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'The Rachel Maddow Show' for Tuesday, December 11th, 2012

Read the transcript to the Tuesday show

THE RACHEL MADDOW SHOW
December 11, 2012

Guests: Mary Kay Henry, Tom Harkin

EZRA KLEIN, GUEST HOST: Good evening. I`m Ezra Klein. Rachel Maddow
has the night off.

We begin tonight with an update on the breaking news in the Pacific
Northwest, the terrifying scene that unfolded earlier tonight at a shopping
mall in Portland, Oregon.

A gunman with what witnesses describe as a rifle opening fire on
holiday shoppers. Two people were killed. The shooter also killed, and
one person has been seriously injured according to the sheriff`s
department.

An eyewitness who had been browsing the watch counter inside Macy`s
described the scene to our Portland affiliate KGW-TV.

(BEGIN VIDEO CLIP)

BILL HOFF, WITNESS (via telephone): It was constant boom, boom, boom,
boom, boom, boom, boom, boom. It wasn`t -- you know, it wasn`t just a
couple of shots. Whatever the shooter was shooting at, they continued to
shoot.

An employee of the store actually saw a masked gunman come in. And as
fast as she got the call to security, the gunshots started. So I and
others just hit -- you know, got behind the counter. And a couple of
people stood there and I got them to duck down too. Kind of wait until the
coast is clear enough. And then I got down and other people, we said we
need to get to the back of the store.

Let`s work our way through the walls. We went back to the dressing
rooms. One of the employees was trying to get people in the dressing room.
And I urged her to get everybody is there a locked door? And we all went
behind the locked door until we heard somebody from the security speaker
system say evacuate the store.

(END VIDEO CLIP)

KLEIN: Our affiliate reported the gunman was wearing a white mask and
body armor shouting, "I am the shooter, I am the shooter", as he ran into
the mall.

Authorities are searching the mall room by room for employees and
shoppers who might still be hiding and afraid to come out.

(BEGIN VIDEO CLIP)

LT. JAMES RHODES, CLACKAMAS COUNTY SHERIFF`S DEPARTMENT: At this
moment, the mall remains closed and we search the mall methodically and
carefully, looking for anybody that might be injured. There are several
employees and patrons who have secured themselves and hidden in various
rooms, and carefully one at a time we`re approaching those people,
gathering and escorting them out of the mall.

I can confirm that we believe at this point that there was one and
only one shooter involved, and that shooter is deceased. In addition to
that, we have at least one patient who was taken -- taken from the mall
with a traumatic injury. And at least two that were deceased, in addition
to the shooter.

REPORTER: Two what?

RHODES: Two dead in addition to the shooter.

REPORTER: Two dead and one --

REPORTER: Or did officers?

RHODES: I`m not prepared to answer that question yet. I`m trying to
protect some of the investigation at this point because we want to be sure
-- we want to be certain that we do everything we can to confirm that there
is just the one, and that we haven`t missed anything and so forth. So
protecting some of that information is important.

REPORTER: Can you tell what`s he was wearing?

RHODES: Some of the information that I will not release is specifics
as to age of the shooter, what they were wearing, the nature of the
firearm, and those type of things we need to protect at this point until
we`re certain that we have gathered all the evidence and make sure that
this is a secure scene.

(END VIDEO CLIP)

KLEIN: That was Lieutenant James Rhodes in California.

Two people killed tonight when a gunman opened fire on holiday
shoppers and employees -- I`m sorry, in Oregon, not in California -- inside
a Portland area mall. The gunman was also killed. And as we just heard
from the sheriff`s department, a third person with what is being described
as a traumatic injury.

We`ll bring you more updates on MSNBC as events develop.

And now, for today`s other news. You know this picture, don`t you?
This is Martin Luther King Jr. standing on the steps of the Lincoln
Memorial in our nation`s capitol, August 28th, 1963. His most famous
speech, the one we call "I have a dream."

You probably, however, don`t know this guy standing beside Dr. King
that day. That`s Walter Reuther, in some ways the inventor of the modern
American labor movement.

Here`s Walter Reuther again marching to the Lincoln Memorial that day
for Dr. King`s big speech. Walter became a union organizer in Michigan in
the sometimes difficult and sometimes violent strikes of 1936 and `37.

At the time workers in the big auto plants were coming home sick and
injured and exhausted. And no matter how long or how hard they worked,
they were coming home broke, too.

The auto companies didn`t want unions, but the workers struck and they
struck hard, and the workers eventually won. On February 11th, 1937, G.M.
signed its first contract with the UAW, the United Auto Workers. If you
called this contract the beginning of the American middle class and
Michigan the birthplace of the American labor union, and Walter Reuther the
father of all that, you probably wouldn`t be much overstating your case.

Mr. Reuther was born in West Virginia. He learned tool and dye making
in a union family. He moved to Michigan and found a job in the automobile
industry. He found his life`s work in helping its workers.

