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'Up w/Chris Hayes' for Sunday, December 30th, 2012

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UP WITH CHRIS HAYES
December 30, 2012

Guests: Suzy Khimm, Jamelle Bouie, Kevin Williamson, Maya Wiley, Jeff Merkley, Amy Kremer, Fergus Cullen, Keith Ellison

STEVE KORNACKI, MSNBC ANCHOR: Good morning from New York. I`m Steve
Kornacki in for Chris Hayes.

The spokesman for former president George H.W. Bush says his condition has
improved and he`s been moved from intensive care back to a regular room at
Methodist Hospital in Houston.

And members of Congress are scrambling to beat the January 1st deadline to
avert a broad package of spending cuts and the expiration of all the Bush
tax cuts. We got the latest on that in just a moment. But right now, I`m
joined by Jamelle Bouie, a Knobler Fellow at the Nation Institute and a
staff writer for "The American Prospect" magazine, "Washington Post"
reporter, Suzy Khimm, who also writes for the paper`s Wonk Blog. Kevin
Williamson, deputy managing editor at "The National Review," and Maya
Wiley, founder and president of the Center for Social Inclusion, a
nonprofit group that advocates for social and economic equality.

We`re now one day away from what most media are calling the fiscal cliff,
the political concoction enacted by Congress to frighten itself into
passing deficit reduction measures. It means that unless Congress acts in
the next 48 hours, the Bush tax cuts will all expire, along with federal
unemployment insurance and various tax credits, and a broad package of
spending cuts -- including defense spending -- will start to take effect.

Through weeks of fruitless negotiations between President Obama and House
Speaker John Boehner, Senate leaders from both sides are now working on a
deal this morning to avoid the fiscal cliff, or as Chris Hayes and I call
it, the fiscal curb. We`d like the term better because the deadline is
soft. It`s not like every American is going to be handed a bill on January
First and there are way to manage the damage if the country does go over
it. The Senate is set to convene this afternoon with the House to follow
tonight.

Now, there`s a chance that a compromise will be reached today, less than 48
hours before tax rates revert to their Clinton-era levels and before across
the board spending cuts take effect. But when the president took to the
podium Friday afternoon to urge lawmakers to get their act together he
didn`t exactly project confidence.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: This is deja vu
all over again. America wonders why it is that in this town for some
reason, you can`t get stuff done in an organized timetable. Why everything
always has to wait until the last minute. Well, we`re now at the last
minute. And the American people are not going to have any patience for a
politically self-inflicted wound to our economy.

(END VIDEO CLIP)

KORNACKI: This may be why the president also said that if Senate leaders
can`t produce a deal then he will demand a straight up or down vote by the
Senate on his proposal from a week ago to extend the current rates on
income below $250,000 along with unemployment insurance benefits.

(BEGIN VIDEO CLIP)

OBAMA: If members of the House or the Senate want to vote "No" they can.
But we should let everybody vote. That`s the way this is supposed to work.
If you can get a majority in the House and you can get a majority in the
Senate then we should be able to pass a bill.

(END VIDEO CLIP)

KORNACKI: So, what the president is doing here is daring Republicans to
let taxes go up for all Americans. This leaves Senate Minority Leader
Mitch McConnell in a weird, gray area. He recognizes the gamesmanship and
a need to get a deal done, but he also has an eye on the Republican Party`s
conservative base, which is relentlessly opposed to any tax increase. And
so incidentally, Senator McConnell is up for re-election in 2014 in the
same state where a Tea Party rebellion toppled McConnell`s own protege in
the 2010 GOP primary and instead, send Rand Paul to the Senate. For the
latest on congressional negotiations, I want to bring in NBC News Capitol
Hill correspondent, Kelly O`Donnell who joins us from Capitol Hill. Good
morning, Kelly.

KELLY O`DONNELL, NBC NEWS CORRESPONDENT: Good morning. Waiting for some
action here today, but it seems pretty quiet at the moment, Steve. It`s
one of those things where you feel like something big is going to happen
but as you walk through the corridors here, it seems pretty quiet at the
moment.

KORNACKI: Well, we have all sorts of conflicting reports out there about
what the broad framework would be if there`s going to be a deal. I guess
sort of the big stumbling blocks throughout there, number one, if there`s
going to be a deal, what would the threshold be for the tax increase? Would
it be $250,000, which Obama originally proposed? Would it be $400,000,
which he supposedly offered in a revised offer a week ago? And then, of
course, there`s the status of the sequester. We have $1.2 trillion in cuts
over ten years, half from defense, half from non-defense discretionary
spending. Is there any indication at all where if there`s going to be a
deal today what they`re talking about in terms of those two issues?

O`DONNELL: Well, we`re reading tea leaves, but what we can say is that on
Saturday there were the most senior-level staffers who were doing a lot of
the nitty-gritty negotiating as well as some visits from the top leaders
themselves. We`re told that paper was exchanged back and forth meaning
proposals being outlined and going back and forth with details. We`re told
the sticking points really do center around that income threshold. Where
would you set a new tax level, above which everyone would pay higher taxes?
How much income could you protect for the majority of Americans? 250 is
the number the president started with.

As you point out he had withdrawn his earlier offer of $400,000 as the
income threshold. Aides say that is because that was a part of a much
bigger plan and now the expectations are something smaller. And in the art
of negotiation, looking for leverage, the president withdrew that. It`s
expected, certainly by Senate Republicans, that that number will come back
up. I`ve had a number of members of the Republican Party in the Senate who
are not directly involved in this saying that if it could get to 500,000
there would be a lot of votes for that. But going beyond those taxes,
there`s also the issue of the inheritance tax, which would go up sharply
come January First. That`s an issue that Republicans are concerned about.
But also, some Democrats who are in especially states where you have lots
of family farms and ranches, where people might be asset-rich but cash-
poor. So they`re concerned about trying to make that not be such an
enormous jump when it comes up.

And then even another very kitchen-table Sunday-morning kind of issue, the
issue of milk prices, unrelated to the fiscal cliff, there`s this lagging
problem with a farm bill that went nowhere. And because of the way farm
policy works, come January milk prices could essentially go as high as
eight dollars a gallon. They`re really feverishly working here to come up
with a plan to avert at least part of that and trying to tack it on to this
fiscal cliff talk. So, there`s a lot going on beyond sort of the whole
issue of taxes. It runs deeper than that and that`s what makes it so
difficult and so complicated. Every new issue opens the door to new sorts
of conflicts and compromises. And it takes some time.

KORNACKI: And can you take us through, Kelly, just quickly, what the
roadmap would look like if, let`s say, McConnell and Reid say this
afternoon, hey, we`ve come up with the basic deal here. What are we
looking at in terms of this will go to the Senate, this will go to the
House? When will this happen? How would that all play out.

O`DONNELL: The expectation right now is that it would become a Senate move
first, in part because that has been something Speaker Boehner has insisted
on. The senators here, the president sort of gave the green light that the
Senate should act first. So, if they were able to come up with a plan we`d
see a vote in the Senate, then it would go to the House and then the ball
is back in the speaker`s court. Can he get enough votes? The big deal
with the speaker`s own so-called Plan b failing was that Democrats agreed
not to go along. Now the pressure would be different and you would expect
many more Democrats would participate and vote in support of it. So, even
if you lose a significant number of Republicans, you might be able to get
enough. All of that contention are what`s really in the deal? So there
are some steps here. There are some potential pitfalls where it could come
apart. There isn`t a real sense of optimism right now. But there`s a way
that it could get done and there is certainly a way that it could be
derailed. Steve.

KORNACKI: All right, well, Kelly, if I could impose on you to stick around
for a few minutes, I want to bring our panel in here and keep you in the
mix a little bit. Kevin, maybe we could -- we could pick it up with you.
Kelly mentioned there this sort of expectation on the Senate side, I guess,
that if there`s some kind of a deal here that income threshold would be
set, maybe closer to four, $500,000. That would be, you know, the Bush era
rates would revert for everybody below that number. I`m looking at this
and I`m saying, I`m not sure about the Senate but the House last week, Plan
b was a million dollars. That was the threshold and Boehner didn`t have
enough support in his own conference to bring that bill to the floor. Do
you -- is there any reason to think Republicans now would go along with a
lower threshold?

KEVIN WILLIAMSON, NATIONALREVIEW.COM: No. I wouldn`t think so. I mean
it`s almost an entirely symbolic issue. I mean you`re not going to raise
very much revenue by targeting these very small groups of people. You can
take top two percent, raise their taxes to 90 percent or 100 percent,
you`re still not going to close the deficit. Doing it for the 250 and up,
just going to reduce the deficit by something like 10-12 percent.
Something like that. So it`s really just a question at this point of what
sort of hollow, empty meaningless symbolic gesture does Washington want to
make and how big a group of people do they want to put on the altar to make
that gesture.

KORNACKI: But -- yeah, go ahead.

MAYA WILEY, CENTER FOR SOCIAL INCLUSION: I think what`s so interesting
here is that we`re talking about the Republicans fighting to protect 1.2
percent of the American public from a tax increase, because 98.2 percent of
taxpayers are below the $250,000 threshold, so it`s kind of amazing in the
Congress, particularly when we`re talking about the House, that has made a
pledge around taxes that its willing to allow 98.2 percent of Americans to
pay more by going over -- around this curb, I agree it`s more of a curb
than a cliff. But I think this issue of the deficit is really an important
one. Because I don`t think it`s just a symbolic gesture. I mean and one
of the things that we`ve seen is $200 million we`ve started carving off the
deficit. We`ve been carving slowly, I think the question is also the time
frame of deficit reduction, right? I mean it`s how fast, over what time
trajectory do we see health? Because we`ve actually been making
improvements even over the past three years.

KORNACKI: Well, it seems ...

WILLIAMSON: So, that 1.2 percent number that I just want to point out,
what you are saying, is your complaint that the Republicans are looking
after the interest of a very small minority group? That`s not normally the
criticism in the GOP.

WILEY: But now, that`s what I think -- that`s what I think is the irony
here. Because I think it`s actually ideologically inconsistent. I mean I
think actually if you are saying that we -- wee stand for a proposition
that we don`t want to see tax increases and we`re unwilling to compromise
even though what you are saying Democrats is that 98.2 percent of people
will continue to get the tax cuts that the Republicans ...

