updated 7/27/2012 4:26:17 PM ET 2012-07-27T20:26:17


Guest: Neera Tanden


EZRA KLEIN, GUEST HOST: Good to see you too, Michael. Thank you very
much.

And thank you for you at home for sticking around for the next hour.
Rachel has the night off tonight.

All right. Let`s just be honest here, today, July 26th, 2012 was a
terrible, horrible, no good, very bad day to be Mitt Romney. Even if you
consider yourself the staunchest Mitt Romney supporter out there, I think
you have to admit today did not go exactly according to plan.

The kickoff of Romney`s overseas trip has been a disaster.

Here`s a lead paragraph tonight in London`s daily "Telegraph"
newspaper. Quote, "Mitt Romney is perhaps the only politician who could
start a trip that was supposed to be a charm offensive by being utterly
devoid of charm and mildly offensive."

So it`s been a bad day for Mitt Romney, a bad day that all began with
this seemingly innocuous comment about the London Olympics he made to our
very own Brian Williams last night.

(BEGIN VIDEO CLIP)

BRIAN WILLIAMS, NBC NEWS: In the short time you`ve been here in
London, do they look ready to your experienced eye?

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: You know, it`s hard to know
how well it will turn out. There were a few things that were disconcerting
-- the stories about the private security firm not having enough people,
the supposed strike of the immigration and customs officials. That,
obviously, is not something which is encouraging.

(END VIDEO CLIP)

KLEIN: Wrong answer. I mean, not wrong exactly, I think he`s
probably right in the substance. There had been legitimate concerns raised
about security, about organization, all of that, but wrong answer when the
purpose of your trip is to make the people holding the Olympics like you.

That comment from Mitt Romney on his maiden voyage overseas set off a
bit of a feeding frenzy in the U.K., and leading the charge was a man that
Mr. Romney was there to charm in the first place, British Prime Minister
David Cameron.

(BEGIN VIDEO CLIP)

DAVID CAMERON, BRITISH PRIME MINISTER: We are holding an Olympic
Games in one of the busiest, most active, bustling cities anywhere in the
world. Of course, it`s easier if you hold an Olympic games in the middle
of nowhere.

(END VIDEO CLIP)

KLEIN: In the middle of nowhere. I think the term you`re looking for
there is oh, snap.

Mitt Romney`s comments stirred up such anger across London today that
he was eventually forced to publicly walk back his remarks during a press
conference outside of 10 Downing Street a bit later in the day.

But the damage was done. Earlier tonight in front of a crowd of
60,000 people in London`s Hyde Park, here`s how London Mayor Boris Johnson
addressed the crowd.

(BEGIN VIDEO CLIP)

BORIS JOHNSON, MAYOR OF LONDON: There are some people coming here
from around the world who don`t get known about all the preparations we`ve
done to get London ready in the last seven years. I hear there`s a guy --
there`s a guy called Mitt Romney who wants to know whether we`re ready. He
wants to know whether we`re ready.

Are we ready? Are we ready? Yes, we are!

(END VIDEO CLIP)

KLEIN: I hear there`s a guy called Mitt Romney. It wasn`t just Mitt
Romney`s comments about the preparedness of the city of London that got him
into trouble today. It was a series of gaffes he committed during his
first full day overseas

After meeting with Prime Minister David Cameron, for example, Romney
then met privately with Britain`s opposition leader David Miliband.

The only problem with that meeting with Ed Miliband, the whole Ed
Miliband part of it. London`s "Daily Mail" reporting, quote, "During a
meeting with Mr. Miliband at Westminster, the American made another gaffe
as he seemly didn`t know who the Labour Party chief was and instead
addressed him as Mr. Leader." So that was strike two.

A little earlier in the day as Romney was addressing the British press
corps, Romney let out this little doozy.

(BEGIN VIDEO CLIP)

ROMNEY: I appreciate the insights and perspectives of the leaders of
the government here and opposition here as well as the head of MI6.

(END VIDEO CLIP)

KLEIN: MI6, you say? MI6 is like Britain`s CIA, but more so. It`s
what James Bond belongs to in the books. And thing about MI6 is you don`t
talk about MI6.

Here`s how that was reported. Quote, "For American readership, this
is not like bragging that you just met the CIA Director David Petraeus.
The British take on the national secret intelligence service comes with an
extra-heavy dollop of the whole secret thing. The existence of the MI6 was
not officially acknowledged until 1994." So yes, whoops.

There was an entire mime created on Twitter today under the
#Romneyshambles. Here`s how the political editor of London`s "Daily Mail"
summed up the reaction from Whitehall, which is sort of the colloquy named
for the British government.

Quote, "Serious dismay in Whitehall at Romney debut. Worse than Sarah
Palin. Total car crash. Ouch! Two of the kinder verdicts
#Romneyshambles."

So this was not a good day to be Mitt Romney. But you know, as bad as
a reaction was to Mr. Romney`s comments about the Olympics during that
interview with NBC last night, I think there`s one answer he gave that`s
been lost in all the coverage, but in the long run in this election is
going to matter much, much more.

