updated 3/11/2013 12:02:14 PM ET 2013-03-11T16:02:14

THE LAST WORD WITH LAWRENCE O`DONNELL
March 8, 2013

Guests: Robert Reich, Nina Totenberg, Eliot Spitzer, Felix Salmon

EZRA KLEIN, GUEST HOST: As a great economist in the British rock collective
Chumbawamba, never quite said, the U.S. economy gets knocked down but it
gets up again. But Republicans in Congress keep trying to keep it down.

(BEGIN VIDEOTAPE)

TAMRON HALL, MSNBC ANCHOR: Today`s encouraging unemployment report.

CHRIS JANSING, MSNBC ANCHOR: Stunning new numbers on the economy today.

UNIDENTIFIED MALE: Huge job gains.

UNIDENTIFIED FEMALE: The private sector kicked in, in a big way.

UNIDENTIFIED FEMALE: Two hundred thirty-six thousand jobs were added last
month.

UNIDENTIFIED MALE: Two hundred and thirty-six thousand.

HALL: The nation`s unemployment rate.

JANSING: Fell two notches to 7.7 percent.

HALL: To 7.7 percent.

UNIDENTIFIED FEMALE: This came as a bit of a surprise.

UNIDENTIFIED MALE: You do have this robust growth in construction.

UNIDENTIFIED MALE: Robust.

UNIDENTIFIED MALE: Because of all the housing stuff we have been talking
about.

UNIDENTIFIED MALE: Robust.

UNIDENTIFIED MALE: The economy is moving in the right direction.

UNIDENTIFIED MALE: The Dow reaching record-high levels.

UNIDENTIFIED FEMALE: That`s great, right?

UNIDENTIFIED MALE: That`s good news.

UNIDENTIFIED FEMALE: You know, the sequester has happened.

(LAUGHTER)

UNIDENTIFIED FEMALE: How does that change the equation?

HALL: The dire predictions that we have heard regarding the sequester?

UNIDENTIFIED MALE: We need to do everything we can to avoid self-inflicting
wounds.

UNIDENTIFIED MALE: We`ve got to do a big bold bargain.

UNIDENTIFIED FEMALE: People are finally optimistic.

UNIDENTIFIED MALE: But it`s got to be based on common sense.

UNIDENTIFIED MALE: I`d like to say that common sense has come out of the
closet.

UNIDENTIFIED MALE: Bill Clinton calls for an end to DOMA.

UNIDENTIFIED MALE: Time has changed since 1996.

ANDREA MITCHELL, MSNBC ANCHOR: Former President Bill Clinton is now
declaring his change of heart.

UNIDENTIFIED MALE: His heart may have been in one place.

MITCHELL: And urging the Supreme Court to do the same.

UNIDENTIFIED FEMALE: Not that he really understood the impact.

UNIDENTIFIED MALE: Clinton made DOMA the law of the land, clearly he wasn`t
proud to do.

UNIDENTIFIED MALE: This was a discriminatory law.

UNIDENTIFIED MALE: It was done under the cover of darkness.

REP. NANCY PELOSI (D), CALIFORNIA: I believe that DOMA is unconstitutional.

UNIDENTIFIED MALE: We learned from history.

PELOSI: I know it`s unconstitutional.

UNIDENTIFIED MALE: We grow from history.

UNIDENTIFIED MALE: This is a discriminatory law.

UNIDENTIFIED MALE: We welcome change.

UNIDENTIFIED MALE: This is a civil rights battle that is very nearly won.

(END VIDEOTAPE)

KLEIN: We learned today that the economy added 236,000 jobs in February.
And the unemployment rate is down to 7.7 percent, the lowest since 2008.
And all of that is very good news.

Now, sometimes these jobs reports, it can be sort of good news at the top,
bad news inside, like a rotten Oreo. But not really in this one -- 48,000
new construction jobs, and 150,000 since September. That is a real sign of
an improving housing market.

Twenty-four thousand new retail jobs means people are shopping and stores
are bullish, they think they`ll continue to shop.

In the private sector, both quickly hours and hourly wages went up.

The takeaway -- you just can`t keep the American economy down. We are
resilient. We`re scrappy.

As Chumbawamba would say, we get knocked down, we get up again. You are
never going to keep us down. Which is not to say that Congress isn`t
trying.

You guys probably heard about the great Krugman/Scarborough/Thunder Charlie
Rose deficit, smackdown apocalypse. It was kind of boring.

But, OK, the whole point of the great clash was these guys hate each other
and they disagree. You`ve got to pick a side.

Now, anything they do agree on, anything that unites the liberal Nobel
Prize-winning bearded economist guy and the class of `94 conservative,
former Republican congressman guy, anything they can come together, that
must be approaching a near universal truth, like puppies are cute and
terrorists are bad. And I`m not even sure that Joe Scarborough thinks
they`re bad. He might be cat person, I`m just assuming he does But even
that might be controversial.