KORNACKI: Well, the other -- the other issue here, though, is we can talk
about is this impasse right now. Republicans are saying "No" at this
threshold or that threshold, but the bottom line is if we get to January
First and there`s no deal, then the game changes completely and at that
point anything Republicans vote for, Suzy, would be a tax cut?

SUZY KHIMM, WASINGTONPOST.COM: Yeah, I mean this is the irony of what`s
happening. I mean what happens after January First, as you mentioned,
there isn`t a hard deadline. Not all of the spending cuts and tax
increases will happen on January First, but what happens is that the law
changes. So technically speaking, Republicans would be voting for a tax
cut rather than a tax increase.

And this is something that Democrats have been holding on to saying that,
well, you know, after January 1, it`s going to be politically easier for
Republicans to not be on -- you know, on the books saying they voted for a
tax hike. This is why you saw such a big opposition to Boehner`s Plan B.
Because that plan that he brought -- this bill that he brought forward that
would raise taxes on income above $1 million because they said, no. You
know, why would we be on the vote on the books, voting for this thing where
we think the threshold can go down even farther? Why would we want to do
that? So, this is one argument for why things do change politically even
if they don`t change substantively after January 1.

KORNACKI: On that point, and I want to bring Kelly back in. The sequence
-- I picked up on this same thing, and a lot of people have the sequence
here really seems to matter to Republicans, particularly in the House,
whether it happens this week and it`s a tax hike, and the next week and
it`s a tax cut. I guess one of the questions is, Kelly, if there is some
kind of a deal and if McConnell and Reid on the Senate side strike some
kind of a deal, how much -- does McConnell have to take into consideration
the House here? What could pass the House? What Boehner could even bring
to the floor? Is McConnell`s bottom line here, basically, I have to first
have a guarantee this is going to pass the House before I go public and say
I have a deal with Reid?

O`DONNELL: Well, that`s where part of the leadership comes in in talking
to members. What we`re hearing is they will present a deal if one is
reached to their membership. Take their temperature and get a sense of
where things are going. From observing Capitol Hill, my sense is always
that Mitch McConnell tends to be able to see a few steps ahead of himself
politically and that`s important here knowing what might be achievable.

Part of what`s happening, too, is as intense as the public pressure is
right now to see something happen, as much as there is complaint and
criticism leveled against Congress, whatever they do, whatever vote they
cast, they live with for a long time politically. If you look back to
something like TARP where the country was in real financial crisis, you got
people to cast a vote and then politically, many of them suffered because
of that vote. They`re aware of that. So as much as there`s this certainly
reasonable call to, say, sit down and work something out, each member has
to decide what they are able to do and how it might be used against them in
the months and years to come should they seek re-election.

That`s part of the personal interest that you have to calculate in looking
at how they`re trying to make a deal, because many Democrats also expect
that the threshold could go above $250,000, they`d be OK with that. Not
all, but some. So there`s the sense that once a deal is struck,
everybody`s got to live with it.

So pushing it as close to the deadline, trying to ring out as much for each
side as they possibly can, is in part, because the longer a deal sits out
there, the more it is criticized. If they can get as close to the deadline
and maybe even going over it, it does change the atmosphere politically
about what can be done and about how the public will view it. If they
reach a compromise and then people are sort of clubbed politically over the
months and years to come, that`s something that makes them very hesitant,
especially if it`s something that is as core in their various beliefs.
Whether it`s preserving as few tax increases as possible or if it`s
protecting entitlements. Whatever it might be. Those things, they each
carry sort of a bag of their own votes around and sometimes those can mean
the critical difference of whether they`re able to stay in office or not,
so you have to look at it through almost the individual member perspective
to get a sense of why does it take so long.

KORNACKI: Right. The re-election incentive and particularly in this era
the threat of a Republican primary challenge. We`re going to talk later on
the show about how that affects discussions like this in Washington.
Anyway, NBC News` Capitol Hill correspondent Kelly O`Donnell, thank you for
joining us this morning. Democratic Senator Jeff Merkley is right after
this.

(COMMERCIAL BREAK)

KORNACKI: All right, we`re talking about the latest in the fiscal cliff or
we should say, fiscal curb drama in Washington. I`ve got a panel here. I
want to talk to you a little bit here, Jamelle, about where, maybe,
Democrats are coming from on this right now.

UNIDENTIFIED MALE: Yeah.

KORNACKI: Because we were talking about this in the last segment about how
the game changes on January 1. If there`s no deal, if there is inaction,
there`s a lot of potential leverage here, it seems that the President Obama
would have. Look, all of the Bush era rates go away. Polls suggest
Republicans are going to be blamed more than Democrats if we go over -- if
we go over the curb so to speak. Is there a real incentive here, maybe for
Democrats to say, let`s just not make a deal today?

JAMELLE BOUIE, PROSPECT.ORG: I think the only incentive is for Democrats
not to make a deal, to wait for us to go over the curb, to wait for, first
that`s going to be repealing the Bush tax cuts or moving into a lower level
for Republicans, so there`s base saving for them. And for Democrats
there`s more leverage to ask for what I think are the important elements,
which are unemployment insurance, stimulus spending, hopefully, an
extension to the payroll tax. I mean I for me, I would prefer us just to
postpone the status quo for two more years because what`s important right
now is to get the economy back in gear and getting the economy back in gear
...

KORNACKI: You would extend?

BOUIE: I would -- -the fiscal cliff would happen like in 2014.

KORNACKI: So -- so Bush tax cuts for the top two percent.

BOUIE: Right.

(CROSSTALK)

KORNACKI: You say keep those.

BOUIE: The whole shabangabang (ph) for the next two years, just because
what we need is just more money going to the economy to keep things afloat.
And this -- this is just not the time to figure out how we`re going to
reduce that. It doesn`t -- it`s not quite that important right now.

KORNACKI: Well, Suzy, picking up on that point, you`re just here you know,
very closely following that stuff down in Washington, it looks like, my
interpretation of this and tell me if I`m wrong ...

KHIMM: Yes.

KORNACKI: The payroll tax is basically gone already?

KHIMM: Yep. I totally agree. It`s not even being mentioned and the
reason is, Obama`s last offer -- when we actually had Obama and Boehner
still negotiating in good faith, passing deals back and forth, (INAUDIBLE)
included. He actually dropped his demand for having an extension of the
payroll tax holiday in which the payroll tax got dropped from 6.2 to 4.2
percent. He dropped it. He -- and his stimulus offer shrank from I think
425 billion to 175 billion. So it`s something he`s already given up. You
had Tim Geithner saying earlier in the year that, you know, this -- a
payroll tax holiday is just that. It`s a holiday. Holidays aren`t
supposed to last forever.

It was put in place because the economy was in freefall. You have --
unemployment is better. Things are, comparatively speaking, better than
they were when they first passed this, so, you know, it`s time to let this
go. You`re going to have some Democrats worried the payroll tax fund
Social Security. They`re worried about compromising the integrity of
Social Security.

And it`s just something that the folks aren`t talking about. They say,
this is something, you know, as much as I agree that there are lots of
parts of the so-called fiscal cliff that are a curb, this is something that
will take effect immediately in January and it is a tax hike on the middle
class. If you earn $50,000, you expect your taxes of the year to go up
about $1,000. So this is just a reality that, in fact, both Democrats and
Republicans are likely to be hiking taxes on a substantial portion of the
American population.

KORNACKI: Right. And when we talk about the effect of this on sort of the
working poor and the middle class or we can talk about the payroll tax,
obviously, which hits them directly. The other issue here, I guess, Maya,
quickly, is these tax credits that are out there. The earned limit tax
credit, which was expanded. Child tax credit was expanded in 2009 or the
stimulus. This is sort of up in the air right now about whether this, you
know, expansion is going to continue for the next few years. That has a
real impact on these families, too.

WILEY: And it has a significant impact. And we`re talking about families
that are working long hours. So we have to start with the fact that we`re
talking about people who are working. Because I think there`s a myth that
people who are low-income and in need of either various forms of subsidy
programs or tax credits are somehow not pulling their weight. You know,
the 47 percent type of comment. The reality is, these are people who are
working very hard. Wages have stagnated in this country and in order to
pay for child care and in order to make sure you can pay for groceries at
the end of the month, these tax credits are actually really, really
important to a whole lot of Americans. And so, it`s actually something in
this economy where we see not only are people struggling. I mean you see
people struggling and not being able to pay food bills at the end of the
month.

KORNACKI: And there are some interesting issues here. But Kevin, I want
to ask you about this next. And we`re up a little bit against time right
here, but there`s some interesting issues here for Republicans, I think
when we talk about the payroll tax cut, we are talking about something --
this really affects, you know, tens of millions of Americans. And this is
more money in their wallets. We talk about this tax credit, the earned-
income tax credit, for instance, which was a Republican idea originally and
had a lot of Republican support through the years. So, I kind of want to
ask you a little bit, you know, in the next segment what Republicans make
of these things going away potentially? And that and Democratic Senator
Jeff Merkley as promised, he will be on the show after this.

(COMMERCIAL BREAK)

KORNACKI: Right now, I want to bring in Democratic senator from Oregon
Jeff Merkley. Senator, thanks for joining us. I guess some of the news
we`re getting overnight is that Mitch McConnell says he`s been exchanging
papers with Harry Reid and potentially working towards a deal this
afternoon. What we`re hearing is I guess one of the sort of points of
contention here is -- OK, the Bush tax cuts are going to have to go away
for some people, but where will that income threshold be set? $250,000,
Obama`s original offer, $400,000 his second offer, maybe $500,000 Kelly
O`Donnell saying Republican senators could go along with. $1 million was
Plan B.

I wonder, in terms of the senator, Democratic senators, in terms of your
colleagues on the Democratic side, what is -- what is an acceptable level
to you for where that income threshold should be?

SEN. JEFF MERKLEY (D) OREGON: Certainly, there`s a whole spectrum of
opinion. I think most of us feel that the right thing for America is for
the line to be at $250,000. So, that leaves only two percent of Americans
who would be paying more and it does a maximum amount to start impacting
the deficit. On the other hand, this is a negotiation. We realize there`s
going to be some flexibility. The president has already carved out that
territory. So the line isn`t going to be a rigid line, if you will.

