updated 10/22/2012 2:47:08 PM ET 2012-10-22T18:47:08

UP WITH CHRIS HAYES
October 21, 2012

Guests: Elise Jordan, Joe Sestak, Ali Gharib, Anne-Marie Slaughter, Larry
Korb, Sonali Kolhatkar; Hooman Majd, David Corcoran


CHRIS HAYES, HOST: Good morning from New York. I`m Chris Hayes.
Former South Dakota senator Democrat George McGovern died this morning at a
hospice in Sioux Falls. McGovern was an influential leader for a
generation of American liberals, running for president and losing to
Richard Nixon in 1972. George McGovern was 90 years old, a prophetic voice
for peace, a decorated war hero, and we mourn his passing.

And the White House last night denied a "New York Times" report that
Iran and the United States have agreed to one-on-one nuclear talks. We`ll
have that story later in the show.

Right now, joining me today, we have Ali Gharib, senior editor for the
blog Open Zion and TheDailyBeast, where he writes about America`s Middle
East policies, Anne-Marie Slaughter, professor of politics and
international affairs at Princeton`s Woodrow Wilson school and the former
of policy planning for the Obama State Department, Joe Sestak, former
Democratic congressman from Pennsylvania, retired three-star admiral and
former director of defense policy for the Clinton National Security
Council, and Elise Jordan, former speech writer to Secretary of State
Condoleezza Rice and a former National Security Council official.

The defining moment of Tuesday night`s presidential debate came during
an exchange between President Obama and Mitt Romney on last month`s attack
on the American consulate in Benghazi, Libya. The issue had been seen as a
slam dunk for Romney but quickly turned into a political disaster.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The day after the
attack, Governor, I stood in the Rose Garden and I told the American people
and the world that we are going to find out exactly what happened, that
this was an act of terror.

MITT ROMNEY (R-MA), FMR. GOV., PRESIDENTIAL NOMINEE: I think it`s
interesting -- the president just said something, which -- which is that on
the day after the attack, he went in the Rose Garden and said that this was
an act of terror.

OBAMA: That`s what I said.

ROMNEY: You said in the Rose Garden the day after the attack, it was
an act of terror? It was not a spontaneous demonstration. Is that what
you`re saying? Is that what you`re saying?

OBAMA: Please proceed, Governor.

ROMNEY: I -- I want to make sure we get that for the record because
it took the president 14 days before he called the attack in Benghazi an
act of terror.

OBAMA: Get the transcript.

CROWLEY: He did, in fact, sir. So let me -- let me -- call it an act
of terror -- and...

OBAMA: Could you say that a little louder, Candy?

(END VIDEO CLIP)

HAYES: After that, Romney dropped Libya from his stump speech and has
not mentioned it since. But just because he backed away from talking about
Benghazi does not mean there aren`t still unanswered questions about what
happened.

On Thursday night, Jon Stewart tried to get at that point during an
interview with the president.

(BEGIN VIDEO CLIP)

JON STEWART, "THE DAILY SHOW": The difficulty -- the perception
seemed to be that State was on a different page than you, or that you had
Susan Rice, five days afterwards, saying on shows, Well, this video, and
could have been a part of that. And then other people...

OBAMA: Jon, you know, the truth is, is that information comes in.
Folks put it out throughout the process. People say it`s still incomplete
and...

STEWART: It`s part of the investigation, helping the communication
between these divisions of -- not just what happened in Benghazi, but what
happened within -- because I don`t know, I would say even you would admit
it was not the optimal response, at least to the American people as far as
us all being on the same page.

OBAMA: Well, here`s what I`ll say. If four Americans get killed,
it`s not optimal.

STEWART: Right.

OBAMA: And we`re going to fix it.

STEWART: Right.

OBAMA: And...

STEWART: All of it.

OBAMA: All of it. And what happens during the course of a presidency
is that -- you know, the government is a big operation. At any given time,
something screws up, and you make sure that you find out what`s broken and
you fix it.

(END VIDEO CLIP)

HAYES: Information coming out about the attacks is no less confusing
now. Several reports over the past week seem to corroborate, at least
partially, the Obama administration`s early accounts of the attack being
precipitated by an anti-Muslim video on YouTube, an account, I should note,
they have since distanced themselves from.

Adding another twist to the story, on Friday, anonymous administration
officials accused the Republican congressman Darrell Issa, chairman of the
House Oversight and Government Reform Committee, of endangering several
Libyans who have been secretly working with the U.S. by not redacting their
names when he released 166 pages of unclassified but sensitive Libya-
related documents.

Heading into tomorrow night`s foreign policy debate, the details of
what happened in Benghazi on September 11 are, I have to say, more
confusing to me as a consumer of news than they have ever been.

We talked about this pretty early on, and I will put myself in the
category of people who were troubled -- category of people who were
troubled by what seemed to be a distance between what the reporting and
what the intelligence agencies seemed to be saying and what was coming out
of the White House. And I thought that gap was worrisome. And we talked
about it on the show.

I don`t know what to think anymore because what looked like at first
was -- the official U.S. government line was that this was spontaneous and
in reaction to the video. And there was a parallel channel of reporting
seemed to be indicating this was premeditated, it was the work of possibly
al Qaeda militants and had nothing to do with the video. In fact, there
was no protest of the video. So that -- that was -- that was what
happened.

Now we have reporting from "The LA Times" and "The New York Times" who
were talking to people in Benghazi who were all saying, No, dude, it was a
video.

Here`s -- here`s "The LA Times" -- the assault was opportunist, no
evidence of an al Qaeda link. "The assault on the U.S. diplomatic mission
in Benghazi last month appears to have been an opportunistic attack, rather
than a long-planned operation, and intelligence agencies have found no
evidence that it was ordered by al Qaeda, according to U.S. officials and
witnesses interviewed in Libya."

Here`s my question to you. Has the media been punk`d by the right? I
mean, did conservatives essentially generate a controversy where there was
none? Because I am now beginning to think that was the case. And I am
someone who on this program thought this is a very important issue. It
seems there`s this distance. And now I really don`t know what to believe.

ELISE JORDAN, FMR. SPEECH WRITER FOR CONDOLEEZZA RICE: I think...

HAYES: Guide me.

JORDAN: I don`t think it is! I think it`s fantastical to think that
a video caused this! And I think that the administration...

HAYES: But the people on the ground are saying that!

JORDAN: But at the end of the day, what are they protesting? They
are storming an American consulate. It is about American policy...

HAYES: Well, no, but...

JORDAN: ... a policy that they do -- that they are protesting
against, that they don`t like. And we should have had a fortified defense,
and Obama should have taken responsibility! The whole problem -- Obama had
a chance to show presidential leadership in the 48-hour period afterwards.
Romney also both (ph) (INAUDIBLE) abysmally failed!

HAYES: Well, wait a second. Wait a second. That seems to me
projecting onto -- and I`m not saying that -- you know, obviously, the --
there is -- I think one of the things that`s been confusing about the
story, right, is that we want to identify some cause, right, that -- and
that all stories must be mutually exclusive with each other. Either it was
the video or it was Ansar al Sharia or it was al Qaeda in the Islamic
Maghreb or it was premeditated, right? All of those things can be true
concurrent. So that`s part of the problem, right?

ALI GHARIB, THEDAILYBEAST.COM: It`s a premeditated attack in reaction
to the video...

HAYES: Right! Exactly!

GHARIB: ... by probably not al Qaeda.

HAYES: Right. But also by protesters who happened to be around with
guns because they`re -- the country`s awash in guns.

I just want to respond one thing to this about it being American
policy. I mean, I think, at a certain level, you have to take it somewhat
at face value what the people who pulled off the operation are saying. I
mean, if they say, We were doing this because of the video, I`m inclined to
believe them.

When Osama bin Laden said why he did 9/11, I`m inclined to believe
that`s why he did 9/11, We don`t want American troops in Saudi Arabia
occupying the holy land, or whatever. Why -- why are -- why -- we`re not
going to project onto these folks what we think their motive was, right?

JOE SESTAK (D-PA), FMR. CONGRESSMAN: But to Elise`s point, I think
there`s two separate issues here. I think on the security issue...

HAYES: Right.

SESTAK: ... there`s more than enough evidence to say that this -- the
administration did not handle this well. When you have a request come in
for more security, whether it would have made a difference or not, after
the U.N. office, the Red Cross office, the British ambassador had all been
attacked (INAUDIBLE) embassy, a hole had been blown in the wall of that
compound or consulate earlier -- there should be accountability,
responsibility by this administration on that.

On the second issue, I think when Representative Thornberry, a
Republican on the House Intelligence Committee, actually says, You know,
what the intelligence community was telling us, General Petraeus, is
exactly what the administration was putting out to the public -- people
tend to forget.

I worked in the National Security Council, headed Deep Blue,
(INAUDIBLE) antiterrorism unit -- that there are no one-armed intelligence
officers. They`re always saying, On the one hand, but on the other hand...

(CROSSTALK)

SESTAK: The issue is this. It`s hard to (INAUDIBLE) assertion of
conspiracy or anything or to say the policy`s unraveling because
intelligence agencies maybe didn`t have it right. There is no assertion
that can be made of conspiracy by these professionals. That`s what`s
missing in this piece. General Petraeus misrepresenting something? No
way.

ANNE-MARIE SLAUGHTER, PRINCETON UNIV.: No, and well, and there is a
way to square the circle here, where it -- originally, if you said it was a
spontaneous thing from a protest, what that sounded like was there`s a
protest going on outside the consulate, and then suddenly, that escalated
into a, Hey, let`s take over the consulate and let`s kill them.

Then they realized they had RPGs. And people do not demonstrate on
the street...

HAYES: With RPGs, right.

SLAUGHTER: ... about a video with RPGs. So then it looked like, OK,
it must have been an attack. Then there was evidence that it could have --
I mean, certainly, you had the head of al Qaeda calling for an attack.
There were -- it looked like there were links.

But then, ultimately, it is in reaction to the video, according to the
people on the ground, but it was an attack that was spontaneous that day,
not premeditated for weeks.