He said, quote, "There is no greater calling than to serve your fellow
men. There is no greater contribution than to help the weak. There is no
greater satisfaction than to do it well."

A quarter century after that first contract with G.M., Walter Reuther
was standing up there with Dr. King as president of the UAW. Now, it`s
true that Dr. King was a union activist himself. When Dr. King was
assassinated in Memphis, he was in town supporting a sanitation workers
strike.

It is also true, however, that union activists were key supporters of
civil rights. Look at this picture again. The caption information that
survives with it says in this front row, you have leaders from the National
Urban League, the NAACP, the Brotherhood of Sleeping Car Porters, Walter
Reuther of the UAW and the secretary of the Leadership Conference on Civil
Rights.

And look at the signs behind them in the crowd. "End segregated rules
in public schools. We demand voting rights now. Jobs for all now. Civil
rights and union rights and economic rights side by side, marching into
Washington, D.C.

That is how it was. When Americans push for fair treatment at work,
win or lose, they move as a group because they have to. Their power is all
in the numbers. It is a power of many working often against the power of
money, or the power of entrenched incumbency with regular folks.

This is a power of world that America belongs almost exclusively to
unions, solidarity. And unions interpret that solidarity broadly. They
see themselves as in solidarity with working class. And so they spend
their time and their money and their manpower pushing for much more than
pro-union legislation.

Unions push for better access to health care for their members and for
all of those who aren`t their members. Push for better Social Security and
Medicare and child labor laws. Unions push for equal pay for women in the
workplace for their members, and again, for the women who are not their
members.

When states try to make it harder to vote, unions push back, and they
sometimes win. Just ask Ohio Republicans who thought they could cut the
time for early voting in half until this truck rolled up. It`s filled with
petitions to stop them. The Ohio unions had worked all summer getting
those signatures.

When a single billionaire pours $100 million into a Republican
campaign in single campaign section -- and, yes, Sheldon Adelson, we`re
talking about you -- the countervailing force, if indeed there is one, is
often organized labor which tends to support democratic candidates and put
its money and its manpower where its mouth is. That is part of the reason
why Sheldon Adelson now says he will double his spending on conservative
causes and in particular, he is going to throw that money behind anti-union
initiatives at the state level.

It is also why Republican politicians in general don`t like unions.
It`s why Republican governors have tried to weaken unions through
government policy. Since the red tide elections of 2010, we have seen this
in Indiana and in Wisconsin, where Republican majorities took away union
rights.

Republicans tried to do that in Ohio too. And voters repealed the
anti-union law by 22 points.

Today, Republicans succeeded in taking away union rights. They
succeeded in weakening unions in the cradle of American labor, in Michigan,
in Walter Reuther`s home. It didn`t even take them all that long.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Mr. Speaker, of the question of final passage of
Senate bill 116. There are 58 aye votes and 52 nay votes.

UNIDENTIFIED MALE: Majority of the members (INAUDIBLE) having voted,
therefore, the bill is passed.

(END VIDEO LCIP)

KLEIN: The Michigan legislature today finished what they started out
of the blue last week. They passed a pair of bills to take union rights
away from public employees, and this is important, from workers in the
private sector.

You can see the reaction from supporters of union rights today at the
capitol. More than 10,000 people gathered on the lawn outside. They say
the protests today in Michigan the largest the state has ever seen. The
bills weaken unions in Michigan by making it so that workers do not have to
pay for union representation.

Even before these bills passed, you did not have to join a bill in
Michigan. Even if there was a union job, you didn`t have to be part of it.
You only had to pay your share of the cost of the union representing you.

What Michigan Republicans approved today is a new rule that says you
do not have to pay even if you are being represented. You get the perks of
membership, the higher wages, the higher benefits without contributing
anything. You can be a free rider.

Yesterday, Michigan`s entire Democratic congressional delegation met
with Governor Snyder and asked him to please slow the process down, to stop
the bills, or at least send them out for referendum. Let the people have a
say.

President Obama had a word with Governor Snyder at the airport in
Detroit yesterday. We don`t know what they said.

But later that day, President Obama gave a speech about the economy
and the middle class in which he came out strongly against a Republican
plan to weaken Michigan`s unions.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What we shouldn`t be
doing is trying to take away your rights to bargain for better wages and
working conditions.

(APPLAUSE)

We shouldn`t be doing that.

You know, these so-called right-to-work laws, they don`t have anything
to do with economics. They have everything to do with politics.

(END VIDEO CLIP)

KLEIN: Across the state, Democrats yesterday reminded Governor Snyder
he used to insist this kind of bill was too divisive for Michigan. He said
that right up until last week when he called a hasty press conference on
Thursday to announce he had reversed his position and the legislation
suddenly appeared as if by magic.

Those bills passed the first round of voting in roughly an hour and a
half. This evening, Governor Snyder announced that he had signed the bills
into law, calling them good for workers and for freedom and for the
economy. He said the rest of the protesters can finish up, and they can go
home now that he was finished with his part. Signed, done. The era of
strong unions in the birthplace of the unions appears done.

