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'The Last Word with Lawrence O'Donnell' for Monday, August 15th, 2011

Read the transcript to the Monday show

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Guest Host: Chris Hayes
Guests: Jim Hightower, Erica Grieder, Matt Yglesias, Reihan Salam, Deepak
Bhargava, Penn Jillette

CHRIS HAYES, GUEST HOST: The third wealthiest man on the planet says
President Obama is right about taxes. Rick Perry says Obama`s wrong about
that and everything else. And Penn Jillette is here with why Rick Perry is
wrong about God.

(BEGIN VIDEOTAPE)

(MUSIC)

GOV. RICK PERRY (R), TEXAS: Let me tell you when I`m in, I`m in all
the way.

EZRA KLEIN, MSNBC POLICY ANALYST: We`re going to be spending a lot of
time with Rick Perry over the next couple of months.

HAYES (voice-over): We know Rick Perry is Michele Bachmann`s new
challenger. But what do we know about Rick Perry?

UNIDENTIFIED MALE: People are trying to figure out who exactly is
Rick Perry.

UNIDENTIFIED MALE: People are disconcerted about the religiosity of
his campaign.

UNIDENTIFIED MALE: And he told me that he had absolutely no interest
in running for president.

KLEIN: And his big idea is almost everything the federal government
does is unconstitutional.

UNIDENTIFIED MALE: What he said was Social Security is a Ponzi
scheme.

PAT BUCHANAN, MSNBC POLITICAL ANALYST: He`s got to go out there and
beat somebody in Iowa.

PERRY: What are you going about it?

UNIDENTIFIED MALE: Rick Perry is Mitt Romney`s worst nightmare?

PERRY: I hope I`m not anybody`s worse nightmare.

ANDREA MITCHELL, NBC NEWS: Mitt Romney is campaigning in New
Hampshire.

BUCHANAN: Go up to New Hampshire and knock off Mitt Romney.

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA: They might as well be
Legos.

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: I`m a real
person.

CHUCK TODD, NBC NEWS: For Bachmann, it`s all about Iowa, Iowa, Iowa.

BACHMANN: Here in Waterloo -- Waterloo -- Waterloo, Waterloo.

UNIDENTIFIED MALE: They all have good hair.

BUCHANAN: And he`s a very attractive candidate.

UNIDENTIFIED MALE: That is the best Republican hair I have seen.

HAYES: LAST WORD favorite Tim Pawlenty is out, and Lawrence O`Donnell
responds.

LAWRENCE O`DONNELL, THE LAST WORD HOST: The official position of this
show is that Tim Pawlenty is going to be the nominee.

TODD: Pawlenty`s out.

TIM PAWLENTY (R), FORMER MINNESOTA GOVERNOR: I`m from a small state.

MITCHELL: Where does the Pawlenty support go?

PAWLENTY: That pathway doesn`t appear available to me.

UNIDENTIFIED MALE: It was time to bow out.

KLEIN: I tried to read Tim Pawlenty`s book. It was one of the worst
experiences of my life.

HAYES: And President Obama gets a boost from a billionaire class
trader.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think you`re less
wealthy than Warren Buffet.

UNIDENTIFIED MALE: We mega-rich continue to get our extraordinary tax
breaks.

UNIDENTIFIED MALE: Some type of parody is I think only fair.

OBAMA: He pointed out he pays a lower tax rate than anybody in his
office.

UNIDENTIFIED MALE: My friends and I have been coddled long enough.

UNIDENTIFIED MALE: He couldn`t be more spot-on.

OBAMA: It`s time for the games to stop.

(MUSIC)

(END VIDEOTAPE)

HAYES: Good evening from New York.

Well, all of a sudden the Republican presidential primary race has
gotten really, really interesting. And since interesting has an inverse
relationship to frontrunner Mitt Romney, that could only mean the
Republican Party must have a new presidential frontrunner, and indeed, it
does, well, kind of. Texas Governor, Rick Perry.

But, first, a somewhat sad housekeeping note. For those of you
playing at home, you can cross out Tim Pawlenty`s name. He dropped out
after a third place finish in the Ames, Iowa, straw poll. More about that
in a bit.

Michele Bachmann won this weekend`s straw poll with more than 4,800
votes out of nearly 17,000 cast. She squeaked out a victory over Ron Paul
by only 152 votes. However, her first place finish has led the media to
declare Bachmann a real contender for the Republican nomination.

Blogger Andrew Sullivan wryly noted Saturday night that her vote total
was roughly equal to the number of people who visited his blog that hour.

But the real realignment in the Republican race came with Rick Perry`s
presidential announcement on Saturday.

Quick primer on Perry: he served lieutenant governor to George W. Bush
starting in 1998 and assumed the governorship after Bush became president.
He was elected to full terms in 2002, 2006, and again this past November.
He`s run 10 races and never lost a single one.

The late, great Molly Ivins who coined shrub for George W. Bush dubbed
Perry "Governor Good Hair.

Perry`s stewardship of Texas is the raison d`etre for his campaign.
Perry thinks if America were only governed like Texas is governed, America
would be a lot more like Texas, which in Perry`s mind would be a good
thing.