Whatever is in the middle of that Venn diagram, that must really be obvious
apple pie stuff. Well, here is liberal economist, Paul Krugman and former
Republican Congressman Joe Scarborough agreeing on Charlie Rose, the
deficit marble versus D.C. smackdown thunder doom that taking money out of
the economy now, contractionary policy, is the wrong thing to do.

(BEGIN VIDEO CLIP)

PAUL KRUGMAN, NOBEL PRIZE-WINNING ECONOMIST: Would you support an extra
$200 billion in infrastructure and education?

JOE SCARBOROUGH, MSNBC ANCHOR: Oh, yes, I talk about it all the time.

(END VIDEO CLIP)

KLEIN: And he does, I have heard Joe Scarborough talked about that a lot.
And that is how far outside the norm Washington is right now when Paul
Krugman and Joe Scarborough are standing in agreement, Washington is
standing stubbornly on the opposite side, holding fast to the damn it,
puppies are totally ugly position, the take money out now in the middle of
a weak recovery position.

Consider what our Chumbawamba economy has been dealing with from Washington
since just the New York. Washington -- and this one was both Democrats and
Republicans though over the objections over the Obama administration. Let
the payroll tax holiday expire, so workers have less money in their
paychecks. They got less money to spend in the economy. That might be part
of why in one of these jobs reports few bad moments, the January jobs
numbers, which was the monthly tax cut expired, the January jobs numbers
revised down. They were disappointing, 119,00 new jobs.

Also, Washington raised taxes on the wealthy, Democrats like that. But it
is contractionary in a middle of a weak economy.

Republicans decided to embrace the sequester instead of compromising to get
something to replace it, we will have to wait until next month`s jobs
report to see the beginning of the impact of that. But it will be very bad
this year. No one is talking about more stimulus the way Scarborough and
Krugman are, of course, because Republicans in Congress have made clear
that is a complete no go. So, sorry, Joe and Paul.

Washington could still shut down the government. We`re talking about that.
And today, there is this -- hints that Republicans might want to repeat the
awesome debt ceiling horrible disaster of 2011.

"Wall Street Journal" headline was Boehner continues to link that debt
ceiling to cuts. Quote, "House Speaker Boehner on Thursday said he would
continue to insist the next debt ceiling increase be accompanied by
matching spending cuts, raising the prospect of a high stake showdown when
the borrowing limit expires this spring. So, there is something to look
forward to.

What happened to the economy when we had a high stakes showdown over the
debt limit in 2011? Because we`ve seen this movie before. This chart is all
you need to know.

That red circle right there, that is the big dip in new jobs added to the
economy in May, June, July, August, when the United States was seriously
talking about defaulting on the debt. We basically cut our job creation in
half for that period.

It was unprecedented, unnecessary, completely damaging economic sabotage.
And Washington keeps coming up with new and unusual ways to scare the
economy, to take money out and confidence out of the economy, none more
twisted than taking the nation`s credit rating and credit worthiness
hostage.

But Washington, there is a way to stop doing it. And it`s not that
complicated. They could just stop doing it. They could go home. They could
go play golf, go on a vacation, spend time with their kids, don`t try to do
anything big and new. Just don`t do things that hurt the economy. Take a
Hippocratic Oath.

I want to show you one more number from the jobs report, 7.2 -- 7.2
percent. That is what the unemployment rate would be if government
employment had stayed at the same level as 2008. We know we could have
saved those jobs if we had wanted to. We know we could have created more
jobs like those jobs. We could have hired 100,000 new teacher`s assistants
and park rangers, and those people could be spending money. They could be
buying things and creating jobs.

That is the easy stuff, the low-hanging fruit.

The American economy is doing a great job surviving Congress` continuing
efforts to hurt it. Just think of what the American economy could be doing
if Washington actually tried to help it.

Joining me now, Robert Reich, former labor secretary under President
Clinton, a professor of public policy at the University of California at
Berkeley.

It is good to see you, Robert.

ROBERT REICH, FORMER LABOR SECRETARY: Hi, Ezra.

KLEIN: So give me your broad take on the jobs numbers, what you see in
today`s report.

REICH: Well, it`s very encouraging news, not only do you get the numbers
and the unemployment rate going down, but most of the numbers behind the
numbers are also very good, construction, most sectors, retail, restaurant,
hotel, I mean you have a fairly broad based jobs recovery.

But you are absolutely right. I mean, the American economy is like a huge
boxer that keeps on trying to get up, and just about gets up and is very
resilient. But then gets slammed down again, and most of the slamming down
is public policy, and that public policy has been pushed again and again by
the Republican Party. The sequester is only the last.

KLEIN: What is kind of amazing to me about this kind of crisis continuance
and the uncertainty it creates, in 2010, Republicans ran, their big thing
what was holding America back was what they called policy uncertainty. Big
businesses simply didn`t know what was going to happen in Washington
because of Obamacare and because of the fiscal cliff and all of the rest of
it.

