updated 10/8/2012 11:59:17 AM ET 2012-10-08T15:59:17

UP WITH CHRIS HAYES
October 7, 2012

Guests: Ro Khanna, Chris Rabb, Peter Welch, Rebecca Traister, John McWhorter, Lizz Winstead

CHRIS HAYES, HOST: Good morning from New York. I`m Chris Hayes.

President Obama returns to Los Angeles today for a celebrity-studded
concert and fund-raiser. And Venezuelan president Hugo Chavez faces what
might be his biggest electoral challenge to date, as Venezuelans go to the
polls in today`s presidential election there.

Right now, joining me today, we have Congressman Peter Welch, Democrat
from Vermont, Chris Rabb, author of "Invisible Capital: How Unseen Forces
Shape Entrepreneurial Opportunity," and adjunct professor at the Fox School
of Business at Temple University, Ro Khanna, author of "Entrepreneurial
Nation: Why Manufacturing Is Still Key to America`s Future," and former
deputy assistant secretary in the Obama Commerce Department, and my
colleague, J.J. Ramberg, the co-author of the new book, "It`s Your
Business: 183 Essential Tips That Will Transform Your Small Business" --
(INAUDIBLE) to the 184th tip -- and host of MSNBC`s "YOUR BUSINESS," which
precedes us on Sunday mornings.

So you look familiar to our viewership, I am sure. It`s great to have
you here.

J.J. RAMBERG, CO-AUTHOR, "IT`S YOUR BUSINESS": Thank you. Good to be
here.

HAYES: All right, if there has been one hero of this presidential
election, it has been the mythic small businessman. Republicans dedicated
their entire convention to the small business owner with the theme "We
built this." And Democrats rarely miss an opportunity to tout how their
policies would help small businesses.

This dynamic was on full display in Wednesday night`s presidential
debate, where the words "small business" were mentioned over 25 times.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: ... make sure that
we`re helping small businesses.

MITT ROMNEY (R-MA), FMR. GOV., PRESIDENTIAL NOMINEE: ... champion
small business...

-- the number of small businesses...

-- small business people...

I know what it takes to get small business growing.

-- helping small business...

-- because small business...

OBAMA: ... encouraging small business growth...

-- lowered taxes for small businesses...

-- small businesses...

-- through small businesses...

-- through small business...

-- 97 percent of small businesses...

ROMNEY: It`s small business...

OBAMA: ... focusing on small businesses...

ROMNEY: ... guy who has a very small business...

-- successful small businesses...

-- these small businesses...

OBAMA: ... those small businesses...

(END VIDEO CLIP)

(LAUGHTER)

HAYES: But all the praise for small businesses and their owners
obscures the big questions we should ask. What exactly counts as a small
business, and what is their role in the U.S. economy? It turns out that
many of these small businesses talked about by political elites are
anything but small.

In order to avoid paying corporate income taxes, many business owners
use pass-through entities, sole proprietorships, limited liability
companies and so-called S-corporations allow companies with a limited
number of owners to file no corporate taxes and pass profits through to the
owners.

The owners then file the profits on their individual tax returns,
making the term "small business" in some cases more about the number of
owners, rather than anything else. As a result, these small business
owners include partners in hedge funds, private equity shops and lawfirms.
And as President Obama pointed out during the debate, also Donald Trump.

(BEGIN VIDEO CLIP)

OBAMA: Under Governor Romney`s definition, there are a whole bunch of
millionaires and billionaires who are small businesses. Donald Trump is a
small business. And I know Donald Trump doesn`t like to think of himself
as small anything, but that`s how you define small businesses if you`re
getting business income.

(END VIDEO CLIP)

HAYES: All right, this term is driving me nuts, I got to be honest.
It`s -- it has become so central. We all -- everybody celebrates small
business. It seems to me a term in search of an actual definition. It
also seems that There is no actual agreed-upon definition, so it could mean
anything, basically. It`s like saying "workers," and workers includes
hedge fund managers and janitors because they both work for a living, but
that`s not a useful concept in any way.

And it also seems reverse-engineered to score some political point,
right? It seems like it begins as it`s business, but it`s small. Like,
that -- it`s great, right? Like, it`s not big business. That`s a -- big
business is bad, but it`s -- but it`s business. It`s not the state, the
public sector. It`s everything we love as Americans because it`s small,
but it`s business.

What is a small business?

RAMBERG: Yes, and it`s completely misrepresented in many ways, the
effect on small business -- they use -- people use the term because it`s
easy to get behind small business, right? Nobody wants to go out there and
say, I`m against small business. And so it`s easy to go out there and say,
This helps or this hurts small business.

But in terms of the actual definition, I mean, if you look at the SBA,
it`s under 500 people. And I think...

HAYES: Employees. Employees.

RAMBERG: Under 500 employees. I think all of us at this table can
agree that if you have 499 employees, you do not have the same needs as
somebody who has four employees. And so it gets very confusing.

HAYES: I think the -- part of the reason of the force of the concept
is that we all -- I mean, I think about the laundromat or the diner down
the corner from my block that I love, and I love the owner and I love the
people that work there.

And like, I don`t know, they probably have 12 employees or something.
And it`s, like, I -- you`re great. You guys are great. I want everything
to help you in the -- in the (INAUDIBLE) policy standpoint. But that`s not
necessarily what we`re talking about, right?

CHRIS RABB, AUTHOR, "INVISIBLE CAPITAL": Right, but we are also have
people in the same community who -- let`s say it`s a Latina who employs
people from the community and is a predatory lender. It`s a small
business, too.

HAYES: Right!

(CROSSTALK)

RABB: ... predatory lenders. That`s just me, you know?

HAYES: Right. Right.

(CROSSTALK)

RABB: So we have to get beyond the terms. I say, starting with this
show, we have a moratorium on the term "small business" because, you know,
as a guy, I like unicorns.

HAYES: OK.

RABB: But I don`t say I like unicorns with horns...

HAYES: Right.

RABB: ... because that`s a given.

HAYES: Right.

RABB: OK? So it`s the same with small business. 99.7 percent of
businesses are technically small business, based on the government, right?

HAYES: Based on the 500 -- less than 500 employees.

RABB: Fewer than 500 employees. Exactly.

HAYES: Right.

RABB: So you could can fit all of the CEOs of firms over 500
employees in Madison Square Garden. And the rest of the businesses...

HAYES: Right.

RABB: ... could fit in -- or the population of South Carolina, more
or less.

HAYES: Wow.

RABB: It`s massively different. You`re talking about roughly 18,000
people who run businesses more than 500. That`s very small compared to the
millions of businesses that generally are having a very hard time.

So it`s not a matter of bigness or smallness. Ultimately, it should
be about those businesses that help sustain communities versus those that
prey on them.

HAYES: Isn`t this just -- Congressman, this is just -- it strikes me
this has just become one of these things that`s just, like, political cant,
right? I mean, you are never going to get up in the well of the House and
say, I proudly bring before you today this bill that is really going to
stick it to small businesses.

(LAUGHTER)

HAYES: Because that -- I mean -- but if you say, This bill is going
to be great for small businesses, whether or not that`s the case, then you
-- you give it this kind of patina of legitimacy.

REP. PETER WELCH (D), VERMONT: Well, you`re right on both counts.
I`m not going to stick it to small businesses.

(LAUGHTER)

WELCH: But you know, it`s not a term in search of definition, it`s a
term to avoid definition. That`s the deal because everybody wants to be,
quote, "for business."

But the reality is that some small businesses get the job done. But
most of the time, when you`re talking small business, it is -- the sense of
it, I think, is that it`s people who are in the business that they`re
running -- the owner, occupier. They`re actually there getting their hands
dirty, getting the job done.

But the truth is that we need big business and small business. And in
fact, small business does very well if some of the big businesses are doing
well, as well. And there`s an unwillingness to take on the definition of
what the role of government is in big business in restraining anti-
competitive practices, predatory practices.

But you really do need both. And in fact, it really should be much
more part of, How do we build an economy that`s sustainable, that helps
build communities? And then what`s the role of government in it?

RO KHANNA, AUTHOR, "ENTREPRENEURIAL NATION": In the debate, I think
what you saw is Mitt Romney can no longer defend tax cuts for the rich, so
he wants to say, Well, I`m not really for tax cuts for the rich, I`m for
tax cuts for small business.

(CROSSTALK)

KHANNA: But look at the definition. Under the definition of small
business...

HAYES: Hold that thought. Let me play -- let me play Mitt Romney
making exactly this case, right, which he basically says, You want to raise
taxes top marginal rates, that`s fine because you think you`re going to
stick it to rich people. But really, you`re going to stick it to the
beloved small business owner.

KHANNA: Right.

HAYES: Check it out.

(BEGIN VIDEO CLIP)

ROMNEY: Mr. President, you`re absolutely right, which is that with
regards to 97 percent of the businesses are not taxed at the 35 percent tax
rate, they`re taxed at a lower rate. But those businesses that are in the
last 3 percent of businesses happen to employ half -- half -- of all the
people who work in small business.

(END VIDEO CLIP)

HAYES: OK, please respond to that because there is so much nonsense
in that little bit of sound!

KHANNA: Well, first of all, the statistic that it employs half is
just ridiculous. But let`s look at this really carefully. Under that
definition of small business, I`m a business. Why? Because I`ve written a
book. I get royalties on the book. That`s business income.

So if Mitt Romney cuts my taxes, suddenly, I -- I`ll have more money
to come from Silicon Valley to travel to New York to be on your show. I`m
not going to go and hire anyone.

HAYES: Right.

KHANNA: So this idea that cutting the taxes is going to lead to job
growth is absurd! And in contrast, you know, the president`s saying, I`m
for tax cuts, too, but I am going to give tax cuts if you actually hire
someone.

HAYES: Look, let me make (INAUDIBLE) establish one thing first,
though, just because it can get -- I -- my brain was soup as I was trying
to sort through all of these different definitions.

The SBA, the Small Business Administration, defines small businesses
as with employers less than -- 500 or less, employees, right? So if you`re
qualifying for a small business loan -- that`s not the definition that`s
being used here. The definition that`s being used here is actually a tax
status, right? In this study...

(CROSSTALK)

RAMBERG: And this is where the fact (ph) is wrong. So...

HAYES: Yes. Thank you.

RAMBERG: ... all the people who have pass-through income -- so you
have a kind of company that`s set up so that you`re not taxed at the
corporate rate, you`re taxed at the personal rate -- those people employ
half of the Americans that he`s talking about...

(CROSSTALK)

HAYES: Half of the people employed by small businesses, right.