His campaign sees the Texas economy as its trump card. Here`s Perry
making the case in South Carolina on Saturday.

(BEGIN VIDEO CLIP)

PERRY: We have led Texas, based on some just really pretty simple
guiding principles. One is: don`t spend all of the money.

(CHEERS AND APPLAUSE)

PERRY: You know, two, is keeping the taxes low and under control.
Three is you have your regulatory climate fair and predictable. Four is
reform the legal system so frivolous lawsuits don`t paralyze employers that
are trying to keep jobs.

(CHEERS AND APPLAUSE)

PERRY: And over the years -- over the years, we`ve followed this
recipe to produce the strongest economy in the nation.

(END VIDEO CLIP)

HAYES: Paul Krugman dismantled the strongest economy in the nation
myth in "The New York Times" today.

Krugman says, "It`s true that Texas entered recession a bit later than
the rest of America, mainly because the state`s still energy-heavy economy
was buoyed by high oil prices through the first half of 2008. Also, Texas
was spared the worst of the housing crisis partly because it turns out to
have surprisingly strict regulation on mortgage lending. Despite all that,
however, from mid-2008, unemployment soared in Texas, just as it did almost
everywhere else."

The unemployment rate in Texas 8.2 percent, that`s slightly lower than
the national average, but it`s worse than 25 other states, including -- and
I have not seen this noted anywhere today -- including every single one of
Texas`s neighboring states, Louisiana, Arkansas, Oklahoma, and New Mexico.

In fact, if presiding over a local commodity boom is the best
qualification for government, well, then, Jack Dalrymple, the governor of
North Dakota with its 3 percent unemployment rate, should be your guy.

Joining me now is Jim Hightower, former agricultural commissioner of
Texas, the editor of the "Hightower Lowdown." And Erica Grieder, who
covers Texas for "The Economist."

Jim, I`m going to start with you. For many people, this is their
introduction to Rick Perry. Of course, you ran against Perry in his first
successful statewide race, and he beat you. How did he beat you and what
did you learn from it?

JIM HIGHTOWER, FMR. TEXAS AG COMMISSIONER: Well, actually, Chris, he
didn`t beat me. It was Karl Rove, who recruited Perry to switch parties
from the Democrats to the Republicans in order to run against me.

The chemical lobby and other special interests were offended in our
state that I had promulgated some pesticide regulations to help family
farmers, to help the consumers living against the spray field, to help farm
workers. So, they were out to get me.

And Karl Rove basically sent Perry out to west Texas to roam around
from one county farm bureau meeting to the next, get him out of the way,
while he put $3 million dollars -- he being Karl Rove -- into one of his
patented negative campaigns to come after me. But the significant thing
about Perry is that he has become a formidable campaigner, but not anything
really when you probe it all that strong.

For example, he won reelection last year as governor of Texas, and
he`s now bragging about that across the country saying, see, I win sweeping
victories, but what he doesn`t tell you is we had the lowest voter turnout
in America. Thirty-three percent of the people of Texas voted in that
election. He`s the choice of about 18 percent of the people of Texas.

HAYES: Eighteen percent still gets him in the governor`s house,
right?

HIGHTOWER: It does because the Democrats refuse to run as Democrats,
and therefore, could not get 19 percent. That`s the pathetic tale here.

HAYES: Let me turn to Erica for a second. Erica, you covered Perry
for awhile, you wrote, I thought, a really interesting piece on your Web
site the other day basically saying don`t -- to coin a phrase --
misunderestimate this guy -- he has been beating expectations. What is the
source of his appeal, his ability to win every race he`s ever been?

ERICA GRIEDER, THE ECONOMIST: Well, to use another phrase from George
W. Bush, I think he benefits from the soft bigotry of low expectations.
There`s been an absolute trend in Texas, despite the victories he snatched
over the past 25 years in state politics, people consistently think that
he`s just fluked his way into office, that he`s just kind of managed to get
there through a string of dumb luck and kind of coincidences -- I don`t see
the support for that, even in the most recent election.

HAYES: So, that`s not the case, what is he good at? Because it
looked particularly in this last election like he was facing a primary
election from an incredibly well-known, popular politician, Kay Bailey
Hutchison. He survived that. He won reelection fairly handedly.

What are -- what is the source of his strength?

GRIEDER: Well, one thing we could say, I guess this goes to
Hightower`s point, is that I think Democrats have struggled to wrestle up
candidates to run against him probably because of his strength as a
campaigner.

The more interesting victory in 2010 I think was against Kay Bailey,
as you note, people expected that to be a very, very close sort of clash of
titans in Texas. Kay Bailey has obviously won statewide office before and
was considered popular, more so than Perry at the time.

I think he has a sense of what he needs to do to win, he`s very
focused on his message. He raises a lot of money. He`s good on the stump.
He has, you know, good retail politics skills. We`ll see that in the next
few weeks and months.

So, his political skills are sort of underestimated.

