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'The Rachel Maddow Show' for Monday, June 11, 2012

Read the transcript to the Monday show

Guest: Rush Holt

EZRA KLEIN, GUEST HOST: Thanks to you at home for sticking around the
next hour. Rachel has the night off.

What if I were to tell you there`s a surefire way to put people back
to work right now, to put people back to work tomorrow? What if I were to
tell you this surefire job creator is something that`s been embraced even
by Republicans going back decades? What if I were to tell you over the
last three years, we`ve been doing the exact opposite of this tested,
proven thing that helps end recessions?

I have a graph for you tonight. It`s an unusual type of graph. It`s
a mystery graph. Going to see what I mean here.

In 1981, shortly after Ronald Reagan was sworn in as president, he
faced an awful recession -- the worst since the Great Depression, in fact.
And one of the things that Reagan did as president to help get people back
to work after that recession, he made this blue line right here go up.
That blue line went up and so did jobs.

In 1990, halfway through George H.W. Bush`s first term, again, the
country`s economy hit the skids. Part of the reason, the 1990 recession
didn`t sink us totally? It`s that red line right there. That red line
went right up.

`01, George W. Bush is president. The country is rocked by the
bursting of the tech bubble and 9/11. Again, the economy heads into
recession and again the thing that helps end that recession is that yellow
line right there which goes up.

So here`s the mystery. What did all of those Republican presidents do
to help end the recessions that they faced? What did they all increase as
president during those recessions? What do those lines represent?

Government jobs. Government employment grew under all those
Republican presidents. Not only did we not lay off public workers, we
hired more of them, a lot more.

That helped prevent bad recessions from turning into horrible ones.
So, what`s happened to government employment in this recession? It`s gone
in the exact opposite direction. It has gone down.

We`ve been suffering through recessions, it`s been far worse than any
recession in modern history. One of the things we know the government can
do to keep people in jobs is to give them jobs. That`s the one thing we
haven`t been doing.

You know, you`ve been told the whole problem right now, the big thing
holding back this economy recovery is that President Obama just keeps
growing the size of government. It`s what Republicans keep saying, right?
That`s the big problem. The government`s giant tentacles rip through this
great country of ours and strangle private enterprise.

You know that, right? You know it`s kind of wrong, right?

Government spending has gone up under Obama. Much has been temporary
help to the newly unemployed workers and families to afford food, housing,
education and health care. But government employment has gone down under
Obama, and not because he`s wanted it to. The entire political and media
establishment in this country have had their collective hair on fire over
the last three days over six words uttered by President Obama at the White
House on Friday.

But it`s the 43 words that followed those six that are really, really
important to the economy right now and have gotten totally lost.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The private sector is
doing fine. Where we`re seeing weaknesses in our economy have to do with
state and local government. Oftentimes cuts initiated by governors or
mayors who are not getting the kind of help that they have in the past from
the federal government.

(END VIDEO CLIP)

KLEIN: As Republicans keep pointing out and as Obama agreed later in
that day, the private sector is not doing fine, but it is adding jobs. You
know what`s doing terribly, though? You know what`s really doing badly?
The public sector.

And the problem, as President Obama is trying to point out before he
got eaten up by the news cycle, is that the green line in this graph is
going in the wrong direction. Instead of doing what we`ve done
successfully as a country in the last three recessions before this one,
instead of saving or even creating government jobs, as a means of
maintaining employment and demand in this country, instead of doing that,
we just let those jobs go away. We put more of those people out of work,
making the economy worse, leaving more unemployed people to fight for every
open job, to sign up for unemployment insurance, to stop spending money in
the local communities.

Right now, the unemployment rate in this country is at 8.2 percent.
Since Barack Obama was elected, the public sector has lost about 600,000
jobs. If you put those jobs back, if we haven`t lost one job, if we stayed
neutral at zero, the unemployment rate would be down to 7.8 percent right
now.

Not great, but better. What if we did more than that? At this point
in George W. Bush`s administration, public sector employment had grown by
3.7 percent. That would be about 800,000 jobs today. If we had done that
to help fight off this recession, if we had followed the Bush formula, then
we`d have 1.4 million jobs more.

And the unemployment rate would have fallen to 7.3 percent, if
everything else had stayed the same.

When the government employs somebody, it is a real job. A teacher is
employed. A police worker is employed. A park ranger is employed. That
person gets a check. They spend that money in their local grocery store or
on their kids. They contribute to the economy.

And yet these jobs were part of the past three Republican recoveries.
Now that a Democrat is in the White House -- well, here`s Mitt Romney --

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: He wants another stimulus.
He wants to hire more government workers. He says we need more firemen,
more policemen, more teachers.

Did he not get the message in Wisconsin? The American people did.
It`s time for us to cut back on government and help the American people.

(END VIDEO CLIP)

KLEIN: Democrats have wanted to give state and local governments
money to hire more teachers and policemen and park rangers. Mitt Romney is
right about that. Republicans have blocked them.