KORNACKI: And the other issue there, I guess, is the sequester, which, if
nothing happens there on January 1, we`re talking about $1.2 trillion in
cuts over ten years, half the defense, half the non-defense discretionary.
Would you be OK with the sequester not being part of this deal, with that
sequester taking place?

MERKLEY: It`s been very clear that there`s too many pieces on the table
for them all to get resolved in the next couple of days, so I would -- I
would expect that there might be a bump in this sequester, but I don`t
think there will be a big restructuring, the detailed restructuring that
will be figured out later on. But I`ll tell you that unemployment is a
huge, immediate impact. In my home state of Oregon, 30,000 folks will be
cut off at the knees. Not only does that have a huge impact on those
families, but it has a huge impact on the revenue flowing through those
communities. And that would just send shock waves. And that hits right at
the heart of working America.

KORNACKI: Yeah, and that`s -- we were talking about this in the last
segment, the impact on the working poor. The impact on the middle class.

And Kevin, I was starting to ask you this question. I mean, unemployment
insurance is obviously a component of this extending the unemployment
insurance. It looks like eventually when there is a deal, unemployment
insurance will probably be part of it, at least that`s my reading of it.
It might be a situation where if we have to wait a week or two that`s to be
some retroactive component there. But then, there are these other issues
we were getting into in last segment about the tax credits, about the
earned-income tax credit, about the child tax credit expansion, and I was
talking about how these were originally in many cases Republican ideas.

Now I`m not hearing much Republican support for expanding this. Where do
you think Republicans are on continuing the expansion of the child tax
credit, the earned-income tax credit, even the payroll tax credit? Even
though we are saying it`s off the table. Is that something you think we
should continue with?

WILLIAMSON: They`re divided. There are a lot of Republicans who care a
lot about the child tax credit and there are a lot of Republicans who care
a lot more about simplifying the tax code and trying to make, you know, a
flatter, simpler, couple of brackets, lower sort of rate. And those people
are always having a debate for a long time, you know. The tax code being
used for political purposes or economic purposes, and the credit for
manufacturers. Credit for certain kinds of other businesses. There`s one
of those things that both parties do and have done it for a long time and
when people come along later when they want to simplify things they end up
trying to take out things that they used to support 20 years ago or 25
years ago. So yeah, I mean, you see this is an old conservative idea, but
its one that has been displaced by people who are more interested in having
a simpler and flatter tax code.

KORNACKI: And one of the other things that occurs to me here is when we
talk about -- there are broader issues at work here. Because, you know,
Kevin made the point, and I think earlier, about, you know, even if you
have these tax increases on the wealthy, we`re not talking about a huge sum
of money here in terms of -- in terms of funding the government. But it
seems like one of the issues here, it seems maybe Democrats -- or you see
this as an opportunity to address inequality.

BOUIE: Right. Over the last ten years, sort of income for the wealthiest
people has gone up and stagnated for almost everyone else and raising taxes
on the wealthy isn`t something necessarily that will put a huge brick on
that, but you lift your foot off the gas a little bit and begin -- you can
use that money to begin supporting programs like unemployment insurance,
bolstering programs like the Affordable Care Act, which do end up putting
money back into the pockets of ordinary Americans.

I sort of think that, like I said earlier, that the focus on deficit
reduction is very odd. Unemployment is still in the seven -- 7.5 to 8
percent range. It`s not going down particularly rapidly. And what I think
we want right now is to focus all of our attention on lowering
unemployment. Ultimately full employment is the best deficit reduction
program, it`s the best way we have to reduce the amount of money the
government spends. Just people putting in more tax revenue. There is a
less of a need for income support programs when there`s full employment.
And so I just -- as a whole, I find Washington`s obsession with reducing
the deficit to be very, very odd, given the circumstances.

KHIMM: Let me just challenge one thing.

KORNACKI: If it wasn`t -- we`re up against a break, but there -- Jamelle
(INAUDIBLE) I think I want to talk about a little bit in the next -- this
is an artificial crisis. There are other things we could be talking about.
And that component of this discussion, we haven`t heard much about. We`re
going to get to after this.

(COMMERCIAL BREAK)

KORNACKI: All right, we`re back talking about the latest in the fiscal
drama in Washington and we`re joined again this block by Senator Jeff
Merkley from Oregon. And Senator, I guess, so one of the issues here that
we were talking about in the last segment is -- we still have a jobs`
crisis in this country, by the way. We still don`t have much growth and we
still have tens of millions of people, we have more than 10 million of
people, obviously, who are out of work. Obama was talking about originally
having an infrastructure component in any deal. Some more -- some spending
on infrastructure. Some more stimulus for the economy. Is that a part of
these negotiations right now, do you think? And does that have -- does it
have to be in there for you and Democrats to go along with any deal?

All right, we have got an audio issue with -- with the senator there. Pick
it up, I guess, maybe Maya. You know, Jamelle was talking about the
relatively low impact in terms of the budget picture of the Bush tax cuts
and letting it go for the wealthy. I think you wanted to kind of make a
point there?

WILEY: Well, yeah. I think it is an important point to say that this
deficit issue is one we should question a bit, `not because we shouldn`t be
concerned about the deficit, but I mean I think this notion that $800
billion ...

KORNACKI: I guess I`m with you.

WILEY: ... is not a lot of money is a kind of a bizarre conversation for
most Americans. So I think it doesn`t sound like a lot of money if we`re
looking for short-term deficit reduction. It`s a heck of a lot of money if
we talk about investing in Americans. So, I think one of the things that
we have to have a better conversation about is what actually gets the
economy back on track. And actually is the -- so 800 billion is a lot of
money.

KORNACKI: I`m told we have the audio back for Senator Merkley. Story for
this year. But Senator, what were you going to say about stimulus and this
deal?

MERKLEY: Yeah, I think the stimulus is largely dropped off the table right
now in the context of the Medicare tax cuts and the unemployment insurance
and the tax brackets and estate tax. I think it`s being pushed aside and
that`s unfortunate because really, this is about keeping our economy back
on track and we`re so far away from having living wage jobs and a low
unemployment rate.

KORNACKI: And one other issue, I just -- while we have you on I want to
make sure to get to this. When President Obama gave his -- made his
statement on Friday, he basically said, look, if there`s no deal here I`m
going to put pressure on the Senate to have a straight up or down vote on
this basic, sort of stripped-down version of the tax code extension for
$250,000 or less. And, of course, when he says straight up or down vote in
the Senate, he means he doesn`t want Republicans filibustering it and
forcing the 60 votes. It seems to me if there is no deal today, very
unlikely that Republicans will go along and say, hey, you know, let`s vote
for that, but it does speak to a broader issue there I think with -- with
what the filibuster has done in the Senate?

MERKLEY: Well, and in fact, I think Harry Reid will couple that with
unemployment insurance. I think those two go together. And the
Republicans -- my vote for it, I mean voting against a tax rate for 98
percent of Americans and voting to kill unemployment insurance for a huge
number of Americans. But I`ll tell you the filibuster is important. You
may have heard the president say he doesn`t want the Senate to filibuster.
He wants that deal ahead. Because that`s been the silent, secret
filibuster has been paralyzing the Senate. We just had the two years have
been the least productive virtually, in the Senate`s history.

WILEY: Senator ...

MERKLEY: Yes.

WILEY: Maya Wiley from the Center for Social Inclusion and I appreciate
your comments and Portland does have the best coffee in the country, I will
say that.

MERKLEY: Thank you.

WILEY: But can I ask about the dynamics in the Senate with senators from
seven states. Because one of the interesting things about the 2.1 million
people who are going to lose unemployment benefits if we go around this
fiscal curb is that southern states have been less generous in terms of
unemployment benefits. And they made -- I`m wondering if there`s a dynamic
where southern senators are less concerned about the impact on unemployment
insurance or not?

MERKLEY: Well, I haven`t seen that dynamic directly. That`s kind of a
regional impact. Folks are looking at people in their state and I think
every state has a sizable component. Families that are being unfairly cut
off in the middle of their terms without planning. I mean certainly we
need to pull back in extended unemployment as unemployment improves, but it
needs to be a coherent strategy that people can count on, not a sudden blow
that sends families reeling.

KORNACKI: And Senator, in the last minute here, I just -- what is your
read on what`s going on in Washington today. Do you think there`s going to
be some kind of a deal? Now or do you think we`re going to have January
First come and go and nothing`s changed?

MERKLEY: I would be betting there`d be some kind of a deal. A smaller
deal. But inside those rooms, you never know what`s going to come out.
But I think there`s, you know, the core presentation Obama put out, is
going to be built on with a few other elements and that would be my best
guess.

KORNACKI: All right, Democratic Senator Jeff Merkley of Oregon. Thanks
for joining us this morning. We`re going to be right back.

(COMMERCIAL BREAK)

KORNACKI: There`s a particular aspect of the fiscal impasse that I want to
focus on in this block, and we mentioned it a little bit earlier when we
were talking about the payroll tax cut. It`s been down at 4.2 percent,
usually 6.2 percent, comes out of everybody`s paycheck every week, every
other week, whenever you get your paycheck. That seems to be, as Suzy was
saying, that`s going away no matter what here. Neither side has decided
they want to push for this. It seems to me, it`s really interesting, we`ve
created this situation where if you get rid of the payroll taxes, Jamelle
was saying, there`s a hit to the economy right there. That`s going to
affect GDP growth the next year. At the same time like Suzy was saying,
this is how we fund Social Security. This is how we have decided we are
going to fund Social Security. It`s not coming out of the general fund.
We have a specific tax that`s designated to it. Jamelle, do you think we
ever should have sort of messed with -- tinkered with the payroll tax in
the first place a couple of years ago?

BOUIE: Ideally you would have had another mechanism to get money into the
economy. I think the payroll tax was meant to replace the making with tax
pay credit. And when that wasn`t renewed then this was the next best
option. I think that this is probably still the best option, the payroll
tax cut and, you know, I guess, (INAUDIBLE) one note on this, but to go
back to what I said earlier. Ultimately, what will keep Social Security
sustainable is the rate of growth in the economy. And if -- if I had to
trade a couple of more years of reduced revenue for Social Security for
more growth, I think more growth is the right trade to make. I`m worrying
-- a lot of worrying about, you know, if we keep the payroll tax low or we
lose money for Social Security over the long term? Probably, but I think
it`s offset by the additional growth you get from just having lower
unemployment and the faster GDP growth and the whole nine yards.