And then they come into power and they are creating just week by week, huge
uncertainty over the next crisis -- will we shut down the government at the
end of the month? Will we go into a debt ceiling crisis in the summer? Will
the sequester actually remain or go away?

They really had when they came into power in 2010, a critique that all
Washington needed to do was give the economy a bit more certainty, just get
out of the way. And since coming in, they have made it their mission to
create a pretty much unprecedented sort of crisis uncertainty that we just
haven`t ever seen before.

REICH: Well, not only the uncertainty, but they also in their hearts seem
to believe in austerity economics, that is the very bizarre notion that
when you have high unemployment, when consumers can barely spend enough to
keep the economy going, the best thing for government then to do is to cut
back spending. And if you cut back government spending and consumer
spending at the same time, you`re just going to have higher unemployment.
And we know that.

That`s why the sequester is so dangerous. And that`s s why also the other
Republican kind of doctrinaire idea of trickle-down economics that`s been
with us for what? Thirty years, is also so bizarre and so dangerous for the
economy, because the rich and big corporations don`t create jobs. The job
creators are the vast middle class and everybody wants to join the middle
class. It`s their spending that creates the incentives for businesses to
expand and hire.

And we`ve seen that over the last couple of months. Were it not for
consumer spending going up, businesses would not then begin to hire.

KLEIN: How much do you think -- if Washington decided they wanted to help,
how much do you think realistically could be done, how much could a package
of stimulus, maybe long-term deficit reduction with it, how much could that
do to boost the economy over the next year?

KLEIN: Oh, I think it could boost it significantly. For example, if we
continued the payroll tax cut. If we hadn`t increased payroll taxes and if
we had not embarked upon sequestration, the economy would probably continue
to grow at a fairly healthy. Now, we have to put these words in quotes.
"Healthy", that is 2 percent to 3 percent this year, which would continue
to bring unemployment down.

If on top of that, Washington were to embark upon the kind of stimulus that
Joe Scarborough and Paul Krugman both agreed on, that is $200 billion more
in education, infrastructure spending, then you could see even more jobs
being created.

But the chances -- you know as well as I -- the chances of those happening
are right now are nil.

KLEIN: Yes, they`re quite low. And it`s unfortunate.

Robert Reich, author of "Beyond Outrage" -- thank you for joining me
tonight and making me beyond outrage.

REICH: Thanks, Ezra.

KLEIN: Seventeen years ago, President Bill Clinton did that something --
not that something, the one you`re thinking of. I mean, he did that
something, too, but it`s not the one I`m talking about.

Seventeen years ago, he signed something into law he now says is
unconstitutional. His mistake and the remedy for it are next.

And Elizabeth Warren wants to know why an ounce of coke will get you jail
time, but a billion dollars worth of drugs laundered through your bank gets
you a fine. Attorney General Eric Holder has a very worrying answer.

(COMMERCIAL BREAK)

KLEIN: If you have always dreamed of being awarded a Nobel Prize -- well,
get in line, nerd, I`d like mine to be in physics. The only problem is I
don`t know much about physics.

But if you`re skipping the whole winning it on your own merit thing and you
just want one to -- I don`t know, look at or take out at parties or to hold
when you giving pretend acceptance speeches to the mirror. Not that I do
that. I just have a friend who does that. Have we got a deal for you?

There is a Nobel Prize for sale. The 1962 Nobel Prize for medicine, to be
precise. I will give you a couple of seconds to remember who won it that
year.

Give up? Francis Crick, and his friend, James Watson and Maurice Wilkins.
This is a big Nobel Prize. It`s for discovering the structure of DNA. It is
Crick`s medal that is up for auction and it is a first time a Nobel Prize
has been sold at public auction. The starting bid will be have a million
dollars and part of the proceeds will benefit the Francis Crick Institute
in London.

His granddaughter said he didn`t display the Nobel Prize or any of his
awards. He decorated his office walls with the chalkboard and a portrait of
Charles Darwin. But he discovered DNA or the structure of it. You don`t
have to be so modest.

(COMMERCIAL BREAK)

KLEIN: Sometimes, we as a nation, we get things really wrong. For example,
back in March 1857, the Supreme Court ruled that people of African descent
could never be full U.S. citizens. The Dred Scott decision basically said
that all men were created equal. That part of the Constitution, it didn`t
apply to black people, slave or free.

In his majority opinion of the court, Chief Justice Robert B. Taney wrote,
"It is too clear for dispute, the enslaved African race were not intended
to be included, and formed no part -- formed no part of the people who
framed and adopted this declaration."

Obviously, Taney was wrong, and 11 years later, that decision was overruled
by the 14th Amendment. And today, we look back on Dred Scott with
revulsion.

But this happens, laws and decisions that make sense to one generation can
come to seem repulsive to future generations. And not just repulsive, but
unconstitutional, because the experiment that is America has evolved to
include and protect the men and women in the past that we hurt.