RAMBERG: It`s not the 3 percent that he`s talking about. The 3
percent employ a small percentage of that.

HAYES: Right.

RAMBERG: So when he`s talking about 54 percent...

HAYES: Oh, I see what you`re saying!

(CROSSTALK)

RAMBERG: ... it comes from an Ernst & Young study...

(CROSSTALK)

HAYES: An Ernest & Young study that was commissioned by the S-
corporation trade group, OK? I was reading the study last night.

RAMBERG: Right, but the study still says the correct thing. It`s all
of these corporations with pass-through.

HAYES: Right. I just -- I just want to make the point that this
study that is the bedrock for these statistics about this thing about small
businesses and their job creation potential or all these sort of fractions
you get in the debate about -- that study about S-corporations, which is a
specific kind of pass-through income entity, was commissioned by the S-
corporation preservation trade group that Ernst & Young did for them,
right? So that`s -- that`s the foundation upon which we are basing these
policy debates.

WELCH: I`m getting a headache listening to us talk.

(LAUGHTER)

HAYES: Perfect! (INAUDIBLE)

WELCH: And I think that`s sort of what happened in the debate because
average people sitting there are trying to figure out how are they going to
pay the bills and where can they get a decent job. And they know that the
jobs that are out there now aren`t paying the bills. They know that
inflation is going up. Even though it`s, like, 1 or 2 percent, it`s -- buy
gas at 4 bucks a gallon, pay for college education, whatever it is.

And the talk on small business just obscures, What are we going to do
in this economy to increase demand? And demand is then going to drive the
profitability of small business, just what you said.

HAYES: We`ve got a survey about -- of small business owners, which I
thought was very interesting. It was conducted by Wells Fargo and the
Gallup Small Business Index. And they say to them, Why aren`t you hiring -
- why are you not hiring, right?

And their number one hiring concern is that the revenues won`t justify
adding employees -- I mean, that there aren`t enough people, customers to
sell things to because the economy is not very good.

And then you have to go current state of economy, cash flow ability to
make payroll -- you have to go all the way down to the bottom of that for
new government regulations at 46 percent.

RAMBERG: So after the -- after the debate, I spent a lot of time
first talking to small business organizations to say, What was your
reaction to this? And they had all these very interesting statistics and
big ideas.

Then I spent a bunch of time talking to small business owners and
saying, What did you think of the debate? And you know what they said? I
don`t really care. What I care about is how am I going to get more people
through my door? How am I going to increase my customers? What`s my
marketing plan?

HAYES: I want to -- I want to talk about some of these groups that
represent or speak for small business, like the National Federation of
Independent Business, which is another brilliantly Orwellian name, and
also, if we focus in on a definition of small business that we can agree
on, whether we should really be helping them anyway. Like, is it the case
that they play some special role in the economy -- right after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ROMNEY: Your plan is to take the tax rate on successful small
businesses from 35 percent to 40 percent. The National Federation of
Independent Businesses said it will cost 700,000 jobs. I don`t want to
cost jobs. My priority is jobs.

(END VIDEO CLIP)

HAYES: That was a moment in the debate last night on Wednesday night
that almost made me climb out of my chair because this has become
commonplace in the election. Scott Brown has cited a study by the National
Federation of Independent Business, and what could possibly more -- be more
independent than a federation of businesses...

UNIDENTIFIED MALE: Exactly.

HAYES: ... that then themselves are independent?

UNIDENTIFIED MALE: Right.

HAYES: But the National Federation of Independent -- is essentially a
right-wing interest group that is out there to, you know, destroy Democrats
at every opportunity. I don`t think I`m overstating things when I say
that.

UNIDENTIFIED MALE: No.

HAYES: They have a very -- it would be like me getting up here and
be, like, Well, you know, the Occupy Wall Street working group has -- has
come up with a study saying that -- you know. It`s just not an independent
source in any way.

RABB: It`s akin to someone from the Tea Party saying, You know what?
These folks just don`t hate Obama enough...

HAYES: Right.

RABB: ... because NFIB split from the U.S. Chamber of Commerce years
-- it`s the baby brother of the U.S. Chamber of Commerce.

HAYES: And the U.S. Chamber of Commerce, we should say, has been
incredibly opposed to things like the Affordable Care Act and others and
has fought Obama tooth and nail. But the National Federation of
Independent Businesses split off because they thought the Chamber of
Commerce was too soft.

RABB: Yes.

HAYES: Right? That`s -- so that`s...

RABB: And on a more basic level, too. I mean, they oppose
regulations of virtually every kind. They oppose Affirmative Action, which
-- you know, interesting because elite organizations, corporations...

HAYES: Have all filed amicus...

RABB: Exactly.

(CROSSTALK)

RABB: Universities all support these things as necessary things for a
diverse and highly competent workforce for the 21st century. So NFIB is
radical. So any time anyone references that, it`s a red flag.

KHANNA: Here`s the irony. If you forget all the complicated and
misleading statistics and just talk to actual small business owners...

HAYES: Yes.

KHANNA: ... and you say, What do you need?

HAYES: Yes.

KHANNA: Do you want a marginal tax cut of 5 percent? Almost every
small business owner will tell you, in my judgment (ph), that their biggest
issue is access to capital. How do they get loans? How do they survive
the valley (ph) of death (ph)?

And the biggest place where you can help them is the Small Business
Administration, which is providing these loans. Three of the people who
spoke at the Republican convention, quote, unquote, "small business owners"
championing him, received loans from the SBA!

UNIDENTIFIED MALE: You know, that`s really true, and...

KHANNA: And that`s where the president -- he`s increased the loans
that the SBA is providing. He increased the limit from $2 million to $5
million for the loans available. He`s said you can have venture-backed
companies that get loans. So let`s have a real debate...

(CROSSTALK)

HAYES: There have been increased -- they have expanded the category
of enterprises and the amount of loans that you can get from the SBA.

WELCH: That`s true and...

KHANNA: Absolutely.

(CROSSTALK)

WELCH: ... and they work -- the SBA works with our local banks. And
the smaller the bank, the better.

But you know, I think that the whole debate on small business is
really a metaphor for big, bad government. You know, the Democrats always
have a burden of trying to convince people that what we`re trying to do
actually can be in partnership with creating jobs and helping businesses.

But to the extent that the government -- right now in the debate, it`s
the enemy. So when we talk about small business, it`s trying to provide
some reassurance. I think that`s what President Obama is trying to do,
that, Hey, we hear you. We want to be your partner.

When they talk about small business, it`s trying to peg us as the ones
who are the enemy.

UNIDENTIFIED MALE: Right.

HAYES: J.J., do you agree with Ro, what Ro just said about what --
what small business -- you spend all your time, basically, talking to small
business owners. And when we say small business, I should -- because the
category is so murky -- I mean, I watch your show, and it`s, I have a
retail shop and I have, you know, seven employees or...

RAMBERG: Right. We do not deal with the 499...

HAYES: Right.

RAMBERG: ... employees...

HAYES: Exactly.

RAMBERG: Access to capital is definitely an issue. I don`t find it
as the biggest issue. I think -- I think -- I mean, the NFIB does say
this, and in my experience, I agree with it, which is getting customers it
the biggest -- is the bigger issue.

HAYES: Right.

RAMBERG: And a lot of people aren`t going out to try and get loans
because they`re not certain they`re going to be able to pay them back.

UNIDENTIFIED MALE: Right.

RAMBERG: But I do think access to capital is big. The SBA definitely
has increased the number of loans, but there are an awful lot of issues
with banks being able to actually lend money to small business owners.
That is still an issue.

HAYES: Chris?

RABB: So here`s the thing. SBA doesn`t give money, it just
guarantees loans.

HAYES: Right.

RABB: Right? So you still have to go...

RAMBERG: Right.

RABB: ... to your local bank in order to qualify. But there are a
ton of business owners, as you well know, who don`t have the collateral,
who don`t have good credit to get a bank and then -- to get a bank loan and
then get a guarantee from the SBA.

RAMBERG: And talking about regulations, there are some regulatory
issues that are making it harder for banks to loan to small businesses.

HAYES: But let me ask -- can I -- can I ask this question before we -
- it`s, like, OK, why should I care? If I -- and we all presume that
helping small business is an obvious...

UNIDENTIFIED MALE: I don`t.

HAYES: ... is an obvious policy goal, right? We should -- the
government should be doing...

(CROSSTALK)

HAYES: ... and you just touted the Small Business Administration.
Well, look, you know, we don`t have those subsidies for other kinds of
loans. I mean, we do for student loans and other things. Why -- once we -
- once we get our hands around the definition of small business, what --
what is special about small business that we should be concerned with
its...

RABB: OK...

HAYES: ... survival either way?

RABB: All right, so most businesses are geographically small.
They`re small-scale in terms of the number of people they employ, and also
their range of services and products. So they are often neighborhood,
maybe town, city-based businesses. So they`re -- if they`re going to
employ people, they`re going to employ people from their local economy, and
that is inherently good, right?

It doesn`t matter if you have somebody who`s coming in and brings in a
business and it hires everyone from outside.

HAYES: Right.

RABB: I`m not even talking about outsourcing, I`m talking about the
suburbs versus inner-city Philadelphia. When I`m concerned about
businesses coming into my city, right, I`m interested that they employ,
ideally, people who are chronically underemployed or unemployed.

HAYES: Right.

RABB: Those are the -- that would be the biggest bang for the buck.
If we want to have a real policy to help businesses, it should be ones that
target areas where you have the greatest distress in terms of economic-
socio issues.

HAYES: Ro, I want to hear your thoughts on this, just quickly going
to take a quick break.

KHANNA: Sure.

(COMMERCIAL BREAK)

HAYES: Ro Khanna, you worked in the Obama administration on a lot of
small business issues. You`ve written a book about entrepreneurship. And
what we`re talking about now is both the -- the kind of politics of the
term "small business," but then the actual economic role of small
businesses, and then finally, whether we should actually be crafting
government policy around small businesses.

KHANNA: Well, when it comes to economic growth and job creation, not
all small businesses are equal. The small businesses that have created the
most jobs are the ones that have come in existence in the last five years.

HAYES: Right. Exactly.

KHANNA: They`re the start-ups. And when you look at what those
start-ups are in, it`s in clean technology, biotechnology, information
technology. And it`s often started by immigrants.

So what are the policies, then? Let`s have immigrant reform. Let`s
have investment in international laboratories. Let`s have investment in
ARPA-E and science and technology university research.