KHIMM: Yeah, one thing that the way they have devised the payroll tax
holiday, they actually say, technically speaking they`re not taking money
out of Social Security. They`re replacing it with money from the general
budget. So you never actually have a gap. The concern, however, is that
that actually kind of ends up lumping together, Social Security, which was
supposed to be in a protected trust fund with the general budget. And
eventually, you know, those two things could get negotiated, you could have
future years in which you have the Social Security as part of the general
budget discussion. Which folks who were intent on protecting that trust
fund really don`t want.

But it`s true, that there will be a hit. I think Moody`s -- Moody`s
analytics estimated that it`ll be .6 percent of GDP production, because of
the payroll tax cut. If you talk about the sequester cuts that everyone
really wants to avoid, that they are really bad, that`s about 110 billion
in 2013. The payroll tax cut is about $115 billion. And that`s money that
comes out of people`s paychecks. That`s money that people say has a lot of
bang for the buck. Because, you know, it`s money that appears when you
were going to go out and spend it. It`s not something that you have to
calculate oh, how much in taxes am I going to pay this year? You know, how
much money do I have to spend? So, it`s stuff that really does spend out
pretty quickly.

KORNACKI: And I think that we -- sometimes maybe it`s good to take a step
back and appreciate what the payroll tax has become in this country. What
it means to the budget. Because this is something, again, FDR came up with
this to pay for Social Security, you know, 70 or 80 years ago or whenever
exactly that was. It`s now is about, what, 35 percent of all the revenue
coming in to the federal government is coming from the payroll tax. And we
are talking about what`s basically a regressive tax right here. Because
there`s a cap of $112,000.

WILLIAMSON: And keep in mind, that this is a fiction that the payroll tax
pays for Social Security. I mean, when you`re running large net deficits
and there`s nothing in this so-called trust fund except, you know,
government (ph) securities, there`s no tax that pays for any particular
program. The politics of the payroll tax is that it helps sustaining the
fiction that Social Security is something like an insurance program or
retirement program rather than what it is which is regular old welfare
program, except that`s a welfare program for the middle class.

KORNACKI: Wait a minute. So FDR`s idea was ...

(CROSSTALK)

KORNACKI: .... if you see the money coming out of your paycheck, you are
invested in it.

(CROSSTALK)

WILLIAMSON: With that tax in there, no one could ever mess with my damn
Social Security program.

KORNACKI: Right. And it kind of worked.

WILEY: Yes.

(CROSSTALK)

WILLIAMSON: But we should keep in mind that it is a fiction.

WILEY: Well, so the only fiction here is that it won`t impact people if we
don`t pay enough attention to making sure we have this insurance system for
people to retire. It was actually a pillar of creating the middle class,
coming out of the Great Depression. We -- it was one of the policies that
actually helped produce the American middle class in the second half of the
20th century and I think you made the really important point, Steve. If
we`re really going to talk about the sustainability we have to talk about
the fact that we cap it. And that, so the payroll tax holiday is
incredibly important for low income working people and middle-class
workers. It`s actually people like, frankly, my family, who have a cap.
And who are going to, well before 20 years before we finished our working
lives, are no longer going to be paying into the Social Security system and
that`s wrong. We should pay it forward.

KORNACKI: And, you know, and to Kevin`s point there, I think another --
I`m trying to remember what I read in a column this week by somebody I wish
I could give him credit or her credit, but, you know, we think about Social
Security in terms of, you know, the payroll tax cut, in terms of the
payroll tax, in terms of the trust fund and everything, but there are other
ways we could decide to think about Social Security. And we could just
decide that it`s like the military. It`s something we just want. It`s a
program we want to fund even if that means deficits, even if that means
more is going to be paid out sometimes than is coming in. We could choose
to think of this as something that we as a society just want.

WILLIAMSON: Well, frankly, we would be better off if we did. You know, if
we`d just give up all these ridiculous little fictions and just treat
things in a straight-forward kind of way. We`re going to spend this amount
of money, if we are going to spend this, you have to have this in taxes to
do -- you are going to have a much simpler and easier tax system than we
have -- higher taxes for the middle class almost certainly. Although one
of the things we should keep in mind in this is that the real difference
between the United States and most European countries or Canada isn`t that
we tax the rich so lightly. We actually tax the rich fairly high here
compared with those countries, is that we tax the middle class so lightly.
Now no one is going to win a lot of elections going out and saying, well,
if we really want to have a long-term sustainable future with spending that
looks something like what spending is now we have to have a very large tax
increase on the middle class, but that`s where it is, that`s where the
money is.

BOUIE: I think this is -- I mean I think this is a really key point. And
I think that liberals thinking long term if they want to build sort of a
sustainable welfare state, a welfare state that benefits lots of people, we
have to start having a conversation about in the future taxing middle class
folks more heavily. I personally would want Social Security to become what
is essentially a pension program. You know, the private sector pensions
are on the decline. Millions of Americans don`t have enough money saved up
for retirement, so why not just take more money out of people`s paychecks,
a larger -- I mean a large middle-class tax increase and that goes towards
a sustainable pension program for most Americans.

KORNACKI: Well, we -- I think we`re up against another ...

(LAUGHTER)

KORNACKI: ... frustrating. But Suzy and Kevin of "The Washington Post",
Kevin Williamson from "The National Review", thanks for joining us this
morning. Could the fiscal curb cost John Boehner his job? That`s next.

(COMMERCIAL BREAK)

KORNACKI: For all of the focus on the power of 41 senators to extract
simple majority rule, one thing the fiscal curb fight has shown us is that
the potential for a minority to extract majority rule is even more
disproportionate in the House and that for all the focus on Monday,
December 31st, speaker of the House actually has an eye on Thursday,
January Third. Because that is when House -- the House will decide whether
to re-elect John Boehner. These things are not unconnected. When you
consider that Boehner needs a majority of the entire House to win, and
since Democrats won`t vote for him that means that just 17 Republican
defectors could cost him the speakership. And he lost a lot more votes
than that on his Plan b, which means that if there are just 17 Republicans
who would rather sail off a cliff than let a single tax cut expire, John
Boehner may be asking himself right now, which he values more. His job or
yours?

Right now I want to bring in Amy Kremer, the chair of the Tea Party Express
and cofounder of the nonprofit American Grassroots Coalitions and Fergus
Cullen, the former chair of the New Hampshire Republican Party, former
campaign manager, he`s now director of the free market think tank, the
Yankee Institute. He`s also an editorial columnist at the New Hampshire
Union Leader, Manchester, New Hampshire, of course, big important paper in
the New Hampshire primary before years.

Amy, I guess I want to start with you, because we`ve been talking --
there`s been a lot of discussion about this dynamic of, you know, does
Boehner even want to cut a deal now, or does he want to wait until after
January Third? Harry Reid even made that point on the Senate floor last
week because, you know, who knows. Maybe there`s a few dozen conservatives
in the House who just -- who just don`t want this guy to be speaker
anymore. I wonder, you`re with the Tea Party. What do you think? Do you
want two more years of John Boehner as House speaker?

AMY KREMER, TEA PARTY EXPRESS: Well, I don`t think that -- I mean there
are a group of people that are focused on that, but I don`t think that`s
our real focus. Our real focus is ringing in this out of control spending
and getting our debt and deficit under control, living within our means.
And I think that`s what most people are concerned about. Look, you get rid
of John Boehner, who else are we going to get? I mean, if -- we lost the
election. Elections have consequences. We`re not going to get everything
we want. But we need to focus on the real issue of our debt and deficit.
Instead of focusing on the power of who`s in charge in the Republican Party
and the Democratic Party and who`s winning of the two parties?

KORNACKI: Well, let me just ask you -- so you`re focusing on the deficit
here. If we do nothing, if there`s no deal in the next few days, and we do
nothing in the first few weeks and there`s no patch in the first few weeks
of the new year the deficit problem basically solves itself, doesn`t it?

KREMER: Well, I mean, we`re not -- we have over $1 trillion deficit every
year. Over a trillion dollars. It`s not sustainable.

KORNACKI: But doesn`t -- I`m saying, if we -- if we all of these issues
here, with all the Bush tax cuts going away, with the sequester, with the
payroll tax expiring, with the estate tax going on, if we do all the stuff
that the fiscal cliff or the fiscal curb, whatever you want to call it
does, the deficit problem is solved?

KREMER: I don`t know that it`s solved completely. I mean I have no idea
what that specific number is, but I know that we`re over $16 trillion in
debt and like I said, we`re spending a trillion dollars more a year than we
currently have. No one -- I mean everybody keeps talking about entitlement
reform and how we need to reform these programs because you can`t balance
the U.S. budget just dealing with discretionary spending, we`ve got to look
at entitlements, but no one is even talking about the biggest entitlement
that`s going into effect the January, that`s Obamacare that`s another
trillion dollars. We cannot afford this.

KORNACKI: Fergus, let me ask you. You`ve been actually a sort of a
critical voice of the Tea Party recently. But Amy makes the point. She
says if John Boehner is not the speaker, you know, who would be? And it
seems to me that anybody who`s the Republican speaker right now is going to
have to come to some kind of a deal at some point on the fiscal stuff with
Obama here and expose him or herself to cries of sort of disloyalty from
the right and any Republican speaker is at some point going to have to deal
with the debt ceiling, which we are going to have come with -- come up --
come to in a months or so. Is it possible for anybody to really be an
effective Republican House speaker right now?

FERGUS CULLEN, FMR. CHAIR, N.H. REPUBLICAN PARTY: Well, I don`t envy him
the job, but, you know, John Boehner is a survivor. I think people forget
that he had been on the leadership track rising up through the ranks and
got derailed several years ago and then he was able to come back. I
remember seeing him at a Republican event back in the `90s in Connecticut
at a congressional race. He spent a decade, he may have spent two decades
traveling around the country to competitive districts. He`s got a lot of
personal relationships within that caucus even though there`re a lot of new
members. Yeah, this is a real leadership test right now in navigating the
fiscal cliff. We saw the debt ceiling debate a year and a half ago. That
was a political disaster. A real tough position for John Boehner, because
he had all these freshmen, many of them Tea Party backed members who didn`t
want to compromise at all and yet, he was able to thread that needle
politically and policy-wise. We don`t want to have another debacle like
that again.