That`s bad for a lot of workers. Research shows worker makes more not
only when they have a union, they make more even if they don`t have a
union, but other companies in their sector do. A rising wave lifts many
boats, even ones that seem far away.

But it is also bad for our politics. Corporations have their
lobbyists and they cost a lot of money. Rich guys have their cash. For a
long time, a key source of power for causes as diverse as the civil rights
movement and universal health care was unions, was organized labor,
solidarity.

A lot of Americans who aren`t in a union, who aren`t in an industry
with unions benefited from having organized labor as their lobbyist.

We don`t know what modern American politics looks like without that
kind of solidarity, without Walter Reuther`s defendants trying to serve
their fellow man, help the weak and do it well.

The question is, will we have to find out, over the last two years
from Wisconsin to Indiana to Michigan, have they just been a period in
which American labor suffered some very hard hits, but their fortunes will
turn again? Or is this really the end of real powerful unionism in
America?

Joining us now is Mary Kay Henry, president of the Service Employees
International Union who is born and raised in the great state of Michigan.

Ms. Henry, thank you very much for taking the time to talk to us on a
very busy day.

MARY KAY HENRY, SEIU PRESIDENT: Glad to be with you, Ezra, on this
incredible day for working people all across the nation.

KLEIN: So, tell me what is incredible about it. What comes next, not
just in Michigan, but for American labor?

HENRY: Well, I think you just told the story beautifully. I
understand there were two 90-year-old Flint sit-down strikers at the rally
in Lansing today, and they stood up in the 1930s to build the American
middle class, as we once knew it in the `50s and `60s in this country.

And since 1972, workers have been losing wage gains that were won when
30 percent of us had the right to bargain and lift wages for everybody.

And I think Snyder -- his action both decides that Michigan needs to
become a low wage economy, where you have to string together three jobs in
order to make ends meet, and eliminate the remaining middle class in the
state. And it`s bad for economics, and it`s bad for our democracy.

KLEIN: But what is the plan for American labor going forward? This
has been a dispiriting year for supporters of the labor movement, or two
years, actually in Wisconsin, in Indiana, and in Michigan. Is there -- in
your meetings, is there a strategy for coming back? Are these setbacks
seen as reversible?

HENRY: Well, Ezra, I see it as a reawakening of working people --
dispiriting because the attacks have been so relentless. Its attacks on
workers, attacks on civil rights, voting rights, attacks on Planned
Parenthood, on immigrants -- it`s all connected in our minds.

And so, we are reawakening and going to build a powerful movement that
we`re going to build power in the workplace, build power at the ballot box,
build power in our communities. And make it crystal clear that Snyder
can`t get away with this by building a more powerful worker community
movement in the state of Michigan and rebuilding a middle class, not just
in Michigan, but all across this country.

KLEIN: Supporters of these laws -- I don`t really like to call them
right-to-work laws, I think it`s just framing. But supporters of this law
say, why should you, if you`ve just been hired by an employer, G.M. maybe,
why should you have to pay to be represented by a union that you didn`t
vote for and maybe that you don`t want to join? Maybe you don`t like
unions in general.

What is your response to folks who think this just makes sense, we
shouldn`t have to pay for things that we didn`t explicitly opt into?

HENRY: I don`t think government should interfere in the decision
between working people and their employers. And there are lots of ways in
which workers make the decision when they bargain their contracts and vote
on their contracts about the rules of the road.

And this is a situation where government is deciding to intervene in a
labor management relationship. In a system where labor laws are broken,
they side with corporations and the wealthy. And it`s why wages have
remained stagnant for 30 years.

And we have got to rebuild our power in the democracy and in our
economy so we can lift wages for everybody, get this country back to work,
and make service jobs, jobs that people can raise their families on and
expect that their kids are going to do better.

KLEIN: Do you think specifically in Michigan there is an opportunity
for appeal?

HENRY: I know that that is being considered, Ezra. But here is what
I think. I think the labor movement is going to join hand with the
community movement. We`re going to organize like you`ve never seen before.

We`re going to assist the Wal-Mart workers that are trying to say to
Wal-Mart let`s get off food stamps and get a wage where we can actually
feed our families without relying on government assistance.

We`ve got to do more private sector organizing. Yes, we can make an
appeal in the electoral session. We need to send a message to the governor
and Republicans that we`re not going to tolerate this.

But we`re going to organize on many fronts simultaneously.

KLEIN: Mary Kay Henry, president of the Service Employees
International Union -- thank you very much for being here tonight.

HENRY: Thank you.

KLEIN: Much more news tonight, including some breaking news that the
world sort of saw coming from the Korean peninsula. Stick around.

(COMMERCIAL BREAK)

KLEIN: Well, the White House and the House Republicans are mired in
that thing that rhymes with smischal smiff -- smischal smiff, I think.