Did you happen to see this part?

(BEGIN VIDEO CLIP)

WILLIAMS: Let`s talk about domestic -- the economy, before we wrap
things up. The major planks of your job plan -- lower taxes, both
corporate and marginal rates, and reduce regulation. Explain how that
would be different from what George W. Bush tried to push through.

ROMNEY: Well, let me describe -- actually, there are five things
necessary to get this economy going. One: take advantage of our energy
resources. Particularly, natural gas, but also coal, oil, nuclear,
renewables. That`s number one.

Number two: trade. I want to dramatically increase trade and
particularly with Latin America.

Number three: take action to get America on track to have a balanced
budget.

Now, those three things, by the way, are things which we have not been
doing over the last three years, which are essential to getting this
economy going again.

Number four: we`ve got to show better training and education
opportunities for our current workers and coming workers.

And then, finally, what I call "restoring economic freedom". That
means keep our taxes as low as possible, have regulations modern and up-to-
date. Get health care costs down. These things will restore economic
freedom.

(END VIDEO CLIP)

KLEIN: So how is it that different from what George W. Bush tried to
push through? It is not. It is not different from what George W. Bush
tried to push through -- lower taxes, fewer regulations, more domestic
energy production, promises of deficit reduction that are overwhelmed by
increased defense spending and tax revenues and panting rhetoric about
economic freedom pretty much defined the Bush administration`s economic
policy.

And how did that economic policy work out? It was a disaster.

This graph is by David Leonhart of "The New York Times." it looks at
five-year growth periods since 1955. The two periods that span the Bush
years, `01 to `05 and `06 to 2010, they come in dead last. The jobs
picture wasn`t any better.

This graph from the Center for American progress compares job growth
under Bush`s business cycle with job growth under the preceding cycles and
gives Bush a handicap actually. It doesn`t count `08 when the financial
crisis and recession began.

But even when the handicap, the Bush years performed poorly. See that
on the right, they are the small bars. Note the graph again. It ends
before the financial crisis -- a financial crisis that is at least
partially attributed to the "let the banks do whatever they want, they
would never crash the financial system, would they?" attitude towards bank
regulation that dominated in the Bush, and to be fair, in the Clinton
years.

Once you add that in, Bush has the worst record since Herbert Hoover,
every single measure we might want to track -- jobs growth, median
household, income growth, poverty, un-insurance, new firm creation,
participation in the labor force -- every one goes in the wrong direction,
and yet Romney can`t explain how his policies differ.

One of my frustrations with campaign coverage is there`s a tendency to
look at real failings, substantive deficiencies in ideas as political
problems. So, this gets talked about as a messaging issue. Romney needs a
better answer to the question of, how do you differ from George W. Bush?

It is not a messaging problem. Romney doesn`t need a better answer to
how your policies different than Bush`s. He needs policies that are
actually different, that actually take the lessons of the last decade into
account.

As "New York" magazine`s Jonathan Chait writes, Romney`s answer,
quote, "indicates a larger problem. Republicans have not really
internalized the degree to which Bush`s policies truly failed to produce
strong economic growth. They blamed him for letting spending grow too high
and they recognize the crash was a bad thing, but conservative rhetoric
almost uniformly failed to acknowledge that even pre-crash growth, even
before the crash, growth under Bush was absolutely miserable."

It almost -- it also almost uniformly fails to acknowledge that we
live in a world today completely reshaped by the 2008 financial crisis.
These last few years have been extraordinary economic years. We have been
through and in some ways are still trapped in a once-in-a-many-generation
economic storm, and nothing in Romney`s agenda is responsive to that fact.

That is what amazes me. There is no new thinking here, nothing a
Republican in 2007 or 2005 or 1999 or 1991 couldn`t have proposed.

Romney`s like a doctor looking at a patient with acute pneumonia and
prescribing as he always does during physicals, diet and exercise. Might
be good advice, probably is even, but we need more than that right now.

The one exception here is Romney`s pledge to roll back the Dodd-Frank
Wall Street reform law, which is to say to return policy to something more
like what it was before the financial crisis. It`s like the opposite of
new thinking.

In this case, the Obama campaign is actually a telling contrast.
Think back to Obama`s 2008 campaign. What did he run on? Well, getting
out of Iraq, that was a big part of it, but his big domestic ideas were
long term. They were a health care plan, middle class tax cut called
Making Work Pay, a plan to cap carbon emissions, immigration reform.

And he promised that all would be paid for because in an expansionary
period, we had to get deficits down. We couldn`t keep running deficits
while we were growing, right?

But by the time he entered office, the economy begun to collapse, and
so, this is really the key part here. His policies changed. It`s not that
he didn`t support the other stuff or that he didn`t try to pass it. In
fact, he did pass health care reform, but his first initiative was a
massive deficit finance stimulus bill.

And, by the way, before he got into office, he helped pass the second
trounce of the TARP bailout bill, too.