WILEY: So, when President Obama won the election in 2008, "The Onion`s"
title was -- "Black Man Wins Nation`s Worst Job." Now I feel like we have
the white man who has the nation`s worst job. Because I actually feel
sorry for John Boehner. I mean I think the reality is you -- he`s leading
a House, which is actually looking to not the 53 percent of Americans that
want -- do not want to see the country go around this fiscal curb, which is
what the polls are showing, but that`s a national poll. And the reality
is, they`re going back to districts where they are actually, you know,
frankly, reporting to a very small percentage of the American public. And
so we`re not -- that`s why the conversation is different in the Senate and
the House and that`s really the problem that John Boehner has.

KORNACKI: All right. Well, we are up against a very hard deadline here.
But I want to bring in the co-chair of the House Progressive Caucus.
That`s the Democratic congressman from Minnesota Keith Ellison and that`s
right after this.

(COMMERCIAL BREAK)

KORNACKI: Hello from New York. I`m Steve Kornacki in for Chris Hayes.
With me this morning I have Jamelle Bouie of the American Prospect, Amy
Kremer of Tea Party Express, former New Hampshire GOP Chairman Fergus
Cullen. Now, with the Yankee Institute think tank. And Maya Wiley. She`s
with the Center for Social Inclusion. So, we have been talking about the
status of, the future of John Boehner, the House speaker. And Maya was
making this point, Jamelle, and I guess I kind of agree with this.

Boehner is frequently pilloried as an unusually weak speaker. As if he has
poor political skills or poor leadership skills and it really doesn`t seem
to be his fault here. He just seems to be sort of a -- he was in the right
place at the right time in terms of claiming the speaker`s gavel, but he
was in the wrong place at the wrong time because he is a D.C. lifer. He
goes back more than 20 years, he`s cut deals with Democrats, his
fingerprints are all over on "No Child Left Behind," other things like
that, and now certainly he`s presiding over this Republican conference
that`s filled with sort of true believers who have been -- who have doubted
his sincerity from day one.

BOUIE: That`s exactly right. You know, Boehner could have chosen to be a
hands-off speaker like Dennis Hastert earlier in the last decade, but he
wants to be a strong speaker, but he certainly is just not in a position to
do it. Partially because it`s not a question of him being able to get --
build a majority of House members. It`s a question of him being able to
build a coalition of a majority of Republicans. And the median House
Republican is actually just very, very conservative. And so there`s just
not very much space for John Boehner to maneuver when it comes to deal
making or really just corralling its caucus for much of anything.

KORNACKI: And that`s ...

AMY KREMER, TEA PARTY EXPRESS: Can I?

KORNACKI: Yeah, go ahead.

KREMER: I just want to say that, you know, while we`re not focused on
whether he`s going to be speaker or not, I`m certainly not happy with him
and I know a lot of people are not happy with him for removing those three
Tea Party freshmen from their committee assignments. That did not help
this situation whatsoever. It was a power play, you know, from I guess the
caucus to say who`s in charge. But you`ve got to show some good will. If
you want people to come along and, you know, come together on something,
you`ve got to show some good will and I -- I mean and that was not the
right thing to do.

KORNACKI: Well, let me ask you. We are talking hypothetically here, we
don`t know what`s going on in these negotiations, but if, this afternoon,
Harry Reid and Mitch McConnell come out and they say we have a deal and
let`s say the deal is that, you know, income -- the Bush tax rates will
expire for everyone -- for -- will be extended, excuse me, for everybody
under $400,000, it will expire for everybody over $400,000. Let`s just say
that. Would you consider that -- would folks in the Tea Party consider
that a tax increase and would you consider the Republicans who vote for
that to be sort of disloyal for the conservative cause?

KREMER: Well, first of all -- I don`t think -- I mean it`s ridiculous to
me that here we are ten or 11 years later even talking about this. I mean
these should have been permanent from the beginning and here we are -- and
this is a self-made, created date, that they`ve given themselves but ...

KORNACKI: Remember -- remember -- remember why we set this date.
Remember why the Republicans said ......

KREMER: I know. I know.

(CROSSTALK)

KORNACKI: they are taking this date, because they wanted to pretend it was
deficit neutral ...

KREMER: Right.

KORNACKI: ... so they had to play with the clock to do that.

KREMER: Right. Right. I understand. But we`re never going to advocate
for tax increases on anybody, a tax rate increase on anyone, because at the
end of the day, look, we have a spending problem. We don`t have a revenue
problem. But say we want to generate more revenue. Do you know how many
companies did not pay income taxes over the past three years? Fortune 500
companies that are making billions of dollars and there`s loopholes so
they`re not paying any taxes.

KORNACKI: But I just -- I`m trying to think (ph) a little bit, because I
think there are some broader ...

KREMER: You want me to say ...

KORNACKI: Would you consider it, if there`s a deal between now and January
First, and Republicans go out there and they vote for a deal that ends up
resulting in higher tax rates for upper-income Americans whether it`s 250,
whether it`s four or whether it`s five or whether it`s a million, would you
consider that a tax hike and a betrayal of the conservative cause?

KREMER: I am never going to agree to that. But they`re going to do what
they have to do. And at the end of the day their constituents are going to
decide, you know, are they going to re-elect them. But I`m never going to
advocate -- I`m never going to go out there and saw it`s OK to raise taxes
on any individual.

WILEY: And so, this is Boehner`s problem, right? I mean so he can`t cut a
deal that says 98.2 percent of Americans will continue to have the tax cut
that George Bush gave them. Because 1.2 percent of Americans who can
afford to pay more for our children`s education and for healthcare
shouldn`t -- I mean I -that`s ...

KREMER: That`s essentially what I`m saying ...

This is the thing. You -- we -- what is raising taxes on that two percent
going to do? It`s not going to help the situation. If you look, look
across this country and there are five states that are -- the unemployment
rates are declining and it`s because they have lower taxes. They have
gotten rid of collective bargaining. I mean they`re -- it`s not because
they`re going out there and increasing the tax rates.

WILEY: What I mean ...

KREMER: Those states that do -- the chief executives annual survey said
that the five worst states to do business in are states that have
ballooning deficits, you know, out of control spending. They`re taxed to
death and they`ve got unionized workforce.

KORNACKI: You know what I -- what I always think of when I hear this kind
of discussion what we`re talking about here, if you let the Bush tax rates
expire for the wealthy, it will be kind of letting it revert to what it was
in the 1990s under Bill Clinton. And I can remember in 1993 -- I can
remember in 1990, these were the two tax fights, 1990 under George Bush Sr.
a Republican, 1993 under Bill Clinton, the Democrat, these were the last
two tax hikes that we had and both times there was a ban of conservative
Republicans led by Gingrich in `90 -- Gingrich in `93.

And it ended up being every Republican in `93 that said you can`t raise
these rates. It`s not going to bring in revenue. It`s actually going to
kill jobs, it`s going to plunge us into a second recession. You can play -
- there`s incredible footage of Gingrich and Kasich and all these guys
saying this. And I look back at the 1990s and not only did we have the
longest sustained period of growth in the postwar era, we also had
shrinking deficits every year. And by the end of the 1990s we had a
surplus!

KREMER: But the reason for that was because of the dotcom boom. I mean
because everybody was ...

KORNACKI: But the claim -- but the claim was raising these rates would ...

KREMER: We don`t have that right now.

KORNACKI: But the claim was that raising these rates would make it
impossible for the economy to grow.

KREMER: But this is -- see, this isn`t the problem. The real problem is
all we`re talking about is raising taxes. This is a political trophy for
the president. We`re not talking about the real issue of cutting spending.
Why is that not part of the conversation?

BOUIE: I`m curious as to where we would cut spending, right? At the
moment non-defense discretionary spending is almost cut to the bone. Any
more cutting and you`re just sort of knocking millions of poor kids and old
people off of valuable programs and resources. And then when it comes to
entitlements we`ve already cut under the Affordable Care Act, you know, 700
to $10 billion from Medicare, we`ll probably see Social Security cuts,
unfortunately. I mean there is -- everywhere we can cut we`re making cuts.
And still, the deficit isn`t going down substantially, so I`m just -- I`m
very interested in where -- where this spending problem exists. Because I
don`t see it.

CULLEN: And Rahm Emanuel said never let a crisis go to waste. Right? If
we can`t have a serious conversation about entitlement reform now when will
we? And you can`t talk seriously about cutting the deficit without talking
about Social Security, Medicare, Medicaid and defense. I mean those are
something like 75 percent of the total budget, as Jamelle says, the all --
the non -- the discretionary programs are minuscule compared to that. So
if we can`t have that conversation now, and maybe if it takes putting ...

KORNACKI: But it seems like ...

(CROSSTALK)

KORNACKI: It seems like we are ...

(CROSSTALK)

CULLEN: Such a bad thing.

KORNACKI: It does seem like we are having that conversation in the sense
that if you look at the Affordable Care Act, if you look at what
Republicans ran against in 2010 and 2012, it was Obama`s Medicare cuts.
Obama addressing Medicare. You look at Social Security, which there are a
lot of people who would argue there`s no actual Social Security crisis in
terms of contributing to the deficit, and yet Obama in his last offer to
the Republicans was willing to go along with the version of this chained
CPI, you know, sort of -- It would basically be a benefit cut. It would be
some provision. It would be basically be a benefit cut and I think -- I
think there`s a lot of frustration, on the left, I would say, where I say,
look, Obama has done things here that really irritate us and where is that,
you know, similar compromise coming from on the right? Where are the
ideas, frankly, on the right for further entitlement cuts and changes
beyond that?

CULLEN: Well, and a lot of us as Amy pointed out, are terrified about the
economic impact, the budget impact as Obama care gets implemented. And the
president to his credit ran on higher taxes for the rich. I mean he said
he was going to do it, now he`s won the reelection and he`s planning to do
it. So, to get to an earlier questions, yes. If they raise taxes on those
400,000, or million, it is a tax increase, but, you know, but that`s an
issue that they`re going to have to fight out. That 1990 budget tax
increase still scars the Republican Party today. Two decades later. They
learned lessons, remember that George W. -- excuse me -- George H.W. Bush
who we`re glad to hear is recovering, was defeated running for re-election.
That memory lasts a long time with the Republican Party.

KORNACKI: "The New York Times" (INAUDIBLE) the last Republican to ever
vote for an income tax hike was Pete Domenici, the former senator from New
Mexico on October 1990, since then not a single Republican vote for a tax
hike.

