updated 4/4/2013 12:27:51 PM ET 2013-04-04T16:27:51

THE RACHEL MADDOW SHOW
April 2, 2013

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

Guests: Eliot Spitzer, Dustin McDaniel

RACHEL MADDOW, HOST: Can you tell how good you are yet?

CHRIS HAYES, "ALL IN" HOST: I can`t tell. You know how that is. You
think about everything you did wrong as soon as you get off set is what you
do.

MADDOW: Well, tonight, you did wrong is private because it`s
spectacular, man. Congratulations.

HAYES: Too kind.

MADDOW: Keep going.

All right. Thanks to you at home as well for staying with us for the
next hour.

There is a lot in motion right now in the news.

We`ve got updates for you this hour on the killing of that district
attorney and that assistant district attorney in that one county in Texas.
Two separate and apparently targeted killings less than 100 miles from
where the apparent killer of the Colorado prisons chief was himself killed
in a shootout with police. We`ve got a bunch of developments in that
situation today including on the crucial issue of whether a white
supremacist prison gang may be linked to these assassinations.

We`ve got election night results tonight from South Carolina. Those
are coming, too, in just a second.

The Kansas clinic that was run by Dr. George Tiller before Dr. Tiller
was murdered by an anti-abortion activist four years ago, that clinic today
in Kansas made its formal announcement that it is reopening for the first
time in four years.

In the guns debate, Connecticut moved forward today with the most
ambitious and most unique package of gun reforms since the Newtown school
massacre back in December. A vote is expected tomorrow in the Connecticut
legislature. The governor says he will sign it.

While today, the NRA distinguished itself by having the stones to
announce yet another plan for more guns in schools, while continuing to
block everybody else`s votes to keep guns away from both schools and from
madmen.

President Obama announcing a big new plan that some scientists are
calling a moonshot, a big, ambitious scientific project of national
significance that could change medicine, could frankly change the world if
it works.

Are we the kind of country that does stuff like that anymore? Can we
be that kind of country again?

Like I said, there`s lots in motion in today`s news, but we begin with
scandal. Good old fashioned bribery, scandal -- complete with perp walks
and politicians in handcuffs and envelopes of cash being passed at diners
and in parked cars and secret wiretaps. Sometimes, politics is really just
an episode of "The Sopranos." And today was one of those days.

What happened today, actually, in terms of understanding the players
and what they did, the easiest place to start is the 2012 election in New
York state. It`s kind of a weird one in New York state.

You know that the governor of New York state is a Democrat and a very
popular one, Andrew Cuomo. He was not on the ballot in 2012. He had been
elected two years earlier in 2010. Election night 2010, everything else in
the country went Republican, but that New York governor`s race that put
Andrew Cuomo office, that race was blue by 30 points.

And then in 2012, Andrew Cuomo`s not on the ballot. The only
statewide races in New York were, of course, the presidential race, in
which Obama beat his opponent by 27 points. That was one of the biggest
margins of any state in the country. The other statewide race on November
2012 in New York state was the Senate seat held by Democrat Kirsten
Gillibrand. Senator Gillibrand beat her challenger by a 45-point margin.

So, yes, the political picture in New York state was just
overwhelmingly Democratic, just solidly blue in terms of the 2012 election.
But New York is a big state, a largely rural state and a more idea logical
state that it sometimes gets credit for, thanks to its statewide election
results.

One of the manifestations of New York`s unheralded diversity is that
even though the state is so blue it looked cold in any statewide vote, when
it comes to voting for state legislators, it`s not nearly like that. The
Senate in New York state, the Senate has only been in Democratic control
three times since World War II.

But on election night November 2012, on that hugely blue night in
November where President Obama beat Mitt Romney by a 27-point margin under
the leadership of a Democratic government with the highest approval ratings
of any governor in state in the country, on that hugely blue night in
November, where Kirsten Gillibrand embarrassed her opponent, on that big
blue night New York, it looked like even the impenetrable fortress of the
permanently Republican-dominated Senate was going to come crumbling down
and finally become blue as well. The Democrats looked like they won the
Senate in November 2012 in New York. Democrats in November won 33 seats,
Republicans won 30 seats.

So that means Democrats take over the Senate, right? Wrong. Even
though the Democrats won a clear majority in the senate, a subgroup of
Democrats decided to peel off and caucus themselves with the Republicans
instead, so the Republicans could keep control in the Senate. It was
really weird. It was very weird at the time.