In Burke County, Georgia, in 1976, eight black residents filed a suit
alleging the state`s at large election system kept black residents off the
commissioner`s board, despite blacks being majority of the county`s
population.

In the Rogers v. Lodge case, the Supreme Court ruled in favor of those
black residents. The court found that while the original state policy on at
large election systems was, quote, "neutral in origin," over time it was
maintained for discriminatory reasons. In this case, the discrimination was
against the black residents.

More recently in 1998, two gay men in Texas were arrested for engaging in,
quote, "deviant, sexual intercourse," which was at the time banned in the
Lone Star State. In the 2003 Lawrence v. Texas decision, the Supreme Court
went back on the past decision allowed the states to ban consequential gay
sex.

In his majority opinion, Justice Kennedy wrote, "Later generations can see
that laws once thought necessary and proper in fact serve only to oppress,
only to oppress, as the Constitution endures persons in every generation
can invoke its principles in their own search for greater freedom."

As the Constitution endures -- this is an important point by Justice
Kennedy and one we`re thinking a bit about. One reason the Constitution
does endure is that it is written so that it can survive, changing mores
across generations. It adjusts as society adjusts. It adopts.

Gay marriage may be the next example of this, may be the next example of
what society coming to believe something once thought was clear and
constitutional, was maybe even a pulse of discrimination.

In 1996, when the Defense of Marriage, or DOMA, was first signed into law,
no one thought or few thought it was unconstitutional. Now it could
possibly be the next law repealed by the Supreme Court, and not on some
technical point, but because society has redefined who counts as us in the
American experiment. It has redefined what normal behavior is, and thus
what the Constitution protects.

President Bill Clinton, who signed DOMA into law 17 years ago, wrote this
in a new op-ed. "On March 27," he wrote, "DOMA will come before the Supreme
Court and the justices must decide whether it is consistent with the
principles of a nation that honors freedom and equality and justice above
all, and is therefore, constitutional. As the president who signed the act
into law, I have come to believe that DOMA is contrary to those laws and,
in fact, incompatible with our Constitution."

The American experiment is potentially evolving again.

Joining me now is NPR`s legal affairs correspondent Nina Totenberg.

Nina, it`s good to see you here tonight.

NINA TOTENBERG, NPR: Nice to see you, Ezra.

KLEIN: What do you think it means to the court that Bill Clinton came out
today and said he was wrong? And that this bill he signed into law is in
his view, fundamentally unconstitutional?

TOTENBERG: I actually don`t think what he says makes a huge difference. The
country has changed so dramatically over the last even five years, or seven
years that as President Clinton conceded in his op-ed piece, you could not
imagine the change 15 years ago, or 18 years ago. It`s just inconceivable,
but the society -- societal switch and the switch in public opinion.

That is not to say that the country is united in its view on this issue.
And there are many people who believe and continue to believe, and for all
I know the Supreme Court will say that well, society may change but society
has a way to change and that is through the democratic process by changing
the law.

KLEIN: Do you think given that, that the Defense of Marriage Act will be
overturned? I mean, what is the sort of conventional wisdom here on what
the court will do?

TOTENBERG: Well, there are two gay marriage cases before the court. And in
some senses, the DOMA case is the easier of the two, because there are nine
states, including the District of Columbia, where marriage is legal. And
marriage is traditionally is the prerogative of the state law.

The problem is, the Congress that is legislated this proposition, DOMA,
that says that the federal government will not recognize those legal
marriages. So, in particular case before the court, we have a woman who was
with her partner for 44 years, married when it was finally -- when New York
finally recognize the marriage, and when her partner died, when her spouse
died, then she had to pay $363,000 in federal estate taxes that she would
not have had to pay if her spouse was a man instead of a woman.

And I think that probably hits, for one of the better expression, the
federalism sweet spot for at least five of the justices and maybe more,
that New York recognized the marriage. And under the Equal Protection
Clause, she is being treated differently than other married couples, other
legally married couples.

KLEIN: When you talk about the federals and sweet spot there, this belief
that sort of the center of the court is about that has a real strong pull
towards state`s rights, I mean, I often think that is about the real desire
to tailor these court cases towards Kennedy. In particularly, what he wrote
in Lawrence v. Texas, which I thought was really eloquent, and really
implied I think it desired to not to be on the wrong side of history when
it comes to do this.

So ,where do people think Kennedy is going to end up in those cases? I
mean, is this his belief that you don`t want to -- that you want to be on
the right side of history, a narrow one, or is it an expansive one, could
have led to a kind of a more radical opinion from him?

TOTENBERG: Justice Kennedy doesn`t usually do very radical things. He likes
to take smaller steps if at all possible. And there is this other case in
which it is possible for the court to say that every state has to recognize
gay marriage if it`s a fundamental constitutional right.

My sense is that is less likely, the court is less likely to go that far.
But you can really never be sure. And I am loathe to speak for any of these
people.

I am perfectly happy to be an analyst, but I have been wrong often enough
and thought that they were going to do something pragmatic when they did
something more radical and quite the reverse.