You know, it`s much more comprehensive, how to foster start-ups, than
just cutting the marginal tax rate on wealthy individuals.

HAYES: This is a really important point about job creation, right,
because the other thick (ph) stat we get is about small businesses creating
most of the jobs. And of course, small businesses, when they`re 99.7
percent of the businesses, that shouldn`t be surprising. It`s just
statistical tautology, in some ways.

But the places where you do see more job creation is in small start-up
firms. In the first five years of firms, that`s where you`re getting the
most.

And there is -- there is a really interesting trend that`s happened in
the economy, which is that firm creation and start-ups have declined, and
in a disturbing way. I think we have a chart of new businesses. The
number of U.S. companies less than a year old starts to decline. Now, it
starts to decline not when the tyrannical socialism of Barack Obama is
imposed on the nation, but actually way back in 2006.

And it actually -- that -- that last part of the chart is pretty
striking. I mean, there is -- there is something happening. Now, it might
just be that that`s when the housing bubble bursts, and then we have this
long recession, so people aren`t starting businesses because they don`t
think there`s going to be customers for them. But that strikes me as -- as
something important and a real -- a genuine problem to think about.

(CROSSTALK)

RABB: No, no, no. I mean, what it takes to be a business is to print
a business card in this country. Most businesses are sole proprietors.

HAYES: Right.

RABB: If you -- if you say you`re a businessman, you`re a
businessman. That`s one of the good things about this country...

HAYES: Whether you`re (INAUDIBLE) or not.

RABB: Exactly, right? I mean, the challenge is -- we don`t need more
entrepreneurs in this country. We need, actually, a more inclusive,
better-trained entrepreneurial class, right? If all of these universities
and corporations and government officials say, We need a diverse, prepared
workforce, some of those work -- those people in the workforce are going to
start their own businesses. We want them ready.

If they`re listening to Donald Trump, we`re screwed, right, because
Donald Trump believes all you need is a great idea...

HAYES: Right.

RABB: ... a good attitude and hard work.

(CROSSTALK)

HAYES: This is the story we heard.

RABB: That`s the unholy trinity of business in America, right? But
there`s no statistical -- there`s no data to prove that that`s enough. And
everything else is what I call "invisible capital," all those things.

And a perfect example is if -- the five things that are the only
statistically significant things that will improve your chances in
business, according to the Kauffman Foundation, which is the preeminent...

(CROSSTALK)

HAYES: ... huge study that...

(CROSSTALK)

RABB: And they do studies all the time and they`re respected by
Democrats and Republicans alike.

They say that it is access to sufficient start-up capital, formal
education, choice of industry, which is what you were just talking about,
previous work experience in a relevant field, and previous work experience
in a family-owned business.

They are the only five statistically significant factors that improve
your chance in business.

RAMBERG: I mean, you and I both agree about this. There`s this sort
of cult of the entrepreneur, right? Everyone wants to be an entrepreneur.

UNIDENTIFIED MALE: Totally.

RAMBERG: And when we think of that, we think of Richard Branson or
Mark Zuckerberg, which is not the reality for most people, right? Running
their own company is very hard and it`s very scary and you`re up at 3:00 in
the morning.

That said, I do think it`s important to support small business, A, for
job growth, and B, because a lot of innovation comes from these small
businesses.

I would like to do a study one day of big business and small business
and try and get the same thing through, the same idea or anything through
and see how long it takes through a small business and a large business.

HAYES: There`s a -- yes, please.

WELCH: Well, no, I was going to say that I thought really -- your
point really was good. When we`re talking about it politically, we dumb it
down and we act as though government can somehow pick the winner small
business and the loser small business.

And in fact, it should be at the focus of the individual start-up
business, or macro policies like immigration reform, where you`re going to
get people who`ve got an incredible amount of energy, or education, which
is getting increasingly impoverished and where it`s out of reach for lots
of folks, or infrastructure, which we should have been building.

We need more broadband in Vermont for folks to be able to come up from
New York and bring the good ideas to Vermont.

HAYES: Or...

WELCH: These are macro policies that only government can do. The
micro, picking whether you`re going to be successful or you`re going to be
successful we`re really bad at. But the macro is the -- is where you need
governmental investment in these things that then give somebody with a good
idea, a willingness to work hard a shot at getting...

HAYES: And there`s one more area of policy that no one ever talks
about and that there has basically been a consensus on since Reagan, which
is anti-trust policy. There is nothing in this -- we just do not care
about anti-trust enforcement anymore, more or less. There`s a few
exceptions that prove the rule.

But I want to -- I want to ask about, do we actually -- do we actually
value small business in any real way in a world of Wal-Mart and Amazon?
Right after this.

(COMMERCIAL BREAK)

HAYES: There`s a fantastic book that you should check out. It`s by a
guy named Barry Lynn, who works at the New American Foundation. It`s
called "Cornered," and it`s about monopoly capitalism, and it`s sort of the
history of anti-trust and the fact that there was this intellectual
tradition that was very much pro-concentration, right? Large firms are
more efficient. We want to get rid of small businesses.

And this was even a left/right belief, right? There was the -- the
big consolidators at the time, and even the kind of proto-socialists
thought, yes, big enterprises, and we can organize their workers and -- at
then in the end of the New Deal, there was this turn towards much more
aggressive anti-trust enforcement and a really explicit policy of trying to
create competition and also to try to preserve small businesses.

And there`s policy mechanisms you can do this. I was just reading
about how in France, they don`t allow large book sellers to sell under cost
the way that Amazon does, which has basically destroyed the world of
independent book sellers. And that`s just something we would never do
here, right, because it`s antithetical to the American belief in the price
system. You can`t tell people the price they can sell books at.

But if you were really serious about the fact that there`s a social
value to small businesses as small, as independent book sellers, you could
do that, right?

Another area of policy that we were just talking about is patent law,
right? I mean, it seems to me like those are two big parts of American
policy that don`t get discussed, but if we were serious about small
business would get discussed.

RABB: Right. Well, my brother and I started a business back in the
mid-`90s in Chicago, and we eventually filed for two patents. And we got
them after our business was shut down.

(LAUGHTER)

(CROSSTALK)

RABB: And we owed so much in legal fees, and if anyone came up
against us, we couldn`t afford to go after them.

RAMBERG: That`s the issue that`s not talked about a lot, is not only
do you have to get the patent, then you have to defend the patent, and
so...

HAYES: Talk about what does that mean because this -- I think there`s
-- there`s really interesting reporting being done on this, and it hasn`t
bubbled up as a big political issue, but it`s really important.

RAMBERG: Right. OK, so I`m a small business owner. I get a patent.
I find out you, Chris Hayes, huge business (INAUDIBLE) or big companies,
millions of dollars, billions of dollars, you`re violating my patent.
Well, now I have to fight it -- I have to fight you.

HAYES: Right.

RAMBERG: And you have deep pockets, I don`t. Who`s going to win?

HAYES: Plus, there are entire little micro-enterprises that are just
patent trolls, right? They`re -- they just sue people for patent
infringement.

WELCH: Yes, a lot of Texas operations. But they -- no, this is in
Vermont. It`s exactly right. I`ve been talking to some business folks up
there, and they`ve got patents and they`re getting sued constantly. And
it`s just a stick-up.

And how do you -- this is an area where government should provide some
clarity, so that if you have a patent where there`s a dispute, it can be
resolved and settled quickly and not basically you having to give up what
you have earned.

KHANNA: And in terms of getting patents, I mean, the administration
tried. Partly, it`s a funding issue. The Patent Office is woefully
understaffed, underfunded to get these patents out.

HAYES: Mark down 8:36 is when we got to Patent Office funding in the
show!

(LAUGHTER)

KHANNA: But no, it`s important because I think...

HAYES: No, I know it`s important!

KHANNA: ... what J.J.`s point was, look, starting a small business is
really hard. And saying that simply cutting taxes -- it sounds great, and
I wish it were that easy, but it`s not. If we`re going to be competitive,
as the congressman said, we have to care about infrastructure, we have to
care about immigration, we have to care about access to capital, consumer
demand, patent. And that`s hard to talk about in a debate, but that`s
reality.

HAYES: We talk the policy frameworks -- let me just show this, the
number of U.S. jobs in new companies -- numbers of U.S. companies in new
companies over the last four administrations going back to George H.W.
Bush.

Again, we see that fall-off. The fall-off begins under George W.
Bush. But my point there is that marginal -- it`s very hard to look at
that and tell a story about marginal tax rates as being the thing that is
defining because, obviously, you see very high levels of...

RAMBERG: You know, I also want to make this point about new
companies. We talk about small business as the savior, right? We`re going
to create -- we`re going to create jobs. What people don`t realize is that
as a small business person, your goal is to not hire people. Your goal is
to keep your expenses down as low as possible...

HAYES: That`s right!

RAMBERG: ... while creating revenue.

HAYES: Right.

RAMBERG: And so...

HAYES: And labor is very expensive. It`s the biggest part of your
payroll (INAUDIBLE)

RAMBERG: And labor is very expensive. And so with the advent of the
Internet, all this technology, it`s much easier to run a company without
hiring as many people.

HAYES: Chris Rabb, author of "Invisible Capital: How Unseen Forces
Shape Entrepreneurial Opportunity," Ro Khanna, author of "Entrepreneurial
Nation: Why Manufacturing Is Still Key to America`s Future," and my
colleague, J.J. Ramberg, co-author of "It`s Your Business: 183 Essential
Tips That Will Transform Your Small Business," and host of "YOUR BUSINESS,"
which is here every Sunday morning at 7:30 AM Eastern.

Thank you so much. This was a great conversation.

RAMBERG: Thank you.

UNIDENTIFIED MALE: Thank you.

UNIDENTIFIED MALE: Thank you.

HAYES: Americans face plenty of pressing issues aside from the
economy, we just didn`t hear about them during Wednesday`s debate. That`s
next.

(COMMERCIAL BREAK)

HAYES: A little Mountain Goats on this Sunday morning. And I am
going to make it through this year if it kills me.

According to a recent NBC News/"Wall Street Journal" poll, 46 percent
of voters say the single most important issue in deciding who to vote for
is the economy. The second most important concern, social issues.

On Wednesday night, there wasn`t a single word mentioned about the
latter. This Thursday, in the debate between Vice President Joe Biden and
Representative Paul Ryan, and in the next presidential debate on October
16th, voters will get another chance to hear what candidates have to say
about a whole host of issues beyond budget, policy and health care, things
like voting rights, women`s rights, marriage equality and welfare reform,
topics that were omitted from last week`s match-up between President Barack
Obama and Mitt Romney.