I want to bring in Congressman Keith Ellison of Minnesota, he is the co-
chair of the House Progressive Caucus. So, Congressman, we are having this
discussion about a lot of things, but about tax rates in particular, so
there is talk of potentially, you know, that maybe there is some kind of a
deal today and would the threshold be 250, would the threshold be 400?
From your standpoint and from the standpoint of the House Progressive
Caucus is there a bottom line here, where, you know, if that threshold is
too high you won`t support a deal?

REP. KEITH ELLISON, (D) MINNESOTA: Well, there are bottom lines. But the
most important bottom line is -- no cuts to Social Security beneficiaries,
Medicare and Medicaid beneficiaries. We need the Defense Department --
defense is going to have to share in whatever cuts we see. The most well
to-do people are going to have to pay more and we absolutely need some
infrastructure spending to get people back to work. Those are bottom
lines. There`s a lot of room to negotiate within there.

I believe that we`re not doctrine there. We do believe in negotiating, but
we`re not going to allow the poorest, most vulnerable Americans, seniors
and people on survivor benefits pay for other people to have, you know, you
know, tax breaks and stuff like that. So those are the bottom lines. But
we are open to negotiation. We`re not taking the Tea Party position where
we won`t agree to anything. We will agree to some things, but we`re not
going to let the most vulnerable people pay for this.

WILEY: Yeah, I think this is -- this is the fundamental difference between
what`s happening in the Democratic Party and the Republican Party right
now, so thank you, Keith, for your leadership. Because what`s happening in
the Democratic Party right now is that Democrats are actually not paying
attention only to the left of the party and has actually come to certain
sets of compromises within the party. And I think this is not happening on
the Republican side, which is part of what we`ve been talking about
Boehner`s problem. But, you know, I also want to challenge a little bit
this notion that $800 billion, so I mean, Amy, I don`t know if you have
kids ...

KREMER: I have one.

WILEY: Yeah, and I have two. And when we`re looking at what the sequester
is going to do in the name of budget -- of the deficit, we`re literally
going to take 1.6 million kids are going to lose education benefits. I
mean we`ve seen 26 states cut education funding. If you wanted as Jamelle
said, if we want to really go after the economy and deficit we`ve got to
get people working and we`ve got to get them able to work ...

UNIDENTIFIED MALE: That`s right.

WILEY: And the way we do that is we invest in our children. So, my kids
are in public school. Title One, 1 million kids. And by the way, by the
way, 600,000 of those kids will be white. And 1 million will be black and
Latinos.

KORNACKI: There are a lot of issues around the sequester. I want to talk
about them with the congressman and other subjects, too, when we come back.

(COMMERCIAL BREAK)

KORNACKI: We`ve been talking about the status of House Speaker John
Boehner and the future of House Speaker John Boehner, the status of the
fiscal curb negotiations and then we have Congressman Keith Ellison from
Minnesota with us, the chair of the House Progressive Caucus. And
Congressman, I want to ask you a little bit about Boehner, but first I want
to pick up on the point that Maya was making about the sequester and the
impact of the sequester.

And I want to ask you just about that a little bit. Because there are
conflicting reports this morning about -- if there is an emerging deal
whether the sequester would be addressed or not, I think a lot of the
speculation now is that it would not be addressed. This $1.2 trillion in
automatic cuts would be triggered. Maya was talking a little bit about the
domestic side of that, the non-discretionary defense spending. But you`ve
written some -- you`ve teamed up with a very conservative Republican, I
think to suggest may be the defense side -- we should be OK with this?

ELLISON: Well, we should have defense cuts. The fact is, though, that
they should be smarter than the sequester offers. The sequester is just
like a big chop. We should go through and make wise cuts, discontinue
programs we don`t need. And look at other ways and other programs. But,
yeah. Defense cuts need to happen since 2001, the budget is more than
doubled. And when you look at exactly what we`re spending, you wonder,
what we`re spending it on. I can tell you, you know, a lot of kids in the
military, they`re not seeing their pay go way up. This is being spent on
other things.

You know, we got literally, over 100 military bases around the world. And
we`re defending places where, you know, other countries should take a
greater responsibility for their own security and the United States doesn`t
need to be the policeman on the whole globe, so I`m all in favor of some
serious defense cuts. We need to discontinue some of these Soviet era
weapons systems that we just don`t need. A lot of this spending is driven
by Congress, not the military. And so, you know, no doubt about it, me and
Mick -- oh Mick would -- I can`t think of Mick`s last name -- Mick Mikolski
(ph), I think it is. He and I teamed up on a letter, in which we proposed
some serious defense cuts and we`re looking forward to seeing that happen.

KORNACKI: So you have, obviously, you have worked a little bit with the
Republicans now. I`m just wondering what your sense is. Do you ...

ELLISON: Oh yeah.

KORNACKI: You look at John Boehner, we are talking about this January 3
vote coming up, the possibility it really wouldn`t take more -- it would
take fewer than 20 Republicans, basically, to topple him. Do you think
he`s in any danger especially if he cuts a deal, of losing his job as
speaker the next week?

ELLISON: I doubt it. And the reason why is the people who are so -- so
much against any kind of negotiation, they number in about 50. And so I
think that that is, you know, that is a little bit more than he can
tolerate in terms of getting his speakership back. But I don`t think those
50 who are opposing him like on the Plan b are ready to upend his
speakership. So I don`t think that he`s in any real danger, I think they
can get 17 people to vote against him for speaker, particularly when they
know the kind of chaos it would create in the Republican conference. So I
really doubt it. I think that what -- I think Speaker Boehner, the real
question is, you know, is he willing to run any risk? Will he put a deal
up for a vote in which it takes a number of -- a majority of Democrats to
pass? That`s the real question.

Because even if he can retain his speakership, does he really want to
govern in a way where he needs Democrats to do it? I think that`s the
long-term serious question. I think it would make him a better states
person, but at the end of the day, you know, it`s his decision to make in
terms of whether it`s him keeping it -- his job or a firmer grip on his
job, or putting Americans back to work. That`s the choice he has to make.

CULLEN: Congressman, this is Fergus Cullen over in New York. You come
from what would be described as the safe Democratic seat in Minnesota, in
Minneapolis. To what extent does the fact that the majority of members of
Congress in both parties come from safe districts driving this trouble to
reach a compromise on issues like this?

ELLISON: Well, that`s a good question. Now, I think conventional wisdom
is that the safe seat thing is driving much of the polarization. Because
people don`t feel they have to compromise, but as we`ve just pointed out,
you know, I`m working with Republicans on trying to reduce defense
spending. I work with the Republican colleagues all the time, look for
opportunities to work together and I know -- there`s -- and so, it`s really
not as simple as you might think it is. At the end of the day, these
people outside of Congress who get Republican members to sign pledges and
who punish them with people who are further to the right than they are with
primaries who are really driving this national conversation right now.

That, to me, is the real problem. You know, there are people who believe
the myth that, you know, poor people have too much money and rich people
don`t have enough. And if rich people had more money, they`d invest in
planning equipment and hire the rest of us. Well, we tried that. It
didn`t work, it hasn`t worked. It`s a failed economic philosophy. We need
to reject it. And, you now, that`s the real problem. People sitting
outside of Congress, pulling strings, particularly on the right side of the
political spectrum.

KORNACKI: Congressman, only a few seconds left. We asked Senator Merkley
this earlier and I`ll ask you. You know, it`s Sunday and we`re up against
this January 1st deadline. It is a soft deadline, but we`re up against it.
What is your best -- best read on the situation right now? Do you think
there is going to be a pre-January 1 deal?

ELLISON: You know, I`m an optimist. So I`m hoping that we are. I think
we should have been in D.C. last week trying to hammer out something. I`m
going to be there ready to vote for anything that doesn`t violate the best
interest of my constituency and the American people. I know there will
have to be compromises, but we`re not letting the poor pay for this. We
just won`t do it. And if that`s what they need to get a deal then they are
not going to get my support. But if there`s something that protects low-
income Americans, but calls on some sacrifice from others, then, you know,
my mind is opened.

KORNACKI: All right, Keith Ellison, Democratic congressman from Minnesota,
chair of the House Progressive Caucus, thank you for joining us this
morning.

Is that fiscal curb the last gasp of the dying Tea Party? That`s next.

(COMMERCIAL BREAK)

KORNACKI: Most, if not all the problems we`ve been discussing, Speaker
Boehner`s specifically in the fiscal curb, more broadly, can be traced back
to lawmakers affiliated with or gripped by fear of the Tea Party. The
question is, are we witnessing the dying gasps, the last gasps of a dying
movement who`s ranks were diminished by the November election or is this a
sign that Tea Party`s grip on the GOP is as strong as ever, or both?
Remember, it was only two years ago that pundits were calling the Tea Party
a dominant lasting force in American politics.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The Tea Party, which was really not even on the screen
about a year ago at this time, is a very domineering force during the
course of this election.

UNIDENTIFIED FEMALE: One story will be with us. The rise of the Tea
Party.

UNIDENTIFIED MALE: Regardless of what those elites think, the Tea Party
movement is an authentic grassroots movement.

UNIDENTIFIED MALE: I wouldn`t sell short these candidates.

UNIDENTIFIED FEMALE: Tea Party Americans, you`re winning!

UNIDENTIFIED MALE: It`s a big mistake not to take it seriously.

UNIDENTIFIED MALE: So you think the Tea Party is here to stay?

UNIDENTIFIED MALE: Absolutely.

(END VIDEO CLIP)

KORNACKI: Back there, it seemed far fetched to even contemplate the demise
of the Tea Party, but the past two election cycles have produced a number
of costly, high-profile general election defeats for Tea Party candidates.
Sharron Angle and Christine O`Donnell back in 2010, and then this year,
Todd Akin and Richard Mourdock, they all lost key races the GOP otherwise
probably would have won. The Affordable Care Act, which the Tea Party
devoted itself to fighting was upheld by the Supreme Court this past June.
And since the November election, Tea Party lawmakers in the House have been
dislodged from key committee posts by Speaker John Boehner and in fighting
its royal Tea Party groups like Freedom Works.