While that`s going on and will keep going on for a while, your United
States Senate is haggling over something that might be even more important
to the health of the republic, at least if in the future we want to, I
don`t know, solve any problems ever.

I`m speaking, of course, of that great scourge, the filibuster -- that
Senate only rule that allows any senator in the majority or the minority to
force legislation to pass not by the standard 51 votes, but by 60, which
for most bills means certain death. Rarely do 60 senators agree on
anything.

And over the last few years, the use and abuse of the filibuster,
mainly the not exclusively by Republicans has reached record-breaking
Senate stopping heights.

So what do you do? If you are Harry Reid, leader of the Democrats in
the Senate, you try to reform it. And if you`re Mitch McConnell, the
Republican leader who is using it all the time because it is your main kind
of power you try to stop reform of it.

Now, there are a couple of plans for changing the fill buster to make
it less common or more difficult to use or even to eradicate it all
together.

First, there is a lawsuit, a real one. It is in the courts and
everything for house Democrats and a good governance group called Common
Cause are suing the Senate. That court case began this weekend in
Washington. They argue the filibuster is illegal because it infringes on
what they see as a constitutional guarantee of majority rule in Congress.

The court system has never before entered into the Senate`s internal
rulemaking, and quite frankly, it is unlikely to do so now. But they`re
trying.

The other track is in the Senate. Majority Leader Harry Reid keeps
threatening to change the rules. He says it will happen at the very
beginning of the next Congress, the very first item on the agenda.

The main idea under consideration, the main way to change the rules
comes from Oregon Democrat Jeff Merkel. And it will force talking
filibusters.

If you want to filibuster, you can`t say 60 vote rule, too bad. Can`t
vote on that. You actually got to go down and hold the floor and talk and
talk and talk and talk and talk all night and for days and for weeks. You
need to work for it.

There is merit to this idea. It would take filibusters harder on the
minority. It would make them more transparent to the public. It would
make them less likely on popular bills, but it wouldn`t reverse the
fundamental transformation of the Senate into a place where 60 votes is
required to get anything done.

So there is a proposal that personally I like better. It`s --
frankly, it`s kind of an ingenious proposal. It recognizes that there is
general value in protecting the minority`s right to be heard. But in order
to protect that right, you don`t need to make every vote a 60-vote
supermajority.

This proposal would in one fell swoop end the 60-vote Senate, but it
would preserve the tradition of lengthy debate. And this idea doesn`t come
from outside group or some young radical. It comes from a long-standing,
highly respected senator. He chairs an important committee. And to his
credit, he proposed this idea back in 1995 when he was in the minority.

And so it would have hurt him and his party first, there is no
hypocrisy here. That senator is Democratic Senator Tom Harkin from the
great state of Iowa, and he very kindly joins us tonight to explain his
proposal.

Senator, thank you very much for being here.

SEN. TOM HARKIN (D), IOWA: Hey, Ezra, nice to be with you. Thanks.

KLEIN: So tell me, how does your proposed reform work?

HARKIN: Well, basically, my proposal is, again, as you said, it would
still allow the Senate to slow things down a little bit. But it would not
permit the minority to actually stop something.

My proposal is very simple. That on the first vote, you would need 60
votes. If you didn`t get 60 votes, you would have to wait three days. You
could offer it again. Then you would need 57 votes

If you didn`t get that, you`d have to wait three more days, during
which time you could be filibustering. And then after that, you need 54
votes. And then you could continue to filibuster. And after three more
days, you just need 51 votes.

So that after say about eight or nine days, 51 votes gets to decide
what goes on the Senate floor. And that`s really the essence of it. That
it can slow it down, but the minority can`t just stop something.

KLEIN: You propose this, and I really find this to be a fascinating
part of your involvement in this issue you. You proposed it in 1995.
Democrats were in the minority.

What made you believe, what makes you think now that you could live
with this in the minority if you were in the minority?

HARKIN: I said at the time, Ezra, that -- and you can check the
record on this. I said at the time that we`re like in an arms race. I had
been in the minority and in the majority and then back in the minority.
And every time it changed, the filibusters kept going up. It was like if
the Republicans did it to us 10 times, well, we`ll do it to them 2010, and
then they`ll do it to us 40, and on and on.

I predicted at the time if we continue on in this path, that the
Senate basically wouldn`t be able to function. Little did I know how right
I was going too be.

And that`s what has happened, Ezra. In the last three Congresses, the
minority, the Republicans, have basically made a power grab, a power grab
that basically says that you have to have 60 votes to do anything. It`s a
de facto rule. In order to get anything done, you need 60 votes.

What they have done is they hijacked, they have hijacked the
fundamental principle of our system of government. And that is that a
majority decides what you do. They`ve hijacked that.

They have destroyed a tradition of the Senate. We had filibusters in
the past, but they were used sparingly. During Lyndon Johnson`s six years
as majority leader, he had one filibuster.