As you heard Mitt Romney say, Republicans don`t believe in hiring more
government workers. They don`t believe in stimulus. They believe it`s
time to cut back on government, as he put it.

This is a new belief on their part. It`s not just this graph that
shows Republicans usually increase government jobs when they`re the ones in
power during recession. It`s also Republican President Richard Nixon who
famously declared that we are all Keynesians now.

It`s Ronald Reagan implementing stimulative deficit finance tax cuts
and increasing government spending in the 1980s. It`s George W. Bush
passing what was called, literally titled the Economic Stimulus Act of
2008.

It`s Republicans right at the beginning of the Obama administration
proposing a variety of stimulus measures which had the same basic idea --
deficit spending usually on tax cuts to boost the economy.

But now, now that President Obama is pleading with Republicans to act
in a way they`ve acted for decades during the worst recession, or continued
downturn since the Great Depression? They say they don`t believe in that
stuff anymore, they say it`s time to cut government spending. They say the
only thing that will get the economy moving again is getting government out
of the way. But the thing that`s really remarkable here -- they don`t
believe that.

One thing you might worry about with a Romney administration is that
they would come in and slash the budget immediately. Slash public
employment. Slash government spending. It`s what they seem to be saying,
right?

But they`re not going to do any of those things. Not one. And I
don`t know that because I have some secret insight into Mitt Romney. I
don`t know it because I look deep into his heart. That he truly, truly
believes government spending is necessary during an economic slowdown.

I know that because I just listen to what he said when he was asked.
When Mark Halperin of "Time" magazine asked Mitt Romney why he wouldn`t cut
spending his first year in office 2013, cut government spending by, say, $1
trillion if it`s holding the economy back, here`s how Mitt Romney
responded. Quote, "Well because if you take a trillion dollars for
instance out of the first year of the federal budget, that would shrink GDP
over 5 percent, that it`s by definition throwing us into recession or
depression. So I`m the not going to do that. Of course."

I`m not going to do that, of course, of course. You couldn`t have
gotten a better definition of Keynesian budgeting from President Obama.

You probably couldn`t have gotten one from Keynes. Take money out of
the federal budget and in the short term, in the immediate term, take money
out of the economy. You reduce demand. You slow growth.

The government should spend and hire during recessions. That`s one of
the things that helps end them. Republicans know that.

Well, at least they know that when they`re the ones in power.

Joining us now is the host of MSNBC`s weekend show, "UP WITH CHRIS
HAYES." He`s also the author of the new book out tomorrow I believe,
"Twilight of the Elites: America after Meritocracy."

Chris, it is good to see you.

CHRIS HAYES, HOST, "UP WITH CHRIS HAYES": It`s always great to see
you, Ezra.

KLEIN: So, what do you attribute, this sort of turnaround, this 180
on Keynesian economics, and more to the point on government employment?
Because it is the case Republicans in previous years have just been
gangbusters on government employment after recessions. It`s gone up by
much, much more than anything they have led on in last couple of years.

HAYES: You know, we had Patrick Gaspard, who`s the head of the DNC
right now, on my show this weekend, and I asked him straight up, right, the
question I think that is on everyone`s mind and is implied by your very
deftly done opening monologue which is: are the Republicans intentionally
tanking the economy? And he didn`t answer the question straight up.

But I think the evidence does mount. I don`t even say that to impugn
the good faith of the Republican Party, because I can imagine a scenario in
which you think that the president is such a disaster for the economy,
right? You think he`s so bad long term that a short term -- that
contributing to the short-term demise of the economy is actually for the
greater good of rescuing America from a second term of Barack Obama.

But I think it becomes harder and harder and harder to make the case
that that is not what is going on. I mean, clearly is the case that
Republicans when in office have done all the things you`ve mentioned.
They`ve increased public sector employment, they`ve been -- they`ve been
fined with stimulus. George W. Bush signed the stimulus act.

I think it is the case that there is no political incentive right now
for the Republican Party to boost -- to do anything to alleviate the
suffering and misery in the economy now between now and election day. And
the one big question in all this, right, is the way the system is designed
is a poor economy in the short term should hurt incumbents in Congress.

I think they think they are somehow immune from the effects of that.
I think that`s the big open question about whether that`s going to continue
to hold, but so far it looks like it will.

KLEIN: I think they`re right. I mean, my understanding, the evidence
on that is that it tends to hurt the majority party, and Americans see the
majority party as the president.

But I`m interested in what you say, because I always take it as this
kind of psychologically complex phenomenon, that you see by the way on the
left sometimes, too, where people convince themselves very quickly of what
it is in their electoral interest to believe.

HAYES: Right.