So I -- you know, the people I talked to in Washington right after all
said privately, We`re still trying to figure out...

HAYES: Right.

SLAUGHTER: ... what was going on. This was really hard to figure
out.

GHARIB: This is the thing, is that -- I mean, Admiral Sestak raises
the point that there is a real sort of policy security issue here. And
then above that, and the only thing we hear much about, is the political
issues.

And that is an instance of what you`re talking about, Chris, where the
right`s attack really did work in the sense that in the immediate aftermath
of the attack, Romney came out and attacked Obama and was denounced by
everybody.

HAYES: Right.

GHARIB: And like, Bill Kristol said he sounded unpresidential.

HAYES: Right.

GHARIB: Denounced by everybody. But what it did is it forced the
administration to take this from an issue where they could make these sort
of mild-mannered, On the one hand, on the other hand comments, and it made
them commit to a line. And they went out there and they pushed that line
on every Sunday talk show.

HAYES: OK. Yes, but there`s also...

(CROSSTALK)

JORDAN: I think President Obama`s passivity on this issue has just
been, quite frankly, a disgusting response! I can`t believe he went on Jon
Stewart -- he`ll go on Jon Stewart, he`ll go on "The View," he`ll say it`s
not optimal for someone to get killed. It just -- he needs to show
leadership...

HAYES: Well, he was repeating. I mean, the "not optimal" thing --
Jon Stewart used the word "optimal."

JORDAN: Yes, but he hasn`t really -- I mean...

SLAUGHTER: Oh, come on. He stood up and said, I`m commander-in-
chief. Absolutely I`m responsible.

HAYES: Right.

JORDAN: Very evasive during the debate. He did not answer the
question!

(CROSSTALK)

JORDAN: I thought Romney gave him such a huge gift by completely...

HAYES: Well, I think we`re all in agreement with that. I don`t think
he was -- I don`t think he was passive. I think...

(CROSSTALK)

GHARIB: ... with Anne-Marie. He stood up and said...

JORDAN: Well, we`re at war! I mean...

GHARIB: ... I take full responsibility.

JORDAN: I mean, we are at war! Why will Obama not say this was an
act of war against America?

(CROSSTALK)

HAYES: I want to address that! I want to address that because it
seems to me -- no, that`s...

JORDAN: They want to downplay the...

(CROSSTALK)

JORDAN: ... intervention in the Middle East can go to war and you can
intervene in the Middle East without any cost!

HAYES: That`s the deeper question. I want to talk about that because
it seems like there`s -- and -- there`s moving semantic goalposts. They
have to say "act of terror" and now they have to say "act of war." I don`t
know, like, most horrendous act that ever happened in the history of
civilization. I mean, we -- we -- I want to be clear about what -- what --
what we are asking of the president to do, when you say passivity, right
after we take this break.

(COMMERCIAL BREAK)

HAYES: Elise, you raised I think an important and provocative
question before went to break, is, are we at war with Libya? I mean, that
-- that -- when you say this is an act of war...

JORDAN: In Libya.

HAYES: ... are we at war in Libya? I don`t think we`re at war with
Libya. But are we at war in Libya? And this is a kind of a profound
definitional question because there was some debate about whether the
president had the authority to order the intervention in Libya. There was
some noises coming from Congress, although not a particularly strenuous
effort, to make sure that it didn`t happen.

And it gets to this point of security, right? I mean, if we get off
this sort of what happened when timeline -- and I think -- I think we`re
maybe at consensus at the table that there are a bunch of facts stacked on
top of each other which are not mutually exclusive, and that accounts for
some of the confusion, right, in the initial reports.

In terms of diplomatic security, Ali, you were making a point during
the break about private security contractors and the role that they had
filled in previous -- previously in our long era of intervention in that
region.

GHARIB: Yes. So these -- these -- well, the thing about Libya is
that Libya was not classified by the State Department as a war zone. And
you can make whatever you want of that. I mean, it basically is a conflict
zone because there are weapons around. Elise is right about that.

HAYES: Tons of weapons.

GHARIB: But that`s kind of how Libya is going to be for the next 100
years, right, 50, 100 years...

HAYES: Bold prediction, it will continue!

GHARIB: Libya is a conflict zone. I mean, that place is flooded with
weapons. And then in the previous model, in these other places that were
considered war zones, you have this super-beefed-up security with
Blackwater private security...

HAYES: Right.

GHARIB: ... contractors. These guns ran around. There was the
Nisour Square massacre in Iraq. They killed a bunch of people. And now
governments like Libya`s new government don`t want us to put these
mercenary armies on the ground there.

They consider that boots on the ground, just the same as if they were
U.S. Marines. And in fact, it`s actually worse than U.S. Marines because
there`s no accountability for those people, as we saw from Blackwater`s
activities in the Bush years. There`s no accountability to anyone.

I mean, they do protect their charges. This is a point Elise made
during the break which is true. And it creates a conundrum for us because
how do you protect people without those? We used to have the diplomatic
security service, which its sole job -- I mean, that`s -- the whole point
of bolstering that service would be so that we could save the governments
like that in Libya, that, Hey, we have a group of accountable American...

HAYES: Right.

GHARIB: ... government employees...

HAYES: Who are in the American chain of command.

GHARIB: ... whose sole job -- whose sole job is to protect our
diplomats abroad. But we`ve gutted that in favor of outsourcing it and
having these unaccountable mercenaries...

(CROSSTALK)

SLAUGHTER: We`ve also -- we`ve also cut the budget for it
dramatically.

HAYES: Right. Absolutely.

SLAUGHTER: We have diplomatic security...

HAYES: Right.

SLAUGHTER: ... and they`re extremely good. In fact, many, many
diplomats complain all the time that they are too well protected, they
can`t do their jobs.

HAYES: We talked about that on the show.

SLAUGHTER: And indeed, Ambassador Stevens wanted to be out there.
But we`ve cut the budget. We`ve gutted the budget for the State Department
as a whole.

SESTAK: You`re absolutely right, Anne-Marie. It`s been cut 10
percent since 2010. But the real issue is, what are the implications for
the Arab spring and for our positions there in Libya and northern Africa?
Are we headed in the right general direction? And my argument is, yes,
overall. We`ve established an AFRICOM, a military command over Africa,
with more drones just being requested for that. It`s not that...

(CROSSTALK)

SESTAK: ... understanding that al Qaeda has metastasized, to some
degree, because two thirds of al Qaeda`s leadership has been decimated in
Afghanistan and Pakistan.

The issue is, however, when you look at Libya itself and understand
that on the proportional representation in its recent legislature
elections, the majority of those 100 that were elected were moderates or
secular.

Is it going to be spotty security? Is it going to be rough going?
Absolutely. But as you look a little bit more towards the east and see
that Morsi then went to Iran and said, Hey, wait a moment, I may not always
agree with the United States, but stop building a nuclear weapon. And
number two, what`s happening in Syria is outrageous.

HAYES: Right.

SESTAK: You begin to say maybe we have an Egyptian...

(CROSSTALK)

SESTAK: ... Islamic government and a Turkish Islamic government that
began becoming two strong bulwarks of owning the suitcase of problems more
in the Arab world. And that can help us.

So are we in the general right direction? Yes. Is it going to be
spotty? Yes. But so has it been in the past, when 12 (ph) of our
embassies were attacked during the Bush years and a diplomat was killed in
Pakistan.

HAYES: The case that the Romney-Ryan ticket is making, which is -- is
to use the example of what happened with the attack in the Benghazi
consulate as this data point in a broader argument about the unraveling of
the American foreign policy.

Here`s vice presidential candidate Paul Ryan making that case.

(BEGIN AUDIO CLIP)

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL NOMINEE: The Benghazi thing
would be a tragedy in and of itself if it was an isolated incident. The
problem is, it`s not simply an isolated incident, but a picture of a
broader story of the absolute unraveling of the Obama administration`s
foreign policy. Go around the world and you see policy failure after
policy failure. And that is something that they just can`t defend.

(END AUDIO CLIP)

HAYES: That -- that is the case of the Republicans, that this is --
that this is part of -- that the tragedy in Benghazi indicates some broader
failure in the Middle East.

JORDAN: Well, I think there are a lot of problems, clearly, today in
the Middle East. Your question of weapons of mass destruction -- now, I
still -- I just do not get why we intervened in Libya if we are trying to
convince people to cede their weapons of mass destruction. If you`re the
Iranians and you see we actually go in and intervene once you do give away
your weapons of mass destruction, what incentive do you have...

(CROSSTALK)

HAYES: I think that`s an interesting, provocative point. But let me
-- let me set the context for viewers who are not familiar with his, right?
Of course, Gadhafi had a nuclear weapons program, and one of the big
victories that was announced during the Bush administration, which they
chalked up to the Iraq intervention but I think was absolutely not the case
-- it was a lot of diplomacy, actually, by the EU -- convinced Gadhafi to
give up his nuclear weapons. He gave up his nuclear weapons.

And there is a case to be made that what he did was he gave up his
nuclear program, and next thing he knew -- not next thing he knew, a few
yeas later, there were NATO bombs essentially deposing him, and that that
essentially is a bad nuclear...

(CROSSTALK)

SESTAK: ... my point -- I was actually not in support of the Libya
intervention, first off. But that said, this unraveling issue kind of is
amazing to me.

I mean, here we are, having stopped this tragic war in Iraq, where our
army could not respond to any other war plan throughout all of the world,
to defend South Korea, by testimony of the Joint Chiefs of Staff, because
they`ve done nothing but counterinsurgency training, to where a four-star
Marine Corps general said it`s going to take us 10 years before we`re ready
to be back to handling all the combined arms around the world (INAUDIBLE)
third (ph), to have had a shift of our focus to the Western Pacific, to
where our naval forces by this president are now 60 percent of our arms,
rings (ph) down (ph) in Australia -- if you`re a Democrat, some of them
would now be saying, if it was a Republican president doing that, Are you a
warmongerer? (SIC)

No, I don`t think this is unraveling. This is beginning to stitch
back the strength of the entire fabric of our national security.