HAYES: Jim, I`m going to ask you a question, I think I know what you
think about, but I want to hear your sustained thought on whether Texas is
indeed a model economy and state that we should want to emulate at the
national level.

HIGHTOWER: Well, Perry calls it the "Texas miracle" and that miracle
has profited corporations and the rich in our state extremely well. But if
you`re a regular American, if you`re a regular Texan, a work a day person,
this is not the kind of economy that you`re going to enjoy.

For example, Perry talks about all the jobs that he`s created. What
he doesn`t mention is that those are mostly jobettes, not real jobs. In
fact, in his 10 years as governor, he`s created more minimum wage jobs than
all other states combined.

He`s also managed to create a state in which we`re number one in the
number of children and families without health care coverage. We are
number one in the wage gap between the rich and the poor. We`re number one
in the most regressive tax system in the country. We`re number one in the
number of toxic releases from industrial plants and chemical factories in
our state. We`re number one in the things that we ought to be number 50
in, and we`re number 50 in the things we ought to be number one in.

HAYES: Erica, what part of the Rick Perry record is going to cause
him the most trouble politically? I don`t mean that in terms of the
general election, but the primary, perhaps, or the general, all the way
through. What is he going to be -- what is he going to have to counter as
he goes forward in the race?

GRIEDER: Well, on the primary side, I would cite two things. We`re
actually seeing him being attacked a little bit from the right, which is
kind of interesting given the perception that Perry is a far-right zealot
himself. We`ve seen Rick Santorum attack Rick Perry on gay marriage
because Perry has suggested that he would be in favor of sort of federal
approach to that. We`ve seen Tom Tancredo attack Perry as being a moderate
immigration.

So, that`s -- he`ll face these attacks from the right, from more
conservative candidates than he is. And I think also in the primary, he`ll
have to start changing his message on jobs a little bit, because what he`s
done in Texas, I think, has worked for Texas. I mean, that`s a debate
people can have, but it has resulted in job creation. But it`s also not a
strategy that can scale to other states or to the nation as a whole. This
involves a lot of jobs being poached from other states and jobs tied are
Texas-focused, manufacturing, energy and so on.

HAYES: Well, Krugman also the point I thought was interesting, the
column today. He said, you know, a certain amount of that job growth is
successfully luring jobs from another state --

GRIEDER: Right.

HAYES: -- which is a zero sum strategy and might make you a popular
governor, but at a national level does not amount to a job`s strategy.

Jim, I`m going to give you the last word. What do you think is going
to be the hardest part of his record for him to face going forward?

HIGHTOWER: Well, I think it is his corporatization, he`s George W.
Bush without the intelligence and without the ethics. He`s completely
wedded to the corporate powers, 204 corporate interests have put more than
$100 million into his campaign over the last decade. That`s AT&T. That is
Koch brothers. That is ExxonMobil. That is every special interest that
you can imagine.

And this is who the guy really is. He flirts with this kind of Tea
Party extremist thing, and on that side, he`s Michele Bachmann with a
better hairdo, you know?

But -- so he`s got that side of it, but really at his core, who he
loves and who loves him, are the corporate powers, and that`s the kind of
presidency that he would bring to America.

HAYES: Jim Hightower, former agricultural commissioner, author of the
"Hightower Lowdown," Erica Grieder, who writes for "The Economist," you can
read her excellent work completely on byline in the magazine. So, you`ll
have to sniff it out if it`s about the right topic -- thank you both for
joining me. Appreciate it.

HIGHTOWER: Thank you.

GRIEDER: Thank you.

HAYES: Joining me now is Matthew Yglesias, not on byline, a fellow at
the Center for American Progress.

Matt, how are you doing?

MATT YGLESIAS, CENTER FOR AMERICAN PROGRESS: Good. Good to be here.

HAYES: So you did the -- you did your proper homework this weekend
and read Rick Perry`s book, "Fed Up." And you summarize his ideal Social
Security like this -- according to Perry, Social Security is by far the
best example of a program, quote, "violently tossing aside respect for our
funding principles."

How do you think that`s going to play on the stump?

YGLESIAS: You know, I think it`s going to be tough. I mean, if you
read this book, it`s much less boring but is very radical. It paints a
picture of a candidate who`d be the most conservative since Barry
Goldwater, at least, and someone who thinks that the overwhelming majority
of the federal government`s activities are completely unconstitutional.

That means to him Social Security. It means Medicare. It means all
regulation of banks. It means all kinds of environmental regulation. It
means all federal involvement in education.

And it`s a really sort of bracing, far-right, states right tract, that
I was frankly a little surprised to see from someone who has national
political ambitions.

HAYES: Here`s him sort of defending this on the stump on Sunday in
Iowa. Do we have this quote about entitlements?

(BEGIN VIDEO CLIP)

PERRY: I know our friends on Democrats side, they`re all going to
jump up and say, oh, those bad old mean Republicans, they`re going to take
away your Social Security and take away your Medicare. No, we`re not. But
we`re going to make sure that the next generation is taken care of and the
next generation does, in fact, have the security that they know that they
can have in this country.

