty complex coalition to keep together
and as ugly as this sausage is, it may, in fact, be the sausage that gets
them all reelected in 2012.

MADDOW: Is there something that the Democrats need to be thinking
about and the White House needs to be thinking about in terms of energizing
the base?

We saw in 2010 was not a lot of Democratic voters going out and doing
identifiable thing. What we saw in 2010 was a comparably large number of
Republican voters rushing to the polls and electing Republican candidates,
and Democrats essentially sitting on their hands. How does the White House
keep Democrats from sitting on their hands?

HARRIS-PERRY: Yes. This is the big question. I mean, you know, when
you`re running, you want two things. You want a really good enemy and you
want somebody that you can get behind. That`s what 2008 was.

And the thing that I love best about what Obama for America did as a
campaign in 2008 was it assumed that American voters would respond to
argument. It assumed that they were adults, that you could make a case to
them. And that even if that, you know, so-called median voter didn`t agree
with you today, but if you can make the right kind of case, you might be
able to win that median voter.

They have not governed that way, they campaigned that way in `08.
They did not governed that way. And so, I think they`re going to have to
decide whether or not they really think Americans are adults who can be --
who can hear an argument. I think that`s what Wisconsin shows.

Look, Wisconsin got the government they elected. Those people didn`t
get put in by some sort of coup. You know, they were elected to those
positions, but when they saw what it was, as you point out, lit up the
base.

MADDOW: Yes. And lit up the base and lit up the base not just in a
way that made them angry about what the Republicans were doing, which I
think has succeeded the national level in terms of a Democratic agenda, but
it made them start cheering for their Democrats and wanting more of them.
And that`s I feel like the step that national Democrats having to take.

HARRIS-PERRY: It`s tough and they are going to have to do that. And
they`re going to have to do with more than rhetoric. I can remember during
the campaign, Senator Clinton said you campaign in poetry but you govern in
prose. And so, the question, can we regain a little bit of the poetry
along with the difficulty of the prose.

MADDOW: Melissa Harris-Perry, professor of political science at
Tulane, MSNBC contributor, thank you for coming back so soon. You just did
a great job.

HARRIS-PERRY: Thanks.

MADDOW: Fans of "THE ED SHOW," time to get extra excited. Do you
want to know who their guest is right after this show tonight? Want to
know who it is? Bill Maher, it`s true.

And here, dictators, say what you will about their politics. The
great dictators of the world really know how to put on a show.

(COMMERCIAL BREAK)

MADDOW: "Best New Thing in the World Today" now with extra singing
and hard hats and singing in hard hats. Yes, stick around.

(COMMERCIAL BREAK)

MADDOW: In North Korea, the annual Arirang Festival was going on
right now, celebrating one of the few things North Koreans are allowed to
celebrate, the birth of Kim Jong-Il`s dad. Arirang has synchronized
marching, of course, and singing and dancing and gymnastics. Arirang is
said by the North Koreans to be the largest gymnastics display in the
world. You can believe that at your own risk.

As with all dictatorial spectacles, children are an important part of
this terrifying display of precisely synchronized human motion. So too are
flip cards that spell out all sorts of pro-Kim Jong-Il statements.

In the midst of all the Arirang forced smiling and card flipping and
gymnastics, already on the verge of starvation, North Korea has been hit by
recently by bad flooding -- floods that killed at least dozens of people
and destroyed dozens of homes and acres of farmland.

Even though South Korea was hit badly too, that`s what these pictures
show. South Korea`s Red Cross offered the North millions of dollars worth
of medical supplies to deal with the flooding crisis. So far, no response
from the leader. Clearly, he`s been busy forging ahead with his festival.
Floods, muds, starvation, smarvation (ph).

Vying with North Korea today, though, for the most unbelievable
dictator-related spectacle in the news was, of course, what happened in
Egypt. Egyptians got to see Hosni Mubarak for the first time since he
resigned, amidst of huge popular protests back in January. Today, Hosni
Mubarak was in court charged with corruption and complicity of the deaths
of more than 800 people killed in the months-long revolution.

The 83-year-old who ruled Egypt with an iron-fist for decades arrived
in Cairo on a hospital gurney, placed in a cage in a courtroom set up for
his trial, alongside his sons.

"The New York Times" reporting today the dictatorship in Syria picked
today for an all out military assault on a rebellious city of its own
called Hama because of the expectations that Syrians like the rest of the
Arab world would be transfixed by those images of Mubarak in that bed, in
that cage, in that courtroom -- facing trial before the people over whom he
previously asserted absolute power.

Activists in Syria say more than 100 people have been killed by the
Syrian military just since Sunday, including 45 people killed today. But
no news organization, including MSNBC, can confirm that, because no news
organization has been allowed into Syria.

According to the United Nations, the al-Assad regime in Syria has
killed more than 1,500 people in five months of protests there. The U.N.
Security Council, including China and Russia, condemned the violence today
in Syria. China and Russia are not real big condemning regimes using
violence against their own people, so that was a big deal. Even though
autocratic dictators sometimes pretty good at throwing big showy parties --
even though they do that, they do still sometimes get called out to account
for their brutality against their own people.

What happens next in Syria and what the international community can do
to help the Syrian people, of course, is still anyone`s guess.

We will be right back.

(COMMERCIAL BREAK)
MADDOW: "Best New Thing in the World Today" is not a metaphor for
why we need a jobs program, for why building big building projects to fix
roads, and schools and bridges and tunnels and sewer lines are a good idea
right now. I swear this is not a metaphor. This is just pure apolitical
awesome in that context.

Last year you might remember, we filmed a giant construction project
that will one day be a new subway line in Manhattan, 2nd Avenue subway.
Through the shaded area in the middle of Central Park -- see how there`s
three different subway lines on the west side, but only one lonely green
one on the right? Having another subway line in the east side will be
really nice one day.

But in the meantime, if you live or work along Second Avenue, the
construction is a pain.

(VIDEO CLIP PLAYS)

MADDOW: To increase the peace in the neighborhood, one construction
worker, a local 40 iron worker Gary Russo (ph) is giving up his lunch break
every day to serenade the neighborhood. Over the last few weeks, people in
the neighborhood have been stopping to listen and posting videos of him on
YouTube.

(VIDEO CLIP PLAYS)

MADDOW: And that sign behind him says, "Forget all the noise, traffic
and impact of the Second Avenue subway, enjoy the music."

Local 40 iron worker Gary Russo and the sweet, sweet sound of
infrastructure in the making, that is undoubtedly "The Best New Thing in
the World Today."

Thank you very much for being with us tonight. That does it for us
tonight.

One reminder again, the guest on "THE ED SHOW" tonight is Bill Maher,
which means you should definitely stick around.

Have a good one. Good night.

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

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