(CROSSTALK)

HAYES: Hold that thought for a second. We just got to take a quick
break. Come back to you after the break.

(COMMERCIAL BREAK)

HAYES: Anne-Marie, I`m sorry I cut you off to go to break, but you
wanted to respond?

SLAUGHTER: Libya, and I wanted to respond?

(LAUGHTER)

SLAUGHTER: So I did support the intervention in Libya very strongly.
I think it was the right thing to do. And I just -- I have to point out,
In Libya, the fact that there was an attack on our consulate is nothing
new. We`ve been having attacks on our consulates and our embassies for a
long time. They have actually decreased, although I agree we needed more
security.

What`s really different is that hundreds of thousands of Libyans took
to the streets demonstrating against Ansar al Sharia and holding signs
saying, America, we are sorry.

HAYES: Right.

SLAUGHTER: So the reason we did this was because we had to support
the opposition. We had to save a city that was possibly 700,000 people
under attack.

And Romney`s position`s completely incoherent because, on the one
hand, he`s saying we ought to do more in Syria. He supported the
intervention in Libya. We are reaping the harvest slowly. They`re
actually also opposed to the Chinese and to the Russians on oil there.
They`re very pro-us.

And you know, yes, it`s awash in weapons. Yes, it`s fragile. It was
always going to be. But we`re actually beginning to see some of the fruits
of our policy with respect to Libya and with respect to Egypt. Not with
respect to Syria.

HAYES: And I will also say this. I think one of the things about
Libya -- and I myself have gone back and forth on this, on the Libya
intervention. You know, when you`re looking at Syria, I mean, the problems
that -- the problems in Libya, which is, you know, militant groups and
heavily militarized militias that have a lot of weapons and the kind of
Balkanization that`s happening and a power vacuum that happens in post-
revolutionary environments -- to the extent you chalk them up to the
American intervention, which I think is somewhat fair because the Americans
did lead an intervention -- you now have Syria going on.

And I think in some ways, you`re kind of running this experiment in
parallel, right? We`re almost certainly not going to intervene in Syria in
the way we did in Libya. And what you`re going to see is essentially the
same set of problems. You`re going to see, you know, al Qaeda or al Qaeda-
affiliated jihadis on the rise. You`re going to see it awash in weapons.
All of those things are happening without the American intervention.

So I think to the extent that you chalk up those problems in Libya to
the American intervention, Syria is a little bit of a counterexample just
because those same issues are happening in Syria in the absence of it.

GHARIB: Yes, I mean, those -- the groups that we gave air cover to --
just like if we intervene in Syria, the groups that we were giving air
cover to in Libya are Islamist militant groups that were fighting against
the regime alongside with, you know, the sort of, like, secular hipster
rebels which you saw running around.

(LAUGHTER)

GHARIB: There were also those Islamist groups. And we gave them air
coverage and they`re there. And then there`s been this power vacuum -- and
you know, eastern Libya was the place that supplied the most jihadists into
the Iraq war. And so we knew what -- or we should have known, if we could
talk about these things seriously...

SLAUGHTER: We did.

GHARIB: Yes, I mean, I`m sure you knew, but I don`t think many people
knew...

(CROSSTALK)

GHARIB: ... what we were getting into when we were saving that city.
And it`s a complicated world. And it just sort of goes to show how -- how
kind of bereft of any connection to reality our politics has become with,
you know, Darrell Issa`s hearings on his because this is a real, serious
issue that should be investigated, and we should be talking about the
contractors and diplomatic security, and we can`t get past the partisan
politics of it to talk about the real issues.

HAYES: And let me -- let me say this. This Diplomatic security point
to me (ph) strikes me as really important, right, that we`ve taken this
tack to outsource it. Now we`ve seen -- we sort of -- we saw what happened
with Blackwater, and Jeremy Scahill, my colleague, your friend, you know,
reporting about what happened in Nisour Square and all that -- and you
know, it strikes me that one of the things to think about is, like,
actually reconstituting diplomatic security and bolstering it internally.

And then the last thing I`ll say -- and this gets into the security
question about the funding, right? And I -- this -- this can sound -- and
I want to say this carefully. In any -- right now in Washington, D.C.,
there are memos in every single department from the Bureau of Land
Management to diplomatic security to the National Security Agency asking
for more money.

I mean, that is the background condition of every single bureaucracy
in Washington, D.C. So it does not necessarily mean in all those cases
that that memo is correct. In this particular case, where there was a
request for funding, it now appears retroactively it was correct and there
was a wrong judgment made.

But I think what ends up happening is in the wake of one of this (ph),
we see reporting that says there was an increase (SIC) for more funding,
but of course, the background condition in any and all cases right now
across the entire United States government is that people are asking for
more funding. It doesn`t -- it doesn`t necessarily mean that it`s leaping
off the page to whoever is -- whoever is dealing with that request.

Ali Gharib from TheDailyBeast, and Elise Jordan, former speech writer
for Condoleezza Rice, great to have you guys here this morning. Really
appreciate it.

GHARIB: Thanks. A pleasure.

HAYES: Obama doubles down on restraining defense spending. That`s up
next.

(COMMERCIAL BREAK)

HAYES: President Obama did something remarkable in Tuesday`s debate.
Unprompted, he attacked his Republican opponent, Mitt Romney, for wanting
to increase spending on national defense. President Obama raised the issue
during an exchange over deficit reduction and Romney`s proposed across-the-
board tax cuts.

(BEGIN VIDEO CLIP)

OBAMA: The cost of lowering rates for everybody across the board 20
percent, along with what he also wants to do in terms of eliminating the
estate tax, along what he wants to do in terms of corporate changes in the
tax code, it costs about $5 trillion. Governor Romney then also wants to
spend $2 trillion on additional military programs, even though the military
is not asking for them. That`s $7 trillion.

(END VIDEO CLIP)

HAYES: What`s extraordinary about that moment and the president`s
position on defense spending in general is not just his promise to keep
Pentagon spending flat over the next 10 years, it`s that the Obama campaign
has clearly calculated that there`s a political cost to Romney`s call for
an additional $2 trillion in defense spending.

Romney, in fact, has said that defense spending -- get this -- should
be pegged automatically at 4 percent of gross domestic product. This
despite the fact that the threats the U.S. might face don`t expand or
contract in direct proportion to our GDP.

But if the president thinks he has the better part of the political
argument over defense spending, so does Mitt Romney. He has hit the
president repeatedly over the administration`s proposed leveling of defense
spending.

The polling, however, would (INAUDIBLE) the president does indeed have
the upper hand. A Gallup poll earlier this year found that 41 percent of
Americans think we`re spending too much on defense, while only 24 percent
say we`re spending too little.

So after a decade of explosive growth in spending on wars, defense and
security, Americans seem now to be reconsidering the wisdom of deeming the
Pentagon budget politically untouchable, as it has been for the duration of
our long war on terror.

On top of that, the sequestration cuts mandated by last year`s deal to
resolve the debt ceiling crisis mean defense spending will be cut by more
than $50 billion next year unless Congress settles on a long-term deficit
reduction deal before the end of the year.

That along with the sea change in attitudes on defense spending among
Americans, and Democrats in particular, would seem to provide us the first
occasion in a long time for a real debate on the size, scope and cost of
the American military.

Joining us now is Larry, Korb, senior fellow at the Center for
American Progress, a former assistant secretary of defense under Ronald
Reagan, and Sonali Kolhatkar, host of "Uprising," which can be heard on
KPFK Pacifica Radio and co-director of the Afghan Women`s Mission. Great
to have you guys here.

I want to start with a quote from George McGovern, who departed this
morning, in an open letter that he wrote to President Obama upon President
Obama`s inauguration. "When I entered the U.S. Senate in 1963, the defense
budget was $51 billion. That was at a time when our military experts felt
it necessary to have the means to win a war against the combined powers of
Russia and China. Today we have a military budget over $700 billion.
That`s including the -- the funding for the wars. And yet neither Russia
nor China threatens us, if, indeed, they ever did. Nor does any other
nation."

I think the amount of spending increase in the last 10 years, I think
people haven`t quite gotten their heads around it. It`s essentially --
even when you take out the war funding, if I`m not mistaken, we`ve seen a
doubling of just the base budget of the Pentagon over the last 10 years.
And we now have, in this -- we have a very clear distinction in this
campaign, as far as I can tell, in the plan of how that spending`s going to
go forward.

We have a graph, I think, that shows this. This is the options on the
table. The green line is Mitt Romney`s idea about what the base -- this is
base spending. It doesn`t include wars. This doesn`t include security.
This doesn`t (INAUDIBLE) Department of Homeland Security. If you talk
about security spending, you get an even larger amount of money -- Barack
Obama`s proposed leveling and then the sequestration.

Larry, you worked on this issue for a long time. What has changed?

LARRY KORB, CENTER FOR AMERICAN PROGRESS: Well, what has changed --
and I think the late Senator McGovern pointed it out. We don`t have an
existential threat. Yes, we have a threat with terrorism. But it`s not
something that you`re going to win, you know, with a lot of nuclear
weapons, or you know, huge armies and navies.

And when you tell people, even Republicans, that if you control for
inflation, take the base budget under sequestration, you`ll go back to
where you were in 2007 -- nobody was complaining then.

And the other thing is that even with sequestration -- no, I don`t
think we should do it automatically, but I think you can do it correctly --
you`re above what we spent on average, controlling for inflation, in the
cold war. And if you add more funding spending (ph) -- and remember, this
is the first time we`ve ever separated it out. In Korea and Vietnam, we...

HAYES: It was all part of the same thing.

KORB: Right. If you add in more funding, we`re higher again in real
terms, controlling for inflation, than at anytime since World War II.

HAYES: Right.

KORB: So -- and when you tell people, they say, Wait a second. And
the other thing that people don`t understand is if you allow the Pentagon
to have what Bob Gates called a gusher of defense spending, people won`t
make hard choices and you can have everything.

And you can take a look at over the last 10 years, the General
Accounting Office -- Accountability Office has looked and they said, Your
95 weapons systems, cost growth of $400 billion. John McCain says a
scandal and a tragedy, $50 billion on weapons we canceled.