KLEIN: To sort of use a Sinclair line, it`s hard to get a man to
believe when his re-election depends on him not believing. And so, that
creates sort of a difficult question with compromise, right? Because if
they really convince themselves of it too much, whatever Mitt Romney says
there`s a chance he could come into office and the Tea Party folks in
Congress say, huh-uh, you may know deep down you can`t take a trillion
dollars out of the budget but you promised cap, cut and balance, and we`re
holding it to you and you`re going to tank the economy right now.

HAYES: This -- to me, this is the core existential debate here, which
is how much is Mitt Romney lying, right? Does he believe what he`s saying?
That`s the big question in American politics right now. And I think you
can make a case on either side.

But I think you`re absolutely right. I mean, at a certain point,
everybody in the vast right wing media machine is saying the same thing,
right? Which is that government spending during recession can only hurt,
it creates uncertainty, it hurts small businesses, it`s prolonging the
recession, et cetera, et cetera. I think it`s going to be very hard to do
the 180 pivot if he is in fact elected.

Now, I think it`s an unanswered question which direction he would go
in. You and I actually debated this on my show, right? What is in the
heart of Mitt Romney?

But I think that right now the coalition has been mobilized so
strongly in favor of that that it`s going to be very, very, very difficult
to walk that back.

KLEIN: I think it`s right that it`s difficult to walk it back, but I
guess you end up sort of saying, well, a lot of tax cuts, a lot of this.
The thing that worries me about this in the sort of broad way you were
putting it in terms of who gets rewarded and punished, what we`re learning
increasingly is that we have this kind of breakdown of accountability in
the American political system where you can have a minority that using
obstruction and later on divided government that essentially drives
outcomes or at least drives non-outcomes through gridlock then instead of
getting judged for the consequences the majority gets judged for
consequences that aren`t of their making.

I mean, Republicans and Democrats agree that Barack Obama, President
Obama`s preferred economic policy, the American Jobs Act, has not actually
passed Congress. And yet, this is considered the Obama economy and
Republicans say, you know, every job lost, every job not gained is 100
percent on his watch despite the fact what he would like is something very,
very different than what we have. What we have is a little more similar to
the --

HAYES: The Boehner economy.

KLEIN: -- slowing reducing austerity spending that they would prefer.

HAYES: Yes. This is something that I think you put your finger on
what is the problem. Right, which is that they have normalized obstruction
so much that it`s no longer a story. I, myself, I`m guilty of this. I was
just having a conversation today about how much we cover Congress or don`t
cover Congress. What ends up happening is you don`t cover bills that are
in Congress or initiatives in Congress. You think, that will never get
passed.

You don`t cover a presidential initiatives because you know it won`t
pass Congress. Right, the American Jobs Act. You take the dysfunction as
the status quo, as normal, right?

And so, it is not a news story when Republicans in Congress do things
to make sure that the economy in the short run doesn`t recover, even though
if you step back for a second and you don`t think of that as normal, it`s a
fairly remarkable fact about the depths of dysfunction and radicalization
on the right side of the aisle right now.

I think that`s really true. They have succeeded in making this
assumed by everyone. It has been priced into how we in the media talk
about them. And they`re getting away with it because of that.

KLEIN: Gridlock is now the baseline.

Chris Hayes, host of "MSNBC`s weekend morning show "UP WITH CHRIS
HAYES," author of the new book that comes out tomorrow, "Twilight of the
Elites: America After Meritocracy."

I have read this book. It`s wonderful. You guys should all buy it.

Chris, you should be proud of it.

HAYES: I appreciate that, Ezra. It means a lot.

KLEIN: Chris, thank you for joining me.

It is on between the United States government and the government of
the state of Florida. Anything you can sue, I can sue better.

And the stakes are really, really high for the rest at country and in
fact for small "d" democracy, itself. That story`s next.

(COMMERCIAL BREAK)

KLEIN: For all of the viewers who have written in wondering why this
show doesn`t spend for time talking about giant tortoises, you know who you
are, your wait is over. The most resonant emotionally compelling giant
tortoise story you will hear anywhere on cable news is coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GOV. RICK SCOTT (R), FLORIDA: I have a job to do to defend the right
of legitimate voters, citizens of our state. We`ve been asking for the
Department of Homeland Security`s database, SAVE, for months and they
haven`t given it to us.

(END VIDEO CLIP)

HAYES: Twelve years ago, the presidential election turned on a 537-
vote margin in Florida. Thousands of voters we later learned had
misunderstood their ballots. Thousands more were turned away from the
polls in error.

Florida failed one of the foundational rights we have as citizens --
the right to vote. So after that embarrassment, you think they`d be pretty
careful today, right? Yes. You`d think that.

Florida`s Republican Governor Rick Scott announced today that his
administration is suing the federal government in hopes of forcing the
Department of Homeland Security to help them out with a big election year
purge of Florida voters. Mr. Scott has said the purpose of the purge is to
remove noncitizens from Florida voter rolls.

When Scott`s administration sent a purge list to county election
supervisors, those local officials found it to be riddled with
inaccuracies.