This year, his campaign`s idea is the American Jobs Act, which
combines big, but temporary, tax cuts for workers and small or expanding
businesses, with aid to state and local governments, with a huge but
temporary effort to rebuild our nation`s infrastructure and an extension of
unemployment benefits.

Whether you agree with these policies or you hate them, you think they
are exactly the wrong thing for the economy, they are, if nothing else,
clearly connected to the current state of the economy. They are ideas to
get people back to work now, to get money in people`s pockets now, to
reward businesses for hiring new workers now.

No Democrat was running around the country talking up state and local
aid or vastly expanded unemployment benefits in 2007 or 2004 or 1999.

But the same simply cannot be said for Mitt Romney`s plan, and that`s
because, to the great misfortune of the country right now, which needs a
good economic debate, the Republican Party`s economic policy thinking is,
at the moment, in shambles.

Joining us now: Jared Bernstein, former chief economic adviser to Vice
President Biden, now, a senior fellow at the Center on Budget and Policy
Priorities, and an MSNBC contributor.

Jared, it is good to see you as always.

JARED BERNSTEIN, MSNBC CONTRIBUTOR: Great to see you and great to
listen to you.

KLEIN: Well, first -- tell me if I have it wrong. You`re a smart
guy. You know how to read this stuff. You`ve read all of the plans many
times. You know the Obama administration`s policies well.

Are -- and the Bush administration`s, for that matter. Are there
major differences between the Bush economic agenda and Bush economic
philosophy and what Mitt Romney`s proposed here?

BERNSTEIN: No, if anything, Governor Romney doubles down on many of
the measures you mentioned. It was interesting, you just said, well, one
thing that`s different is repealing Dodd-Frank. That`s deregulation,
right, that`s the hair of the dog that bit you, and the amnesia that`s
setting in vis-a-vis financial markets.

By the way, actually, I was struck by Sandy Weill yesterday, former
CEO of Citigroup, saying, no, actually, all that stuff that he was
partially responsible for, it didn`t work, so even some people in the
banking sector, Greenspan recognized it. So., this deregulatory trickle
down agenda, I thought it was germane for you to go through the outcomes,
the poverty, it`s doubling down, Ezra.

KLEIN: So, the thing I think is important here, right, because, you
know, there`s just kind of a false equivalence, oh, we need new economic
thinking. And one thing that I think has impressed me about, particularly,
the Clinton area of vets around Barack Obama, is that in the `90s, what
they did, that things that they were and you were part of these debates,
was they wanted to balance the budget when a lot of progressives were
saying you need to invest, and they were big on deregulation.

And they have executed, basically, a 180 flip. They are not saying
you don`t need to balance the budget eventually or at least cut the deficit
eventually. But for now, you need to do more deficit finance stimulus in
the short term. You need to do more regulation to the financial sector in
the short term.

BERNSTEIN: Correct.

KLEIN: At least implement Dodd-Frank, because we live in a different
economic moment. Is that -- am I misreading that?

BERNSTEIN: It`s exactly right. This whole kind of notion that`s
embedded in our thinking that somehow Republicans are fiscally responsible
and Democrats aren`t has been completely flipped on its head by the dynamic
you just mentioned.

When the economy is growing, the GDP is rising, unemployment`s
falling, you`re moving towards full employment, that`s when you want your
deficit to come down, as it did under Clinton and as it did not decidedly
do under Bush. There we have what are called structural budget deficits,
the kind of budget deficits that grow when she should be shrinking when the
economy is expanding.

And it`s exactly -- at a time like this, you actually want your
deficits to be large enough to support the economy, given the private
sector ongoing weakness. When that private sector comes back online,
that`s when you want things to go back to normal.

If you actually look at what Mitt Romney`s proposing again, you`re
just looking at budget deficits as far as the eye can see.

KLEIN: That is, to me, the single most annoying part about our
economic debate right now, because I think if you ask Mitt Romney what is
different, and kind of said this to Brian Williams, is that he is going to
cut the debt, he`s going to cut the deficit, he`s going to cut spending.

I`ve looked at his plan and run the numbers on it or at least read the
people that do run the numbers on it. I see trillions in tax cuts and
about a trillion in new defense spending, at least. At least 4 percent of
GDP, a floor. There is much higher than where we are now.

And he`s got some gestures towards spending cuts, but he does it at
anything that is of anywhere near the size as what he`s promised to spend
or stop taxing, so it doesn`t balance the budget. If you believe
austerity, it is not austerity.

BERNSTEIN: Exactly. And that`s the ruse. And when you look at Mitt
Romney, what he`s doing in his budget, does he say I`m taking defense off
the table, I`m taking Social Security off the table, and I`m cutting taxes
$5 trillion over Bush, over 10 years? That`s the doubling down part.

The only way you do that is if you cut government to a point that is
theoretically impossible, so the arithmetic stands on its head. What
sounds fiscally responsible is fiscally deeply irresponsible.

KLEIN: Jared Bernstein, MSNBC contributor and senior fellow at Center
on Budget and Policy Priorities -- as always, thank you for being here
tonight.