KLEIN: Nina Totenberg, I think that`s probably wise. Thank you for joining
me tonight.

TOTENBERG: Thank you.

KLEIN: There is an election next week, one that follows rules made in
Latin, and burns all the ballots when it is done. I`ll explain.

All you need to know when you pick a pope, and I will do it in under two
minutes. That is coming up next.

(COMMERCIAL BREAK)

(MUSIC)

KLEIN: You thought the elections were over? No, the campaigns continue,
which means so does my favorite MSNBC jingle, which you just got to hear.

This year, there are elections for governor in New Jersey, and Virginia,
and elections for mayor of Los Angeles and Boston and New York City. But
there is a big one next week -- election for pope.

My two-minute challenge tonight is to explain to you how that election
works. And it is weird.

Get the clock. All right.

Today, the College of Cardinals decided the conclave will begin next
Tuesday. Conclave comes from a Latin phrase, cum clavis, I think I
pronounce that right, meaning under lock and key.

On Tuesday, 115 of the 207 cardinals will go into the Sistine Chapel, take
a vow, and lock the doors. It is 115 because only cardinals under the age
of 80 can vote. They get paper ballots with a Latin phrase that translates
to "I elect as supreme pontiff" followed by a space for them to put a name.

Cardinals then go to the altar in order of seniority, say a prayer out
loud, and leave the ballot on the altar. If no candidate receives two
thirds of the vote plus one in several rounds of balloting, voting, the
ballots are then bound together with needle and thread, and burned with
straw making black smoke. No pope.

After three days of voting, they take a day off, followed by seven more
sessions of voting. And another break.

After 33 votes, if no one gets 2/3 plus one, they pick between a top two
candidates until somebody gets to the magic number. When that happens, the
ballots are burned without straw to make white smoke, and we know there is
a new pope.

The new pope doesn`t have to be a cardinal, by the way. They can actually
choose any baptized Catholic male. Chris Christie can even be our next
pope.

Most of the conclave process started in 1268 when cardinals haven`t been
able to agree on a successor for more than two years.

Finally, after prayer, a cardinal said the name of a 79-year-old named
Peter Morone (ph) who didn`t even lived in Rome. They have to track him
down and beg, convinced and even intimidate him to be pope, he became pope
Saint Celestine V.

He is remembered for two things, one, the reinstatement of the conclave,
the other, the edict allowing the Pope to resign, which did, just days
after making he did.

All right, stop the clock. I have plenty of time. By the way, I imagine the
Pope Benedict much better than this will be treated better than him. His
successor locked him in prison, where he died a few months later.

It is no longer about too big to fail. It is something much scarier now.
Too big to jail is next.

(COMMERCIAL BEAK)

KLEIN: The spotlight tonight, a very disturbing admission from attorney
general Eric Holder.

(BEGIN VIDEO CLIP)

ERIC HOLDER, U.S. ATTORNEY GENERAL: I am concerned that the size of some of
these institutions becomes so large that it does become difficult for us to
prosecute them, when we are hit with indications that if you do prosecute,
if you do bring a criminal charge it will have a negative impact on the
national economy, perhaps even the world economy. And I think that is a
function of the fact that some of these institutions have become too large.

(END VIDEO CLIP)

KLEIN: The institutions, in question they are very large, large banks,
including HSBC, which is doing a lot of drug laundering. And Holder is not
the first to express concern. A few weeks ago on this program, we showed
you this.

(BEGIN VIDEO CLIP)

SEN. ELIZABETH WARREN (D), MASSACHUSETTS: Tell me a little bit about the
last few times you have taken the biggest financial institutions on Wall
Street all the way to a trial.

UNIDENTIFIED MALE: We do not have to bring the people -- a trial, or --

WARREN: Well I appreciate that you say you don`t have to bring them to
trial. My question is, when did you bring them to trial?

UNIDENTIFIED MALE: We have not had to do that. That`s practical matter
should chief, our supervisory calls

ELISSE WALTER, SECURITIES AND EXCHANGE COMMISSION: I will have to go get
back with the specific information.

WARREN: I`m really concerned that too big to fail has become too big for
trial. That just seem seems wrong to me.

(END VIDEO CLIP)

KLEIN: So they are the attorney general and two federal regulators
explaining why they don`t like to take banks to trial. But in a way,
Holder`s answer was clearer of one. The regular just said simply we didn`t
want to do it, we just didn`t do it, we didn`t need to do it. Holder
clarified, the attorney general of the United States, a pretty powerful
guy, said that banks are too big. That when you try to bring a criminal
charge it is too difficult to do. And plus, you`re discouraged by people
saying it would rattle world markets. But if these banks are too big to
jail, that means they would truly be too big to hold accountable, it is
also means they are too big to scare and that could be very dangerous. And
finally, it sounds like it needs, it might actually too big to exist.

Joining me now is Felix Salmon, finance journalist and former New York
governor and attorney general Eliot Spitzer who prosecuted many cases in
the financial sector.