For me, one of the most glaring omissions of that night was the issue
of sensible gun laws. Let`s remember the first presidential debate took
place a short distance from Aurora, Colorado, the site of this summer`s
mass shooting that killed a dozen people and injured 58 others.

One of those victims, a man named Stephen Barton, had a message for
the candidates in an ad that actually aired during the debate.

(BEGIN VIDEO CLIP)

STEPHEN BARTON, AURORA SHOOTING VICTIM: This past summer in a movie
theater in Colorado, I was shot, shot in the face and neck. But I was
lucky. In the next four years, 48,000 Americans won`t be so lucky because
they`ll be murdered with guns in the next president`s term, enough to fill
over 200 theaters.

So when you watch the presidential debates, ask yourself, who has a
plan to stop gun violence? Let`s demand a plan.

(END VIDEO CLIP)

HAYES: Just one of many issues that didn`t get an airing on Wednesday
night`s debate.

Joining us at the table now is comedian Lizz Winstead, co-creator of
"The Daily Show," John McWhorter, professor of linguistics and American
studies at Columbia University and a "Daily News" columnist, as well, and
Rebecca Traister, contributor to "The New York Times" magazine and
Salon.com. Great to have you all here.

All right, so the debate -- I guess I feel of two minds about the
debate in the sense that focus is good and depth is good. And I was
appreciative of the fact that the format allowed for focus and depth on the
issues they did talk about, but frustrated that there`s only so many of
these.

One of them`s going to be foreign policy. And so in terms of domestic
policy issues, the next debate is basically it, and the vice presidential
debate. And I just feel like there`s a lot of stuff I want to hear them
on.

The other issue -- I`ll say it and then I`ll shut up. And I`m curious
what you guys wanted to hear. But the other issue that did not come up
that I was really hoping would come up because it`s a local issue in
Colorado, there is a ballot initiative in Colorado right now that hasn`t
gotten a ton of attention nationally, but it`s pretty interesting.

A majority of likely Colorado voters support Amendment 64 to legalize
marijuana in the state of Colorado. It`s 51 percent in favor, 40 percent
not in favor. So this is a big deal. This is probably going to happen in
Colorado. And I really genuinely wanted to hear Mitt Romney and Barack
Obama say where they were on it.

REBECCA TRAISTER, SALON.COM: And one of the things that strikes me --
I constantly hear the dichotomy between (INAUDIBLE) went deep on economic
issues but we didn`t touch on all the social issues, like women`s rights,
or for example, drug laws.

We don`t talk about the way that a lot of the social issues that we
write off as kind of soft are economic issues. So that when you`re talking
about employment, when you`re talking about health insurance, when you`re
talking about people`s ability to participate fully in the economy, you
actually are talking about women`s rights. You`re talking about
reproductive rights. You`re talking about drug laws. You`re talking about
issues like prisons, right, that we didn`t talk about, we never talk about,
right? But -- and gun laws...

HAYES: Right, because there ends up being this kind of Mars/Venus
distinction, right...

TRAISTER: Right. And...

HAYES: ... with the hard numbers here, and then, like...

TRAISTER: Right.

HAYES: ... the social issues there.

TRAISTER: Right. And in fact, what we never get to is the important
thing we need to acknowledge and address, which is these are economic
issues. These are the heart of our economic issues, you know, across the
country.

JOHN MCWHORTER, COLUMBIA UNIVERSITY: The drug laws create an entire
generation of people who, because of things that they`ve done, which maybe
they eventually regret, ends up holding them down for the rest of their
lives.

And it also -- it creates a distraction. If life has not been
terribly kind to you, maybe sometimes for a given week or two, it`s easier
to make the choice of going onto the black market, so to speak, and selling
drugs. Next thing you know, you`re stuck.

And if you`ve done time, it`s can be very difficult to have any kind
of life. That`s now becoming a race-neutral issue. It`s creating a whole
group of people. And so therefore, no, it`s not just a social issue, it`s
about the whole fabric of the nation.

LIZZ WINSTEAD, COMEDIAN: I would also say, too, it`s also one of
those issues that when we talk about these independent voters -- you know,
legalization of marijuana is something that libertarians talk about, you
know, that tiny little middle when we all say, How could there be people
who are undecided? That particular issue is one that really resonates.

HAYES: And it`s showing up in the -- I`m kind of amazed by the
polling out in Colorado on this, frankly. I mean, I do think -- I think
this is -- this is a place where we`ve paid a lot of attention,
particularly on this show, to the amazing evolution of public opinion on
gay rights. But this is -- on legalization is another place...

(CROSSTALK)

HAYES: ... real sea change happening. Congressman, are you ready to
come out in favor of legalization on the show here?

WELCH: Well, we have medical marijuana in Vermont. But you know,
what struck me is that the debate -- the presidential debate mirrored
congressional debates...

HAYES: Yes.

WELCH: ... which is to say we don`t talk about anything. We actually
don`t have a conversation.

HAYES: Congressman...

(CROSSTALK)

HAYES: ... we talk about nothing (INAUDIBLE)

(LAUGHTER)

WELCH: Well, it`s so different than when I served in the Vermont
legislature, where you`d have -- the committee would be in the same room at
the same time, hearing the same witnesses, and over time, you`d get to
build up some trust and you have some confidence that the person you were
talking to actually wanted to make Vermont a better place.

In Washington, it`s all talking points and it`s all poll-tested. We
don`t sit together in a committee room. The folks who come in to talk have
an agenda. The most glaring one was, of course, the contraception issue,
where it was all men talking about women`s issues.

So the inability to actually have adult conversation about issues that
are tough, and to have a certain amount of mutual respect and trust where
you`re debating some of these things like prisons or legalization that`s
not an easy issue -- it`s not like there`s a quick, easy answer.

But the debate mirrored that. And that`s a breakdown...

HAYES: Really good point.

WELCH: ... in congressional functioning.

MCWHORTER: So there`s no informal situation where over drinks or in
the cloakroom or walking down the hall, where people have the real
conversation, where the real business...

WELCH: We don`t.

MCWHORTER: ... gets done...

WELCH: No. No. It`s terrible.

MCWHORTER: ... like in the old days?

WELCH: And you know, I started having these lasagna dinner parties at
my house. And we had -- we had some Republicans over. And it was, like,
such a big deal, it actually got in the news. We had Costco lasagna, and
that was, like, newsworthy.

HAYES: Delicious. Hold that thought. I want to talk about what you
would -- as a sitting member of Congress, what you would like to see
addressed on Thursday in the vice presidential debate and the next debate,
and I want to talk about issues some of the issues that you -- you just
mentioned glancingly about contraception, right after we take this break.

(COMMERCIAL BREAK)

HAYES: We are talking about the omissions, which are sizable, from
Wednesday night`s presidential debate, and also, I think, as an
intervention into what we want to see in the vice presidential debate
that`s coming on Thursday and the one other debate between the two
presidential candidates that will have domestic policy.

Given how much contraception, reproductive choice has been in the news
this year, the war on women, et cetera, it was extremely striking to me, I
have to say, that that was nowhere to be found.

TRAISTER: Especially since the gender gap -- I mean, it`s striking
that Obama didn`t bring it up. It`s no at all striking that -- that Mitt
Romney didn`t bring it up because the gender gap is crucially important to
whether or not Barack Obama is going to win a second term, and it`s very
much on his side.

And so one of the things that I was perplexed about watching the
debate, it was not that he didn`t attack Romney on a variety of issues, it
was that he didn`t offer a sort of positive version, especially given that
it turned out to be a rather free-form...

HAYES: Right.

TRAISTER: ... structure to the debate since Lehrer wasn`t directing
it much. And I wanted him to talk positively about his stance on women`s
rights and his...

HAYES: Right, just bring it up out of nowhere because why not?

TRAISTER: And he should talk about Lilly Ledbetter. You don`t want
to talk about abortion, talk about Lilly Ledbetter...

HAYES: Right.

TRAISTER: ... because this is really working for him strategically in
the -- it`s crucial! And so that was -- that was very surprising to me.

WINSTEAD: And I also think, too -- just to double down that -- did I
just say that? Oh! Kick me off your show right now!

(LAUGHTER)

HAYES: I`m not going to throw you under the bus.

(CROSSTALK)

HAYES: ... throw you under the bus.

WINSTEAD: I think the other thing that people really want to look at
in this election is not only Mitt Romney but the party that Mitt Romney
serves, and with the issues of choice and the legislation that`s going on
not only in Washington but around the states, when -- when -- when -- Obama
gets called up all the time on he didn`t get this done, he didn`t get this
done, he didn`t get this done, and it`s because of this destructive
Congress a lot of times.

When you have Mitt Romney, who`s got to lead this party, especially
the party of, you know, Allen West and all of these people who are
crackpots on science and women`s issues -- that was a real chance for
Barack Obama to say, I have defended you against this this whole time,
and...

(CROSSTALK)

TRAISTER: And I passed health care legislation that changed...

WINSTEAD: Yes!

TRAISTER: ... your economic universe. It changes your ability to
take care of yourself affordably.

HAYES: I`m glad that you mentioned the absence of congressional
obstruction as an issue because that, to me, was very striking, as well.
As someone who works in this body that has about 10 percent approval rating
from the American people, how do you...

WELCH: And falling.

(LAUGHTER)

HAYES: Exactly. How do you talk about -- I mean, are you struck by
how little congressional obstruction seems to be invoked and how much --
how little...

(CROSSTALK)

HAYES: ... the debate?

WELCH: I was really astonished at that because, essentially, Romney
just -- it was a game changer when he came in and he said he wants to tax
the rich. Regulation is essential.

HAYES: Right.

WELCH: That was his quote. He cares for the poor and the elderly.

HAYES: Right.

WELCH: I mean, what planet are we on after the two years that he went
through? And that was when Obama -- because the debate is really much more
about getting an emotional tone and an emotional connection, and the issues
that we talk about are in service of that.

And that was the opportunity for Obama to hold him accountable and ask
him, Well, what about that guy, Mitch McConnell, who`s such a big supporter
of you, and said that his goal...

HAYES: Right.

WELCH: ... as the Senate leader, is to make me a one-term president?
What about the debt ceiling, where you guys pushed us over the cliff and
had no plan B? What about the midnight budget agreement two Decembers ago,
where we were about to shut out the lights in government?

And there was a fight for failure that has been really the core
approach of the Republican leadership. and I think that was an opportunity
for Obama to say something that people know is true. Congress is
dysfunctional, that it`s Republican leadership that had a plan that,
incidentally, worked for quite a while because if nothing gets done, most
people who are busy struggling to get things done, they throw their hands
up and they just say, you know, A pox on both your houses.