The "Miami Herald" reported the list was produced with, quote, some
outdated data and that it, quote, "targeted hundreds of actual citizens who
are lawful voters."

Late last month, the Justice Department warned the state to stop the
purge, saying it would appear to violate both the Voting Rights Act and the
National Voter Registration Act. At which point, the county election
officials charged by the Rick Scott administration with carrying out the
purge told the state they weren`t going to do it anymore.

Last week on this show, Rachel spoke with the Republican election
supervisor from Volusia County, Florida, about her decision to halt the
voter purge in her county.

(BEGIN VIDEO CLIP)

ANN MCFALL, ELECTION SUPERVISOR: So, it looked like the list was
bogus, if you will. It was outdated. Of the 15, 10 had never voted in
Volusia County ever. So I just quietly put the list aside.

There`s a federal law in the NVRA, the National Voter Registration
Act, that says in federal elections you cannot change, with few exceptions,
you cannot change a person`s voter registration history within 90 days of a
federal election. So we aren`t going to do anything with it, no matter if
Governor Scott says, do this. We just can`t do it. It`s against the law
for me to do that.

(END VIDEO CLIP)

KLEIN: But even after the warning from the Justice Department, even
as local election officials, including many from Scott`s own party, refused
to carry this big election year purge, Rick Scott`s administration has
plowed forward, promising to continue to purge.

(BEGIN VIDEO CLIP)

KEN DETZNER, FLORIDA SECRETARY OF STATE: This is not a time to wait
until after the elections. It`s time to act now to make sure that
individuals that are voting are eligible to vote and that voting rolls are
accurate and clean here in Florida. We plan to do that.

(END VIDEO CLIP)

KLEIN: That was Florida secretary of state on Friday doing the
rhetorical equivalent of thumbing his nose at the Justice Department.

And today, Governor Scott announcing the lawsuit he hopes will force
the federal government to help with the great Florida voter purge of 2012.
But remember that part where the Justice Department said the Florida voter
purge violated federal law? Yes, it turns out they were serious about
that. The Justice Department also announced a lawsuit today saying they
plan to sue to stop Florida from carrying out the purge warning the state
one more time to cut it out.

Quote, "Please immediately seize cease this unlawful conduct." It`s
about as stark as it gets.

As for Florida`s argument that the fed should be helping them with the
purge, they`ve been denied to a homeland security database that is crucial
to their voter purging process, the Justice Department says the database
wouldn`t help anyway and the sloppy error prone surge is sloppy and error
prone because it`s the way Rick Scott`s administration has carried it out.

Quote, "Your claim the Department of Justice and Department of
Homeland Security worked in concert to deny Florida access to the SAVE
Program database is simply wrong. The significant problems you`re
encountering in administering this new program are of your own creation.
The program has critical imperfections which lead to errors that harm and
confuse eligible voters, especially the program is based on information
collected sometimes years ago from driver`s license applications. The
information is often going to be outdated as a number of persons will
subsequently have become citizens and lawfully registered to vote.

Your data appeared to be faulty in other ways and resulted in native
born citizens including a decorated World War II combat veteran being sent
letters demanding they affirmatively prove their citizenship. We are aware
that one county election supervisor who reviewed a state-provided list of
over 1,000 potentially ineligible voters determined the list had a
significant error rate and advised further use of the list would
potentially disenfranchise elder voters based on an inaccurate list."

So, it`s not clear at this point whether and how the Rick Scott
administration might continue to carry out their election year voter purge,
but it is clear they`re determined to try to carry it out, no matter what.

And in an election year, in the very state that decided the election
12 years ago on a razor thin error-ridden margin, you might think they`d
know better. Indeed, the scary thought is they do know better. That`s why
the deeply unpopular Scott administration is trying to kick these voters
off the rolls.

(COMMERCIAL BREAK)

KLEIN: On the spectrum of living things who get together and stay
together, you know, couples, special friends, at one end is Hollywood.
Life is fast, options are many, and commitments are relatively flimsy.
This person of celebrity was married in front of a national TV audience and
filed for a divorce 72 days later.

On the other end of this spectrum called the Kardashian spectrum are
giant tortoises. For them, life is slow. Even if you want to leave, how
fast can you really go anywhere?

But it is my sorry duty to report that even giant tortoise
relationships can be challenging. Bibi and Poldi are giant tortoises, a
male and female, at the zoo in Klagenfurt, Austria. They have reportedly
lived as a couple at that zoo for 36 years. Before that, they were
together in a zoo in Switzerland.

They`re 115 years old and they have, according to the head of zoo,
been a couple since very early in their lives -- until recently. Until
Bibi, who is the lady tortoise of the two, had awoken to the same old, same
old tortoise face one too many times.

Zoo keepers figured out something was up after all those years of
ostensible bliss when Bibi bit a chunk of Poldi shell off and walked away.
Ouch!