So really -- and then the final thing, which is interesting -- if we
keep -- you know, we`re 40 percent of the world`s military expenditures.
We got up to 50 at the height of the cold war. You`re going to have free
riders. The Europeans will say, Well, why should we have to worry? The
United States is going to, you know, take care of us.

HAYES: (INAUDIBLE)

SONALI KOLHATKAR, KPFK PACIFICA RADIO: Yes, you know, I think one of
the things that we`re also missing is that ordinary Americans want to know,
What percentage of my income dollar is going to military spending? And
nobody discusses that. If you look at that, about half of our income
dollars -- income tax dollars -- excuse me -- go towards military spending.

And you can`t count Social Security because that`s a trust fund.
That`s something we pay into.

HAYES: And we pay -- that`s separated...

KOLHATKAR: You have to count past wars. You have to count veterans
benefits. That`s all part of war spending. You have to count the interest
on the debt that we`ve gone into for war.

And when you tell ordinary people that -- I think if they knew that,
that number at 41 percent would be even higher.

HAYES: Right.

KOLHATKAR: The other thing -- and I`m glad you used the term
"leveling" when you talk about these issues, what Obama`s plan is --
because the president`s mostly talking about...

HAYES: Cuts, yes.

KOLHATKAR: ... cuts.

HAYES: We...

KOLHATKAR: And it`s not cuts.

(CROSSTALK)

KOLHATKAR: You wouldn`t be losing your raises, which is essentially
what...

HAYES: And we should say the leveling -- that leveling that we showed
in that chart -- can we show that chart again, just so that people are
clear, and this is a distinction that`s important. This is in real
dollars, not nominal dollars, which means there are in nominal dollars,
which means in the actual price tag that`s on the budget, they go up every
year to keep pace with inflation. So that leveling is an actual leveling,
actually leveling in real dollars.

SESTAK: You know, there`s actually -- nobody wants a stronger defense
than I do. I mean, 31 years in the United States military -- you want your
soldiers to go over there and come back having accomplished the missions
with tools (ph) they need.

But that said, to Larry`s point, two other things have changed. Our
capability within one ship alone is so much more. An aircraft carrier
today can do nine times the strikes in 24 hours, nine times the targets in
24 hours than the same aircraft carrier could do just 15 years ago because
the new domain of warfare is knowledge, the ability to have satellites pick
up where the adversary is and link it in real time to our aircraft going
on.

So therefore, it`s not how many ships, how many fighter aircraft you
have...

HAYES: (INAUDIBLE) point.

SESTAK: ... it`s capability with the knowledge. Number two is
accountability. Everyone wants accountability in our spending. But take
that aircraft carrier...

HAYES: If I may object. Not everyone wants accountability in our
spending...

(LAUGHTER)

HAYES: ... particularly in our security spending. There is an
industry of contractors that would very much, thank you very much, not like
to have accountability in our spending.

SESTAK: Let`s just say that the people in Elk County in Pennsylvania
want it. And so therefore, when you see in that aircraft carrier that was
asked for a few years ago of $11 billion, that the confidence factor that
that price was right on internal Navy documents was about 35 percent.

Would you buy a car if the car dealer said the price you`ve got to pay
for that car next year is roughly a third of what I`m going to tell you,
and you just pay me next year? In short, we have...

HAYES: Right.

SESTAK: That`s why we have costs overruns in 2008 of $300 billion
because we have this tyranny (ph) of optimism, the price that we give (ph)
forward (ph) is going to be right. We need (INAUDIBLE)

HAYES: But of course, the argument on the other side -- and this is
the argument that`s made all the time, is that there are jobs attached to
every one of those cost overruns. There`s someone building those things.
And I want to show an ad Mitt Romney is running -- because this where he
thinks he`s on strongest footing in weighting (ph) this politically -- when
we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ROMNEY: This president can ask us to be patient. This president can
tell us it was someone else`s fault. But this president cannot tell us
that you`re better off today than when he took office.

UNIDENTIFIED FEMALE: Here in Colorado, we`re not better off under
President Obama. His defense cuts will weaken national security and
threaten nearly 20,000 jobs. Romney`s plan, reverse Obama defense cuts,
strengthen our military and create over 200,000 new jobs for Colorado.

ROMNEY: I`m Mitt Romney and I approved this message.

(END VIDEO CLIP)

HAYES: Some good old-fashioned military Keynesianism from Mitt
Romney...

(CROSSTALK)

HAYES: Government spending does not create jobs.

KORB: ... rolling over in his grave listening to those things.

HAYES: Yes, I mean, this -- and this...

(CROSSTALK)

HAYES: This has obviously been the standard Republican line, you
know, forever, which is that government can`t create jobs, except if
government jobs are defense-related.

Anne-Marie, my sense is that you`re supportive of the basic contours
of the Obama trajectory for defense spending.

SLAUGHTER: Absolutely. And I mean, I actually am not -- I`m not in
support of sequestration and simply cutting $50 billion across the top. I
mean, I think we actually need to figure out what the threats are and
relate our spending to the threats.

But that said, you know, former chairman of the Joint Chiefs Mike
Mullen back said in 2009 that the deficit was the greatest threat to our
national security, that our -- that we needed to rebuild our strength at
home, we needed to rebuild our health and our education and our
infrastructure, and that that -- that`s part of what we need to be strong
in the world.

And the other part, going back to our discussion on Libya, we -- you
know, $50 billion is the entire budget for the State Department, pretty
much.

HAYES: Yes.

SLAUGHTER: Right? We need more diplomats. We need more development.
We need more of all the other kinds of ways in which we advance America`s
interests in the world. And the Pentagon actually understands that. When
you look at what we needed in Afghanistan, it`s not more soldiers, it`s
more of the rest of the...

(CROSSTALK)

SESTAK: Absolutely. Because that way you can -- I`m sorry.

HAYES: Sonali, but you -- I`m curious if you think that the Obama
trajectory is -- is -- is aggressive enough.

KOLHATKAR: Well, no, when you compare Obama to Romney, he comes out
looking like a peacenik.

(LAUGHTER)

KOLHATKAR: But if you -- if you look at Obama in absolute terms, it`s
true that he wants to fight leaner wars. He wants a leaner military. But
that`s because drones are cheaper, more efficient.

And do we -- is that what we want? I mean, what do ordinary Americans
want? Most Americans are sick of war. Most Americans want international
cooperation. So I agree with Anne-Marie about, you know, diplomacy being
important, although, in the past, U.S. diplomacy has been more of a
sledgehammer rather than a velvet glove...

HAYES: We`ll talk about that next.

KOLHATKAR: ... but I think it`s really important that when we look at
Obama and his trimming of the military budget, it`s not because -- it`s
going to lead to us fighting fewer wars necessarily. It may mean fewer
boots on the ground, and that`s good for Americans, not losing lives. But
it`s not going to mean fewer other lives being lost because we`re going to
be want -- he wants to invest more in drones. He has expanded the drone
war far beyond Bush.

This is not a president -- this is a president who sees American
interests and goes after them. He may not want to get involved in wars
that he doesn`t see American interests in directly, but it doesn`t mean
that he is a peace president. He never has been and he won`t be.

KORB: You know, it`s interesting. After every build-up, when I
worked for Reagan, we went up for four years by 28 percent in real terms.
When we had a deficit problem, we came down 10 percent in real terms over
four years. Sequestration is only 8 percent reduction from where you are.

HAYES: Right. And people are running around Capitol Hill like it`s
the end of the American...

(CROSSTALK)

KOLHATKAR: It`s going to make us not the strongest...

KORB: And if you go back and you take a look, as Mark Shields calls
him, our last liberal president, Richard Nixon, he cut 30 percent in four
years -- 30 percent in real terms. And he -- you know, he started EPA and
OSHA...

HAYES: Right, right, right.

KORB: ... and all the other things Republicans are complaining about.
And go back to the point that Anne-Marie -- you know, Admiral Mullen,
Secretary Gates, said, Well, deficit`s a big problem. We need to spend
more on State. But when you ask them, Do you want to take it from defense?
Oh, no, no, we don`t want to cut...

HAYES: Right. Right.

KORB: And that`s what we need. We need a unified national security
budget that looks at State, Homeland Security and defense and make those
trade-offs.

SESTAK: Those other (ph) elements of our power can actually
prevent...

(CROSSTALK)

SESTAK: The point is, it would be a real shame to say that we are
going to continue to build or retake (ph), as Romney wants to, an F-22
that`s not needed because of a job because that`s not what the warrior out
there wants to hear.

And when you really look at his numbers, Chris, they`re quite --
they`re really something. There`s three-and-a-half million jobs in the
defense and aerospace industry. According to what Mr. Romney is saying,
this 10 percent cut in our defense budget, even if you do sequestration,
would mean you`d lose 40 percent of all those jobs. That`s ridiculous.
And so the numbers don`t even add up.

KORB: Well, you know, when the defense spending went up in the last
five years before you had the Budget Control Act, these companies were
laying off people!

HAYES: Right.

KORB: They had less -- and if you take a dollar and you say, I want
to spend that on defense, education, health or even a tax cut, you create
more jobs.

HAYES: Well, that -- and that`s part of the issue. We actually
talked about this in mining (ph) yesterday, right? A lot of the defense
spending is an incredibly capital-intensive undertaking, as opposed to
labor-intensive, right? If you spend a dollar, right, it depends on where
you put that dollar, if it`s a very capital-intensive industry or a very
labor-intensive industry.

Things like health care and education are very labor-intensive.
Things like building nuclear submarines is very capital-intensive. And so
in terms of the job creation potential per bang of buck, health care...

(LAUGHTER)

HAYES: One of the things that`s fascinating -- one of the things
that`s fascinating is -- is -- is that American public opinion on this has
fluctuated more than I thought it would. I want to show you some of the
data on that when we get back.

(COMMERCIAL BREAK)

HAYES: So having come of age post-9/11 as an adult and as a reporter,
I think I had come under the impression that the sacredness, the sanctity
of the defense budget was a fixture in American politics.