HAYES: Right.

WELCH: And that was the moment where I thought the president had the
opportunity to show that he was a fighter because that`s what people also
want to know. And when Romney stole the show by literally turning upside
down what his positions had been, it was time to hold him accountable.

MCWHORTER: Yes, I can`t make any sense out of it. I think -- it`s
been said in some places -- and no, not by me -- that Obama actually -- and
this has been said by people who are fans of his -- that maybe he`s just
not very bright. The other night was the first time I actually wondered
what was wrong with him. It`s not fair that.

And then I don`t think that it`s because he`s afraid to be an angry
black man. To say the sorts of things that you`re talking about there
would not have looked angry, it would have looked just like intelligence.

I suspect that he is used to just being -- riding somewhat on that
charisma of his. And I think he kind of thought that just standing there
and being his rather larger-than-life self would take care of things in a
way they just didn`t because we`re used to him now.

HAYES: Well, there`s one other -- a few other theories about this,
since we`re talking bout. You know, Steve Schmidt at the table on the
coverage made a good point. He worked on the 2004 reelect for Bush. And
he said no one can nag the president to prepare for debates because the
president always has more important things to do.

And when you say, You need to go to debate practice, he says, You
know, Turkey and Syria are about to go to war. That`s sort of the argument
winner. The only person who make the president prepare for a debate is the
president himself prioritizing it. And I do think preparation does matter
and I do think we saw that a little bit.

MCWHORTER: Would he have even practiced, though, for these?

HAYES: Yes! Yes! Yes!

(CROSSTALK)

WINSTEAD: And I just want to say -- and the one thing they should
practice, if their advisers didn`t know this, and maybe they don`t, is what
it`s going to look like on TV because that split screen -- I was surprised.
I -- the network that I watched, and I don`t know which one it was because
it was on at this larger thing that I was at...

HAYES: Sure.

WINSTEAD: ... showed a split screen the entire time.

HAYES: Yes.

WINSTEAD: So when the president is taking notes and carrying on
and...

HAYES: Looking down.

WINSTEAD: He has no idea. If you -- if he were to see that in
advance, if they would have shot it like that, he would have not done that.

(CROSSTALK)

(LAUGHTER)

HAYES: ... apologize. I want to hear what else we should be hearing
on Thursday we didn`t hear on Wednesday after this.

(COMMERCIAL BREAK)

CHRIS HAYES, MSNBC HOST: Hello from New York. I`m Chris Hayes. And
with me this morning I have Democratic Congressman Peter Welch from
Vermont; comedian Lizz Winstead; John McWhorter, Columbia University
professor of linguistics and American studies and Rebecca Traister of
salon.com.

We were talking about Wednesday night`s debate and specifically what
wasn`t in Wednesday night`s debate? Because after the debate was done, I
thought, OK, well, that was an in-depth look at basically three issues:
budget and tax policy, Medicare and the Affordable Care Act and a little
bit about Dodd-Frank.

But basically it was those three issues for an hour and a half. Those
are the issues that are central to the beltway of reporting about the
economy. There was very little about jobs and jobs creation except in
talking about how regulation kills it or small business references.

But then there was an entire panoply of domestic policy issues that
are incredibly important that were not talked about. And that`s fine, but
for the fact that there`s only one more debate between those two candidates
that includes domestic policy.

And then we have Thursday night`s vice presidential debate. And so we
are talking about what was not in there that we would like to see. We
talked contraception. We talked about -- I talked about gun control,
talked about the medical marijuana ballot initiative that is in Colorado
that`s polling with majority support.

Congressman, as someone who is in Congress, are there issues that you
are tracking or working on or thinking about that weren`t touched on
Wednesday night and aren`t getting talked about in the maelstrom of a
campaign that is focused on just about two or three issues?

REP. PETER WELCH (D), VT.: Income inequality. That is the big one
for the country. I mean, the real challenge we have is that this country
is having a declining middle class. There`s all kinds of reasons. And we
can talk about it as though there`s some magic bullet that lowering taxes,
which is the essentially the Romney deal, but income inequality is rising.

The wealth that`s been created in the past 10 years has gone largely
to the top 1 percent. And people know it. And they are insecure. They`re
really anxious about whether their kids are going to be able to make it.

Folks especially around college education -- parents thought they had
retirement security with the equity they have in their home. And they`re
having to put a second mortgage on it after their kids take out loans. The
average kid in Vermont graduates with about $30,000 in debt.

So what are the structural issues that are going to get us back on
track where we have an expanding middle class? They did not talk about
that at all. It was just this back and forth on taxes.

LIZZ WINSTEAD, COMEDIAN AND CO-CREATOR OF "THE DAILY SHOW": Well, and
all those issues go into that. You know, gun control. You know, you have
economic disparity leads to crime whether it`s -- or you are a woman in a
family and can you afford to have a child or not.

You and your domestic partner, if you`re of the same sex, the economy
of trying to get health care and making that work for yourselves. Like all
of it plays into that. And that`s the part that is, I think, glaring to
maybe all of us.

REBECCA TRAISTER, SALON.COM: I was surprised that student loans
weren`t talked about, because that`s another area where Obama and the
administration had something really positive to say, a great record. What
they could have talked about, they had the weird conversation about schools
where mostly all I remember is Mitt Romney saying, "I like great schools."

UNIDENTIFIED MALE: Right.

TRAISTER: "I like great teachers."

JOHN MCWHORTER, PROFESSOR OF LINGUISTICS AND AMERICAN STUDIES AT
COLUMBIA UNIVERSITY: Yes. I would add to that. That`s very important.

Labels matter. I`m not sure if there`s an official name for this, but
what you are talking about is part of the general problem, which is the
mismatch between what passes today for a basic education and being able to
have a middle class existence. That`s a huge problem.

And I think that maybe 30 or 40 years ago, that would have been a
euphemism for bringing up, say, the race issue. But now that`s a
(inaudible) problem, imagine the television show, "Breaking Bad," that
demographic of person --

HAYES: No one talked about "Breaking Bad."

(CROSSTALK)

MCWHORTER: Yes, it was ridiculous. And then they could have talked
about "The Jeffersons." But the point is that we have this entire group of
people who are going to high school and coming out virtually unemployable
or they`re never going to be more than scraping to get by. That`s a huge
problem for the nation. It`s no longer anything local. And I would have
liked that talked about.

It`s about education. It`s about job preparation. Community college
is huge and Barack Obama said a little something about it. It was easy to
miss it. I really missed that in this debate about supposedly the nature
of the country, where anthropologists would have been shocked that so much
was about taxes. Taxes are interesting, but there`s more. There`s a lot
more.

HAYES: And in some ways, our tax debate has gotten very, very focused
on -- very small, in certain ways. The tax debate isn`t about -- isn`t
embedded in the broader issue of the prospects of the middle class, income
inequality.

The other thing that I -- that did not come up -- and I think probably
will not come up in any of the debates -- and it will destroy me that it
doesn`t -- is the single biggest, most important issue for the next
generation, which is carbon, which is the climate.

And its absence from this campaign, is just a really frustrating,
maddening, depressing fact about where American politics is in terms of
confronting what will be, in my opinion and the opinion of a lot of people,
and certainly the opinion of scientists who study the matter, the single
biggest issue.

Here is Mitt Romney in October of 2011 flirting with climate
denialism.

(BEGIN VIDEO CLIP)

FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: My view is
that we don`t know what`s causing climate change on this planet. And the
idea of spending trillions and trillions of dollars to try and reduce CO2
emissions is not the right course for us.

(END VIDEO CLIP)

HAYES: And I would have loved -- I would have loved -- I just want to
hear someone play that tape for him. I want to hear the candidates just
forthrightly have it out over what are you going to do?

Do you, Mitt Romney, do you accept the science? Do you accept the
science that the planet is warming? And if it is, what are you going to do
about it?

MCWHORTER: Why can`t the debate be pointed in that way, is the whole
question.

HAYES: And that gets to the format. My colleague, Rachel, said
afterwards that she thought the debate format died a death on that stage
that night. And obviously the debate format is going to be different in
the vice presidential debate and it`s going to be quite different in the
next presidential debate, which will be a town hall, if I`m not mistaken.

But there`s people who have been arguing, hey, just let them go out
it. It`s fine. And then there are people who are saying, Jim Lehrer
completely -- that was -- that was malfeasance on his part.

TRAISTER: Yes, a different moderator might have left us with very
different feelings about that format, if there was somebody who had reined
it in, who had sort of called both of them on you are not answering the
question, which is -- you know, who knows. I don`t.

MCWHORTER: I think that would have happened a lot. Yes, certainly,
if a moderator had said, here is the question that you need to answer and
phrase it in a certain way and arched his eyebrows and just waited.

What happens with debate teams, the sort of thing that many of us
probably participated in. There`s no reason it couldn`t have been that
hard, as in "Hardball." But it just didn`t happen. It wasn`t what I call a
debate.

WELCH: You know, you are really right about climate change. That is
a huge issue and it`s all about our energy policy and it`s a question of
whether we are going to be in denial about that as something that`s very
threatening to the planet.

And it takes a certain amount of confidence that we have to project to
say that this is a problem and, in taking it on, through efficiency,
through clean technologies, we can create jobs, create wealth and make a
better planet.

So there`s an economic opportunity here. You know, Vermont has been -
- we believe in it. We believe in efficiency. We believe in alternative
energy. My wife is a total energy nerd.

(CROSSTALK)

WINSTEAD: (inaudible) lack of carbon footprint over here.

(LAUGHTER)

HAYES: No, but I think the doubly depressing thing about it wasn`t
just the not mentioning climate, not mentioning carbon, it was the rhetoric
around energy.

(CROSSTALK)

TRAISTER: -- energy projects have failed, which was a lie, that half
of what you funded are businesses. And that, I was distressed that nobody
responded.

HAYES: We are going to fact check that one. We actually have a fact
check of that one. That was actually the most egregious lie said in the
debate, which was -- he said you subsidized green energy at the cost of $90
billion. And I think half of the businesses failed. It`s totally,
completely, absolutely 100 percent -- yes, 9 percent. Yes, we`ll do a fact
check on the numbers of that in a second.

WINSTEAD: And I was going to say that, too, in this particular
format, where it is there was time to actually get to some meat of an issue
-- you bring it up in this debate, because as we go down the line, and it
becomes those two, you have three minutes, it does become Solyndra, boom,
you are out. And then (inaudible) becomes that.