Then she expressed a preference, I`m not exactly sure how because
these are tortoises and they don`t talk, for her own cage. There`s no
video of the breakup, as they do not yet have their own reality show, but
zoo keepers have been trying to get them back together and failed, said
Helga Happ who works in the zoo, quote, "We get the feeling they can`t
stand the sight of each other anymore."

After 115 years, it turns out they were living separate lives. If two
with everything in common and more than 100 years together can`t make it
work, it does make you wonder. Let`s hope for them it`s just a spat.

The good news however is this, producer Patricia McKinney of THE
RACHEL MADDOW SHOW has found the antidote, the uplift, the answer to the
question, what`s it all about anyway, if it`s not about long term monogamy
among tortoises?

It is the best new thing in the world. Whatever melancholy the
tortoises left you with, we have it here, don`t despair. Stay tuned.

(COMMERCIAL BREAK)

KLEIN: The media has come to a sudden agreement that if I did not
know how disorganized we all are would almost seem like a conspiracy. They
have decided seemingly over the weekend that the 2012 election will not be
decided by what President Obama does or says between now and November. It
won`t be decided by what Mitt Romney does or says between now and November.
The deciding factor in this year`s presidential election won`t be Paul Ryan
and his plan to reform Medicare or speaker of the House John Boehner or
Minority Leader Nancy Pelosi. It won`t even be Eric Cantor or Harry Reid.

Actually it also won`t be, now that I think about it, Karl Rove and
super PACs and their billion dollars. In fact, the common wisdom now, the
deciding factor will be this woman, Angela Merkel, the German chancellor.
As chancellor of Europe`s largest economy, she`s tasked with managing its
recovery. If she does not effectively manage the situation, the European
economy could crash, causing the global economy to crash and the American
economy to crash. If the American economy crashes so, too, will President
Obama`s re-election chances.

You can read this in "Newsweek" where Niall Ferguson wrote about it or
you can read it in the "Washington Post" where Dana Milbank wrote about it.
You could also read over the weekend in "Politico" where Ben White wrote
about it or read it on my "Wonkblog" today where I brought together some of
the people writing about it.

And in fact, if you tuned into THE RACHEL MADDOW SHOW eight months
ago, you could have heard me say it here, too.

(BEGIN VIDEO CLIP)

KLEIN: If Europe doesn`t get its act together, we`re likely to have a
global recession next year and going to make it very hard for Barack Obama
to get re-elected.

(END VIDEO CLIP)

KLEIN: Good point, past Ezra.

There`s one very important caveat that handsome fellow didn`t
emphasize as much as he could have, and that is this: Europe will decide
the American election if and only if we let it, if we fail, if we have done
a bad job. And by we I mean economic policymakers -- of which I`m actually
not one.

Because what an economic policymaker does for a living is make sure
when something bad happens on the other side of the world, it doesn`t crash
our economy. That is their jump. We don`t knee economic policymakers when
things are going great. You need them when things are not going great.

Right now, there are things we can do. Europe is a bump in the road,
a big bump, a mountain in the road. But it is a bump. Policymakers have
shock absorbers.

In Congress they can pass targeted tax cuts, hire more teachers and
firefighters and police officers. If they don`t want to do that, everyone
agrees we have crumbling roads and bridges in this country, our water
systems are out of date, our subway systems are in need of repair. We can
employ people from the very badly hurt construction sector getting all that
back up to speed.

Actually we could also buy up mortgage bonds to help the housing
market. If you don`t know what that means, don`t worry about it. There
are men and women at the Federal Reserve who do because it is their job to
know what that means and do it when necessary. That is why we pay them.

Remember Friday`s presidential press conference, the one where
President Obama said the private sector is fine and caused everyone in
Washington`s head to explode all at once? This is what that press
conference was actually about, trying to get Congress to do what was needed
to make sure the private and public sectors would be fine in the event of a
meltdown in Europe.

(BEGIN VIDEO CLIP)

OBAMA: Given the signs of weakness in the world economy, not just in
Europe but also some softening in Asia, it`s critical that we take the
actions we can to strengthen the American economy right now.

One of the biggest weaknesses has been state and local governments
which have laid off 450,000 Americans. These are teachers and cops and
firefighters. Congress should pass a bill putting them back to work right
now, giving help to the states so that those layoffs are not occurring.

We`ve got a lot of deferred maintenance in this country. We could be
putting a lot of people back to work rebuilding our roads, out bridges,
some of our schools.

There`s work to be done. There are workers to do it.

(END VIDEO CLIP)

KLEIN: You know, it actually -- it gets even better than that. You
want to hear the craziest thing about all this, the single weirdest thing
about America`s economic situation right now? The markets are so afraid,
they are so terrified that at this moment, they will pay us to take their
money and keep it safe. Literally.