But actually, this polling I thought was really interesting. This is
-- this is basically U.S. views on defense spending and -- from 1969 to
2012. And they`re actually quite volatile. So during certain periods, you
see us saying we`re spending too much, for instance during -- in the post-
Reagan build-up.

And then what happens is the policy seems to adjust. We spend too
much. There were defense cuts towards the latter part of the Reagan years.
There`s the cold war dividend that we take. And then you see we`re
spending too little after 9/11. And now we`re back to spending too much.

And to hit this point home, take a look at this moment that our
segment producer, Sal Gentile (ph), found from the 2000 debate between
George W. Bush and Al Gore. Take a look.

(BEGIN VIDEO CLIP)

VICE PRES. AL GORE (D-TN), PRESIDENTIAL NOMINEE: I propose $100
billion for this purpose. The governor proposes $45 billion. I propose
more than twice as much because I think it`s needed.

UNIDENTIFIED MALE: Governor Bush, two minutes.

GOV. GEORGE W. BUSH (R-TX), PRESIDENTIAL NOMINEE: If this were a
spending contest, I`d come in second. I readily admit I`m not going to
grow the size of the federal government, like he is. I`m concerned that
we`re overdeployed around the world.

Spending money is one thing, but spending money without a strategic
plan can oftentimes be wasted.

(END VIDEO CLIP)

HAYES: The subject there was defense spending specifically. And
remarkably, that was -- that -- Al Gore was to the right of George W. Bush.
George W. Bush was attacking his opponent for wanting to spend too much
money on defense. And that -- I guess the point there is that there is
much more -- the American public is more malleable and more persuadable, I
think, on this than I would have -- than I would have guessed.

SESTAK: The (INAUDIBLE) George Bush said is strategic planning. We
do not have the new strategic approach. What is our strategy for the
future? Since Colin Powell`s days in the early `90s -- it used to be based
on the defense of the two most stressing scenarios we had, Iraq, which is
now gone, and the defense of South Korea, where the chairman of the Joint
Chiefs of Staff says, We don`t need the Army to defend South Korea anymore.

So what are we measuring our military towards? OK, we got some
concerns about China that`s coming onto the world scene and claiming east
(ph) in the South China Sea are its inland waterways almost. And there`s
terrorism.

But our defense -- Quadrennial Defense Review still says two stressing
scenarios. We don`t have a name for them. So we`re still building two
militaries for two major regional conflicts.

(CROSSTALK)

HAYES: We have essentially plugged into that same budget...

SESTAK: Absolutely.

HAYES: ... generic conflict...

SESTAK: Just last year was that decision.

KOLHATKAR: You know, I think -- I think what`s happening here is the
Republicans are trying to find some way in which they can find a context to
say, We want to create jobs.

(CROSSTALK)

HAYES: No, that`s true!

KOLHATKAR: They don`t want to do it through government. But of
course, as you said earlier, the military is considered separate from
government.

It was interesting to hear George W. Bush be more of a classic
conservative, saying that, you know, government spending -- I don`t want to
increase the size of government. Romney seems to have no problem with
increasing the size of government when it comes to the military. But I
think again it`s the issue of jobs because that`s what Americans want to
hear.

HAYES: Right.

KOLHATKAR: He`s going to be bringing that up on Monday, as well,
because people`s eyes will glaze over when we talk about conflicts very far
away in the world that don`t seem to concern their own lives. He`s going
to try to hit it home with the issue of jobs.

HAYES: And it`s particularly -- we should note it`s particularly
important in -- in -- in swing states, right? I mean...

KOLHATKAR: Absolutely.

HAYES: In some ways, the whole thing might just be about Virginia,
which -- a huge about of the Virginia economy revolves around both the
defense contractors and the...

(CROSSTALK)

KOLHATKAR: If Obama is smart, he`ll expose that.

KORB: You know why George Bush was talking about cutting defense
spending, the point the admiral made earlier. He said technology is going
to substitute for -- he had what they called the revolution in military...

HAYES: This is the Rumsfeld vision!

(CROSSTALK)

KORB: Yes. And basically, he was arguing that the Democrats had not
-- you know, not supported that. And I think that`s what people, you know,
forget. And of course, after 9/11, they got everything, and just as Bob
Gates said, you know, opened up the spigots of, you know, defense spending.

HAYES: Here`s the thing I think that -- the broader point. And I was
looking at the chart, which we don`t have, of -- of -- in real dollars, not
as a percentage of GDP but in real dollars, how our security spending
happens.

Huge bump for the cold war. Came down a bit, but that actually
created a new baseline. And we`ve added the war of terror on top of that.
And so now we have these two bumps sitting against each other. And the
point is, we need to reassess -- we can`t keep building security
architecture on top of each other and never actually go back and
deconstruct the old security...

(CROSSTALK)

SESTAK: Particularly when you`re building on force structure, not
capability in the knowledge domain.

HAYES: I want to thank Larry Korb of the Center for American Progress
and former congressman Joe Sestak for joining us this morning. Great
pleasure.

Have the United States and Iran agreed to bilateral nuclear talks?
"The New York Times" says yes, but the White House denies it. That`s next.

(COMMERCIAL BREAK)

CHRIS HAYES, MSNBC ANCHOR: Hello from New York. I`m Chris Hayes. With me
this morning, I have Iranian journalist, Hooman Majd, the author of the
"Ayatollah`s Democracy, An Iranian Challenge," Anne Marie Slaughter from
Princeton University, David Corcoran, co-author of "Towards Nuclear Zero"
and director of Policy Studies at the University of Notre Dame and Sonali
Kohatkar from KPFK Pacifica.

The White House is denying a new report that the United States and
Iran have agreed to what would be their first ever one-on-one nuclear
talks. That denial comes after front page blockbuster "New York Times"
story sourced to Obama officials asserting the U.S. and Iran have agreed in
principal to bilateral nuclear talks after the election.

In principal part added after the story was originally published
online. The White House says it is, quote, "not true that the U.S. has
agreed to talks or any meeting with Iran after the election."

Iran, just this past hour said the same thing. But a senior
administration official tells MSNBC`s Andrea Mitchell that there had been
back channel talks seeking to set up such a meeting. There`s no deal in
place, yet.

The story, confusing as it is, will surely factor into tomorrow
night`s big foreign policy focused presidential debate. We are very lucky
that we have this table of experts to discuss this breaking news.

It was published in the New York Times. I was following it. I was
following the fallout and the reaction. I generally don`t know what to
expect. They agreed to meet. They went back and revised the story agreed
in principle to meet.

Then the White House denied it. Then Iran denies it and so that
leaves me thinking what. I don`t know. What should I think?

ANNE MARIE SLAUGHTER, PRINCETON UNIVERSITY: I had the same reaction. I`m
following this and I`m thinking why on earth in the first place would they
do this? It didn`t make any sense to me that they would do this unless
Obama planned to use it in the debate.

Anybody who is used to dealing with the Iranians would know that
would probably torpedo any chance of it happening. And indeed, what it
looks like to me is the State Department pushed back and said, you know,
this will be disaster in terms of the substance of the policy. So now the
White House has denied it, which means the president can`t use it. I can`t
understand what on earth the purpose was of leaking it to begin with.

HAYES: There was a smackdown from Israeli Ambassador Michael Oren who
basically say we don`t know anything about this. This is not --

HOOMAN MAJD, AUTHOR, "THE AYATOLLAHS` DEMOCRACY": The prime minister said
he would be fine with it. That was just this morning I read that. So I
mean, it`s strange, I mean, it is very odd, I agree with you. It`s very
odd how this happened. I mean, you have to think, I have to think it`s
hostile leak.

HAYES: That`s the point. Explain what that means? You mean someone who
does not want have to go forward is essentially --

MAJD: Because I do think -- I mean, Iran has met with the United States on
the sidelines of P5 plus one talks -- I`m sorry the permanent members of
the Security Council plus Germany have been negotiating with Iran with the
U.S. -- the U.S.`s backing many, many years of this point.

In 2009, I think it was Nicholas Burn met with the Iranians on the
sideline in Geneva I believe. So there has been contact between the U.S.
and Iran. There`s also regular contact between the U.S. and Iran through
the Swiss ambassador in Tyron who is living there.

And represents American interest and sees the foreign minister and
sees Iranian officials on a pretty regular basis. So it`s not really big
news to say they said yes, we`ll talk to them. The supreme leader never
said he will talk to the Americans. He`s said we will talk to the
Americans.

DAVID CORCORAN, UNIVERSITY OF NOTRE DAME: We should be talking with the
Iranians. It`s actually would be an encouraging time to move toward it.
It`s essential. We are not going to resolve the nuclear dispute unless we
can sit down and figure out some kind of a dialogue, work out a bargain.
That`s what we need to do. I hope it stays on track and I hope the
president is serious. We can actually get negotiations underway.

SONALI KOLHATKAR, KPFK PACIFICA RADIO: I think what`s going to happen at
the debate is, however, with Romney there. The two candidates are going to
try to outdo one another on who can be tougher on Iran. This is going to be
interesting to see.

Because Obama`s approach has actually been a little bit more
constructive on Iran and that`s all relatively speaking. Because, of
course, it`s still seen as a huge threat rather than diplomacy, you have
the Republican side who wants to see raw American power.

Raw American power doesn`t mean negotiating with a state that
sponsors terrorism. They are going to point it out as a weakness. So any
chance -- and the hostile leak issue is a good point. Any chance there
have been for talks between the U.S. and Iran, it`s going to force Obama`s
hand. It`s going to undermine them.

MAJD: It also affects Iran as well because the Iranians also don`t want to
be seen if they are negotiating with the U.S. This should have been kept
very quiet, if it is true.

Because the last time the Iranians negotiated with the U.S.
secretly, it affected the careers and people in Iran who are negotiating
with the U.S. So that`s also something that is very hostile. But, you
know, given the fact the debate is tomorrow, clearly the timing was
relevant.

SLAUGHTER: I guess, this is actually, there`s not a debate here, right?
Romney is in exactly the same place as Obama is on Iran. He comes out and
he says, you know, his red line is the same. He`s not proposing --

HAYES: He walks that back though.