HAYES: How much of this -- I mean, what struck me, it that it was a
very -- it was very beltway-centric in the fact of -- that the long-term
fiscal health of the country is the central issue for the people that work
in Washington think tanks, that are staffing politicians, that exist in the
complex of the Washington media environment. And it`s not the number one
issue for the American --

WINSTEAD: Well, if I could just real quick, I`m sorry. But I was --
I watched the debate with 400 people in a room, comedy fans, regular folks,
you know, they paid $8 to see a show, who are the 47 percent. We just came
off of that tape, in a week of it. And those people really felt like, why
wasn`t that addressed?

And they talked about it because we had a discussion. They talked
about it, saying, that is us. That is the biggest thing, that half of the
nation was disregarded by Mitt Romney and that doesn`t come up? I mean,
wow.

HAYES: That, I think, was probably, on that note, the most striking
omission of the whole night. from the moderator, from the president, even
from Mitt Romney himself, who, you know, he might bring it up just to sort
of dispatch of it. He was on "Hannity" the night afterwards.

But I really do hope that we see that whoever is -- that the people
who are moderating the next debates think to themselves, OK, we have that
territory has been pretty well covered.

There`s a lot of stuff out there that we need to actually just get the
candidates on the record on. It`s this opportunity that you never have
when you are covering a campaign. I would love to have either candidate
and get them on the record on a whole variety of issues.

Democrat Congressman Peter Welch from Vermont, comedian Lizz Winstead
and Rebecca Traister of salon.com, thank you so much for joining us this
morning.

Mitt Romney tries to walk away from his hard stance on immigration,
while "The New York Times" is confronted over its use of the term "illegal
immigrant". That`s next.

(COMMERCIAL BREAK)

HAYES: Immigration was another issue we didn`t hear about in the
first presidential debate, despite the very prominent role it played in the
Republican primary. And in spite of the president`s dramatic move to
provide temporary legal status for some undocumented immigrants under the
age of 30 who were brought here illegally when they were children.

In fact, on Monday, Romney told "The Denver Post" that he would not
cancel the two-year deportation reprieves already granted by the Obama
administration under the new policy, saying, quote, "I`m not going to take
something they`ve purchased."

This left open the question of whether Romney would continue the
program itself. But just hours before the debate on Wednesday, a Romney
campaign aide sent an e-mail to "The New York Times" clarifying his
comments. It read, quote, "We are not going continue Obama`s program. We
are going to replace it and would only honor visas already issued."

One reason I was frustrated by the omission of this issue on Wednesday
night is that Romney has had an interesting relationship to immigration
politics, one I would like to see him have to reckon with.

During the Republican primary, Romney repeatedly moved to the right on
a whole host of issues. But his most extreme position arguably -- and the
one that probably helped him win the nomination the most -- was his
rightward move on immigration.

Romney claimed that Rick Perry was creating a magnet for undocumented
immigrants in the state of Texas. He said that he favored making things so
hard for undocumented workers that they would, quote, "self-deport." And
Romney signaled to the Republican base that he shared their views on
immigration in the very language he used to talk about it.

(BEGIN VIDEO CLIP)

FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: Almost half
the jobs created in Texas were created for illegal aliens.

Instate tuition for illegal aliens -- people who are here illegally
today -- sanctuary cities -- giving tuition breaks to the kids of illegal
aliens -- four years of college, almost $100,000 discount if you`re an
illegal alien -- you can`t have any illegals working on our property.
That`s -- I`m running for office, for Pete`s sake. I can`t have illegals.

(END VIDEO CLIP)

HAYES: Language matters. The word illegal continues to be used as a
pejorative, because the word tends to modify the person, and not that
person`s status.

And that is why journalist and undocumented immigrant Jos‚ Antonio
Vargas wants "The New York Times" and other news outlets to stop using the
term "illegal immigrant". Here he is, making that plea, at an online news
association conference just last month.

(BEGIN VIDEO CLIP)

(BEGIN AUDIO CLIP)

JOSE ANTONIO VARGAS, JOURNALIST, FOUNDER OF DEFINE AMERICAN: It`s
time that we retire the word and the term "illegal immigrant" referring to
people. It`s not only an inhumane term, it is a political term. It is an
unfair term. It is an inaccurate term.

(END VIDEO CLIP)

HAYES: Jose Antonio Vargas is with us at the table now, a journalist
and founder of the immigrant advocacy group, Define American, along with
journalist Brooke Gladstone, co-host and managing editor of "On the Media,"
produced by WNYC radio and broadcast on public radio stations around the
country.

And Maria Hinojosa, co-host of PBS` "Need to Know" and anchor of NPR`s
"Latino U.S.".

I have been looking to this -- forward to this conversation all week,
because I think it`s such a profound and intense and loaded question about
what language we use and how the language we use sets the terms of the
political debates.

And so I want you to make your case, first of all, Jose, for why news
outlets like "The New York Times" or the Associated Press should get rid of
the term illegal immigrant.

VARGAS: Well, interestingly enough, you know, Margaret Sullivan (ph),
the public editor -- she and I have had a very open, transparent
conversation and I really appreciate her for saying that -- I mean for
doing that.

You know, in our column, defending the use of the term, the headline
actually was, "Readers Won`t Benefit if `The New York Times,`" -- you know,
"Stop Using This".

My question becomes which readers? As far as I`m concerned, the use
of this term, illegal, in many ways underscores the largely simplistic
nature in which the media talks and discusses this issue. It`s a very --
the way we have talked about it mostly has been very problem-oriented.

HAYES: That`s interesting.

VARGAS: Right? How do you -- in some ways -- and you know, this is
from somebody who`s been traveling around the country for the past year and
a half in places like Alabama, and Arizona and Georgia.

The conversation starts with illegal and ends with illegal. That`s
all it goes to. And, again, the conversations I have had with people
looking me in the face, talking about these illegal Mexicans -- a very kind
of fluid conversation -- of course, you stop people and you`re like, not
all undocumented people are Mexican.

And by the way, I`m one of these illegal people, which actually brings
back to this point.

It`s been fascinating for me, once people actually face somebody who
they think --

HAYES: Right.

VARGAS: Oh, you`re illegal -- no. Oh, so you don`t have papers?

(CROSSTALK)

VARGAS: We have so largely dehumanized this issue. And our job as
journalists -- I`m speaking of somebody who`s been doing this for more than
a decade -- is really being more descriptive, you know, in the way we use
this term.

Maria, who has been fighting this fight, you know, as a journalist for
many years, who happens to be -- she happens to be Latina. I don`t think
this is simply a Latina or a Latino issue. It`s not simply an immigrant
issue. It`s actually an American issue.

HAYES: OK.

But, Maria, here`s -- the argument that Margaret Sullivan (ph), public
editor of "The New York Times" made and the "Times-Standard" folks made --
and we tried to get folks from "The New York Times" on; they couldn`t make
it work.

You know, it is illegal that the transgression of entering the country
is against the part of the law in this codification of the United States
code around how you enter the country. And people who are out of status
have broken a law. And so this is a straightforward description.

And undocumented, you know, undocumented carries its own semantics.
It`s doing its own semantic work. Right? We shouldn`t say that
undocumented is neutral as well, because undocumented communicates
something -- it has its own effect, which is to communicate this
transgression as bureaucratic. This is essentially an oversight, if you
are undocumented.

MARIA HINOJOSA, PBS ANCHOR: So, the issue really concerns all
Americans and using language correctly.

I`m going to ask you a question, Chris.

HAYES: Please.

HINOJOSA: Do you know somebody who has broken the law?

HAYES: Oh, yes. I don`t think I`ve known a single person who has not
broken a law. I`m serious.

I think that`s true of almost every American.

HINOJOSA: So then let`s just say you have a friend who`s broken the
law driving, they`ve broken the law in terms of not paying taxes, broken
the law in terms of being a bad father, a delinquent father and not paying
child support. So that means that now your friends are an illegal driver,
an illegal taxpayer and an illegal father.

This is like, no. So I do what Jose does, which is -- and it is not a
Latino issue, it is not an immigrant issue. It is -- frankly, it`s not
even an American issue. It`s a worldwide issue.

Who told me not to use the term illegal? It wasn`t a radical Latino
professor at Barnard College. OK? It was Elle Wiesel, who could not be
any more different than me when I saw him, when I worked at CNN and I took
the opportunity to ask him, as a journalist, what should I do?

Elie Wiesel, Nobel peace prize winner, survivor of the Holocaust, tell
me, if there is an authority, you should be it.

And he said, Maria, don`t ever use the term "illegal immigrant".

And I said why?

He said because once you label a people illegal, he said that is
exactly what the Nazis did to Jews. You do not label a people illegal.
They may have committed an illegal act. They are immigrants who crossed
illegally. They are immigrants who crossed without papers.

They are immigrants who crossed without permission. They are living
in this country without permission, but they are not an illegal people.

HAYES: John is skeptical of that.

And, Brooke, you guys just did a piece on this on "On the Media, " and
I want to hear you both weigh in, right after we take a break.

(COMMERCIAL BREAK)

HAYES: We`re talking about the term "illegal immigrant" and what kind
of work it`s doing in our politics and whether it`s working against us and
whether it`s working against the interests of leaders and consumers of
journalism and whether it`s working in the interest of justice and equality
in terms of how we think about the issue.

Maria, you just made a very compelling case about why not to use the
issue.

And, John, you seem skeptical a little bit. You are a linguist so --

MCWHORTER: I feel, and I don`t know how much my being a linguist
creates what I`m feeling on this, but I hate to disagree with Elie Wiesel
or Maria or Jos‚, but in the case of these terms, it seems that what
usually happens is it`s like flies have settled on you and you swat them
away and the flies just come back.

So, for example, the term that we now revile, "retarded", nobody would
want to use that term. But if you think about it, if you wrap your head
around it, that used to be a euphemism. The idea was to not call somebody
an imbecile. The idea was just to say that somebody has slowed a little
bit. Then the unpleasant associations settled down and then we use other
terms.

So for example, think about special needs and what that meant when
that term was composed. It was elegant, it was beautiful, it was
respectful. But let`s face it, the same associations have settled down.
And so I just worry, that if we create a new way of referring to these
things, the problems that bother us all are going to just settle back down
on the new terms, such as "undocumented."

For example, African-American, 20 years ago and change, the idea was
we`re going to use that term instead of black. Look how that`s gone. If
anything African-American looks a little bit dainty, it looks like
something somebody came up with for certain reasons.