(END VIDEO CLIP)

HAYES: Now, this gets -- I was talking to someone from Texas politics
today. And they said the thing about Rick Perry, he takes the most extreme
positions and then when people nailed for it, just sort of wriggle away
from them. And that clip struck as a perfect example of this.

YGLESIAS: Yes. I mean, he certainly seemed to be walking away from
his previous statements there. I mean, he`s talking about security. I
mean, it was right there in the book, you know, you quoted on the show.

He said it was a violent break of the founding principles of the
country. He says that the use of the Commerce Clause to justify the
existence of Medicare is unconscionable. He says in the book that we
shouldn`t have direct election to senators. He says that we shouldn`t have
any income tax at all.

HAYES: Wait. He really says we should have no direct election of
senators?

YGLESIAS: He absolutely does.

HAYES: That`s an Alan Keyes special.

YGLESIAS: Yes. I mean, he`s tracing the decline of the
constitutional order and he says it all goes back to the Wilson
administration and the 16th and 17th Amendments.

You know, on the stump -- as best I can tell, you shouldn`t
underestimate him. He answers questions. He tries to come across as folksy
and connect with people. But he has put this positions out there that are
really wild.

HAYES: Matt Yglesias, fellow at the Center for American Progress --
thank you for taking your weekend with Rick Perry`s book and thank you for
coming on tonight.

YGLESIAS: Thank you.

HAYES: Still to come tonight, Tim Pawlenty calls it quits. What it
says a great deal about the direction of the Republican Party

And, later, the direction of the Democratic Party as the president`s
approval rating heads in the wrong direction and he heads out on the road.

(COMMERCIAL BREAK)

HAYES: Coming up, the must-read editorial of the day tweeted 37,000
times and counting. You`ll never guess who`s calling for higher taxes on
billionaires.

And Penn Jillette on religion and politics and why he says, "God, no!"
That`s still to come.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIPS)

TIM PAWLENTY (R), FORMER MINNESOTA GOVERNOR: I`m Tim Pawlenty, and
I`m running for president of the United States.

In order for America to take a new direction, it`s going to take a new
president.

UNIDENTIFIED MALE: If it was Obamneycare on "FOX News Sunday," why is
it not right there?

PAWLENTY: Using the term Obamneycare is the reflection of the
president`s comments that he designed Obamacare on the Massachusetts health
care plan.

It`s not her spine we`re worried about. It`s her record of results.
If that`s your view of effective leadership with results, please, stop,
because you`re killing us.

I understand what needs to be done and I`m not just going to stand up
here and give you the words. You can take it to the bank.

I`m excited about this race, we are going to win it, and it`s going to
start right here in Iowa.

TODD: A distant third with Tim Pawlenty.

MITCHELL: Pawlenty, 2,293.

PAWLENTY: I`m going to be ending my campaign for president.

What I brought forward I thought was a rational, established,
credible, strong record of results. The audience, so to speak, was looking
for something different.

(END VIDEO CLIPS)

HAYES: That`s Boyz 2 Men singing out Tim Pawlenty.

He came, he saw, and he went.

On May 23rd, on the stage in Iowa, Tim Pawlenty became the first to
officially announce he was running for the Republican nomination for
president of the United States and just yesterday, August 14th, he became
the first Republican to drop out of the race -- in Iowa, where it all
started for him.

The former governor of Minnesota decided to exit after coming in a
distant third in the Ames straw poll, behind Michele Bachmann and Ron Paul.

Pawlenty had covered some 3,000 miles in Iowa and spent nearly $1.5
million in his efforts there.

Pawlenty senior adviser Phil Musser told "The Huffington Post" that
the Minnesota Republican "just wasn`t willing to risk debt to shoulder on.
Part of why he would have been a good president."

Tim Pawlenty tweeted today, "It was a great honor to run for
president. I remain committed to turning this around and electing a
Republican to the White House. Thank you."

Of course, as you know, it was the belief on this show that Tim
Pawlenty would ultimately be the pick of the Republican nomination because
he was the only candidate who didn`t seem to have a fatal flaw.

But Pawlenty`s low-key demeanor never quite gained traction with what
is shaping up to be a Republican Party like we`ve never seen before.

Lawrence e-mailed us his reaction to Pawlenty`s departure. Lawrence
writes, "Tim Pawlenty won the rational vote in Iowa on Saturday, but this
is the year that the irrational vote is controlling Republican politics in
Washington and on the campaign trail." I guess he`s shaking his head
already.

"When I picked Pawlenty as the best bet for the nomination, I made the
mistake of thinking Republican primary voters would do what they have
always done and calmly choose the safest candidate on their ballots to send
into a general election. Like all candidates, Pawlenty had weakness, but
the candidates beat him are defined entirely by their weaknesses. There`s
a clear defect in all Republican candidates that would prevent them from
the nomination in a rational Republican Party, but one of them is going to
be the nominee.

Pawlenty`s problem turned out to be, despite all his pandering, he
just wasn`t crazy enough. A party that nominated cautious campaigners like
the first and second Bush, Bob Dole and John McCain has decided to in a
irrational direction, and I cannot predict the irrational."