SLAUGTHER: He walks it back. He says they can`t have a nuclear weapon or
the capability, but he`s not -- he didn`t want to attack Iran --

HAYES: Just so you know, the world of the discussion has its own lingo
jargon. The major policy dispute between Benjamin Netanyahu and the Obama
administration, as far as I can parse, is whether the red line is a nuclear
weapon or the capability of nuclear weapon.

Benjamin Netanyahu wants it to be the capability for nuclear weapon.
The Obama -- the Obama administration stated red line is a weapon. Mitt
Romney agreed and said, our red line is a weapon and then walk it back
said, no, capability, which is in line with Netanyahu.

The problem with capability as a red line is capability is a very
broad concept and can mean any number of things --

MAJD: They are probably there now.

HAYES: In terms of capability.

MAJD: If you think capability, Iran has been there for awhile. It doesn`t
make any sense.

HAYES: In terms of politics, your point that is fascinating is let us all
recall in 2008. One of the major differences between Barack Obama and
Hillary Clinton in the primary that emerged was a willingness to sit-down
with Ahmadinejad, the Iranian regime with no pre-conditions.

That didn`t carried over to the -- and Barack Obama when he said in
this in a debate, people thought that`s a big gaffe and instead they
doubled down on him. They said no, no, no. They turned what looked like a
weakness into a virtue.

They said we are strong enough to be able to talk to our allies. He
would quote JFK, John F. Kennedy, making the same point that real strength
is being able to talk to your enemies.

So now, here we are four years later, heading for a foreign policy
debate when the fruits of that possible policy had been leaked to the
people, we are going to see tomorrow night what exactly and how they play
it. Do they actually embrace that?

KOLHATKAR: And actually international cooperation again is something that
is popular with the country. It all depends on the spin put on it after
the fact. Nobody wants to appear weak.

HAYES: No one wants war.

KOLHATKAR: Nobody wants war either. You are right. These two candidates
don`t differ much. Romney kept being into corner in the last debate saying
no, he doesn`t want to go to war with Iran. He doesn`t want to say that.

HAYES: I agree with you. This is fascinating. There`s a stylistic
critique that comes from the Romney/Ryan campaign, but substantively
particularly on Iran policy. There is really unanimity -- the reason that
I want to talk about that.

And the reason it`s a theorist and practitioner is here at the table
is precisely because there is, I think, a consensus in which everybody
agrees with the sanctions in Iran. I think that should be looked at a
little more carefully. We`re going to do that after this break.

(COMMERCIAL BREAK)

HAYES: As we saw in the vice president debate, despite the bluster, the
candidates are largely in agreement on the center piece of the U.S. policy
towards Iran, which are sanctions.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES OF AMERICA: These are the
most crippling sanctions in the history of sanctions, period, period.

REPRESENTATIVE PAUL RYAN (R), VICE PRESIDENTIAL NOMINEE: Thank heavens we
have the sanctions in place.

(END VIDEO CLIP)

HAYES: Mitt Romney while supporting the current sanctions has promised
even more if elected.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL NOMINEE: I will not hesitate to impose new
sanctions on Iran and will tighten the sanctions we currently have.

(END VIDEO CLIP)

HAYES: All the boasting from both sides obscures many of the questions we
should be asking about the U.S. led sanctions regime against Iran. Are
sanctions strategically wise? Are they bringing Iran closer to suspending
uranium enrichment?

Furthermore, is it morally justifiable to subject a civilian
population that we ourselves hold largely blameless for the actions of its
government to the effects of sanctions? This isn`t the first time this
course of action has been pursued.

After the first Gulf War, Iraq was subject to U.N. sanctions for 13
years right up through the 2003 invasion and conservative estimates are
they contributed to the deaths of 220,000 of Iraqi children through 1998.

The sanctions in Iran are arguably even more comprehensive as Vice
President Biden was eager to point out. They are the most crippling in
history. That said the effects will be quite different.

The sanctions on Iraq followed a bombing campaign that has destroyed
much of the country`s infrastructure and the Iranian economy is much
stronger than Iraq`s was following the Gulf War.

David, this is something that you have spent a lot of time thinking
about and writing about. You were intimately involved with your colleague
advising you on the regimes in Iraq, smart sanctions. What do you think of
the current sanctions regime in Iran and why are they so crippling? What
exactly are we doing with Iran right now?

CORCORAN: There are two different dimensions of the sanctions. One is
from the U.N. Security Council. These are targeted measures that began in
about five or six years ago and they`ve been steadily tightening. But
essentially these are targeted measures.

They are financial asset freezes and travel bans, and then there`s
an arms embargo. And it`s specifically target out of about 100 individuals
and entities, corporations that are specifically linked to the nuclear
program.

They are effective in the sense that they have full and national
agreement. Russia and China are on board. Even Iraq has been cooperating
at least making a show of cooperating with the arms embargo. T hey have an
important impact in that they isolate Iran diplomatically and they send a
message from the whole world that we want some controls over nuclear
program.

We don`t want to see you develop a nuclear weapon. So that`s one
type. The other is the measures that the U.S. itself has imposed. U.S.
has had various forms of unilateral measures on Iran for more than 30 years
and those have been steadily increasing.

Now we have the European community is on board. These are much
broader and they are targeting financial institutions, cutting off the
financing for Iran`s capabilities to do exports and therefore it`s had a
severe impact on oil revenues, cutting off half of the oil revenues.

HAYES: The U.S. and the E.U., which the E.U. joined in on this very latest
round of sanctions this summer and it`s precipitated. In which essentially
the E.U. was buying a lot of oil from Iran. They no longer are.

CORCORAN: They weren`t buying a lot of oil.

HAYES: Relative to the U.S., none.

CORCORAN: Most oil is going to Asia.

HAYES: Most of it is going to China.

CORCORAN: South Korea.

HAYES: I think it`s represented, as far as I can tell, the numbers are
fuzzy, a 10 percent GDP contraction since summer. Think about a 10 percent
GDP contraption. The worst part of the crisis in America in the great
recession after the Lehman brothers collapse is about an 8 percent GDP
contraction.

So we`ve seen -- you know, we are right now, the U.S. and E.U.
imposing this, what is --

CORCORAN: Maybe half of the government`s revenues. This is a huge impact.
We are seeing real impact in terms of inflation, unemployment and perhaps
now some humanitarian impacts in terms of the social impacts as well.

KOLHATKAR: I think this is just unconscionable. Let me just be -- you
know, let me just be real clear. When Biden says crippling, when he uses
that term, I cringe. Who are we crippling? Everything goes to the banking
sector in Iraq.

HAYES: In Iran.

KOLHATKAR: Iran, excuse me. When that is targeted, hospitals are having a
hard time getting medical equipment. There are reports that cancer
patients and multiple sclerosis patients aren`t getting medication.
Iranians are bringing their children for treatment to the U.K.

Do we want to be responsible for that? It`s not addressing the
hypocrisy of nuclear enrichment from countries that have nuclear powers
that have been shown to use nuclear weapons. We are not talking Israel.
We are singling out Iran. It`s an issue that comes up.

HAYES: So should we do nothing?

KOLHATKAR: I mean, we need to look at Iran`s nuclear capabilities from a
very realistic perspective. Iran can`t have them, but Israel can have
them. India and Pakistan can have them.

SLAUGHTER: Those are already done. Are you saying that let`s assume Iran
does not have a nuclear weapon, should we do nothing?

KOLHATKAR: Who puts us in charge? I mean, so because Pakistan is done, we
let them go. Once Iran is done, they are off the hook?

SLAUGHTER: This is a president that wants to go to global zero, right.
This is a president --

KOLHATKAR: Well, let`s start with our own nuclear weapons.

SLAUGHTER: We still have to -- I mean, if Iran gets a nuclear weapon,
Saudi Arabia is going to buy one from Pakistan then you have Turkey and
Egypt do also might. There`s a really good reason not to let Iran --

HAYES: Can I make one distinction here. We have the goal of the policy,
whether it`s legitimate. The goal of the policy is Iran does not get a
nuclear weapon -- whether that in and of itself is a justifiable goal given
our biggest ally in the region.

Even though it`s not admitted, it`s clearly has -- we are the only
country that`s ever used one. Then the question is if that is the goal,
stipulate for a second it is. I take well your caution on that point. Our
sanctions and sanctions regime is wise means of pursuing that goal and are
they morally justifiable --

SLAUGHTER: And compared to what?

HAYES: They are neither.

KOLHATKAR: Thank you. I agree.

MAJD: Nor are they going to accomplish the goal they are setting up to
accomplish. So let`s leave aside the moral question, which I agree with
100 percent. It`s immoral. I have a friend in Iran with cancer who cannot
get medicine.

This is personal. I know people in Iran are suffering. Aside from
the poor, the middle class, the opposition to the regime is suffering
because of the crackdown of the regime which continues and gets more harsh
as sanctions increase.

It`s gotten more harsh since 2009. It`s not working there. Is it
going to change the Iranian leadership? No. You have to understand their
own motivation. The regime`s motivation is definitely to say in power.

This point is to protect the rights of the nation as it sees them as
it sees them. The population generally agreed it has every right to be as
a member, a signatory and member of the IAEA the right to enrich uranium.
It`s not going to happen.

CORCORAN: Let me say, first of all, we need to differentiate between the
smarter sanctions, which are multilateral and these more unilateral
measures, which have a broader social impact.

B, sanctions can be a useful tool diplomatically. The value of
sanctions, George Lopez and I argued for years, as a diplomatic tool. Use
the targeted measures and the U.N. measures to say we have put them on the
table and we are willing to suspend and begin to lift these measures if we
can get a diplomatic mark.

HAYES: You produce the possibility of taking them away, it`s an incentive.

CORCORAN: It`s the bargaining option.

HAYES: Let`s talk about how that has worked in the past. We have had
pursuit sanctions and we pursued the means of stopping nuclear
proliferation in the past.

CORCORAN: In Libya.