The same time, though, Tea Party heroes like Paul Ryan remain in key posts
in Congress and the House Republican conference in particular, is littered
with Tea Party true believers you probably haven`t even heard of. The
fear of a primary challenge from the right still seems to haunt even once
pragmatic Republicans. To win the GOP presidential nomination this year,
Mitt Romney first had to embrace a far-right Tea-Party friendly agenda. Of
course, that agenda is arguably part of why he lost which speaks to where
the Tea Party`s popularity is with the general population. "The Washington
Post" ABC News poll this month, a majority of Americans, 53 percent, said
the Republican Party is now too conservative.

After the election, even Sheldon Adelson who has spent millions bankrolling
Tea Party groups and candidates described himself to "The Wall Street
Journal" as "a social liberal." Steven LaTourette, a retiring Republican
congressman from Ohio described the Tea Party`s rigid opposition to raising
taxes on the wealthy this way. "It`s the continuing dumbing down of the
Republican Party", he said last week. "We`re going to be seen more and
more as a bunch of extremists, we can`t even get the majority of our own
people to support policies that we`re putting forward." There`s a lot to
think about and talk about here. I guess I felt, personally on the side
of, you know, the Tea Party movement itself, I don`t know how many rallies
there are around the country. I don`t see Tea Party rallies in the news
that much anymore.

But I think in some very important ways, that`s because the Tea Party has
won, the Tea Party mindset sort of grips Republicans in power. Republicans
in Congress who are scared -- either they are true believers, many of them
got elected, or they`re scared of primary challenges and therefore, like we
saw with Mitt Romney in the primary season this year, they just embraced
that agenda. Amy, can you guys declare a measure of victory?

KREMER: Well, we`re absolutely still here. We`re just not out in the
streets having rallies like we were back in 2009 and 2010. Instead, we`re
out working in campaigns. And we`re, you know, e-mailing and calling our
congressmen and senators. And there`s a lot of victories on state and
local levels that aren`t talked about on a federal level. So we`re still
here. I just call it Tea Party 2.0. We`re just not so visible to the
press.

KORNACKI: You were in the previous segment you were expressing a lot of
disgust with, I guess, the Republican leadership, the Republicans who may
be aren`t as committed to the conservative principals as you define them
and that sort of has been what`s animated the Tea Party has been this
frustration with quote/unquote Republican establishment. This was as much
-- I`ve always said the Tea Party movement to me is as much a rebellion
against, you know, Obama and the Democratic president as we see on the
right every time a Democrat comes to office, but it was also, this sort of
internal war within the Republican Party. But when you look at Mitt Romney
basically embraced the Tea Party agenda to get the Republican nomination
this year, can you guys say, we are the establishment now? We won.

KREMER: I don`t think -- I don`t think that Mitt Romney embraced the Tea
Party agenda. And he was -- I mean -- he was not the choice. There were
many candidates in the primary. We had a long primary process. That was,
you know, hard-fought and he was the nominee. But, you know ...

KORNACKI: Where did he--

(CROSSTALK)

KREMER: I want to go back to --

KORNACKI: I know he was a moderate and liberal in the past. Where did he
differ with you?

KREMER: I want to back up for a second, though. First thing I want to
clarify because everybody talks about how the Tea Party is so extreme and
we`re so radical. We`re not focused on social issues at all. We`re
focused only on the spending. Maya, when you get down to a local level,
there may be some groups that focus on social issues. But overall, what
has brought us together and why we have Democrats and independents within
our ranks are because they, too, want Washington to live within their
means. And that is why we`ve been so strong. Because that`s the --

KORNACKI: But the polling data that we show, I mean, the broad -- the
healthy majority of American people do not have a favorable opinion of the
Tea Party. Favorable opinion of the Tea Party is really relegated to the
conservative base of the Republican Party. The conservative base that
votes in the primaries and scares these Republican -- these Republican
office holders. Maya, you want to say something.

WILEY: So even in 2011, the statistics were showing that 55 percent of
Republicans self-identified as Tea Party caucus, and 65 percent if they
were self-identified conservative Republicans. And so, I think, we, you
know, with something like 30 percent of Americans said that they would
self-identify as Tea Party. So anyway you slice it, you`re talking about a
minority of Americans.

But I think that one of the things -- so there`s a difference between --
and I think Amy is right to distinguish between whether you`re in the
streets versus whether you`re organizing in other ways. There`s -- I think
it was 1,000 organized operations on the ground, reduced to 600, so there`s
a reduction, and that`s different from whether there`s actual political
activity, and I think that is what we have to distinguish.

But I just want to challenge a little bit, Amy, this notion that the Tea
Party doesn`t take positions on social issues. I mean, look at gun
control. Gun owners, what was it, the Gun Owners Association was actually
endorsing and has a strong base in the Tea Party. And has actually
produced the Firearms Freedom Act in several states in this country and is
trying to get it passed in several states. I would call that a social
issue and not an economic issue, at least in the way it`s being fought.

And another thing that has been dividing the Tea Party, which I think is
another conversation that is very interesting to have, is comprehensive
immigration reform. You have Dick Armey saying forget about the fences.
We need to be supporting comprehensive immigration reform. And you have
Representative King saying, no way, and even bringing little fences to the
House floor.

KORNACKI: Fergus, this is your party, and I know you`ve been a Tea Party
critic, and we have to go to a break here, but I`m going to ask you when we
come back, has the Tea Party won the war within your party? That`s after
this.

(COMMERCIAL BREAK)

KORNACKI: We`ve been talking about how the Tea Party may have, clearly,
did hurt the Republican Party in the November elections, but at the same
time in the civil war within the Republican Party that we`ve been seeing
since President Obama came into office, if the Tea Party can declare
victory in that. And Fergus, I was going to ask you that question. I
mean, you look at it, there seems to be a new litmus test, at least if you
judge by how Mitt Romney won the presidential nomination this year. All
these new litmus tests have sort of emerged for Republican candidates,
they`re all drawn along sort of the Tea Party principles, Tea Party values,
whatever you want to call them. Is that a sign that within the Republican
Party, the Tea Party has won?

CULLEN: I wouldn`t say so. I think that`s really being re-assessed right
now. In fact, I think the Tea Party is changing in terms of its emphasis a
great deal. Amy has been very focused on fiscal issues today, but so many
other self-identified Tea Party activists are not. And we hear people,
self-identified Tea Party activists, say that President Obama didn`t just
win re-election, the election was stolen through massive voter fraud. You
hear them talking about things like Agenda 21, which is a conspiracy theory
that the United Nations is trying to take over (INAUDIBLE) communities
through planning and zoning boards.

William F. Buckley used to talk about separating the right wing from the
fringe. He knew that if the conservative movement allowed itself to get
defined by the fringe, it would upset the chances of any conservative
winning an election. The Tea Party has not been effective at policing its
own members over the last couple of years, and so the result is that every
Republican ends up looking like a crazy Republican.

Some of this talk is Grassy Knoll take. Some of this is, you know, they`ve
staged the lunar landing in a Hollywood studio talk. When I hear that, I
start buying stock in Alcoa, because I know we`re going to be selling more
tin foil, more Reynolds wrap for all the hats that are going to be needed.
And so you know, too many Republicans in positions of responsibility over
the last couple of years, winked and nodded, tolerated some of this crazy
talk, instead of saying this is really hurting the brand. And it came back
to bite us, not just in the Senate races you mentioned, but in the
presidential election this past year.

BOUIE: I also say that I think the Tea Party has sort of become the
Republican establishment. If you look at Marco Rubio or Paul Ryan, who are
leading the charts to reinvent the Republican Party, even they are still
expressing basic Tea Party ideas, the basic framing of the budget.

What`s funny to me overall is that for all of the -- for all the Tea Party
has sort of become the Republican establishment, you can`t really count
very many policy victories. I think the Affordable Care Act really stands
tall in this regard. If, in 2010, Republicans would have just agreed with
skittish Democrats, have a very scaled-down health care bill, the
Affordable Care Act as we know it would not exist. But sort of the Tea
Party led opposition to everything Obama did resulted in a health care bill
that, frankly, is way more liberal than it has any right to be. And you
can tell that same story for a whole number of policies. So for me, the
Tea Party has had a sort of a Pyrrhic victory. Yes, they`ve kind of taken
over the Republican Party, but when it comes to actual substantive
victories, they have very few.

KREMER: First of all, I have to -- I want to go back to something the
congressman said when he talked about us pulling strings, and he was
referring to Grover Norquist with the pledge. I mean, that pledge is not
to Grover Norquist. That`s to constituents in a state. I mean, my own
senators have signed that pledge. And you violate that pledge, you`re
violating your promise, you`re breaking your promise to your constituents.
We want to hold these people accountable.

And I understand why you would say what you said, Fergus, about some of
this other -- other issues that people talk about. But that -- we`re
focused on -- I mean, I think we`ve been very good at policing our own.
But you can`t -- there`s no one leader of the Tea Party movement. And it`s
not my business to go in and tell these people what they can and can`t
focus on.

You`re going to have the same kind of thing on the left. You have fringe
on both sides. So to say that it`s just the Tea Party is incorrect. But
the most important thing I want to say is, you can`t blame our losses in
November all on the Tea Party. Because moderates lost, too. Moderates
lost, too.

KORNACKI: I think, Amy, the issue there would be the face of the
Republican Party. The image that the Republican Party projects has moved
so far to the right since 2009, in response specifically to the very real
threat that every Republican office holder out there, even people who have
the reputations of being a moderate, the response to the fear of a primary
challenge, and here`s the example I think of. Wisconsin Senate race this
year. Tommy Thompson, the face of moderate Republicanism in the 1990s, OK,
the dream candidate of the quote/unquote Republican establishment, to win
the Republican nomination for that Senate race in Wisconsin, he went to a
Tea Party group and he told them that he wanted to -- he wanted to end
Medicare. He was committed to ending Medicare.

Tape of that meeting came out at the height of the general election
campaign. It destroyed him in the general election. It helped save him in
the primary. He beat off conservative opponents, but he did it by going to
Tea Party groups and telling them exactly what they wanted to hear. And
then when the rest of the state heard what the Tea Party groups wanted to
hear, they didn`t elect Tommy Thompson. He lost by a big amount.

KREMER: I mean, you can say that that`s the reason. I think that, you
know, there are other reasons that he lost. I mean, there were other
moderates that lost, too. Connie Mack in Florida, who`s been a career
politician. I mean, he lost. You cannot blame all of these losses on the
Tea Party.