It hasn`t really had, I think, the effect that it was supposed to. So
I just worry that changing the term is less important than trying to change
the policy.

HAYES: So this is -- now we`re in very, I think, fascinatingly
profound ground, as someone who studied philosophy of language, right?
Because the question is, is it the word that`s doing the work or, as -- you
know, or is it the politics and that that the word comes out of, and then
this deep point about the fact that you say is essentially what determines
the meaning of things.

You can come up with a new term that doesn`t pack the same negative
semantic punch that we think illegal has. But then that can accrue
negative meanings over just --

MCWHORTER: The feelings that are still in the air, then the term
changes meaning, just like the old one did.

HAYES: Brooke, what is your feeling about this? And I guess more
broadly, about these kinds of efforts to change linguistic usage in "The
New York Times" or the AP?

BROOKE GLADSTONE, CO-HOST AND MANAGING EDITOR OF WNYC`S "ON THE
MEDIA": Well, the big problem here is you never really know what comes
first. It is the culture that`s changing? Is it the media that`s driving
things? Is it a particular group that`s making something happen?

Are they working sort of in tandem, going back and forth? You have
got phrases that have been successful through time, but they keep getting
relitigated, you know, affirmative action versus quotas. Pro-life versus
pro-choice, versus pro-abortion or anti-abortion and all the negative-
positive connotations.

You have the ones that identify groups. You have -- you know, queer
was once a bad word. Then you went to sort homosexual, which was kind of
clinical and maybe medicalized. And then you went to gay and then you --
but you don`t call lesbians gay. And you know, I -- there are things
happening within the groups that you just say well, people have a right to
self-identify.

When you are talking about a political or a legal issue or an issue
that is -- or a word that is being defined by a particular context, as in
this case, it`s way more complicated.

HAYES: But let`s say this, I mean, just to push back on that, I think
actually "homosexual" and "gay" is really a good analogy here. Right? Let
me read "The New York Times" style guide on "gay". "Gay, adjective,"

UNIDENTIFIED FEMALE: (Inaudible)?

HAYES: Yes.

(CROSSTALK)

HAYES: -- sitting around reading the style guide all the time.

"Gay, adjective, is preferred to homosexual in reference to social or
cultural identify and political or legal issues: gay literature. Use
homosexual in specific references to sexual activity and to psychological
or clinical orientation.

"Do not use gay as a singular noun," like "a gay," like you`re
(inaudible) you`re saying an older relative might say.

"Gays, a plural noun, may be used only as a last resort ordinarily in
a hard-to-fit headline."

And the place that I think is important here is when we say -- we
grant groups the ability to self-identify. And actually that`s why I use
the term pro-life. People get mad at me for using the term "pro-life."
But those people who advocate for it say they are pro-life. And I am not
going to call them something other than what they call themselves.

GLADSTONE: I would totally 1,000 percent disagree with you here. And
I`ll explain why.

Self-identifying who you are is one thing. And within the
black/African-American community, there are different views of what one
seems like, as you said, (inaudible), you are walking around the issue,
where the other says black. Black is black. Say it.

But when you are talking about a political issue -- and if somebody
says I want to define myself as pro-life; therefore my opponents are anti-
life, you have allowed them to make the -- to win the argument before the
argument even takes place.

HAYES: Jos‚, wait --

GLADSTONE: (Inaudible) different. I think issues are different.

VARGAS: As somebody who is gay and undocumented, I just wanted to
jump in this conversation.

To me, the biggest --

HAYES: I think of you as an illegal homosexual. But continue.

(CROSSTALK)

VARGAS: What has changed, you know, it`s interesting that we have
this really evolving and growing immigrant rights movement, right? In the
past three years or so, more and more people like me are coming out as
undocumented, right, which is an interesting phrase, because I have come
out twice in my life. I`m totally done. Like I`m not coming out about
anything more.

But you don`t -- have you seen an undocumented person with a poster
that says I`m illegal? No. You do not. And to me, let`s get to the
politics of this.

The memo that Frank Luntz (ph) wrote in 2005 that said you should
refer to people as illegal immigrants to criminalize them. This is a
Republican memo. So if journalists argue this, argue using the word
illegal as a neutral stance, are we then listening to Frank Luntz (ph)?

(CROSSTALK)

HAYES (?): The point is there is no neutrality.

GLADSTONE: I am not talking about defining an issue. You know what
I`m talking about?

(CROSSTALK)

HINOJOSA: Real lives, OK? Let me talk about real lives. No, no, no
(inaudible).

(CROSSTALK)

HINOJOSA: I believe, frankly, that if the American people understood
profoundly, like talking to their neighbors, talking to the guy who
delivers their pizza, talking to the person, the custodian at their kids`
school, like if they actually spoke with them about the issue, con corazon,
you know, like, I want to hear. OK?

Then you would begin to hear the stories of things that I saw, as you
know, in a "Frontline" documentary that aired a year ago this month, that
uncovered -- because we went in with cameras -- the truth about what
happens, the real consequences when you label a people illegal is that then
we have privately run detention centers that have no legally binding
standards.

And you have got people who are illegal and they are being treated as
such by the guards, who are being paid minimum wage, a whole other story --
but hold on a second.

So then what happens is that all of the guards talk to the detained
people, by the way, many of them with green cards, in the country legally.

HAYES: Right.

HINOJOSA: OK? They say to them, what do you mean you want food? You
are here illegally. You`re a bunch of illegals. Be quiet.

What do you mean you were just raped and you want to report it? Shut
up, you are here illegally. You have no rights. No. So the consequences
of what happened to our society -- and so I care about this -- Chris, let
me just finish. (Inaudible), I promise.

HAYES: Please.

HINOJOSA: I care about this because I chose to become an American. I
made a decision to become an American citizen and gave up my Mexican
citizenship. And so these basic constitutional human rights issues about
what defines us as a country was what I said benefit -- (inaudible). This
is for Americans.

HAYES: The question is the cause. The question is are those guards,
if the word is -- I mean, the argument you are making is about the work,
the psychological and sociopsychological work that term is doing in making
it OK for those guards to act that way (inaudible) policy -- which, I agree
with you, but I do think that that`s a harder case to make causally.

I`m not defending the detention center.

HINOJOSA: Why does Romney use illegal citizen over and over?

MCWHORTER: You could have that exact same dialogue. You could stage
it the same way with the world "undocumented" being a kind of poison.

HAYES: Well, can you? That`s the question. Hold that thought. I
want to hear more from you on this, right after we take this break.

(COMMERCIAL BREAK)

HAYES: We`re having a really fascinating conversation, that I think
it really matters a lot, not just for this issue, but all the issues that
we cover, right, because language is so important in how we talk about
issues.

And it cuts off certain avenues of inquiry and it opens other avenues
of inquiry. And there`s a campaign right now to get press outlets to stop
use the word -- the term illegal immigrant. And let me just say, say our -
- the UP WITH CHRIS HAYES style guys is we don`t use illegal immigrant; we
use undocumented worker.

And there`s two reasons we do that. One is undocumented workers don`t
want to be called illegal. And like I said, I have a kind of general
disposition to call people what they want to be called, even when I
disagree with them. And it extends to some groups that I -- call
themselves things that I don`t think is the thing that I would call them.

But also, let me read this piece from 2007, which makes the case that,
Maria, you were making earlier, which is just about the inaccuracy of the
term.

This is by Lawrence Downes, called "What Part of Illegal Don`t You
Understand?"

"I`m an illegal driver, an illegal parker and even an illegal walker.
The offenses were trivial and I feel sure I can endure the punishments,
penalties and fines and get on with my life.

"Good thing I am not an illegal immigrant. There is no way out of
that trap. It`s a crime you can`t make amends for. Nothing short of
deportation will free you from it. Such is the mood of the country today.
And that is a problem."

And I just think there`s an inconsistency in how we apply the
adjective to the noun. We don`t say if a company has a super fun site, and
they have massive EPA violations, we don`t say it`s an illegal company. So
--

HINOJOSA: What do you think -- what do you -- let me ask you this.
What do you think, as a linguist, what do you think about the fact, because
my concern actually then becomes that the people, in fact, do on that term,
the number of undocumented people who I encounter. (Speaking Spanish.)
They call themselves (inaudible). (Speaking Spanish.)

And I`m like so what do we think about that as a country?

HAYES: That complicates things.

HINOJOSA: As a country, where you are saying, go ahead and own it.
But then we are saying, we`re -- as a country, we are going to allow this
phenomenon to exist, that you are going to have U.S. citizen children whose
parents walk around saying (speaking Spanish), I`m illegal.

MCWHORTER: And that term, for those people, means something rather
different than what it means for us.

HINOJOSA: No, I don`t know. It means (inaudible) powerless,
isolated, disenfranchised, scared, targeted..

MCWHORTER: (Inaudible) us, but then people adopt terms and so the --

HAYES: The queer phenomenon.

MCWHORTER: -- (inaudible) is considerable. And in terms of this
illegal driver versus illegal immigrant. I think we have to change
immigration policy. I completely understand about the discrimination
against the problems.

But, if you are an illegal immigrant, I think the idea that we -- that
some people have, that that is more appropriate than illegal driver or
illegal gardener or something like that, isn`t somebody who`s (inaudible)
in the back yard, is that if you have immigrated without papers or
whatever, then while you are in that country that you entered, the fact
that you are in it, is a state that continues.

You are somebody who did come --

(CROSSTALK)

HAYES: That`s not legally true in this sense. It is not illegal to
be in the country. The violation is the coming in, which is illegal.

(CROSSTALK)

HAYES: It`s also civil offense. But it also is not illegal just to
be here. The actual -- the violation is the actual discrete moment of
entrance.

Brooke?

GLADSTONE: I did not know that. I thought that your status, if you
can be apprehended and deported for having come in, then it would strike me
that you would still be liable if you are --

(CROSSTALK)

MCWHORTER: We should teach people that. We should teach people that
it really isn`t the fact that --

GLADSTONE: But if you can be deported if they get you --

UNIDENTIFIED MALE: This is a very subtle point.

HAYES: You are deported for the -- for entrance.

GLADSTONE: -- for the entrance. OK.

HAYES: That`s the thing that you have (inaudible).

HINOJOSA: (Inaudible) reference we did before, the --

HAYES: You want to go on the record (inaudible)?

GLADSTONE: I just want to say that I prefer for a wide variety of
reasons "undocumented immigrant" to "illegal immigrant." I don`t like
defining a person as illegal. It feels and it seems incorrect, because you
are not defining the action, you are defining the individual.