All right. Joining me now, "National Review Online`s" Reihan Salam.

Reihan --

(CROSSTALK)

HAYES: Reihan, why do you think Pawlenty didn`t do better?

REIHAN SALAM, NATIONAL REVIEW ONLINE: I think it`s very
straightforward. So, I think Romney is occupying this establishment
moderate side, and then you have a bunch of people, including Michele
Bachmann and Rick Perry competing for this more Tea Party, anti-
establishment feisty, populist side.

Tim Pawlenty wanted to be a tick, just a gentle tick to the right of
Mitt Romney but not so far off that he would scare off establishment
Republicans, that was an awkward spot to be in. It just didn`t take.

HAYES: So, you wrote this book with (INAUDIBLE) from "The New York
Times" and it`s called "Sam`s Club Conservatives."

SALAM: "Grand New Party."

HAYES: "Grand New Party." You`re right.

SALAM: It`s all about --

HAYES: Yes. So, in the beginning you wrote an essay in "The Weekly
Standard," right?

SALAM: That`s right.

HAYES: Wrote an essay in "The Weekly Standard" that was about this
quote from Tim Pawlenty about being not the party of the country club but
also Sam`s Club and you guys identified a kind of vision of the Republican
Party that`s very different than the Tea Party vision that`s been
articulated.

Do you see this as -- what do you think -- what judgment does this
render on that thesis?

SALAM: Well, I think there are a lot of different ways to interpret
it. We were saying a lot of the Republican Party is non-college educated,
working class. A lot of folks have been buffeted by economic change. So,
the question is how does the Republican Party meet their interests and meet
their needs?

And I`d actually say that the Republican Party has responded to them
in lots of funny ways, for example, by fighting Medicare cuts tooth and
nail during the Obamacare debate. But then more recently saying, well,
let`s actually impose Medicare cuts in a different way.

There is this kind of way that you have a whipping back and forth of
recognizing we have to respond to these voters but saying we have these
core ideological commitments that are intentioned with the admission. So,
I actually think you see a party really struggling with that core thesis.

HAYES: You know, that was the most interesting insight in the book,
which is a very good book and I would recommend highly.

SALAM: I agree.

HAYES: About the way that exactly the kind of "government hands off
my Medicare" paradox gets worked through. And, you know, if you see
Pawlenty, what ended up was Pawlenty on the stump was saying the number one
message we`re going to send is get government off our back. It seems like
in some ways, the rhetoric of that is trumping whatever kind of practical
feelings people have towards the concrete things they get from the state.

SALAM: Yes, I think that`s totally classic. So, for example,
Pawlenty was reluctant to embrace Paul Ryan`s Medicare plan. But wait a
second, he proposed a series tax reforms that would also really sharply
reduced the amount of tax revenue that would pay for an unreformed Medicare
system. So, how do you reconcile those two things? That`s very tough.

There are other Republicans who I think were trying to think of
creative ways, create emphasis to do that, but Tim Pawlenty, it turns out
that he wasn`t the right man to do that.

HAYES: Finally, do you think the nature of all primary campaigns is
they tend to push the positions of the candidates towards more ideological
extremes because that`s where the base of the party tends to be and they
have to tack towards the center. Do you think that the incentive structure
right now in the Republican primary is dangerous for the general election
prospects of whoever emerges from this field given the fact that it seems
you can`t but help but go as far right as possible?

SALAM: Well, I think that Republican primary voters are using
straightforward heuristics, they might actually say, oh, well, in practice
they might be open to some kind of tax increase maybe, but if you say that
on a debate stage --

HAYES: Right.

SALAM: -- that`s not a good sign as to whether or not you`ll be a
fighter to tax increases.

HAYES: Right. So, the signaling is the most important thing. But
the thing is you end up with that signal you sent is hung around your neck
in the general.

SALAM: Rick Perry is the great example of this. Rick Perry is the
guy who might have all kinds of squishy moderate positions but the thing is
that he sounds like a conservative. He talks that talk. He walks the
walk. And that`s why he can pretty take any position he wants to. He`s
taken everyone on the book.

HAYES: Reihan Salam, author of columnist of "The Daily Beast," a
friend of mine -- thanks a lot.

SALAM: Good to see you.

HAYES: Coming up, Rick Perry wants to tax the poor, and you might be
surprised who Warren Buffet wants to tax. That`s ahead.

And a look ahead to 2012 and the president`s campaign as new polls
show that voters are less fond of the Tea Party but also less fond of the
president. Stay with us.

(COMMERCIAL BREAK)

HAYES: The most devoted fan of this show is not watching tonight.
Lawrence` mother, Frances O`Donnell, died Sunday morning in her home,
surrounded by her children and grandchildren. Mrs. O`Donnell was 93.

(COMMERCIAL BREAK)

HAYES: Today`s must-read op ed comes from one of the richest dudes in
the world, legendary investor Warren Buffet. Buffet argues in the "New
York Times" that federal tax policy does not ask enough of the wealthy, and
that Congress should, quote, "stop coddling the super rich."