In the six years since Harry Reid has been majority leader, we`ve had
386 filibusters. The Senate has become totally dysfunctional because of
this power grab by the minority.

KLEIN: And when it comes to protecting minority rights, people say,
the one argument you often hear from folks about the filibuster is, look,
you might think the filibuster is a good idea now.

But let`s say Democrats had not won the 2012 election. Let`s say they
had lost it. Republicans had come in with the same 55-vote Senate majority
you have now. Mitt Romney was president. Health care could be repealed,
particularly in the absence of the filibuster.

So what do you say to them?

HARKIN: What I say to that, Ezra, is I`m not afraid of democracy.

I said that to Majority Leader McConnell on the floor this summer. He
was basically saying that, you know, you Democrats better be careful. If
we take over, we can repeal Obamacare.

My rejoinder to that is if that`s what the people vote for at the
ballot box, then elections ought to have consequences. Now, I wouldn`t
vote for it. I might try to slow it down, amend it, change it, but at
least the majority ought to have the right to propose and get their
legislation through. I think that`s what our system of government is all
about.

Again, as you pointed out, I proposed this when I was in the minority.
And I don`t think that the minority has anything to fear.

You see, our Founders set up a very tough system to get a bill passed.
Look at it. It has to pass the House. It has to pass the Senate. And
exactly the same form. So if the House and Senate disagree, nothing
happens. Then it has to survive a presidential veto. And then it has to
survive court challenges.

This was all set up by our Founders. The one -- the one thing they
did not set up was that you had to have a super majority in which to pass a
piece of legislation.

Now you and I both know that the drafters of the Constitution set out
five specific times when the Senate must have a super majority, five. It`s
proving treaties, impeaching a president, that type of thing.

So really, by inference, the Founders, or drafters of our constitution
basically said everything else is 51 percent that passes legislation.

KLEIN: Well, we will see if it ever gets back there in our lifetime.
Democratic Senator Tom Harkin, thank you for joining us tonight.

HARKIN: Thanks, Ezra.

KLEIN: A lot more public policy news to get to tonight, including the
fastest and easiest way for the federal government to deal with the
legalization of marijuana in the states.

Stick around.

(COMMERCIAL BREAK)

KLEIN: We have more breaking news to report tonight. This news
coming now from overseas. According to officials in South Korea and Japan,
the rogue nation of North Korea has fired a long-range rocket tonight in
defiance of the international community. The missile was reportedly
launched at 9:51 a.m. local time. It is unclear at this point whether the
launch was successful. Sometimes they just fall into the water.

But Japanese officials say tonight they believe the missile passed
over Okinawa, Japan. North Korea announced at the beginning of the month
they intended to launch the missile, but there were reports as recently as
this afternoon they had had to dismantle the rocket to make repairs to it.
Experts thought those repairs might delay the launch by more than a week.
But again, tonight, it appears North Korea has in fact fired the rocket.

This is North Korea`s second rocket launch under its new leader, Kim
Jong-un. A similar rocket broke up less than two minutes in flight. North
Korean officials claim this launch is intended to put a weather satellite
into space.

But U.S. officials and many in the international community -- they
believe that North Korea may actually be testing its capability to one day
launch a long-range nuclear warhead.

This launch comes at a politically sensitive time. Neighboring South
Korea is set to hold its presidential election in a few days. South Korea
has announced tonight it`s calling an emergency meeting of its top national
security officials.

Again, it is unclear at this point whether this was a successful
rocket launch. But North Korea has apparently defied the international
community again, testing its second long-range missile this year alone
under its new leader.

We will keep you updated with any new developments throughout the
hour.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARBARA WALTERS, ABC NEWS: Are we going to go over the fiscal cliff?

OBAMA: you know, I remain optimistic that there are enough people of
goodwill in this town that recognize our economy will be much better off,
American families will be much better off if we get this done. The most
important thing we can do is make sure the middle class taxes do not go up
on January 1st. And I`m pretty confident that Republicans would not hold
middle class taxes hostage to try to protect tax cuts for high-income
individuals.

(END VIDEO CLIP)

KLEIN: There is big news tonight out of Washington, where Speaker
John Boehner and Obama are talking. This is actually not nothing, not in
this town. Early last week, they really weren`t talking, and neither were
their staffs.

Progress on what to do about all those expiring tax cuts and schedule
spending cuts and that possible recession Congress might create, totally
stalled. But now today they are talking, and their staffs are talking, and
they`re even exchanging paper, real paper.

News leaked today that in the last few days, there have been new
offers and new counteroffers in the negotiations. But they sound, to be
honest, not that different from the old offers.

"Politico" reports that Mr. Obama has gone from $1.6 trillion in taxes
to $1.4 trillion but hasn`t budged much on entitlements. He`s also brought
up he`ll also be doing corporate tax reform. Mr. Boehner really hasn`t
moved on taxes at all. He is still I`m told at $800 billion, although
details on his offer are sparse.