When it happened, even before we found out what it was leading to
today, it seemed like a weird thing.

"The New York Times" said when it all happened that it was a
particular coup for the breakaway faction of Democrats when they recruited
a Democrat to their side who is the former leader of the Senate Democrats.

Quote, "They also recruited an additional Democrat to their caucus,
Malcolm A. Smith of Queens, a former leader of the Senate Democrats how has
sought support from Republicans for a possible run for mayor of New York
City. The breakaway faction of Democrats and Mr. Smith talked through the
arrangement over a recent lunch of fried meat balls with peppers and onions
at Enzo`s, in the Morris Park section of the Bronx."

Well, today, it was not fried meat balls with peppers and onions, but
it was a shared arrangement between Senator Malcolm A. Smith and the
Republicans who he thought could get him on the ballot as a Republican to
run for New York City mayor.

See, there are a lot more Democrats than there are Republicans in New
York City. So it is a tried and true method to become a Republican,
specifically for the purpose of running for New York City mayor. It means
you don`t have a difficult primary, right? You have an easier primary if
you`re running as a Republican than if you were running on the Democratic
side, even if you have been a lifelong Democrat.

That`s how Mike Bloomberg got the mayor`s job in the first place,
right? Then once he was in -- he ran as a Republican, then once he was in,
he dropped the Republican label and became an independent.

But if you are a registered Democrat and you want to pull this, you
want to appear listed as a Republican on the ballot in a New York City
election. What you need is a majority of Republican Party bigwigs in the
city to sign off on you doing this. Yes, yes, we know you`re Democrat, but
we`ll sign this waiver along you to run as a Republican, we know why you
want to do it.

Well, when that Democratic state senator was arrested today, he was
arrested alongside two other Democrats and three Republicans, with whom he
was allegedly conspiring to bribe his way into getting that permission from
New York City bigwigs so he could get on to the ballot so he could get a
short cut to the mayor`s race, so he can maybe end up running America`s
largest city.

It was the Democratic state senator turncoat who helped give the other
party, the Republicans, control of the state Senate and it was the chairman
of the Republican Party in the Bronx and the vice chairman of the
Republican chairman in Queens and Republican city councilman.

Six arrests and all the accompanying salacious details from the U.S.
attorney today who looked disgusted at what he had to explain to the
public.

(BEGIN VIDEO CLIP)

PREET BHARARA, U.S. ATTORNEY: The complaint sets forth three bribery
schemes involving cash payments of tens of thousands of dollars to elected
officials and party leaders. Every New Yorker should be disheartened and
dismayed by the sad state of affairs in this great state.

From time to time, the question arises, how common is corruption in
New York?

I can tell you based on the cases we have brought and continue to
bring, it seems downright pervasive. But don`t take my word for it.
Consider the words of City Councilman Daniel Halloran caught on tape in
this case. After allegedly receiving a $7,500 cash bribe, he says to the
cooperating witness and you can see on the chart here again to my left,
quote, "Money is what greases the wheels, good, bad or indifferent."

During the same meeting, Halloran allegedly says, quote, "That`s
politics, that`s politics. It`s all about how much and that`s our
politicians in New York. They`re all like that. All like that. And they
get like that because of the drive that the money does for everything else.
You can`t do anything without the money."

After the string of public corruption scandals we continue to expose,
many may fear there is no vote that is not for sale, no office without a
price and no official clean of corruption.

(END VIDEO CLIP)

MADDOW: Money is what greases is wheels, good, bad or indifferent.
Quote from the Republican city councilman arrested today, along with five
others.

Feel dirty yet? How about the allegation that the Republican city
councilman thought his big payoff with dealing with all the bribery, that
he would get named New York City`s deputy police commissioner. If the
bribing worked out and his guy did succeed Mike Bloomberg as mayor, he`d
get that big law enforcement job.

My favorite detail from the complaint is where the vice chairman of
the Republican Party in Queens apparently decided that the stuff they were
talking about was so shady, it was so illegal, that he ought to take
precautions.

And so, he decided in one of these meetings they ought to pat down one
of the guys he was talking with about the bribery details, to see if the
guy was wearing a wire. The guy who he was patting down was wearing a
wire. He was an undercover FBI agent and did have a recording device on
him to record those conversations, but the Republican guy missed it. He
did not do the pat-down well enough to find the wire and the FBI agent just
kept recording.

What would have happened if he had found the wire?

So that`s part one of today`s news that leaves you feeling like you
want to shower in bleach.