You see this web page? That`s a Treasury Department`s list of real
interest rates. It`s how much the government has to pay to borrow. And
you see all those little negative signs? That means after you account for
inflation, the markets are paying us to take their money. We would make a
small profit just by borrowing and holding the market`s cash, make a big
profit by buying and investing in worthwhile things like roads.

It is a huge economic opportunity for us, one of relatively few in a
bad economy. We`re wasting it. Why are we wasting it? Republicans don`t
want to do anymore stimulus. Or if Obama is behind it, (INAUDIBLE)
temporary tax cuts.

Senate Republicans filibustered the Americans Jobs Act which would
have a large payroll tax cut for businesses. House Republicans also oppose
the bill. Neither group have proposed a significant alternative.

Many economists meanwhile believe the Federal Reserve could do more to
support the recovery. So far it`s holding back. One reason many of them
think is congressional Republicans are telling the Federal Reserve clearly
and in no uncertain terms, hold back.

Last week, Federal Reserve Chairman Ben Bernanke testified before the
joint economic committee where Representative Kevin Brady, the committee`s
top Republican, told him to rein it in.

(BEGIN VIDEO CLIP)

REP. KEVIN BRADY (R), TEXAS: I wish you would take a third round of
quantitative easing off the table. I wish you would look the market in the
eye and say the Fed has done all it can, perhaps too much.

(END VIDEO CLIP)

KLEIN: Kevin Brady wishes Ben Bernanke would go to the market when
Europe might be about to disintegrate and say we`ve done too much, we`ll do
no more.

So it`s true, if Congress isn`t going to do anything to protect the
U.S. economy, and the Federal Reserve isn`t going to do any more to protect
the U.S. economy, then, yes, we`re at the mercy of what happens in Europe
and in China and other parts of the world. That is because we have chosen
to be at their mercy. We are not helpless. We`re just acting like we are.

Joining us now is Jared Bernstein, former economic adviser to Vice
President Joe Biden, senior fellow at the Center for Budget and Policy
Priorities and an MSNBC contributor.

Jared, it`s great to see you again.

JARED BERNSTEIN, MSNBC CONTRIBUTOR: Nice to be here. Thank you for
inviting any.

KLEIN: One Europe question before we get into America here. There
was a bailout of Spain. The bailout appeared to calm the markets. We
looked into this today, for four hours and 40 minutes.

BERNSTEIN: Wow.

KLEIN: That isn`t very long.

BERNSTEIN: No. At the end of the day, borrowing costs for Spain,
which actually started out going down during that nice and --

KLEIN: When costs are going down, we know these things are working.

BERNSTEIN: They`re working. That means if Spain needs to borrow to
help itself which it does quite deeply, it can do so at a lower cost. But
after that four-hour respite, basically folks looked into the deal, didn`t
like what they saw, thought it didn`t go far enough. Recognized there are
so many moving parts that if you kind -- it`s a finger in the dike, you fix
one, there are a lot of leaks elsewhere. And by the end of the day, the
move was pretty discredited by the markets.

KLEIN: So, there`s been this kind of fatalism around Europe, China,
around India. There`s a lot of bad economic news coming out of the global
picture. When you say over here, well, maybe some tax cuts would help or
some infrastructure investment, it seems disconnected. It seems like it
has nothing to do with the actual problems here. So draw out the
connection, if there is one.

BERNSTEIN: Well, in a way, it`s almost worse than disconnected
because I think that the interpretation, from conservatives, backed up by I
think some very wrong headed economics, is that kind of austerity works.
That instead of doing the kinds of things the president was suggesting in
the clip you played, actually more stimulus to help create more jobs,
temporarily, as we work our way through this mess and protect ourselves
from all the headwinds coming from Europe, the argument is that, no, the
opposite is what will help you.

If you cut spending, if you rein in budget deficits, all of which has
to happen in the long term, but in the near term, as you can see, very
clearly with Europe, it`s exactly the wrong medicine. So, it`s bad enough
that we`re not doing what we should. We`re actually threatening to make
things worse.

KLEIN: But let`s say we do do what we should. What you`re talking
about. Let`s say the government borrows, it passes a payroll cut for
businesses and invests in infrastructure.

What does that have to do with Europe? How does that protect us if
Europe begins to collapse and financial markets begin to tighten, if
exports begin it weaken? What does that do for workers here?

BERNSTEIN: It replaces some of the demand we would lose because of
the European contraction, the European recession. We export to Europe.
Our banks are intertwined with Europe.

And it`s like our own recession. When you have contractions in
demand, which is just a fancy way of saying a lot of job losses, you end up
having to try to take steps to temporarily appraise that.

I was at a party this weekend and talked to a guy who`s a small
manufacturer and he sells large construction equipment to Europe. This
firm had pretty much hired up after the meltdown. Now, they`re starting to
cut back again because all their exports to Europe have been canceled.

So if we were to say, do some more infrastructure here, it would take
the place of some of that lost demand. You`d actually be replacing some of
the jobs you`re losing because of the European effects.