Earlier today I asked Michael Steel, John Boehner`s press secretary
for details on the, quote, "deal". I was writing quickly and meant to say
offer, but I wrote deal. He wrote back, we are not close to a deal. So,
that is all that is going.

When these deals are reported, we tend to tell you about the numbers.
Obama is at $1.4 trillion in taxes. Boehner is maybe $800 billion. Obama
in his original offer was at $300 billion in health care cuts. Boehner was
at $600 billion.

But a major sticking point is not a number at all. A major sticking
point now is the debt ceiling you. You might remember the debt ceiling,
the dumb, anachronistic thing we have in which Congress has to vote for the
stuff that it has already bought. And if the vote doesn`t go through, then
America`s economy goes boom? Yes. That one.

That has become a huge problem in these negotiations, and for two
reasons. First, a lot of Republicans outside the negotiations on the Hill,
they have convinced themselves the debt ceiling is their secret weapon.

The way they see the negotiations going is this -- Mr. Obama has
leverage now because he really doesn`t care if you go over the fiscal cliff
or curb or slope, or whatever you want to call it. But in February we will
hit the debt ceiling. And if we break through the debt ceiling we will
unleash an economic hell on this nation. And no president would allow
that, right?

So that is Republican leverage, as they see it. Unlike them, Obama is
not willing to destroy the global economy. And so, they figure there is no
real need to cut a deal now, because if that deal, particularly if they
deal includes concessions like taxes, just wait a couple of months, take
the debt ceiling hostage and make everybody believe you`ll shoot.

This is making Boehner weaker. It gives House Republicans an excuse
to ignore the cuts the deal he makes. They say oh, we`ll just wait it out.
He`s just being impatient.

So, there`s a concern among Democrats that Boehner will cut a deal
that he can`t actually deliver, or at the last minute, he`ll back off a
deal because he won`t have the votes.

The White House, by the way, they don`t think the debt ceiling is
Republican leverage. When you talk to them, they are all steel right now
on that subject. Their position is simple, and they deliver it in the tone
of voice Bruce Willis reserves for talking to terrorists. They are not
negotiating. Not on that.

If Republicans go over the cliff and try to open up talks for raising
the debt ceiling, the White House says they will not hold a meeting. They
will not return a phone call. They will not look at the e-mails. They
will move to an entirely public strategy, rallying votes in the business
community against the GOP`s repeated threats to destroy the economy if they
don`t get their way.

Recall Obama`s speech to the Business Roundtable last week.

(BEGIN VIDEO CLIP)

OBAMA: I want to send a very clear message to people here. We are
not going to play that game next year. If Congress in any way suggests
that they`re going to tie negotiations to debt ceiling votes and take us to
the brink of default once again as part of a budget negotiation which, by
the way, we have never done in our history until we did it last year, I
will not play that game. Because we`ve got -- we`ve got to break that
habit before it starts.

(END VIDEO CLIP)

KLEIN: So that`s where all the debt court of appealing is playing
outside the negotiations. Inside the negotiations, the debt ceiling is
also emerging as (a), and maybe even (b), key difference between the two
sides. The White House wants to solve it forever. They`ve proposed
Congress simply gives them authority to raise it on their own. Republicans
-- not so into that idea.

The problem now is one Democrat told me it`s kind of hard to
compromise between on the one hand nothing, which is pretty much the
Republican offer on raising the debt ceiling, and infinity, which is pretty
much the White House`s current position.

But the White House sees it as a matter of grave responsibility. They
are not going to accept some kind of short-term debt ceiling fix. Five
years, 10 years, maybe that they`ll talk about. A year? They say they`re
not doing that.

They figure that if there needs to be a final showdown over the debt
ceiling, a once and for all boss level battle, Bowser style, it`s better to
do it now when they`re at peak strength than to delay it until 2014 or 2015
when Republicans might have more leverage.

So, yes, the two sides, they`re talking. But they`re not close to a
deal, not yet.

Joining us now is noted economist Jared Bernstein, senior fellow at
the Center on Budget and Policy Priorities, former economic policy adviser
to Vice President Joe Biden, an MSNBC and CNBC contributor, and a man who
is very good at finding the deal.

Jared, it`s good to see you.

JARED BERNSTEIN, MSNBC CONTRIBUTOR: Good to see you, Ezra.

KLEIN: So let me start with the news of the day here. What do you
think of the somewhat vague reports we`re hearing about offers flying back
and forth?

BERNSTEIN: I think a little bit of it, and not a lot. When I read in
the paper as I did this morning that there is some sunlight breaking out,
I`m ready for tomorrow saying no. In fact, it`s all darkness.

I do think that the president`s move to come down $200 billion on his
revenue number is real and important. It`s, as you said earlier, once they
start negotiating over numbers like that, some good things could
potentially happen.