MAJD: We also have to remember that Iran doesn`t have nuclear weapons
right now and as far as the most side and the CIA are concerned it doesn`t
have plans to develop them at this point.

HAYES: At this point, right after this break.

(COMMERCIAL BREAK)

HAYES: We had to jump into a heated exchange during the break, which we
will now broadcast live to you. It`s the point of this enterprise. We
were talking I guess the carrot and the stick model ultimately. I mean, I
kind of hate that metaphor, but --

CORTRUGHT: It`s a bargaining tool. Look at the case of Libya you were
mentioning earlier. In `03, Libya came clean. There was an agreement and
they dismantled of what they had with their WMD program, weapons of mass
destruction.

That was a process that had been going on back into the `90s really,
but all through the whole previous era and sanctions were a key factor.
There are international sanctions for awhile. They were lifted when there
was the settlement on the terrorism issues.

The U.S. kept sanctions on. The deal was we will lift the sanctions
if you remove all your WMD capacity and dismantle your production. Gadhafi
did. It`s a model to approach the Iranian model.

We can put pressure on them, but when we come into negotiation, I
hope it will unfold. The U.S. has the tools, the carrots, if you will, to
be put on the table. It`s offered to ease up the sanctions. We can make
up gestures.

We could ease some of the sanctions when the talks begin. The
signal a serious intent to negotiation and use that as the primary tool.
We also have to address other things that Iran is concerned about.

They`re highly insecure. They are surrounded by military capacity.
We have all these military forces in the Gulf, in Kuwait and other places
so we could offer to begin to ease back on our military presence as well.

Security assurances are an essential part of bargaining. Look at
the other cases around the world where we succeeded, security assurances
have to be on the table along with lifting sanctions and normalizing
economic commercial ties.

HAYES: Is this the model that you see for this policy? Is that roughly --

SLAUGHTER: Absolutely. I mean, partly, I think you have to remember Obama
came into office saying I`m going to reach out to the Iranian regime. I`m
going to talk to them. We should engage with them. He tried that and got
nowhere.

The Iranian regime would not respond then you had the green
revolution that broke off. He`s looking for a way to give up their nuclear
weapons program so that absolutely we can improve relations and we have a
lot of business to do with them.

He doesn`t want to bomb them. What`s in between, sanctions that
lead to negotiations. I would say, that`s not ten years worth or 13 years
worth of sanctions with Iraq where you had them on and there`s no clear
goal.

This is a very carefully crafted strategy that says these are the
sanctions, they are really biting. I disagree that they will change the
Iranian regime`s calculus. You will give up or let everybody in. We can
then remove these. Here`s a path to a different set of relations.

MAJD: First of all, when you say let everybody in, there are inspectors in
Iran.

SLAUGHTER: Who are not seeing every facility --

MAJD: I`m sorry. They are seeing every facility that is a nuclear
facility. They are not seeing the military facilities, which they are not
obligated to open up to inspectors. They have asked to see that, but they
have not been -- they legally don`t have to.

HAYES: Because this is important. One of the things Iran is a signatory
to the proliferation treaty. One of the critiques for this reason is that
one can -- there is under the nuclear non-proliferation treaty, you have
the right to pursue civilian purchases of the nuclear -- with technology,
one can`t pursue and be compliant until the day you announce you are no
longer a signatory.

MAJD: If you abide by it.

CORCORAN: There are additional procedures introduced after the Iraq
situation, for awhile Iran was part of that regime, now it`s backed off.
It`s not just that they are there, but there are additional protocols,
further steps that could be taken to make maximum transparency. That
should be the goal. That is enough.

MAJD: I agree. Under the president, Iran abided and signed the additional
protocol that you`re talking about, didn`t have it ratified in parliament
for precisely the reason that they wanted to have a deal before they made
it law. When he said you know, we are not going to abide by that protocol
anymore. We are not getting anything in return.

KOLHATKAR: The question here is what is Obama`s game here? Is the U.S.
supporting the U.N. sanctions and the broader E.U. sanctions if they are
crippling the country and causing human concerns, if this is something that
both candidates even agree on, we are causing harm, we might end up in the
situation similar to Iraq.

Where the regime gets stronger because they are seen as standing up
to the United States. My question is to Anne-Marie, is the Obama
administration`s approach to Iran really that carefully crafted and used in
a way that you said. I`m not really confident.

SLAUGHTER: This is an important question. Remember, we have been trying
to have talks with the Iranians for over a decade. They move forward, they
move back. The idea here was to really demonstrate an international front
and put on sanctions that really do bite and offer them a deal.

The key question is the one you asked, which whether or not they are
biting. It`s whether or not they decide the way to stay in power is to
actually do a deal or the regime decides the way to stay in power is
possibly to invite an attack or simply double down on getting a nuclear
weapon. That`s a calculation that we are trying -- that you have to just
decide what`s --

HAYES: One of the issues here --

KOLHATKAR: It may not work.

SLAUGHTER: It may not.

HAYES: One of the issues here when you talk about this being the middle
path, don`t want nuclear weapon weapons, sanctions there. For that reason,
they are critiqued by the left and right. I want to play Mitt Romney`s
adviser offering his critique of the sanctions regime right after this.

(COMMERCIAL BREAK)

HAYES: There`s -- there are critiques of sanctions from the left and
right. That was true in Iraq, certainly. One of the weird things you saw
on the run up to the war was actually making an argument for intervention
from the kind of left opposition perspective of the sanctions basically
saying intervention is the war on Iraq is a more humane outcome than the
current sanctions regime.

And I thought this from Dan Senior who is a Romney campaign adviser
and formerly of the August Coalition Provisional Authority talking to
Andrea Mitchell making this critique of the sanctions regime.

(BEGIN VIDEO CLIP)

DAN SENIOR, ROMNEY FOREIGN POLICY ADVISOR: We are simply saying imagine if
those sanctions had been put in place earlier on. To say that things are
going fine because the Iranian economy is in bad shape is just a sad
statement of the state of affairs.

The goal is not to weaken the Iranian economy. The goal is to stop
Iran`s nuclear program. Weakening its economy and weakening the regime
politically are means, not results. There`s only one measurement that
matters whether or not Iran is closer to a nuclear weapons program. Today
they are.

(END VIDEO CLIP)

HAYES: Now I`m not a big fan of Dan Senior`s perspective on these things,
but that struck me actually was fairly good articulation of the sanctions
and to say the point being to talk about their cripplingness in of
themselves as a point that you`re scoring in favor of the policy is really
immaterial. The question is, this strategic calculus of how it`s going to
change a regime? It`s unclear whether they could be lifted.

MAJD: The supreme leader of Iran last week said that he didn`t believe or
the Americans are lying when they said they are going to lift sanctions.
It was partly in response to what Hillary Clinton had earlier said, some of
the sanctions could be lifted if Iran came back to the negotiating table.
He also said who said we ever left the negotiating table.

So I think that was a good indication that Iran is willing to
negotiate. I think that, from the perspective of the Iranians, they are
trying to figure out how are the sanctions lifted? Where are the so-called
carrots, the carrot and stick thing?

They don`t believe that the sanctions can be lifted easily or
certainly not by President Obama or President Romney signing off a piece of
paper saying as of tomorrow, there`s no more oil sanctions or banking
sanctions.

HAYES: Why not?

MAJD: I think they are sanctions that are imposed by Congress. It`s not
easy for the president just to automatically --

HAYES: There`s a Senator Mark Kirk in the bill. Senator Mark Kirk passed
the bill and did part of the sanctions.

MAJD: The sanctions on Iraq were lifted on Iraq in 2008, five years after
the invasion.

HAYES: Yes. Mark Kirk, I want to play this sound. He`s become -- he`s
made it his issue, the Iran sanctions. This is him talking about taking
the food out of the mouths of Iranians and whether it`s an appropriate
strategic goal.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Once we get into sanctions and taking those kinds of
actions, the argument immediately becomes, are you really going after the
government of the country or are you taking food out of the mouths of the
citizens?

SENATOR MARK KIRK (R), ILLINOIS: It`s OK to take the food out of the
mouths` of the citizens from an government plotting an attack on American
soil.

(END VIDEO CLIP)

HAYES: Now, again, Paul Ryan wanted to get into the minds during the V.P.
debate. I will do the same. If you are listening to that from their
perspective, it sounds like essentially a policy of regime change --

KOLHATKAR: It sounds like Madeleine Albright saying it was worth it for
Iraqi children to be killed because of sanctions. It`s OK to starve people
in order to undermine their leader?

MAJD: The American soil part is the weird part. Not something saying it`s
OK to take the food out of the mouths of children. Whose government is
plotting an attack on American soil. Does the CIA have information they
made public to attack America, on American soil?

CORCORAN: It`s fundamentally immoral. It`s also strategically
counterproductive. It`s not the way to try to bring about --

HAYES: There has to be an out is the point.

CORCORAN: It`s going to mobilize the people in support of the regime. We
are starting to see indications of that. We have to figure out a way to
keep the sanctions more targeted, smart sanctions was the phrase.

What happened to smart sanctions? Keep them focused. I would like
to see and we could do this, it doesn`t require congressional action, a
message, statement and policies that say we are going to continue the
sanctions especially the multilateral.

But we have no intention of harming them. We are going to ease up
the measures as a gesture to the Iranian people. These are targeted at a
policy, not the people.

HAYES: Let me push back a little bit on this point that, you know, this is
rallying people around the regime or -- you know, again, my understanding,
I have not been reporting in Iran directly, the currency is devalued over
this period of time. When you can`t sell oil, you can`t protect your
currency.

People make a run on it. You have a limited amount of dollars. You
know, inflation has been a problem in Iran, a huge political issue. The
price of food has been internal.

MAJD: For 30 years.

HAYES: For 30 years. People are predisposed to blame the regime for it
for 30 years. Actually, the sanction imposed effect is producing internal
political pressure on the regime. People see the price of commodities
going up.

MAJD: The problem, there`s a major distinction between the Ahmadinejad
government.

HAYES: That`s an important distinction in terms of the constitutional
structure of the Islamic republic when we come back.