Governor, let me start with you. Do you buy what Holder is saying here? Is
there such a thing as too big to jail.

ELIOT SPITZER (D-NY), FORMER GOVERNOR: No. He is wrong at so many different
levels. But, I give him credit for honesty because he finally explained why
this administration and the department of justice has been a failure as the
SEC when it comes to enforcing the rules of integrity in the market place.
They`re afraid. They`re they are afraid. They are terrified. They are out-
negotiated. They are wrong. They`re not too big to jail. They are not too
big to prosecute.

But this is unfortunately what the justice department believes. And as a
consequence, we now not only guarantee the deposits, we guarantee the
returns. We give this owner of immunity. And we have created the behemoths
that simply are too big, they should be broken up. And I think that is the
logical conclusion of his statement, but he is too phrase to articulate it.

KLEIN: Felix, you bring in before when the HSBC chair came down. That while
people want to see criminal prosecution body and folks brought to jail, it
actually may just not be the best thing, or accomplish anything, so where
do you fall in this?

FELIX SALMON, FINANCE JOURNALIST: So, I half agree with the governor, that
yes, the banks should be broken up so they are small enough to prosecute.
But so long as they are too big to fail, and there are many too big to fail
systemically important institutions in the world and the U.S., at that
point I think the attorney general is right. They are too big to prosecute.
If you prosecute them and you win a prosecution, they lose their banking
license. If they lose their banking license they basically have to close
down. We know what happens when the banks close in a chaotic manner. We saw
that with Lehman brothers, which was relatively small by the standards of
HSBC.

And you know, you would wind up throwing tens of thousands out of jobs,
throwing the entire segment into disarray, and trying to add that up would
be a hell lot harder than the consequences of simply firing --

SPITZER: I think that Felix here is portraying a perspective in a world of
gloom and doom that wouldn`t eventually. There is a rational way to say to
a bank, an HSBC that are (INAUDIBLE). Then, I have argued that we should do
with Wall Street institution. What we do with street felons, three strikes
and you are out, some sort of resitivous hearing which works in the world
of criminal and prosecution as the attorney say to them, if we have the
third prosecution or third guilty plea, we will take you and we will
restructure you. We will sell off the pieces of the bank.

We`re not throwing thousands of people out of work. We`re taking the pieces
of your institutions, dismembering and giving it to others financial
institution that will fill the void. We are there Anderson, the prosecutor.
We haven`t had any trouble of getting other accountants to step in to the
void. The world has not failed to have account accountants. There are ways
to mitigate the collateral consequences. And if we don`t say to these
institutions you will be prosecuted, then, they will sense the immunity.
HSBC had the most sophisticated money laundering ever since. And they feels
though they were not sanctioned whatsoever. These corporations want the
rights of individuals without the responsibilities of individuals and we`ve
given it to them.

SALMON: Well, I think (INAUDIBLE). I think they shouldn`t been prosecute
them.

KLEIN: Now, Arthur Anderson is the accounting firm at the center of Enron.

SALMON: And in hindsight, in fact, they were prosecuted for something they
didn`t do which used the number the big accounting companies from five to
four, and they basically achieved nothing, except having less competition
in the accounting world. I love the idea in theory that we could create a
system like this. But there is actually something easier we can do before
we do that, which is actually criminal prosecution of executives.

Now, I mean, there were -- it is difficult to get prosecution in criminal
cased. But that we can try harder at without having to dismantle the entire
organization. I agree with Eliot n that. I`m not saying - these are not
mutually exclusive choice as having in a popular, you have a range with
from the civil to the criminal, criminal against individual and against the
organization, the entity.

And certainly you prosecute individuals as well as we did. But the entity
itself needs, as corporations are the legal entities need to be held
accountable. Otherwise, as Eric Holder says, they go on forever.

KLEIN: There is this bipartisan bill, from senators David Vitter, a
Louisiana Republican and Senator Sherrod Brown, and Ohio Democrat, to break
up the big banks. And the mechanism measure has changed from bill to bill.
I haven`t looked at them recently.

But do you think we have the actual ability to do that without just royal
and loyal financial market. Do you think we can do that in a way that the
aftermath is surrounded of bullet and better of things than what we have
now?

SALMON: Yes. I think banks can be broken up. It is not something we have a
lot of experience doing. And so, you would get a lot of wailing and noshing
(ph) of teeth from Wall Street. But really, the obstacle to a more
political and institutional may are practical. If you have the will, they
are half doing it in the UK with this thing called Vickers, where they`re
basically telling the banks to break themselves in half and run themselves
as two corporations. So a lot of banks, Citigroup, more or less broke
itself in half, banks do this voluntarily all the time. So, we could force
them to do this.

KLEIN: Felix and Governor Spitzer, I would love to keep talking about this.
I`m sorry we can`t. Thank you both for being here.

SALMON: Thank you.

SPITZER: Thank you.