BERNSTEIN: Thank you, Ezra.

KLEIN: What does it say about a candidate that`s based his campaign
on things his opponent has not, in fact, said? Profilers in mis-leadership
next.

Plus, the Ezra Klein challenge number five, the hardest one of all.
Stick around.

(COMMERCIAL BREAK)

KLEIN: President Obama made a campaign fundraising tour through
California early this week. And while he was there, he talked about how
awesome his party`s economic policies are and how crappy Republican
economic policies are, like you do.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I`ll cut out government
spending that`s not working that we can`t afford, but I`m also going to
ask, anybody making over $250,000 a year to go back to the tax rates they
were paying under Bill Clinton, back when our economy created 23 million
new jobs, the biggest budget surplus in history, and everybody did well.

Just like we`ve tried their plan, we`ve tried our plan, and it worked.
That`s the difference. That`s the choice in this election. That`s why I`m
running for a second term.

(END VIDEO CLIP)

KLEIN: That`s what you say when you`re a Democrat running for
president. You say, hey, remember when the economy was great under
President Clinton? That`s what we want to get back to, and remember the
George W. Bush administration kind of flushed it down the toilet? Those
are the same policies Mitt Romney seems into.

For those of you keeping track at home, it`s standard Barack Obama for
president stuff, it`s what he always says, what he said about John McCain
in `08. It`s the Bush administration was tanking the economy and what he`s
been saying about Mitt Romney, all election season long.

But the Republicans have come up with a new counterattack. Here`s how
it goes. They have posted to their YouTube their own version of President
Obama`s standard remarks from Monday night, and spoiler alert, the RNC
version of the Obama argument is missing some words.

Here`s what the Republicans posted and shopped around to the media.

(BEGIN VIDEO CLIP)

OBAMA: Just like we`ve tried their plan, we`ve tried our plan, and it
worked. That`s the difference. That`s the choice in this election.
That`s why I`m running for a second term.

(END VIDEO CLIP)

KLEIN: So the video is captioned "President Obama tells a fundraiser
in Oakland, California, that his plan for the economy worked." So they
left out the part of the speech that made it clear when he said our plan,
he meant the Clinton-era economic plan.

So suddenly it sounds like the president is saying the economy is
totally fixed and perfect now. It`s not what he said. It wouldn`t be
true, either.

Now, there`s an argument to be made the president`s economic policies
have been successful. We`d be in worse shape right now if not for his
economic policies, if not for TARP and for the stimulus, and we can have
that argument another day. That`s not, however, the argument he was making
Monday night.

And that`s important because what happened there is the Republican
Party just grabbed a tiny snippet of the speech and presented it in a way
that completely changed the meaning of the words, which is kind of becoming
a thing this election year.

Remember this great moment in creative editing for the Mitt Romney
campaign?

(BEGIN VIDEO CLIP)

OBAMA: If we keep talking about the economy, we`re going to lose.

(END VIDEO CLIP)

KLEIN: Now, did Obama really say he`d lose if he kept talking about
the economy? No. No, he did not.

(BEGIN VIDEO CLIP)

OBAMA: Senator McCain`s campaign actually said, and I quote ,"If we
keep talking about the economy, we`re going to lose."

(END VIDEO CLIP)

KLEIN: There`s also this bit of creative reimagining on Mitt Romney`s
part last fall.

(BEGIN VIDEO CLIP)

ROMNEY: Sometimes I just don`t think that President Obama understands
America. Now, I say that because this week or was it last week he said
that Americans are lazy. I don`t think that describes America.

(END VIDEO CLIP)

KLEIN: So did President Obama really say the people he`s hoping to
vote for him are lazy? Survey says -- nope.

(BEGIN VIDEO CLIP)

OBAMA: You know, we`ve been a little bit lazy over the last couple of
decades. We`ve taken for granted people are going to want to come here and
we aren`t out there hungry, selling America, and trying to attract new
businesses into America.

(END VIDEO CLIP)

KLEIN: So he did say the word "lazy", which in retrospect probably
wishes he hadn`t, but he wasn`t talking about Americans, he was talking
about policymakers, Washington. America probably thinks Washington has
been lazy. He was talking essentially about himself and the town he`s in.
He was saying more or less the opposite of what Mitt Romney accused him of
having said.

First time this happened you could imagine this was a fluke, second
time, perhaps a coincidence. At this point, looks like creative editing is
a core strategy in the Republican campaign this cycle.

Joining us now is Steve Benen who writes for the "Maddow Blog", and is
a producer for the show, MSNBC contributor, and all-around terrific guy.

Steve, thank you for being here.

STEVE BENEN, MSNBC MADDOW BLOG: Thank you, Ezra. It`s good to be
here.

KLEIN: Look, politics ain`t bean bag, like they say. It`s not like
the Obama campaign has never been ungenerous with Romney`s words. But
lately, this seems to be the whole campaign. It`s all misunderstanding of
you didn`t build that and our plan worked.