On the other hand, there is some of this kind of public negotiating
going on. I thought Speaker Boehner`s comments today were uniquely pretty
unhelpful because he made a bunch of statements that I think were factually
incorrect about the details in his plan versus the president`s, or the fact
that the White House hasn`t really been forth coming with spending cuts.

That`s actually factually incorrect. I don`t think that helps. So
little bit of progress. Not enough.

KLEIN: Why does the debt ceiling -- I`m sorry, why does the White
House care so much about the debt ceiling? Why are they willing to let the
whole negotiations go to a halt over that? Why not just extend it for a
year, or six months later, worry about it later?

BERNSTEIN: Because if you think the fiscal cliff is fun, you`ll love
the debt ceiling. I mean, the economic havoc that is wreaked by the fiscal
cliff is a very gradual thing, as you and have I discussed. I mean, going
over it is a mistake. We shouldn`t do it.

But at least initially, if we can reverse it, it won`t be so bad. If
you default on the nation`s debt on our treasury bills, that`s not a fiscal
slope. That`s a cataclysmic economic event.

Not only are you stiffing creditors who believe they have invested in
the safest debt in the universe, you`re actually threatening to have to
raise our interest rates through the roof in order to service our debt,
which means absolutely a long-term recession. It`s really quite a fatal
step.

KLEIN: "The Wall Street Journal`s" reporting that the White House is
willing to do corporate tax reform in their new proposal. What do you
think about that? What do you think that might mean?

BERNSTEIN: I think it`s a neat idea. The White House is actually
articulated a fairly detailed corporate tax idea in a white paper that
didn`t get enough attention a few years ago. And it`s very much in the
spirit of things that tax reformers, including Republicans, like. Lowering
the rate on taxes and lots of people complain that our statutory corporate
rate is lot higher than other countries.

Our effective rate, what corporations actually pay is quite low. And
that means there is a bunch of loopholes. And to the White House`s credit,
in their white paper, they specify a bunch of loophole closures. The
problem is, you know, my loophole closure is your beloved investment
program.

KLEIN: Right.

BERNSTEIN: So, we`ll have to see how that plays out.

KLEIN: I gave that white paper a lot of attention a few years ago.
Jared Bernstein --

BERNSTEIN: You are exceptional.

KLEIN: Jared Bernstein, senior fellow at the Center on Budget and
Policy Priorities -- thank you very much for being here.

BERNSTEIN: Thank you, Ezra.

KLEIN: In the brave new world of legalized marijuana, how can the
punishment fit the crime, when in some states smoking pot is no longer a
crime? We get into that one next.

(COMMERCIAL BREAK)

KLEIN: Straight ahead, the latest from the congressional manscaping
appreciation society. It`s a hair -- and I`m sorry about this -- do.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GOV. JOHN HICKENLOOPER (D), COLORADO: Obviously I didn`t support it,
right? It`s like you ask me how I feel about it is like being a governor
of a state where we had terrible forest fires. You know, you take this
job, you know, good and bad. And our voters very clearly said that they
thought this was a step forward.

(END VIDEO CLIP)

KLEIN: And there you have it. Colorado Governor John Hickenlooper
not feeling so chill about his state`s voter approved decriminalization of
marijuana. Coloradans, you may recall, voted last month to amend their
state constitution to legalized recreational use of limited amounts of
marijuana by a pinpoint margin. It wasn`t that close.

And this week, Governor Hickenlooper sort of reluctantly signed the
paperwork that gets pro-pot amendment into the constitution -- the state
constitution. He also signed an executive order setting up a task force to
figure out how to implement the new law, how, for example, the state will
regulate the newly legal pot market.

The recreational pot smokers of the great state of Colorado seen here
enjoying their drug of choice on the steps of the state capitol building
are, of course, not waiting around for the details to be ironed out.

But the details are pretty important. Apart from the state of
Colorado figuring out how to regulate the newly constitutional right to
smoke a bowl, there is the not-so-small matter of federal law.

Marijuana use may be well be enshrined in the Colorado constitution as
of this week. It`s still not legal in the eyes of the federal government.
And that matters. Colorado and Washington state where voters also
decriminalized marijuana this year, they`re about to find themselves in the
middle of a major clash between state and federal law. And until it is
resolved, we`ve got something of a legal pickle.

Colorado`s governor for example reached out to the Justice Department
for guidance, as he figures out how to implement the law in the state. But
he does not seem to have gotten very far in his talk with the feds.

(BEGIN VIDEO CLIP)

HICKENLOOPER: I mean, this is a complex piece of jurisdiction. It`s
a kind of thing that often -- you know, it could end up in the Supreme
Court. We recognize they are working as hard as they can to find, you
know, what the right legal decision is.

(END VIDEO CLIP)

KLEIN: Well, the Justice Department has not specific on how to deal
with federal lawbreakers in states that legalized pot. They did release
this ominous sounding statement on the day it became legal in Colorado.