KLEIN: The first for the United Nations is simply admitting they have a
problem. And they do have a problem. That is coming up.

(COMMERCIAL BREAK)

KLEIN: You know I love charts and graphs. I love them. I think charts and
graphs should be used all the time, except of course when just a couple of
words would do, as well.

Case in point, this incredibly useless graph for drinking ages across
Canada, courtesy of the Canadian broadcasting corporation. The drinking age
in Canada is 19, everywhere except for Alberta, Manitoba, and Quebec where
it is 18. You see, I needed a sentence to say that I did not need this
graph. Which divides up the ages, if you are looking at that y axis, a road
of axis from 17 to 20. And then marks them in 6/10th of a year increment.
Who does that? Have it (INAUDIBLE) for finding this. Finally, a graph I do
not like.

And speaking of drinking ages, what age do you have to be to figure out
that drinking while budgeting is probably a bad idea. The U.N.`s troubles
with the demon water are coming up.

(COMMERCIAL BREAK)

KLEIN: Until this week, Republicans have pretty much had the McKayla is not
impressed about the sequester. Back when was supposed to net, they didn`t
feel that way, they were impressed. They were scared even. Back then, House
speaker John Boehner called the cuts devastating. So they were never going
to be allowed to happen. That was also the Republican line during the
election. Barely imploring (INAUDIBLE), warning sequester would be again,
devastating, cost hundreds of thousands of jobs. No way we would let that
happen.

Since the election, though, since then, Republicans have had a sequester
epiphany, a sequester epiphany. The sequester, not so bad. It is full of
spending cuts. It is useless stuff the government does, and the Republicans
love spending cuts, except one, it turns out. There is one spending cut,
Republican don`t love. They don`t love it so much they are willing to dig
deep into their own pockets to cover the cost. They cannot abide the idea
that the American people in a time of austerity would be denied the
essential government function of White House tours. Seriously, White House
tours.

Here is Eric Bolling on FOX`s "the Five."

(BEGIN VIDEO CLIP)

ERIC BOLLING, FO NEW HOST, THE FIVE: I`ll make you a deal, Mr. President.
Jay Carney, grab your pencil. Let these families take their White House
tours next week and I will cover the added expenses. Word is if will cost
around $74,000. If I can get the White House doors open, I will pick up the
tab. Mr. Carney, you know it is an offer you can`t refuse. Give me a call.

(END VIDEO CLIP)

KLEIN: It might have been about the cry. Sean Hannity tweeted that he too
is ready to contribute to this dire national cause, White House tour plan,
tweeted @Eric Bolling, great idea, count me in, I will pay for a week also.

The RNC has begun an online petition to reopen people`s house, and in the
house, representative and in the other House, representative Luis Gomer
tried to pass an amendment saying no more golf trips for President Obama
until White House tours reopen. That will solve.

Here is what is going on. The secret service is getting cut under the
sequester. They took a look at the things they do. And one of the things,
one of the least important of those things is they stand guard during the
White House tours, and make sure no one wants or tries to kill the
president.

So, rather than cutting the things they really need to do, they cut the
White House tours. But, here is the catch. Here are why Republicans in
Congress so mad, and why the conservatives who don`t want Republicans to
cut a deal on the sequester are outraged.

As FOX put it, the White House tours which are self-guided are typically
scheduled through members of Congress. Visitors request to tour up to the
representative up to six months in advance. So, these kids come to town,
they can`t get the tour their parents scheduled through their member of
Congress. And now, their parents are not so happy with the member of
Congress and with the sequester, as well of course, they shouldn`t be.

But, you know what a bit gross about this, it makes me a little ill? The
White House tours don`t matter. They really don`t. They`re really nice, but
they don`t matter. The people they upset are the people who are in touch
with members of Congress. And so, all of a sudden, we are running and we
are petitioning and we are putting forth money and rushing to do something
about, something to solve this national White House tour crisis.

But those folks are going to be fine without their tour. You know who may
not be fine? The jobless who are seeing their unemployment checks, which in
many cases all they have to live on now, cut by almost 10 percent.

You know who may not be fine? The 775,000 women and children who may lose
access to or denied benefits for a supplement nutrition program for women,
infants and children, which has been extraordinarily successful program at
cutting malnutrition and low-birth rate among infants and certainly anemia
among young mothers.

You know who may not be fine? The 100,000 formerly homeless people in
emergency shelters or other temporary house arrangements, who the
department of housing and urban affairs say may be turned back onto our
streets.

And no one on FOX is saying we will dig into our pockets until no one
employed person are reasonably homeless person has to suffer. Luis Gomer is
not saying no pay for Congress until a supplemental nutrition program for
woman and children is made whole. Because those folks, they don`t know
their congressman, and by and large their parents are not fundraisers. They
don`t come to D.C. And before they do come they don`t get in touch with a
congressional staffer and build a relationship. They are just quietly
hurting.

But the political system doesn`t care about that. I mean, it doesn`t want
to ease the pain of the sequester. They want to ease the political pain of
the sequester.