Part two involves this guy, Governor Ultrasound. We hardly knew you,
Bob.

In a political context, Governor Bob McDonnell of Virginia is known
for trying to portray a moderate Republican image while governing in
Virginia, from deep right field. That`s how he got the nickname Governor
Ultrasound.

Now, on his way out of office, he is pushing more antiabortion
legislation and has just signed new strict voter ID restrictions for his
state, which may or may not be blocked by the Voting Rights Act allows the
Voting Rights Act to survive.

But thanks to new investigative reporting from "The Washington Post,"
we also know that Governor Ultrasound, on his way out office, he has found
a whole new approach to making people feel dirty. The executive chef who
Governor McDonnell hired to work at the governor`s mansion when he was
elected, was recently indicted in the state of Virginia for embezzlement.
The chef left the chef`s mansion amid a state police investigation that led
to those embezzlement charges.

But once he left the job of being official governor chef at the
mansion, he still ended up cooking for him and at the governor mansion.
Specifically, the former chef`s catering company ended up doing the $15,000
dinner when Governor McDonnell hosted his daughter`s wedding at the
governor`s mansion.

Now, hosting your daughter`s wedding at the governor`s mansion, that`s
the sort of thing that gets a lot of positive press attention, right? You
get earned media and the kind of attention you cultivate yourself with a
big, public Facebook page full of photos with from the event.

But while the wedding was getting the attention, the governor`s
spokesperson took pains to say that the family, the family, the governor`s
family, was paying for all the expenses associated with that event.

Now, under questioning from "The Washington Post," the governor`s
spokesman is changing the story, saying actually, the governor`s daughter
herself paid for that $15,000 dinner. And by paying for it herself, what
he means is that she, quote, "paid for it by accepting it as a gift from
one of dad`s campaign contributors."

Since it was a gift though to the governor`s daughter and not to the
governor himself, there was no need to report this gift.

The governor does admit to his campaign taking more than $28,000 in
gifts from the same contributor in the form of private air travel. Plus,
but another $80,000 in private air travel donated to the governor`s
political action committee. Plus, more than $9,000 in personal gifts to
the governor, more travel, food and lodging and entertainment, again, not
including his daughter`s wedding.

The contributor in question is the head of a company that makes this
non-FDA approved anti-inflammatory drug which is made from something
related to tobacco. This picture that we have next here, yes, that is
reported to be Bob McDonnell holding their product up to the camera to have
his picture taken with it.

The governor spokesman said the governor never authorized the company
to put this photo of the governor with their product on the company`s
Facebook page, but the spokesman also says, yes, Governor McDonnell does
enjoy taking the supplement.

The company`s launch party for its unapproved drug was also hosted by
Governor McDonnell at the governor`s mansion, paid for the governor`s
political action committee, same political action committee that accepted
tens of thousands of dollars in gifts from that company. Pleasure doing
business with you, sir.

Three days before the daughter`s wedding, the governor`s wife flew
down to Florida to go to an investor`s conference for the company to tout
the benefits of their tobacco-related wonder drug. The first lady of
Virginia, three days before the wedding. Wow.

The company has now reportedly received subpoenas from the U.S.
attorney`s office as pat of an investigation about to be related to
transactions involving the company`s stock. I should also note that among
the significant stockholders to the company is the Republican nominee to
succeed Governor McDonnell, a man named Ken Cuccinelli, who himself is now
in trouble for having gone nearly a year without disclosing that he had
those shares in that company. It`s nice, right?

Perp walking, handcuff politicians in a bribery scandal in New York,
the campaign contributors secretly paying for the daughter`s wedding at the
governor`s mansion in Virginia, then blaming the daughter, saying it was
her relationship with this guy that was under investigation now?

But, oh, wait, there`s more. Oh, wait, there`s more. In case your
second bleached shower of the last 11 minutes isn`t enough, it`s time for a
third, because it`s not just Governor Ultrasound and the astoundingly
personal, mutual generosity of his family and his campaign contributor.
It`s not just envelopes full of cash being passed between politicians and
parked cars in New York City, no, there`s more just from today`s news.

Specifically, from today`s business pages, where we learned today that
the outgoing chief of the Securities and Exchange Commission, the top cop,
the top regulator on Wall Street, is leaving that top cop, top regulator
job to go work for Wall Street.

Mary Schapiro having left her job as chair of the SEC has decided to
land very, very gently with a job at something called Promontory Financial
Group, a Wall Street outfit that helps banks maneuver around the kinds of
regulation that she was in charge of enforcing until about five second ago.