So I don`t -- but, so, I just -- I want to say that when it comes to
issues, political issues -- pro-life, pro-choice -- I don`t like to adopt
the terms of the combatants.

MCWHORTER: If being an illegal driver and being an illegal immigrant
really are qualitatively the same, that`s an argument to be made, rather
than saying that it`s something quite simple that everybody should
(inaudible).

(CROSSTALK)

HAYES: (Inaudible) why it`s not the same.

And I also want to talk about what happens when you wage a campaign
like this. If you end up creating the conditions in which the people you
are waging the campaign against -- "The New York Times", for instance,
can`t actually let you win, otherwise they look like they are choosing
sides (inaudible) political battle, right after we take this break.

(COMMERCIAL BREAK)

HAYES: Jose, you have been, you have been working to get --

VARGAS: I have been a walking uncomfortable conversation. That`s
what I think.

HAYES: A walking uncomfortable conversation about getting rid of the
term illegal immigrant for news outlets. It`s being used in this -- in our
public debate, in our campaign, and it`s used in a very specific way.

Are you worried about the fact that when something becomes litigated
in the political sphere and you are "The New York Times," and you`re saying
we are going to make these style choices that they are then in a position
where if they stop using illegal immigrant, they then look like they are
alienating (inaudible)?

VARGAS: Exactly. And again, I`m not -- Frank (ph) wants me to
political. Like I`m in this -- I`m not -- I`m not privileged enough right
now to be a Republican nor a Democrat. I can`t vote.

UNIDENTIFIED MALE: Right.

VARGAS: So, all I know is I`m not actually -- to me, the word illegal
is an entry point. It`s not really a slice of the pie, it`s actually the
pan. Right? I`m not talking about -- to me, changing the term means
actually broadening and changing and opening up the conversation, right?

What is the difference between you and me? I don`t have papers; you
do. I don`t have the right documents; you do. So we are arguing about
pieces of paper.

And guess what? When you look back from this 50 or 60 years from now,
I remember getting into Lou Dobbs a few months ago, looking him in the eye
and telling, you know, sir, when you use that word illegal, there are 2
million kids in America, sitting around, listening to you, who are hearing
that.

What do you think that does to somebody? Right? So we are arguing
about pieces of paper. And I think that`s so important to talk about this.

And look, as a journalist -- I have been doing this for a decade now -
- I know -- because I`m friends with journalists, right? The last thing a
journalist wants to encounter is to be told what to do and what to say.
The PC police, right? But to me, this is about a matter of accuracy and
description. Are we being as descriptive as we possibly can be? I think -
-

HINOJOSA: And you know what happens? If suddenly -- if suddenly we -
- I wonder what you would think about the conversation if we, then -- not
that I do this all the time -- and it`s going to sound really out there.
But there are many people say, you know what, who were the first illegal
aliens? The first in this country.

HAYES: The settlers.

HINOJOSA: The Pilgrims. The Pilgrims. So what if we now started
calling them that? No, you don`t want that to happen. And you know what,
on the issue of style, I want to know who is in the style meeting
(inaudible) those meetings are, because with the demographic change that is
occurring in our country, that diversity in the media must occur.

HAYES: One note I`ll say is that two papers have styles, don`t use
it, and I think it`s indicative of something, that is "The Miami Herald --
"

HINOJOSA: "The San Antonio Express News," the "Huffington Post."

(CROSSTALK)

HAYES: "San Antonio Express News." But those two newspapers -- that
says something about the business decision of who their readers are also,
right? When you`re thinking about we`re doing it for the benefit of the
readers --

HINOJOSA: It`s not just those. It`s everybody.

HAYES: What you should know for the week ahead, coming up next.

(COMMERCIAL BREAK)

HAYES: So, what should you know for the week coming up?

You should know that sometimes labor strikes work but sometimes that
takes a lot of time. On Thursday, several dozen workers from nine Los
Angeles Walmarts, along with a couple hundred supporters, held a one-day
strike and rally outside one of those Walmarts. Several dozen strikers is
not national news. Anyone striking against Walmart is.

The striking workers said they were protesting unfair labor practices,
including retaliation for attempts to organize and for complaining about
working conditions.

Other Walmart workers employed in the company`s warehouses in
California have also recently struck, complaining about, among other
things, 120-degree temperatures in the warehouses. Walmart said it does
not own the warehouses, but told "The New York Times" conditions there have
been addressed. You should know we`ll be talking about this again if they
haven`t.

The next time you hear someone demand more spending for national
security, you should know that a new Senate investigation raises serious
questions about what value the Department of Homeland Security has in the
effort to root out terrorist plots.

The report by the permanent Subcommittee on Investigation found, for
instance, Syria`s problems at Homeland Security`s 72 regional offices run
by local officials known as fusion centers -- among the problems, four of
the 72 fusion centers listed by DHS don`t exist.

The intelligence they gathered was described as, quote, "uneven,
oftentimes shoddy, rarely timely and more often than not, unrelated to
terrorism."

"More often than not, unrelated to terrorism."

DHS told "The New York Times" a Senate report was inaccurate and
misleading. Senator Tom Coburn said of the report, quote, "Homeland
Security is probably the most ineffective agency in the government,"
adding, because he`s a Republican, "besides Social Security."

You should know that the next debate in the 2012 presidential campaign
will be Thursday night, featuring the vice presidential candidates,
incumbent Joe Biden and Wisconsin Congressman Paul Ryan.

You should know I will be part of MSNBC`s coverage starting at 8:00
Eastern Thursday night and led by Rachel Maddow, with Chris Matthews along
with Lawrence O`Donnell, Ed Schultz, the Reverend Al Sharpton and Steve
Schmidt.

And when you watch this and subsequent two presidential debates, you
should know what the meaning of half is. On Wednesday, Mitt Romney said
the Obama administration put $90 billion into green jobs and that about
half of those businesses they`ve supported have gone out of business.

Never mind that $90 billion hasn`t even been spent yet. Never mind
that only about $34 billion was allocated for that kind of clean energy
business loans, and never mind the Energy Department has only approved $16
billion worth of those loans.

Never mind the Romney campaign said later he was only talking about
businesses that got those loans in the first year. And never mind that
only three businesses actually went under.

Forget all that, and you`re still left with the fact that most
government will be on the hook for those businesses that went under, is an
estimated $600 million, or roughly equal to one half of $90 billion.
Roughly.

I want to find out what my guests thinking we should know for the week
coming up. Let`s begin with you, Jose Antonio Vargas.

VARGAS: You should know that a full 4.5 million young Americans have
a parent who is undocumented. So when you refer to them as an illegal
alien, you`re actually talking about someone`s mom or someone`s dad.

I think Mitt Romney ought to know that, because in some of these
states, like North Carolina and Florida and Ohio, there are enough Latino
and Asian voters to exceed the margin of victory. So using illegal alien
can actually alienate.

HAYES: I think we never got to the alien part of that construction,
but I think there`s this genuine consensus that the alien is like --

VARGAS: It`s not.

HAYES: -- obviously manifest --

VARGAS: Romney is not --

HAYES: -- discussing (inaudible). Yes. All right. So we have total
table consensus on that.

Brooke Gladstone.

GLADSTONE: I think you should know about a 2006 SMRI study that was
done about Democrats and Republicans and how they reason. And when faced
with the hypocrisy or contradictory statements of their own candidates and
then given a reason to sort of think their way out of this problem, what
they -- no parts of their reasoning part of their brain lit up in any
unusual way.

But the emotional parts lit up incredibly. And once they were done,
talking themselves into the idea that their candidate was OK, they got a
super shot of dopamine. So you should know that lying to -- we are wired
to lie to ourselves and, as the election proceeds, keep that in mind.

HAYES: These are MRIs when you go in the tunnel and they scan your
brain and the colors light up from where your reasoning, different parts.

GLADSTONE: That`s right. And they find out that you don`t reason
when you`re figuring out what to think about your candidate. But once up
finish successfully lying to yourself, the reasoning parts light up again
and you get a shot of dopamine. So it`s just like coke.

HAYES: John McWhorter?

(LAUGHTER)

MCWHORTER: I would take a page from Brooke, actually. We have to
realize, as is becoming increasingly clear in the world of psychology, that
emotion plays a whole lot more of a role in our quote-unquote reasoning
processes than we think.

It`s in Jonathan Haidt`s wonderful book -- professor of psychology at
New York University -- has been on this show and we have to apply that
knowledge to, for example, the debates that we`re going to see, where there
will be people trained to appeal to the emotions over the reasons that some
of the wonkier, nerdier people among us might expect would run these
debates.

And it also plays into our immigration discussion in that we feel
rather than we reason.

And therefore, when we change terms, often the fact that the terms
mean a certain thing in terms of reason has less to do than how society
feels and maybe that`s what we need to do something about.

HAYES: Jonathan Haidt has been on the show. I should just note for
the record, that book is a fascinating book. I am unpersuaded by it. I
think it`s sort of problematic and unpersuasive (inaudible) I just want to
get on the record I`m (inaudible).

MCWHORTER: (Inaudible) book.

HAYES: Yes, it`s a fascinating book.

HINOJOSA: Maria Hinojosa?

HINOJOSA: So I`m going to throw out another term that needs to
change.

You should know that the next conversation is minority, which is
another term that I haven`t used in my vocabulary for 20 years. Because
what is a minority? And so in fact, but we can also change the definition
of minority, which is not necessarily powerless.

And the other thing you should need to know or you should want to know
is that I`ll be in Tucson, San Diego and Albuquerque with my new PBS
television pilot, called "America by the Numbers." So if you`re there,
come see me. We`ll be screening.

HAYES: "America by the Numbers," definitely check that out. We`ll
put that up on our website.

I want to thank my guests today, Jos‚ Antonio Vargas from the
immigrant rights group, Define American; Brooke Gladstone from the
fantastic public radio, "On the Media" show; John McWhorter from Columbia
University and Maria Hinojosa from PBS` "Need to Know," Thank you all.

Thank you for joining us. We`ll be back next weekend, Saturday and
Sunday at 8:00 Eastern time. Our guests will include Tom Stemberg, the
founder of Staples and an adviser in the Romney campaign, and "The New York
Times`" Nate Silver, author of the new book, "The Signal and the Noise."

Coming up next is Melissa Harris-Perry on today`s "MHP" Affirmative
action goes on trial at the Supreme Court and the Roberts court could be
ready to end it once and for all. What`s at stake and who is in play.
That`s Melissa Harris-Perry coming up next. We`ll see you next week. Have
a great week here on UP.

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

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