That doesn`t seem like the strategy you choose when you`ve actually
got a good argument that`s resonating with the American people.

BENEN: Exactly. That`s the thing about this that strikes me as the
most interesting. In theory, that shouldn`t be necessary. In theory, if
this president was a radical leftist who had all kinds of crazy foreign
ideas, Republicans and the Romney campaign would simply take the
president`s comments, things he actually said, things he actually did,
present it to the public, and the American mainstream would recoil in
horror at this radical president.

But the fact they aren`t doing that, the fact that they are taking
these comments out of context over and over again suggests they`re not
particularly satisfied with the way the facts are presented where they can
use the facts to their advantage, and so they feel this tactic is the only
real avenue left for them.

KLEIN: Well, this is something that actually really struck me about
the campaign. It seems that the Obama campaign has been trying to get more
and more specific. The most recent ad, President Obama looking at a screen
and saying Mitt Romney`s tax plan works this way. It cuts taxes on the
wealthy most of all, cuts taxes on everybody, there`s no way to pay for it.

Well, the Romney campaign has been trying to say -- they can`t say
Barack Obama wants to raise taxes on the wealthy, because that`s popular.
So they have to say he`s animated by a radical economic theory in which he
doesn`t believe successful people deserve what they have.

BENEN: Right, and that`s --

(CROSSTALK)

KLEIN: Isn`t that the direction it`s going in?

BENEN: I think that`s right. I think ultimately when push comes to
shove, there`s ample polling data that shows what the president is
proposing is actually popular. You mentioned taxes, I think that`s an
excellent example. There`s overwhelming evidence that Americans think
asking the very wealthy to pay a little more on income over $250,000 is
actually pretty popular.

Romney can`t and Republican critics this general can`t simply run
against that because they don`t want to be on the wrong side of public
opinion. And so, as a result they have to come up with some kind of
fanciful notion of the president`s radical ideology that doesn`t really
exist. But the facts don`t cut their way, so they feel they have no choice
but to go in that direction.

KLEIN: I was trying to think about when I watch this stuff, who is it
meant for, and I have a tough time finding effect after these gaffes or
this kind of ad campaigns. When you talk about these swing voters who in
July of 2012 do not know who they support, it seems you`re dealing with
people who almost by definition are not folks you can easily convince
through attack ads and gaffes and things that make up the political minutia
we deal with every day, because if it -- if it did work on them, they`d
already be convinced, wouldn`t they?

BENEN: I think that`s right. I think a lot of this is going to be
considered noise, come October, early November, the notion that this one
quote or another that Romney has taken out of context, will that still be
the major story of the day? Probably not. I think that this is something
that kind of helps define the candidates early on and I think that it`s
probably why the Romney campaign has been so aggressive in trying to define
the president as some kind of foreign radical, foreign being a word that
they use quite a bit.

But ultimately, I think the state of the economy, the state of world
affairs come late fall will have a lot more of an impact how people will
vote than daily nonsense that kind of drives the political discussion at
this point.

KLEIN: Steve Benen, writer for "The Maddow Blog", show producer, and
MSNBC contributor that doesn`t believe in nonsense. Thank you for joining
us on TV tonight.

BENEN: Thank you, Ezra.

Some say there is a limit how wacky a person can be on primetime
television. I say that`s probably true. But still, the Ezra Klein
challenge where we test that is next.

(COMMERCIAL BREAK)

KLEIN: Tonight`s Ezra Klein challenge is the hardest one yet. I
mean, I`ve got -- this is going to be tough.

All right, here`s why -- the most important thing that happened in the
economy today was this incredibly, insanely confusing sentenced flashed
across Bloomberg terminals in every hedge fund and investment bank across
the globe. Draghi: yields disrupting policy transmission are in ECB remit.

This is a sentence, one sentence, or fragment, that caused a huge
stock market rally. It`s a sentence that could mean the eurozone is going
to survive, and it is a sentence that when I first saw it, I understood
three words, "Draghi," "are," and "in."

I understand it now, and in two minutes, you`re going to understand it
too.

All right, do we have a clock? OK. Go!

Let`s begin at the beginning here. Draghi is Mario Draghi. He`s the
guy who runs the European Central Bank, Europe`s Ben Bernanke, and as much
as the crisis there is anybody`s fault, it is his fault and that of his
predecessors. They are the ones that control how much money is available.

Now, the simplest way to understand the euro crisis is Greece, and
Spain, and Italy and Portugal, and Ireland, are having trouble borrowing
money. If they can`t borrow money, they collapse. If they collapse, the
eurozone collapses, if the eurozone goes down, the world economy is going
to get hurt very badly.

Mario Draghi and the European Central Bank however could solve the
problem. You see, they can print money, as much of it as they want, and
lend it to the struggling countries. Spain needs money or we all go under.
Here, Spain, here`s money.

But they`ve been saying this is against the rules for them, they can`t
lend money like that, and even if they could, they wouldn`t because
inflation is scary.