KLEIN: And then as interest rates go back up, we can be paying down
our debt. I mean, we can do short term stimulus and long term deficit
reduction. There`s nothing economically irrational --

BERNSTEIN: Well, the markets are telling us to do exactly that. As
you pointed out in your introduction, the cost of borrowing, which we need
to do to finance this, is so low that the benefits the job growth would
have would certainly outweigh them.

KLEIN: Jared Bernstein, former economic adviser to Vice President Joe
Biden, now a senior fellow at the Center of Budget Policy Priorities --
thank you very much.

BERNSTEIN: Thank you, Ezra.

KLEIN: Why does it have to be such a downer anyway? End of the
planet, light, end of the planet, happy, courtesy of Republican elected
officials, next.

(COMMERCIAL BREAK)

KLEIN: I got to admit, I still feel kind of bad about dropping the
turtle divorce story on you on a Monday. But I swear I`m going to make it
up to you in a few minutes. Uplift. I promise. Best new thing in the
world is coming.

(COMMERCIAL BREAK)

KLEIN: This next picture, the one that`s coming up, I`m just going to
go ahead and say it. That is a fat cat. The cat is fat. The fat -- the
cat is overweight.

The feline weighs too much. Its body mass index is too high. This
truly is a fat cat.

These, however, are figurative fat cats -- members of the American
Bankers Association after their White House meeting during the Great
Depression. These men are fat cats because they have or controlled gobs of
money. When they were described in English they were often referenced as a
colloquialism as the fat cats on Wall Street, dot, dot, dot.

Last year at the height of occupy Wall Street a Wall Street fat cat
took public exception to the term. So, now, we`re not supposed to use it
anymore. It`s insensitive and wrong and I just said it a half dozen times.
Whoops!

Here`s something else you`re not supposed to say in polite company
anymore -- sea level rise. You`re not supposed to say sea level rise, at
least not among Virginia Republicans.

Also, climate change. You don`t want to say climate change anymore.

When Virginia lawmakers wanted to examine the possibility that warming
temperatures will cause the Atlantic ocean to swamp the coastal region of
their state, quote, "They discovered they cannot use the phrases "sea level
rise" or "climate change" in requesting the study in part because of
objections from Republican colleagues and also for fear of stirring up
conservative activists, some of whom believe such terms are liberal code
words." Oh, liberal code words.

Instead of left wing terms like sea level rise and climate change,
you`re supposed to say recurrent flooding which is fine for when it rains a
lot but which describes a situation a little bit less aptly when you are
permanently under water.

The first crazy thing about this is climate change, the term climate
change, is one that Republicans had wanted everyone to use.

Back in `03, Republican messaging guru Frank Luntz advised the party
scary terms like global warming should be replaced with climate change. He
said Republicans do need to talk about the environment only carefully,
since so many voters believe that, quote, "Republicans are in the pockets
of corporate fat cats who rub their hands together and chuckle maniacally
as a plot to pollute America for fun and profit."

Back then, you could say fat cats, without offending any considerably
rounded felines or fat cats.

We have a name for this kind of roundabout euphemistically way of
talking, politically correct, or P.C. for short. It`s supposed to be
something wrong with liberals to chill free speech, considered for hyper-
appropriate language. Conservatives hate it when liberals say happy
holidays rather than merry Christmas or waitren (ph) instead of waiter or
waitress.

In fact, so do a lot of people. That`s why liberal comedian Bill
Maher called his old show "Politically Incorrect" satirizing a practice he
didn`t like in his own crowd. But political correctness isn`t the province
of the left by any means.

The other day, Paul Krugman wrote, political correctness on the right,
how we`re not supposed to call rich people the wealthy anymore. Now we`re
supposed to call them job creators.

The point of the news piece Mr. Krugman wrote is to make it impossible
to talk and possibly even think about ideas that challenge the established
order.

While it`s amusing to think about our national progression from fat
cats to the wealthy to job creators, we actually have a lot at stake here,
the move from global warming to climate change and sea level rise to
recurrent flooding matters.

The commonwealth of Virginia is spending $6 million a year warding off
the Atlantic Ocean in the city of Norfolk alone. The naval base will need
to change its piers at a cost of many, many millions. And Virginia is
losing the salt marshes at heart of its coastal ecosystem because they`re
being inundated by the sea.

Being able to talk about sea levels rising matters. Places like
coastal North Carolina where Republicans are insisting the state prepare
only for the Atlantic to rise 8 inches instead of the 39 inches scientists
say the state should now expect. A few years after advising Republicans to
continue sewing doubt about whether the earth was heating up, Frank Luntz
admitted yes in fact the earth is heating up. The question now in places
like Virginia and North Carolina is whether people elected to serve and
protect the state can protect the state can rally people to solve an urgent
problem or if they will choose, instead, to point out an exciting new
challenge?