The GOP`s great fear right now is sequester will hurt someone who the
political system will actually listen to, somebody with a voice the
political system will hear. Defense contractors, for instance, that is why
they`re trying so hard to get the Pentagon more flexibility and even more
money. That people go in White House tour says where they want the White
House reopen to them. They want to continue the convenient political
fiction that we can make these cuts and no one will really hurt. Because
government spending is just waste and fraud.

But the way they`re doing is not to make it so nobody actually hurts. It is
simply to just trying to ease the pain among the politically powerful,
among the people whose pain gets hurt even at some of the political
powerless who is not just a White House tour, but the very roof over their
heads.

(COMMERCIAL BREAK)

KLEIN: There is a very serious problem at the United Nations, and no, it
has nothing to do with threat of nuclear attacks from North Korea, nor with
negotiations with Iran over the nuclear program. It has to do with the
conduct of certain U.N. officials who are showing up to meetings, a little
-- what is the word? Drunk. They`re drunk, they`re a little -- very drunk.

And thus, we turn to Joseph Torsella, the U.S. ambassador for management
and reform at the U.N. In his remarks at U.N. headquarters yesterday, he
kindly asked his colleagues to save the suds until after their meetings.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Well, well, well. Looks like somebody forget there is a
rule against alcoholic beverages in fraternities on probation. Laugh now,
because you clowns have been on double secret probation since the beginning
of the semester.

UNIDENTIFIED MALE: Double secret probation?

(END VIDEO CLIP)

KLEIN: I`m sorry, that was the wrong clip. That appears to be Dean Warner
from animal house. Here is ambassador Torsella, yes, we have the right clip
this time.

(BEGIN VIDEO CLIP)

JOSEPH TORSELLA, AMBASSADOR, U.N. MANAGEMENT AND REFORM: As for the conduct
of negotiations, Mr. Chairman, we make the modest proposal that the
negotiating rooms should in future be an inebriation-zone, while my
government is truly grateful for the strategic opportunities presented by
some recent past practices, let`s save the champagne for toasting the
successful end of the session and do some credit to the fifth committee`s
reputation in the process.

(END VIDEO CLIP)

KLEIN: All right, ambassador Torsella is being a buzz-kill here, but his
goal is not solid-buzz killing. Rather, he is attempting to speed up the
U.N.`s painfully slow budget negotiations, because if you will pardon the
pun, this problem has been brewing for a while.

In his remarks, Torsella noted the boozing and other behaviors of the
budget committee quote "have contributed to the inability in recent session
of this committee to conduct its important work in a timely and appropriate
fashion. And the U.N. is a body that loves a good happy hour.

As "The New York Times" reports the delegates actually have to leave the
campus for cocktails these days, when they, Unite Nations, began renovating
its Manhattan headquarters in 2009, one of the first casualties of the
construction was the his story delegate`s lounge where for decades the
delegate-working diplomacy was aided by a good, stiff drink.

The last of the bar, the protest from diplomats and their staff staffs and
a temporary outpost was soon established. That bar is also now gone, but
the thirst for liquor at the U.N. is apparently still strong.

And how strong is that thirst? Well, the Atlantic wire tells us, quote
"we`re not talking about cheerful hoops, I had a glass of wine at dinner
drunk. There is always a good and responsible choose of a bit alcohol to
improve a bit of negotiation. But we`re not talking about a delegate having
a nip at the bar. One unnamed diplomat told the press mentioning one
incident where a delegate got so hammered that he barfed.

And another potential problem for ambassador Torsella`s call for sobriety,
the U.N., which must, of course, cater to cultures from around the globe,
has been slow to change in the past, while New York City banned smoker
inside ten years ago, took an extra five years for that to kick in at the
U.N.

The headquarters is now subject to the city`s laws. And for years after the
smokeless ban was around the United Nations, first in city offices, and in
bars and restaurants, delegates puffed away in quarters and meeting rooms
in the general assembly building.

Smoking was ultimately banned in 2008. But this time it could be different,
maybe. This time the member of Torsella`s committee could heed his call and
put down the pre-meeting gin and tonics and hash out their work in a timely
fashion. If not, there will be consequences.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We got to do something.

UNIDENTIFIED MALE: Absolutely.

UNIDENTIFIED MALE: You know what we have to do, toga party.

UNIDENTIFIED MALE: We`re on double secret probation, whatever that is. We
can`t afford to have a toga party. You guys up for a toga party?

UNIDENTIFIED MALE: Toga, toga, toga!

(END VIDEO CLIP)

KLEIN: And look, only one of those men even became a U.S. senator. So you
don`t want to go too far with the parting. So you see, U.N. delegates,
there is a way to do it. You just have to drink after work, not before,
after. That is when you have your drink.

Speaking of which, that is "the Last Word" for this Friday. I`m Ezra Klein
in for Lawrence O`Donnell. You can read more of my work at whatblog.com.

"DATELINE" is up next.

END

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