But that crazy sentence there, that`s them saying they might begin
bending the rules, which is exactly what the market`s been waiting for them
to do. If you translate yields disrupting policy transmission are in ECB
remit in normal English, it would say something -- like the eurozone
collapsing to the point we can no longer do our jobs as central bankers is
something we have the power to intervene in, and it scares us even more
than inflation does.

The only catch here, we don`t know how much Draghi is now willing to
do. That is a very good sentence for the global economy, but a good
sentence won`t save the eurozone, only good policy from the European
central bank will do that of the

All right, did I? I did. Twenty-four seconds left to go.

(COMMERCIAL BREAK)

KLEIN: You talk to anyone in Washington and they will tell you that
next to rush hour traffic on the Beltway and snow, the thing everyone in
D.C. fears most is the National Rifle Association, the NRA. The NRA is
unrivalled in terms of its power to scare and strong-arm and shamelessly
stick to its guns -- sorry, sorry -- and ultimately get what it wants.

But it was not always this way. In 1969, then-President Richard
Nixon, a Republican, as you may remember, told the late journalist William
Safire that guns were "an abomination." he wanted to make handguns illegal.
Years later, he joined Ronald Reagan, also, a Republican, in support of the
Brady bill, which the NRA stridently opposed.

President George H.W. Bush, Republican, made it illegal to import
assault weapons. There was a time in modern history where you could be a
national political figure, a national Republican, and be in favor of gun
control.

Today, that is about as common as a unicorn riding a do bird with the
transit of Venus floating by in the background. Today, even most Democrats
stay out of the NRA`s way. Why pick a fight you`re just going to lose?

Obama`s mostly taken that advice, he hasn`t picked that fight. In
fact, if you calculate the number of new gun control policies he`s
advocated in his first term, you come up with one, and that is a negative
one, by the way. Under Obama, there`s been not one new piece of control
legislation passed on the national level, but there has been an expansion
of gun rights.

As of 2010, your national parks are now armed. It is now legal to
carry loaded weapons into Yellowstone, Yosemite, Acadia, and the Grand
Tetons.

The Obama administration has overseen an expansion, not contraction of
gun rights. Even in the wake of last week`s horrific shooting in Colorado
that left 12 dead and dozens wounded, even then the president indicated no
reassessment of gun laws was necessary. That is until yesterday.

The president was in New Orleans speaking to the National Urban League
when he said something in a normal world would be so rational, so mundane,
as to not warrant a mention, but in this not-normal world, it is shocking.

(BEGIN VIDEO CLIP)

OBAMA: Hunting and shooting are part of a cherished national
heritage. But I also believe that a lot of gun owners would agree that AK-
47s belong in the hands of soldiers, not in the hands of criminals.

(END VIDEO CLIP)

KLEIN: Criminals shouldn`t have guns. Maybe the AK-47 isn`t
necessary for civilian life.

These are not shocking ideas, but they`re part of a political pattern
I have noticed lately -- a pattern of the administration shirking its one-
time Amelioresque (ph) impulses.

For the first three years, the Obama administration`s basic approach
to hot-button issues that press deep cultural anxieties was to back off.
Obama was already an African-American president with an unusual name and
unusually international background and an ambitious policy agenda. Better
let at least some sleeping dogs lie.

Take gay marriage, for example. On gay marriage, there was a belief
in the administration that if the president endorsed the idea that gay
people should be allowed to marry, it would do much more harm than good.
So keep the opposition calm and just let the underlying demographics turn
in your favor.

Then this year something changed, and as you know, the president did
come out in favor of gay marriage.

On the immigration issue, this is what deportations looked like under
the Bush administration. For the most part, they kept going up. When
Obama came into office, there were many who hoped the trend would reverse.

Instead, the opposite happened. President Obama became the
deportation president. He deported more people than any other president
ever. History was made, whether you like it or not, is up to you.

The administration thought that by ramping up deportations, it would
gain enough political capital to get what it really wanted, comprehensive
immigration reform, or maybe just the DREAM Act. The administration was
wrong. It didn`t get what it wanted.

Congress, including a whole lot of Republicans who used to support it,
voted down the DREAM Act and never came anything close on anything bigger.

So, this year, Obama has changed course and acted on his own. He
announced the United States would no longer expel kids from the country
who`d come here through no fault of their own, so that`s three. That`s a
pattern -- immigration, gay marriage, guns.

My suspicion is that the Obama administration found the old strategy
wasn`t working. They were hiding on these issues, but the people they were
hoping to reassure hated in fear of them anyway.

The NRA, for instance, has a Web site called "Gun Ban Obama", where
they say "Obama could be the most anti-gun president in American history."
How do they deal with the fact he hasn`t proposed any actual anti-gun
legislation?

That`s easy. They say, quote, "He refuses to speak honestly about
where he stands. In fact, Obama hides behind carefully chosen words and
vague support for sportsmen and gun rights to sidestep and camouflage the
truth. He pretends to be on our side."

Meanwhile, Obama supporters were frustrated, so the Obama
administration found it wasn`t making anyone very happy. Folks on the
right saw a liberty-crushing madman, folks on the left saw, well, it didn`t
quite look like change it could believe in.