Buffet reveals some shocking details about his own tax bill. "Last
year, my federal tax bill, the income tax I paid, as well as payroll taxes
paid by me and on my behalf, was only 6,938,744 dollars. That sounds like
a lot of money. But what I paid was only 17.4 percent of my taxable
income. And that`s actually a lower percentage than was paid by any of the
other 20 people in our office. Their tax burdens range from 33 percent to
41 percent and averaged 36 percent."

Buffet goes on to explain that the primary reason his federal tax
burden is lower than his employees is that super rich people like himself
derive much of their income from dividends and capital gains. Those are
taxed at a lower rate.

"The mega-rich pay income taxes at a rate of 15 percent on most of
their earnings, but pay practically nothing in payroll taxes. It`s a
different story for the middle class. Typically, they fall into the 15
percent and 25 percent tax brackets, and then are hit with heavy payroll
taxes to boot."

This caught the attention of President Obama, who is in Minnesota for
the first stop of his bus tour today.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Warren Buffet had an
op-ed that he wrote today. He pointed out that he pays a lower tax rate
than anybody in his office, including the secretary. He figured out that
his tax bill -- he paid about 17 percent. And the reason is because most
of his wealth comes from capital gains.

You don`t get those tax breaks. You`re paying more than that. And --
now, I may be wrong, but I think you`re a little less wealthy than Warren
Buffet. That`s just a guess.

(END VIDEO CLIP)

HAYES: I love that phrase, less wealthy. Many on the right argue
that increasing rates on the wealthy, as Buffett and the president suggest,
would only hurt job creation, an argument that Buffet refutes by noting
that, quote, "a net of nearly 40 million jobs were added between 1980 and
2000. You know what`s happened since then, lower tax rates and far lower
job creation."

That fact did not deter Texas Governor Rick Perry from saying this in
his Saturday presidential announcement.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R), PRESIDENTIAL CANDIATE: We`re dismayed at the
injustice that nearly half of all Americans don`t even pay any income tax.
And you know the liberals out there are saying that we need to pay more.

We are indignant about leaders who do not listen and spend money
faster than they can print it.

(END VIDEO CLIP)

HAYES: Let`s -- let`s listen to that first part once again here.
What --

(BEGIN VIDEO CLIP)

PERRY: We`re dismayed at the injustice that nearly half of all
Americans don`t even pay any income tax.

(END VIDEO CLIP)

HAYES: "Half of all Americans don`t even pay any income tax." This
is a very popular conservative talking point. And I`ll say this, Perry is
right. Nearly half of all Americans do not pay any income tax. But why
don`t they pay those income taxes?

"The Washington Post" points out, "this is, for the most part, not
because people have chosen to loaf. It`s because they are working but
simply don`t earn enough to owe income taxes based on the progressive
structure of the tax code and provisions designed to help the working poor
and lower income seniors."

So what presidential candidate Rick Perry implied on Saturday is that
if we should raise taxes on anyone, it should be on the poor and elderly
Americans.

What he did not say was that these sectors, like all Americans, pay
taxes besides federal income taxes. Quoting the "Washington Post" again,
"they pay, leaving aside state and local sales, income and property taxes,
federal gasoline and other excise taxes and most significantly, payroll
taxes on every dollar they earn. These taxes are regressive. Everyone
pays the same share regardless of income. So they hit the poor hardest and
they counter-balance the progressively of the tax code. More often than
not, those payroll taxes are more burdensome than income taxes."

Get this, according to the independent tax policy center, 74 percent
of filers owe more payroll taxes -- OK -- than individual income taxes,
including 85 percent of those with income below 40,000.

As Buffet notes, those payroll taxes are inconsequential to the
wealthy. To the poor and elderly, they are quite consequential.

To illustrate, let`s take a look at Governor Perry`s Texas. Texas is
one of nine states with no state income tax. As for how other state and
local taxes affect Texans, Think Progress published this chart of Texas
state and local taxes on the non-elderly in 2007. That`s Perry`s seventh
year as governor.

All right, those in the lowest income bracket -- that`s the people
making the least amount of money, an income of less than 18,000 dollars,
paid the most state and local taxes as a percentage of income, 12.2
percent. And those in the highest income bracket, the top one percent, the
wealthiest, the people making the most money, with income of 463,000
dollars or more, they paid the least amount of state and local taxes as a
percentage of income, just three percent.

If you think the biggest problem with America over the last decade is
that there has not been enough upwards redistribution of wealth, then Rick
Perry is your man. He`s even got the record to prove it.

Still to come, a presidential primary becomes a run to the Christian
right. The performer, writer and comedian who thinks we need to run in the
opposite direction will join me live here on set. Penn Jillette is coming
up.

And the kind of crowds and questions the president and Republican
members of Congress are facing as they hit the road. This just in, it`s
fricking rough out there. That`s next.

(COMMERCIAL BREAK)

HAYES: It`s shaping up to be another angry August in America. This
time, it`s not just the Tea Party with signs and bull horns. People are
showing up on Republicans` doorsteps demanding solutions to the current
unemployment crisis.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is a dollar bill. Why don`t you come out and
talk to the regular people.