Joining us now is Rush Holt, the Democratic congressman from New
Jersey. He also has a PhD in physics and he`s an author of papers on
magnetic fusion and calcium absorption lines and also one on why we should
value science education.

Congressman Holt, thank you so much for stopping by.

REP. RUSH HOLT (D), NEW JERSEY: Ezra, good to be with you.

KLEIN: Republicans used to support stronger regulation of greenhouse
gases. The idea of cap and trade actually from market that would cut
emissions was a Republican idea in the first place. It was in John
McCain`s 2008 platform and he was also the first to introduce it in the
Senate. Now, the favorite term for it in Republican circles is cap and
tax.

When even Republican policies become an anathema to conservatives, how
do you forge a compromise in Congress?

HOLT: Well, when you change the very language, as you`re describing
now, it leads to really disinformation and challenges the whole basis for
debate. And clearly, that`s what they`re trying to do.

These are powerful interests, energy interests that don`t want the
facts about climate change to be out there. They don`t even want the term
climate change to be out there. There`s no question the sea level is
rising.

Even if there`s no melting of glaciers because of the heating, just
the heating of the ocean, which is happening, has happened, will happen,
means that in the lifetime of today`s kids, it`s going to be a foot or two
higher. If there`s significant melting on land of glaciers and ice caps,
it could be much more than that.

So, changing the language is just the special interests` way of trying
to change the argument and overpower the opposition. It`s what happened
with tobacco. The tobacco companies tried to change the language about
cancer.

They set up a tobacco institute as if it was somehow based in science,
and all it was, was marketing. You know, four out of five doctors smoke
our cigarettes or recommend our cigarettes. You know, crap like that. And
it was clearly that kind of the disinformation that the tobacco industry
used to sow doubt about the science.

KLEIN: The House where you serve, it recently --

HOLT: And you know, it`s --

KLEIN: Sorry?

HOLT: I was just going to say, you know, Rachael Carson and the
pesticide interests and on and on.

KLEIN: The House recently voted against National Science Foundation
funding for political science. In a vote that kind of disturbed me, it was
an amendment from Representative Jeff Flake and it didn`t take away the
funding, it just said the National Science Foundation could no longer use
its funding to fund political science, in part, Representative Flake said,
because the funding was used to support studies on climate change.

That kind of, sort of subtle and specific interference with scientific
judgments worried me as a precedent. Am I right to be concerned, or is
this not a big deal?

HOLT: You`re absolutely right to be concerned. What we were talking
about with climate change and with tobacco, and with big developers against
the Endangered Species Act and big agribusiness against nutrition science -
- that`s the old-style, long-lasting confrontation science, trying to
overpower their science.

What you`re talking about a more insidious problem that strikes at the
very method of science. And, you know, science is really valuable. It is
really valuable for moving knowledge toward more factual understanding.

And this is not of interest just to people who wear lab coats or
techno geeks. Anybody who cares about the air their children breathe or
the water they drink or the nutrition in our lives or the education of
children with special needs, anybody who would want policy based on as much
as possible on fact, on evidence, should care about this.

And if you start messing with the peer review process, as has happened
with education before Congress, if you start messing with what kinds of
research the National Science Foundation can do, what you`re referring to
and you wrote a very good piece about it, a month or so ago, is if
politicians direct the National Science Foundation about what is the value
of the research or what kind of research can be done, it strikes at the
very heart of the method that leads us to this better understanding.

KLEIN: We`ll have to the leave it there, but I would like to talk
about this another day. Rush Holt, the Democratic congressman from New
Jersey and physicist and scientist, we`re grateful for your time tonight.
Thank you.

(COMMERCIAL BREAK)

KLEIN: Film legend has it in the late 19th century when the Lumiere
brothers first show the film of a train pulling into the station, the image
was so real that the unsophisticated audience panicked and ran from the
approaching train. Now, maybe that didn`t happen, maybe it was just a
legend, but once you realized what cameras can do, put them everywhere,
like up on the moon, or way down deep on the bottom of the ocean, where you
can`t physically bring your human eyeballs, or on the back of birds in
flight, which is simply amazing. I mean, look at that.

Now in the best new thing in the world, a filmmaker dad has done
something simply but genius that transports viewers in time, biological
time, back to toddlerhood. He`s Daniel Brace (ph), a British filmmaker
living in Sweden. He strapped a camera on his toddler daughter and played
hide and seek with her. The result is pure point of view joy.

(VIDEO CLIP PLAYS)

KLEIN: The game goes on for about three awesome minutes, in which we
learned that a toddler will always look for you in the last place she found
you. And we can imagine what it`s like to be a little kid again. I urge
you all to watch it, over and over. Filmmaker Daniel Brace`s daughter,
Olivia, best new thing in the world today. Thank you, guys.

That does it for us. We`ll see you again tomorrow night, until then
you can check out my work at Wonkblog.com.

Now, it`s time for "THE LAST WORD" with Lawrence O`Donnell. Have a
great night.

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

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