So the Obama administration has changed course. Better to stand with
your friends than with no one at all.

Joining us now is Neera Tanden, the president of the very influential
Center for American Progress. She also used to work in the Obama
administration as an adviser to the secretary of Health and Human Services.

Neera, thank you so much for being here.

NEERA TANDEN, CENTER FOR AMERICAN PROGRESS: Great to be with you,
Ezra.

KLEIN: So, first, you`re a better political mind than me. Do you see
this trend, do you see sort of a change here in the way they are treating
some of these -- what many call as cultural issues?

TANDEN: Well, you know, throughout his history, the president has
always believed in the politics of conviction, and he`s believed that when
you talk to his people honestly about issues, you gain political points.
Even when they are not totally popular, and now we`re in a time where we`re
not trying to pass legislation particularly in the House, everything is
literally ground to a halt, so he has the ability to actually talk honestly
about these issues.

And truthfully, after a situation after Aurora, for him to not mention
it at all, raised questions with people, and, you know, he took this from
the perspective that it was very much common sense and cited gun owners
themselves, which I think was a smart move.

KLEIN: And when -- when you sort of step back, I kind of hate to do
the cynical Washington thing, it`s all about changing turnout patterns and
who will actually come to the polls, but you sort of say the politics
convention. But three years we weren`t here and one thing that`s been
striking about the issues he`s chosen here and particularly true on
immigration and gay marriage is that they poll much better among younger
Americans.

And so, I do sort of wonder if they are looking at the polls who is
excited to vote and who isn`t, in saying, in a moment when we can`t pass
anything for Congress, the thing we have to excite people with is
conviction. It is showing that we are on their side.

TANDEN: Well, look, I do think the challenge here is Congress, and
it`s truthfully been Congress on both sides, Democrats and Republicans.
And I do think in the beginning of the administration the president had a
lot of legislation before Congress and he made a conscious decision that
passing health care was an important thing and other things would go to the
side and that was, in my view, the right thing to do, because that would be
transformative legislation when fully implemented.

And so, I don`t think this should be seen as politics or trying to
appease one, I don`t think it`s a political loser and political winner, it
really is one or the other. And I think in this case, the president was
smart to say, look, this is a common sense issue, it might be a politically
difficult thing to do, but a lot of these people are going to vote against
me anyway, and I`m just going to tell it like it is, because otherwise
people think of me as a normal politician -- and that hurts him more than
anything else.

KLEIN: Now you guys at CAP have an event coming up or recently
happened on the NRA --

TANDEN: Yes.

KLEIN: About whether or not they are as politically influential. So
tell me, are they as politically influential as people think they are?

TANDEN: No. We had an event actually -- we did a poll with Frank
Luntz, Frank Luntz was polling, he found that NRA --

KLEIN: Republican pollster.

TANDEN: Republican pollster -- with mayors against gun violence, and
he found in the poll -- he actually polled NRA members, and NRA members
overwhelmingly believe we should have background checks, criminals
shouldn`t just be able to buy guns, people that have histories of mental
health challenges shouldn`t be able to purchase guns.

So, what was really heartening is the president recognized that it`s
really gun members, people who have guns, NRA members, believe in common
sense measures. And I think that really helps show the extreme of the
other side.

KLEIN: Neera Tanden, president of the Center for American Progress,
thank you so much for being here tonight.

TANDEN: Great to be with you, as always.

KLEIN: They say in the middle of disaster is opportunity, right?
Well, guess what, we are in the middle of a disaster, the worst in 50
years, but we have a once in a generation chance to do something heroic.
That is next.

(COMMERCIAL BREAK)

KLEIN: Heroes parades and much deserved displays of gratitude just
ahead.

(COMMERCIAL BREAK)

KLEIN: First, a brief correction. Last night on the show we showed
you a pair of satellite images taken by NASA of Greenland this month, four
days a part. We mistakenly said the images showed the ice sheet melt that
was almost gone. That was incorrect.

The surface of the ice sheet melted. The rest of course is still
frozen. What we got right is these pictures are very scary. And so is
this picture -- a passenger jet in Washington, D.C. this month with its
wheel stuck in the overheated tarmac softened pavement.

Chocolate chip cookies are supposed to be gooey. Runways are not
supposed to be gooey. Also scary, roads that have buckled in the summer`s
record heat. Pavement has buckled all over the place, in Nebraska, in
Iowa, in Virginia, and Oklahoma, and Illinois, and Texas, it is a message.

Taking the train instead. Yes, sure, unless the track gun all kinky
from heat. And remember, last summer, flooding threaten a nuclear power
plant in Nebraska, in that record hot year?

This month a nuclear plant in Illinois had to get special permission
to keep running because the extreme heat outside had driven up temperatures
in the cooling pond.

Last month, the freak out Derecho storm at the mid-Atlantic, I`ve
never heard of a Derecho, it`s a kind weather I didn`t know we could have
until it took down trees and power lines from Ohio and Virginia to New
Jersey.