(END VIDEO CLIP)

HAYES: Even though they are not getting a fraction of the attention
that Tea Partiers got when they disrupted town hall meetings in 2009,
people from Houston, Texas to Kenosha, Wisconsin, to Wilkes Barre,
Pennsylvania, are demanding what polls have long been showing they want, a
focus on jobs instead of the deficit.

President Obama launched his rural economic bus tour through the
Midwest today, trying to address the rising anxiety and anger.

(BEGIN VIDEO CLIP)

OBAMA: There were a bunch of things taking place over the last six
months that were not within our control. But here`s the thing: the
question is how do we handle these challenges? Do we rise to the occasion?
Do we pull together? Do we make smart decisions?

And what`s been happening over the last six months and a little bit
longer than that, if we`re honest with ourselves, is that we have a
political culture that doesn`t seem willing to make the tough choices to
move America forward.

(END VIDEO CLIP)

HAYES: But the anger at Washington`s failure to make those, quote,
"tough choices" also extends to the president. For the first time, his
approval rating dipped to 39 percent over three days last week, averaging a
40 percent approval and 52 percent disapproval rating for the entire week.

The good news for the White House is that the Tea Party ask fairing no
better. Last January, 27 percent of people thought the protest group had a
positive effect. Today that`s down to 22 percent.

The numbers also show the Tea Party has made more enemies than
friends; 14 percent of people call themselves strong supporters of the Tea
Party, while 20 percent call themselves strong opponents. Which all leads
to what I think is the single-most fascinating poll number and also the
most underreported.

Congressional Democrats have taken the lead amongst registered voters
asked who would they vote for if elections for Congress were held today.
The poll found that Democrats have a seven percent lead over Republicans,
51 percent to 44 percent, on a generic Congressional ballot, which is a
wider lead than the Republicans showed leading up to the 2010 House
Republican takeover.

The best phrase to capture the country`s mood these last four years I
think is serial discontent. And it shows no signs of stopping. Joining me
now is Deepak Bhargava, executive director of the Campaign for Community
Change.

Deepak, a pleasure to have you here. How are you?

DEEPAK BHARGAVA, CAMPAIGN FOR COMMUNITY CHANGE: Great to be here,
Chris. I`m doing well.

HAYES: So your group has affiliates all over the country doing
grassroots work in places like Iowa, Detroit, Chicago, New York, all sorts
of communities. I wonder what are you hearing from organizers and folks
who are on the ground about what people are feeling about the situation we
find ourselves in?

BHARGAVA: Well, I`m actually excited. I might be the only person in
Washington, D.C. these days that`s excited. But there`s something
happening in America. And it`s not the Tea Party.

So we`re seeing huge turnouts at events across the country, pushing on
the question of jobs against the radical proposals on Social Security,
Medicare, and Medicaid, a huge amounts of enthusiasm. And I think people
are beginning to see that they can`t depend on our elected leaders to solve
these problems, that they`re going to have to give them a big push.

So I`m really excited. I think there`s a movement coming together in
America centered around jobs.

HAYES: It was interesting to me. I went through the text of the
president`s speeches today, essentially gave the same speech a few times.
And it was - it seemed much more jobs-focused than the language we`ve been
hearing the last two months. He announced today he is going to have a new
jobs plan in September. Do we have that sound? Do we have that sound?
There we go.

(BEGIN VIDEO CLIP)

OBAMA: I`ll be putting forward, when they come back in September, a
very specific plan to boost the economy, to create jobs, and to control our
deficit. And my attitude is get it done.

(END VIDEO CLIP)

HAYES: Was this encouraging to you? What do you think about this?

BHARGAVA: Well, I definitely think the president needs to focus on
jobs. And we`ve begun to hear more from him about it. It has been very
puzzling that even when it became clear that the stimulus wasn`t going to
do the job and get us as far as we need to go, that we haven`t seen large-
scale substantive proposals to put millions of people back to work.

And that`s what I think we`re waiting to see. So not small-board,
targeted message programs, but real substantive programs people can
understand, believe in, fight for, that draw a contrast, even if the other
side won`t go along. We`ve got to stand up and fight for it.

HAYES: Right. What I was going to say is you and I both know that
anything substantive, anything bold, anything actually effective, right, is
not going to have any chance in the House. So if you have an option
between some small-board things, unemployment insurance extension, these
payroll tax cuts, and going big and drawing the contrast, isn`t there some
sort of practical, pragmatic argument to be made for the former?

BHARGAVA: Well, look, I think it is absolutely, on economic grounds -
- everybody`s making the case now that in order to deal with the deficit
problem, we have to deal with the jobs problem. So it`s good economics.

On the politics ground, if we`re fighting within a frame of who cuts
more, how fast, that`s the wrong terrain to be fighting. There`s a huge
un-tapped reservoir of popular anger, discontent, desire to see progress on
the jobs program.

So, yes, he`d have to do some educating of the American people. Yes,
he would have to take some risk. But I think the movement is there to back
him up if he chooses to go bold.