The Republican Party has a branding problem. The Republican Party is
horrible on messaging. Absolutely horrible on messaging, and what ends up
happening is they`re on defense all the time. They never go on offense.
So that is the biggest problem. And they need to figure that out. We`re
here to hold everybody accountable. I mean, it`s not -- we`re not here to
cozy up to the Republican Party. We want Washington to live within their
means.

KORNACKI: We`re going to talk about vision of accountability and how that
relates to Republican primaries and how the Tea Party derives its power,
and that`s after this.

(COMMERCIAL BREAK)

KORNACKI: We`re waiting to see whether today will bring news of a deal on
the fiscal curb by leaders in the Senate and whether the House would then
take that up and whether it would pass in the House. As of right now, it`s
been still 22 years since a single Republican in Congress voted for an
income tax hike, and a big reason for that certainly right now and a big
reason that John Boehner`s very stripped-down plan to raise taxes only on
people with $1 million and above couldn`t even get to a vote in the House
is because there is this fear that lives within the Republican Party right
now. Every lawmaker in the Republican Party, that if I do anything that
gets me declared sort of a traitor to the cause by the Tea Party, by the
right, then I`m going to face a career-threatening primary challenge.

It occurs to me that this has been something that`s defined the Obama era.
This is something I think that is going to define the next decade. David
Wasserman, who writes for "The National Journal," took a look at the
election returns this year and basically said what Democrats have achieved
demographically now with this sort of new emerging coalition that President
Obama put together is they can win national elections. They have an
advantage there. They can win statewide elections, Senate races, that sort
of thing. But because the Democratic coalition now is increasingly packed
into sort of cities and metro areas, it opens up the rest of the country to
a real Republican advantage in House races. We saw that this year, where
Republicans got more than a million fewer votes nationally in congressional
elections, and yet they control the House by a fairly healthy margin right
now.

Jamelle, it seems like we`re talking about, post-Obama we`re still going to
be dealing with that threat of a primary challenge controlling the majority
of the lower House?

BOUIE: I think that`s exactly right. And I`m not sure it`s a problem -- I
don`t know how you fix that problem, right? Precisely because the
Democratic coalition is just naturally kind of sorted into metro areas and
urban areas. It`s not as if you can do redistricting reform and all of a
sudden have a situation where there are more competitive districts and
Republican congresspeople are less vulnerable to primary challenges. So
this might just be the new status quo for a while until population changes
shift, or if we see some, like, you know -- in the unlikely event we see a
massive reorganization of how we actually do elections. But since that`s
unlikely and will not happen, for the next ten years or 15 years even, I
think the House -- I think you`ll see the reverse of the situation in the
middle of the last century, right, where Democrats had a persistent
advantage in the House of Representatives, and won the presidency
sometimes, and had the Senate sometimes, but their strength was in the
House. And I think for the next 15 or 20 years, you`ll have Republican
strength in the House, but Democrats being the sort of the dominant force
in national elections.

KORNACKI: Fergus, this is your party. They`re going to -- we`re saying
they`re probably going to control the House for the next couple of decades.
What can you do?

CULLEN: Let`s acknowledge too that Hispanics and black Democrats have done
this deal. They, especially in the South and in urban areas, they said,
sure, give us our safe majority/minority district, and we`ll trade it for
affluent white suburban districts for a Republican congressman.

KORNACKI: I mean, the Voting Rights Act has--

CULLEN: Sure, but in Southern districts in Mississippi and Alabama, you`ve
got the only Democrats left, save one, I think, are black or minority
Democrats. And so this is a deal that they`ve cut, and now they`re reaping
that.

WILEY: We have to say a couple of things here. First of all,
redistricting, which was controlled largely by Republican-controlled state
houses, had a significant impact on this election. The reason it did is
because, I mean, the Republicans were projected to lose -- if they had not
had this redistricting process in 2010, may have lost 15 more seats in
Congress than they actually lost. So I think it`s wrong to say
redistricting did not have a positive impact for the Republican Party.

But secondly, actually the Supreme Court has decimated us on majority black
districts. It`s a little bit -- the housing segregation patterns are a
bigger part of this equation and the affordability of housing, and where
the blacks and Latinos have real mobility options in where they live is a
bigger part of the story than majority black districts. If we didn`t have
the housing segregation that we have, we would not even be talking about
how we make sure that we`re actually adequately represented by Congress.

KORNACKI: Right. And we`re going to have -- in the next year, this is
something to be watching. The Supreme Court is going to be taking up part
of the Voting Rights Act. So we`re going to be looking at that. And you
know, and the other issue there is just you look at -- we`re talking about
this new coalition that the Democrats have.

Part of the reason the Republicans were able to draw these maps in 2010 for
this year is because there`s a question right now of whether that new
coalition will turn out in off-years, in nonpresidential years. So if they
don`t turn out in 2010, Republicans can win in 2010 and they can draw the
maps for 2012. But we`re up against another one of these awful breaks.
I`m really sorry.

So what do we know now that we didn`t know last week? My answers after
this.

(COMMERCIAL BREAK)

KORNACKI: So, what do we know now that we didn`t know last week? We knew
that some members of Congress, including New York Democrat Jerry Nadler,
were moved by the Newtown, Connecticut shooting to push for a federal gun
buyback. But now we know how effective such a program can be. Los Angeles
this week moved up a gun buyback schedule for next Mother`s Day in response
to the Newtown shooting. It was L.A.`s most successful gun buyback yet,
bringing in 901 handguns, 698 rifles, 363 shotguns, and 75 assault weapons,
including rocket launchers. Almost three out of four people turning in
their guns said in a survey that they feel safer with the weapons off the
street. So now we know that guns can make you not just actually safer, but
also feel safer when you get rid of them.

We know guns are not the only issue where Democrats have been too dormant
for too long. Now we know that the Obama administration is losing one of
the best hopes it once had for effecting real change on another such issue,
climate change. EPA Administrator Lisa Jackson announced this week that
she will be stepping down. When she and the president took office, hopes
were high for significant progress fighting climate change, especially in
the form of cap and trade, which Republicans used to support. Under
Jackson, the EPA has seen some successes, including the ruling that
greenhouse gases are covered by the Clean Air Act, and therefore subject to
regulation. But as the New York Times put it, her tenure ended with a
series of rear guard actions to defend the agency against challenges from
industry, Republicans in Congress, and at times, the Obama White House.

And finally, we now know one reason the non-white vote is on the rise, and
it`s not just the birthrate. The Pew Research Center reported this week
that the reason the black share of the vote is increasing is not because
the black population is increasing, but because the black turnout rate is
increasing. Unlike Latino and Asian voters, whose turnout rate is
disproportionately lower than their share of the voting population, black
voters make up 12 percent of the eligible electorate, but made up 13
percent of the actual turn out in November. One factor Pew noted was that
black community leaders used Republican efforts to suppress the vote to
energize black voters.

Want to find out what my guests know now that they didn`t know when the
week began? Start with Jamelle.

BOUIE: The claim on African American voting was like the thing that I know
now that I didn`t know before, so--

KORNACKI: Looks like I stole your thunder.

BOUIE: You stole my thunder.

KORNACKI: Proof we don`t coordinate before the show.

(LAUGHTER)

BOUIE: About that, I`ll also add that it didn`t begin with 2008. It began
in 2000, the black turnout rate just jumped up dramatically from `96, and
it`s been persistently increasing since then. So there`s a real question
about whether this is Obama driven, or just whether black voters turn out
more indefinitely.

KORNACKI: Amy.

KREMER: I would say that what we now know is that the Tea Party is going
to get blamed no matter what. I mean, the Republican Party, everybody is
blaming us for their losses. This cycle, back in 2010, the Republican
Party wanted to take credit. They didn`t do any of it. It was us that had
the momentum and did that. And I would also say that Washington still
doesn`t get it when now they are all going to get pay raises. I mean, when
we are in this major crisis, we are about to go over this fiscal cliff, and
they are getting pay raises. It`s unacceptable, but we have to do a better
job to hold them accountable. Because at the end of the day, this is about
being American and remaining that shiny city on the hill and being that
great prosperous country, and we can`t do it with our national debt at over
$16 trillion.

KORNACKI: Fergus?

CULLEN: Sure. You know, once we get through this fiscal cliff issue, the
ground has shifted a huge amount on the right on the issue of immigration
reform. I know now of three new groups on the right who are organizing to
start supporting immigration reform. That`s reform that makes it easier
for the world`s most talented, motivated people to live and work in America
legally.

One of them is my own Americans for -- Americans by Choice. But also Brad
Bailey in Texas has a group called the Texas Immigration Solution, which is
starting. Carlos Gutierrez, former secretary of Commerce in the Bush
administration, is starting a group, Republicans for Immigration Reform.
So this is going to be something where a year ago we saw Republican
presidential candidates using immigration as a wedge issue to separate
conservatives from others. Two or three years from now, the next probable
(ph) Republican presidential candidates will be talking about how they
value the contributions of naturalized Americans. It`s going to be a huge
shift within the party.

KORNACKI: All right. Maya.

WILEY: We know that 280 of the profit-making Fortune 500 companies spent
only 18.7 -- paid only 18.7 percent of taxes, despite the fact that their
marginal tax rate was 35 percent. We know that 26 states are going to
continue to cut education spending, which requires actually those
corporations and more wealthy individuals to pay, and we know that at least
1.6 million children are going to lose beginning in the fall of 2013 if we
don`t do something.

KORNACKI: All right. An important reminder there. My thanks to Jamelle
Bouie of "The American Prospect." Amy Kremer of Tea Party Express. Fergus
Cullen from the Yankee Institute think tank, and Maya Wiley with the Center
for Social Inclusion.

Thanks for getting UP. And thank you for joining us today on -- for UP.
Chris will be back next weekend, Saturday and Sunday at 8:00 Eastern Time.
His guests will include filmmaker Oliver Stone talking about his new
series, "The Untold History of the United States."

Coming up next is "MELISSA HARRIS-PERRY." On today`s "MHP," Melissa has a
very special year-ender. The first ever NHP MAP (ph) look back in
laughter. Melissa is joined by a roster of comics, who`ll pick apart the
hilarity and absurdity that was our political year in 2012.

That`s "MELISSA HARRIS-PERRY." She`s coming up next. We`ll see you next
week here on UP.


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