Tonight we`ve got more severe weather from the Midwest to the
Northeast, to where it looks like Ghost Busters outside, with reports of
tornadoes and power outages and general anxiety. Stuck as we are in this
record heat, we have no way of telling yet whether we`re just looking at
weird weather which is temporary or whether what we`re seeing is genuine
climate change happening around us.

What we do know is that human behavior is affecting the climate, we do
know that we`re seeing a preview of a climate change future where the
weather will not just be hotter but stranger ands more extreme with
droughts and floods and parts of our infrastructure is not working quite
right anymore.

"New York Times" today considered the many examples of infrastructure
failed this summer. Along with some efforts to improve infrastructure so
we don`t get as many busted highways and train tracks and headlines about
nuclear power plants going down. Those upgrades cost money. It cost
billions of dollars.

And this Congress has been reluctant to spend on infrastructure,
especially but not only Republicans who keep calling for austerity.

From a purely pragmatic standpoint, this drives me crazy. The global
economy is horrible, unemployment is high, we`ve got a lots of people
sitting out of work when they could be productive building things. Amidst
all the gloom, we have one huge advantage, one economy-changing opportunity
and we have it because we are America. Everyone wants to invest in us,
because we are the gold standard of gold standard investments.

We can do a tip to tail overall of our roads and bridges and power
systems, and we can do it for less money than we will ever be able to do it
for again. And we can do it in a way that helps the economy both now and
in the future.

The way government borrows money is through bonds. We sell bonds.
We`ve called them treasuries. The loans last for different amounts of time.
You have five-year treasuries, ten years and so on. People lend the
government money and the interest we play those people is called the yield.

So, you loan the government $1,000 for five years, say, and at the end
of that time, the government pays you back that $1,000 plus the yield. So
if the yield is 10 percent, the government pays you back 1,100 bucks,
thereabout.

This is a document the Treasury Department keeps, it is called the
real yield curve. It is yield after counting for inflation.

You see all those minus sign? They mean people are lending us money
once you account for inflation at negative interest. They are paying us to
hold on to their money safely because we are America and the world is scary
right now. And we are not scary.

They`re loaning us that $1,000 for that five years, knowing that
they`ll get less than that back. This is an awesome deal. If a
corporation gets this deal, they would be jumping for joy. If Bain Capital
could borrow at these rates, they would buy everything in the economy.

But they can`t. Only America can. And we can take that money and use
it to rebuild our infrastructure, which would help put our economy in the
long run and put people back to work now.

Growing the economy, of course, makes debt much, much painful and it`s
cheap anyway for the people paying for the privilege of loaning us money.

So, the time to invest in our infrastructure is now, right now. Doing
anything less isn`t just missing an opportunity. It is financial
mismanagement on an epic scale.

(COMMERCIAL BREAK)

(VIDEO CLIP PPLAYS)

KLEIN: Back in the spring, the first brigade combat team from the
Minnesota National Guard`s 34th Infantry Division nicknamed the "red bulls
returned home to Minnesota" from a year-long deployment to Iran and Kuwait.
Minnesota`s red bulls played a key role in the end of the Iraq war. They
helped escort the last troops and supplies out of country.

And now, they are all back home in the U.S. And this weekend, they
and other veterans of the wars in Iraq and Afghanistan will get a great,
big, much deserved public thank you from people of Minnesota. Thanks to a
fundraising organizing effort from a grassroots effort in Indianapolis and
St. Paul, the twin cities heroes parade is set for this Saturday, July
28th, starting at 11:00 a.m., making Minneapolis and St. Paul the ever
growing list of cities hosting welcome home parades.

It began in St. Louis in January. Since then there have been welcome
home parades in Houston, Tucson, Fayetteville, North Carolina, Melbourne,
Florida, Richmond, Virginia, Kansas City, Missouri, Austin, Texas, and
Portsmouth, New Hampshire.

And now the twin cities in Minnesota. This latest parade was
originally supposed to happen in April. But you remember the red bulls?
They weren`t all home yet. And their friends and family and the military
reached out to organizers to see if they could please wait. So they did.

Tomorrow, vintage war planes will fly overhead as veterans of the wars
in Iraq and Afghanistan and their families march through downtown
Minneapolis.

There will be face painting for kids, mascots from local hockey and
baseball teams and music and for the veteran themselves, a resources area,
a whole bunch of organizations, gathered in one place to help hook veterans
up with information and services like applying for tax credits, filing a
claim with the V.A., or finding a job.

So this weekend in Minnesota, it is welcome home to Iraq veterans and
all post-9/11 veterans are getting a well deserved thank you from their
community. Maybe if you`re in town, you`ll stop by and join in.

That does it for us tonight. Don`t forget, you can check out my work
at wonkblog.com at the Great :"Washington Post" or follow me on Twitter at
Twitter.com/Ezra Klein and on Facebook, Facebook.com/EzraKlein.

Now it`s time for "THE LAST WORD " with Lawrence O`Donnell.

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

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