HAYES: Deepak Bhargava, the Center for Community Change, one of the
smartest people in all Washington, D.C., thank you for joining me tonight.

BHARGAVA: Great to be with you, Chris. Thanks.

HAYES: Up next, Penn Jillette of the legendary Penn and Teller on
religion in politics and his new book.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: I thank you, oh
God, that you are literally right now -- by faith, you are lighting a fire,
a fire of the gospel, and that Minnesota would just become a burning
incense, a sweet-smelling incense of praise and sacrifice into your
kingdom.

PERRY: I want you to join with me as I share his word with you.

(END VIDEO CLIP)

HAYES: After a weekend of state fair politics in Iowa, the two most
talked about Republicans in the race are Michele Bachmann, who you just
saw, and Rick Perry, who you also just saw. Both candidates who have
stayed -- said they were called to run for office. And both candidates who
have made their faith a center piece of their political identities.

Accounting for her win at the Ames Straw Poll, one Bachmann campaign
staffer told NPR, "Bachmann`s faith-based organization was over the top."
The report also noted the staffer was reading a t-shirt reading "Jesus is
Lord Over America."

Perry, of course, converted both Evangelical Christians and First
Amendment controversy with his prayer rally in Houston earlier this month.
While Evangelicals were the hottest political story for much of the last
decade, the Tea Party has largely dislodged them from the headlines. Yet I
think Bachmann and Perry show that the base of the Republican party remains
defined by its commitment to a very specific Christian world view.

Joining me now, Penn Jillette, magician and author of the new book
"God, No, Signs You May Already by an Atheist, and Other Magical Tails,"
which comes out tomorrow. Penn, thanks so much for being here.

PENN JILLETTE, AUTHOR, "GOD NO": Thank you. I would like to listen
to those clips as a dog would listen to them. Just listen to the tone of
voice, that weird, breathy, crazy, controlled by something outside of
yourself thing. I guess that`s what she`s claiming.

HAYES: I want to ask you about what you make of when you see that
kind of campaigning.

JILLETTE: Well, I am -- and I think this is true with so many
atheists. I`m an incredible optimist. I love life and I love my family
and I`m just very happy. You know, one of the basic tenants of atheism is
that everything in the world is enough. You don`t need anything beyond
this.

And when I see this, I`m seeing a desperation and death throw. Since
9/11, every poll has shown that whatever you want to call the non-
believers, free thinking thinkers or the hardcore word atheists, that
number of is going up and up and up.

And I think the people who are desperate to keep religion, especially
in politics, are clawing at stuff. So we`re seeing this kind of -- whereas
when most of America was very religious and religion was on the rise, there
was kind of a calm feeling about it. You`re getting that kind of
desperation.

I mean, ten years ago, the atheist was strident and the religious were
very calm. Now I feel very calm and they see crazy.

HAYES: That`s interesting. I wanted to ask you about stridency,
because one of the things I liked about this book is that it is not a very
strident book. It is not -- there`s this line of books that came out,
Richard Dawkins, Sam Harris, Christopher Hitchens, many of whom are cited
in these pages.

JILLETTE: And are friends of mine.

HAYES: And friends of yours. You`ve interviewed Richard Dawkins.
But they have kind of -- there was a critique of this new atheism that
essentially took some of the worst formal features of religion faith and
conviction, and sort of proselytize and was sort of standing on certainty.
And you say in this book that to you atheism means admitting you don`t
know.

JILLETTE: It is simply is I don`t know. That`s all there is to it.
Just to say when any of those questions are asked, how did we get here, why
are we here, all of this -- to simply say I don`t know is just to say maybe
no one else knows either. And if you don`t know, you don`t believe.

And there is a gentleness to it. But I think it`s very similar to the
acceptance of gay movement in the `60s, when one of the things you had to
show was that there was real intellectual reasons and moral reasons to
accept gays. That was really important. But there was also a sense that
how do people live their lives? Are they normal people? Are they people
next door and so on.

And one of the things I want to do with this book is talk about how
much I love my children and how they are raised without religion, but with
everything else, you know, presence around -- you know, things like that.
Because I really thought that in terms of the intellectual, moral, and
historical argument, Ian Seeley (ph), Christopher Hitchens and Dawkins make
all those things beautifully.

But I wanted the goofball perspective, just a guy that goes in, does
his show, makes jokes, does magic tricks, and just doesn`t have an
imaginary friend.

HAYES: Penn Jillette, the book is "God No!" and it`s out tomorrow.
Thanks so much. I really appreciate it.

JILLETTE: She did sound sexy, didn`t she, Michele Bachmann, with that
God stuff. She was a little sexy.

HAYES: Breathy I think is the word.

JILLETTE: I was thinking sexy, but breathy is OK.

HAYES: All right. You can have THE LAST WORD online at our blog,
TheLastWord.MSNBC.com. You can follow my Tweets @ChrisLHayes, and watch my
new weekend morning show on MSNBC this fall.

"THE RACHEL MADDOW SHOW" is up next. Good evening, Rachel.

END

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