Quote, "The Department of Justice is reviewing the legalization
initiatives recently passed in Colorado and Washington state. The
department`s responsibility to enforce the Controlled Substances Act
remains unchanged. In enacting the Controlled Substances Act, Congress
determined that marijuana is a Scheduled I controlled substance, regardless
of any changes in state law, including the change in Colorado. Growing,
selling or possessing any amount of marijuana remains illegal under the
federal law."

Sounds like the Justice Department is about to have a fight on its
hands whether it wants it or not. But in all the discussion about how to
head off this impending crisis of what could be done to try to reconcile
these opposing state and federal laws, a pretty simple fix has been largely
overlooked.

This fix comes for the very same law the Justice Department is citing
to emphasize that pot is still a dangerous and elicit drug in the eyes of
the federal government, the Controlled Substances Act.

The Controlled Substances Act was signed into law by 1970 by one
Richard Nixon. It created a system of sorting drugs into categories -- the
most dangerous being with the ones with a high potential for abuse and no,
quote, "currently accepted medical use."

These are big time illegal drugs. Just like the nice man from the
Justice Department said, marijuana is indeed a Schedule I drug, along with
stuff like LSD, peyote, heroin, and ecstasy.

The schedules go all the way up to Schedule 5, which is stuff not seen
as likely to be abused and easy to get. Cough medicine, for instance.

But schedule 2, one step down from the stuff the government says is
turbo dangerous, these drugs, they`re not completely criminalized. These
are things that, by and large, you can get a prescription for. Stuff like
methadone, OxyContin, morphine, opium and Ritalin. Oh, and also, cocaine
and PCP.

Yet marijuana is on the super dangerous, terrible, horrible, no good,
very bad drug list, along with LSD and heroin while cocaine and PCP are on
the less dangerous list with all the prescription pain killers and kids ADD
drugs. But these drug schedule classification, it turns out, they are not
carved in stone. They can be changed. In fact, they can be changed
without an act of Congress.

As my colleague Dale Matthews outlined at "The Washington Post" today,
if there`s a citizens petition asking for it, the Drug Enforcement
Administration can work to get a drug, say, marijuana, rescheduled. Quote,
"In effect, that means the attorney general can direct the DEA to act on a
petition for marijuana rescheduling. So, Eric Holder could direct the
agency to remove marijuana from the list of scheduled drugs,
decriminalizing it for medical use federally."

In fact, as luck would have it, one of these petitions, hey, it`s
already working through the legal system right now.

So there is a simple way to resolve what could otherwise be a really
messy federal state battle over pot smoking in Colorado and Washington.
The feds could just give a little, chill out on this whole pot thing.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I didn`t think I would see this day. And then it
happened.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KLEIN: With majority leader in the Senate, Nevada Senator Harry Reid,
canceled scheduled Senate business due to foggy weather. Flights cannot
land in D.C., and so senators cannot fly in to cast their votes.

However, the Senate stayed open and it stayed open so senators could
still, quote, "make speeches on subjects of their choosing."

Now before we proceed, this is Senator Ben Nelson, Democrat from
Nebraska. Senator Nelson is retiring this year. He decided not to seek a
third term.

In most way we think about Senator Ben Nelson is at the conservative
end of his party, the Democratic Party. But on a more obvious level, Ben
Nelson is a kind of cosmetic radical. In the land of the bald, the silver-
made man is king. And that`s all you need to know to understand what
happened on the floor of the Senate yesterday.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: I think if the truth were
known, many, many senators would be very envious, as I am, and I would even
think the presiding officer, about that hair of Ben Nelson`s.

(END VIDEO CLIP)

KLEIN: The subject of harry Reid`s choosing, Senator Nelson`s
impressive hair, and there`s almost no way we can improve on Harry Reid`s
ode to the Nelson mane. So enjoy.

(BEGIN VIDEO CLIP)

KLEIN: One of the things we learn as little kids and as we get older,
it`s something we also must adhere to, and let`s not be envious. Envy
isn`t something that is becoming on a human, especially an adult. But I
think if the truth were known, many, many senators would be very envious,
as I am, and I would think the presiding officer, about that hair of Ben
Nelson`s.

I mean, that is a mob of real hair. It`s often that people call his
office, e-mail the office. They believe he has a toupee. It`s his hair.
He`ll pull it for you any time to show you that it`s real. I mean, he has
hair like a 15-year-old, Mr. President, and so I have to acknowledge, I am
a little envious of his air.

(END VIDEO CLIP)

KLEIN: He will pull it for you any time at all, just ask him, to see
that it is real. This happened on the floor of the Senate.

Thank you fog and the follicle gods. Harry -- you get it? Harry Reid
opining on Ben Nelson`s luscious locks, such that future generations might
refer of that august body and find hair envy actually in it. That is the
best weirdest new thing in the world.

That does it for us tonight. Rachel will be back tomorrow with great
hair, as always. Don`t forget. You can check out my work at Wonkblog.com.

Now, it`s time for "THE LAST WORD".

Have a great night.

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

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