(COMMERCIAL BREAK)

HAYES: We have, of course, the big foreign policy debate tomorrow night,
all eyes on the two candidates. The first question is going to be about
Iran, particularly after "The New York Times" article.

We are discussing here the Iran policy and whether it`s working. I
made the argument to you, the tightening of the sanctions and what it`s
done to the devaluation of the currency. It`s producing domestic political
pressure on Ahmadinejad. People are saying what are you doing to us?

MAJD: It`s been the case for awhile. It was very important when there
were actually a couple riots.

HAYES: And there`s a crazy video of a woman getting on his car and banging
the windshield.

MAJD: A lot of people do blame the Ahmadinejad government, but not the
regime itself. The supreme leader has been good about deflecting blame
occasionally, not all the time. He has been certainly in this case of
deflecting the blame on the Ahmadinejad government, not the regime.

When they went on strike, not strike, they closed their shops with
the collapse and riots outside the bazaar, the center of commerce in Iran.
They should have fully supported the regime, but anti-Ahmadinejad. The
political, as you pointed out, system in Iran allows for that step --
towards an administration rather than the actual regime itself.

CORCORAN: But the problem that`s emerging is as the sanctions start to
happen, social impact and humanitarian costs are rising. People are
starting to see and turn the blame against the West, against the U.S. it`s
hurting the whole process politically, internally.

It`s undermining those speaking up for more human rights and
democracy. We need to be clear the sanction should be targeted and we
should indicate any social consequences should ease up and lift the
measures.

HAYES: What are you looking for tomorrow night, then? What do you want to
hear?

CORCORAN: I would like to hear that indeed we are looking to have talks.
I would like president Obama, maybe the white house denied it.

HAYES: It`s not going to happen.

CORCORAN: We are going to have diplomacy and prepare the American public
for a compromise. For the last six, seven, eight years there`s been no
compromise. Under Romney, zero enrichment. Under President Obama, there`s
potential for compromise.

SLAUGTHER: I think it would be great if President Obama would say look, we
were willing to talk to you and willing to do a deal. We had a deal on the
table in the fall of 2010 where Turkey and other countries supply you with
the 20 percent enriched uranium you need. You will get stopped doing that.
That`s the first step toward a larger deal. We had that deal. Ironically,
Ahmadinejad wanted it. It`s the supreme leader who didn`t.

MAJD: I think an important point from the Romney perspective is he accused
the president and will tomorrow again, accused the president of going soft
on the green opposition movement. He loves it.

Why didn`t you support the revolution? Every single green movement
leader and activist in Iran, I know them, I have talked to them and spent
time with them, every single one of them is against the sanctions, every
single one. Where is his answer to that?

KOLHATKAR: To pick up on what you said, even if we turn around and say
it`s not our fault if the banking sanctions are hurting you, it`s not our
intention to make cancer medications less available, it`s not going to play
well or unaffordable.

We have to be responsible for our actions. If our actions are
causing these, regardless of what Ahmadinejad is doing, the blood is on our
hands and we shouldn`t forget that.

SLAUGHTER: The blood of the people is on their government`s hands. Come
on.

KOLHATKAR: Absolutely. The government, that government is responsible for
what we do. We are responsible for what we do and if our sanctions hurt
the people --

SLAUGHTER: You are unconnected. We had a deal on the table, they wouldn`t
take it.

MAJD: They put a deal on the table we didn`t take. It works both ways.

KOLHATKAR: I`m saying we have to be responsible for what we do. If these
sanctions cause deaths, it is on our heads and we cannot absolve ourselves
and telling Iranian people, don`t blame us --

CORCORAN: Let`s keep the focus on our goal, prevent proliferation. It`s
going to require a bargain and the sanctions can be useful, but we have to
ease them up at part of the deal.

HAYES: I think laying the ground work politically and rhetorically among
the American populous as the president, very courageously did in 2008.

In the heat of the campaign season, he said look, no, we are going
to talk to our enemies. It`s something to keep our eye on for tomorrow.
Does he come back at Romney? What you should know ahead, coming up next.

(COMMERCIAL BREAK)

HAYES: So what should you know for the week coming up in you should know
already as a general rule, not to believe everything you see in political
ads. Thanks to pro-Publica, you should know that a new $90,000 ad in
Southern Florida only appears to be the product of a grassroots group
concerned with the livelihood of seniors.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You worked hard, saved for retirement and dividends are
a big part of it. But if President Obama and congress don`t act this year,
tax rates on dividends will spike, tripling in some cases. They could do
it again by extending the tax rates for all Americans. Time is running
out. Tell them to stop a dividend tax hike now. Join the fight at defend
my dividend.org.

(END VIDEO CLIP)

HAYES: You should know that the site it directs viewers to is maintained
by none other than Edison Electric Institute, a trade association for
electric companies, which typically pay a lot in dividend and don`t want to
see stock price threatened.

We know that 15 percent tax rate on dividend is set to expire along
with the rest of the Bush tax cuts at the end of the year and that the
Obama administration has proposed taxing dividends as regular income for
those who make at least $250,000 a year. You should know that those taxes
will not affect well over 90 percent of seniors.

You should know that even the one major political party that make an
effort to free itself of corporate donors, does not always succeed.
Democratic National Committee Chairwoman Debbie Wasserman Schultz pledged
last year that the 2012 Democratic convention would be the first to be paid
for by the grassroots taking no corporate money.

You should know the Associated Press reports filings this week with
the SEC show that didn`t happen. The AP says Democrats used $5 million in
corporate money to rent the arena and gotten $8 million line of credit from
none other than Duke Energy.

You should know Democrats responded the contributions are legal and
you should know that that is the point. You should know that FoxConn which
manufacturers devices for Apple, Dell, Sony and Hewlett-Packard and was the
subject of the controversial "Mike Daisy" solo show, admitted this week to
violating Chinese labor laws by using underage workers at one of its
factories this summer.

FoxConn says it employed 56 interns as young as 14, below China`s
legal working age, but other report say there were hundreds. The company
failed to check the IDs of interns sent to the factory by local schools
after FoxConn asked local officials for help with the labor shortage.

Some of the students told Chinese media they were forced to work
without weekend breaks, overtime and overnight shifts under threat of
expulsion from school if they did not.

You should know that our devices connect us to the world not only
through the information we received, but through the people who make them.

And you should know that the third and final 2012 presidential
debate is tomorrow night. MSNBC`s special coverage begins at 8:00 p.m.
Eastern led by Rachel Maddow along with Chris Matthews and I`ll be there
along with Al Sharpton, Ed Schultz, Lawrence O`Donnell and Steve Schmidt.

Let`s see what my panelists think you should know.

MAJD: Oolitics wreaks havoc with foreign policy. That`s what I think this
week. We`ll see that in the debate tomorrow. That political
considerations trump wise foreign policy.

HAYES: You know, I`m very torn on this question because I think it`s true
and very easy demagogue. At the same time, democracy is democracy, right.
To say we`re politicizing foreign policy it`s the citizens of the United
States who determine our government`s actions.

MAJD: Yes.

HAYES: That has to pass the test of some sort of democratic
accountability. Anne-Marie Slaughter.

SLAUGHTER: Well, what you should know is that what Americans do not want
to hear, but it`s true anyway, which is that hundreds of people are getting
killed in Syria every day. We`re up to almost 30,000 people killed, mostly
civilians.

The country is imploding. It`s destabilizing Lebanon, threatening
Turkey, Jordan, and Iraq. More and more militants are coming in who are
not Syrians who are taking over what was originally a much more pluralist
liberal opposition.

People are predicting up to a ten-year civil war. This is a
humanitarian disaster. It is horrific morally and devastating to us
strategically. We should -- the United States should act with the
countries in the region to create a no-fly zone to protect people.

There are lots of risks, but the risks to non-action are far, far
greater. Americans don`t want to hear it, but we are going to regret it.

HAYES: I will take a lot of persuading on the no-fly zone to convince me.
David Cortright.

CORCORAN: There is no plan for actually ending the war in Afghanistan. We
haven`t talked about it. The president says we`ll be out by -- Biden says
yes for sure. They`re planning to keep lots of troops there.

The more important thing is how are we actually going to end the war
in such a manner to prevent the killing from continuing? How do we work
with the people of Afghanistan so get a more accountable representative
government that isn`t just warlords and isn`t taken over by the Taliban?

We need to be engaged in Afghanistan in a much more substantive way.
We need to pull out our troops, yes, but we need a political plan for
ending the war and building a better more accountable government.

KOLHATKAR: David took the words out of my mouth. I wonder if this will
come up out of the debate is the case of the Pakistani girl, Malala
Yousufzai, whether the presidential candidates will bring her case up.

And if they do, are they going to use it to justify our presence or
are they going to admit it`s under our occupation in Afghanistan and the
broader region of Pakistan and Afghanistan that her attack happened.

And that the Taliban under our occupation has only gotten stronger.
That`s a really big question. I hope it comes up and I`d like to see them
address it properly and see good media coverage.

HAYES: You`re talking about the 14-year-old girl in the province of
Pakistan where the Taliban is very strong that shot her. She is recovered.
I think we probably -- recovering. See a question on that.

I want to thank my guests today. Iranian journalist, Hooman Majd,
Anne-Marie Slaughter, David Cortright from the University of Notre Dame and
Sonali Kolhatkar from KTFK Pacifica Radio. Thank you all, great
discussion.

Thank you for joining us. We`ll be back next weekend, Saturday and
Sunday at 8:00 Eastern Time. The presidential campaign heads into the
absolute final stretch.

New poll out for MSNBC showing the two candidates tied. Tomorrow,
I`ll be part of MSNBC`s special coverage of the third and final 2012
presidential debate led by Rachel Maddow and Chris Matthews along with Al
Sharpton, Ed Schultz, Lawrence O`Donnell and Steve Schmidt. Coverage
starts at 8 p.m. Eastern Monday.

Coming up next, Governor Romney`s claim that two-parent households
are the solution to gun violence in America, the correlation between single
parent households and gun violence that does not exist. We`ll see you next
week here on UP.

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