Appointed to the job after the SEC did not catch Bernie Madoff, Mary
Schapiro took over in the midst of the financial crisis. Her tenure was
marked by no executives from companies that caused that crisis, getting
perp-walked or handcuffed ever and now, upon leaving, she joins the
industry herself -- soft landing.

She told "The Wall Street Journal" today that there should not be any,
quote, "revolving door concerns" about what she`s doing here because,
quote, "in my case, there is no revolving door. I won`t ever be going back
to government." Right. Government served its purpose in the case, setting
you up for this Wall Street job.

It should also be noted that the person replacing Mary Schapiro as the
new top cop at the SEC is arriving there from the financial sector.

So, this is how it works, right? I`m in charge of enforcing the laws
that keep you in check. Now, my job is to help you get around those. Now,
my job is to enforce those laws. Now, my job is to help you evade those
laws. That`s how it works, right?

Money is what greases the wheels -- good, bad or indifferent.

When Republican Scott Brown was in the United States Senate, his top
campaign contributor was the financial sector, it was Wall Street. When he
left the Senate, we learned subsequently that his new job is working at the
lobbying firm that represents Goldman Sachs. Around the same time, we
learned that former Democratic Senator Ben Nelson was going to work at a
top lobbying firm for the insurance industry.

Who was Ben Nelson`s top contributor while he was in office in the
Senate? Look at that. The insurance industry.

Every time someone in politics, someone in Washington does this, it
bolsters the expectation of everybody else still in Washington or anybody
planning on ever heading to Washington in their career, that if they use
their time in office, if they use their time in politics to scratch some
rich guy`s back or some rich industry`s back, there will be a nice, soft
landing arranged for them when they get out.

It is every day corruption. It is the every day corruption that we
are told we shouldn`t even think of as corruption.

What gets headlines is when it`s a bunch of guys scheming over fried
meat balls in the Bronx, while somebody is wearing a wire, right? What
gets headlines is when it`s something as humiliating as your wife flying
down to endorse the guy`s product three days before you serve your 200
guests the fancy chicken dinner he bought you that you let everybody you
paid for, for you daughter`s wedding even though he paid for it.

That`s when it gets headlines, right? That`s when it`s very obviously
scummy. That`s when Bob McDonnell and all these New York politicians start
to stink in the public`s estimation. That`s why people don`t want to go
into public service, frankly.

But all of this is the same racket. All of this is. It`s all cashing
in for yourself and for the people who can buy access to you while the
public interest goes begging.

Arrests and perp walks and investigations stop the New York and
Virginia versions of this racket. But what stops the big version? What
stops the Washington version that they tell us isn`t corruption, it`s just
a way of doing business? What stops that?

That`s next.

(COMMERCIAL BREAK)

MADDOW: Former New York governor, former New York attorney general,
Eliot Spitzer, is here next. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BHARARA: Many may understandably resign themselves to the sad truth
that perhaps the most powerful special interest in politics is self-
interest. As I said once before, every time a politician is arrested in
New York, it should not feel like a scene from Groundhog Day and yet, it
does. What can we expect when transgressions seem to be tolerated and
nothing seems ever to change? New Yorkers should demand more.

(END VIDEO CLIP)

MADDOW: U.S. Attorney Preet Bharara today announcing federal
corruption charges against six public officials in New York, including
charges that a Democratic state senator was trying to bribe his way on to
the Republican line of the ballot for the New York City mayoral race this
year.

Joining us now for the interview is former New York governor and New
York attorney general, the man who earned himself the nickname "sheriff of
Wall Street" while he was in office, Eliot Spitzer.

Governor, it`s good to see here. Thank you.

ELIOT SPITZER (D), FORMER NEW YORK GOVERNOR: Thank you for inviting
me.

MADDOW: So, I want to talk to you about the broader connection
between different types of corruption here. But this big potential
election rigging scandal that unfolded today, is the silver lining here is
that it was nice and bipartisan at least?

SPITZER: You know, it was so incredibly stupid. I mean, Malcolm
Smith has put himself into that rare category of corruption, stupid, venal.
It made no sense. But, unfortunately, those who in Albany, seen Albany,
not terribly surprised.

MADDOW: Yes.

SPITZER: It`s a sad, sad day at every level.

MADDOW: But -- U.S. attorney is talking about that, saying, listen,
it shouldn`t feel like Groundhog Day every time a politician is arrested.
I mean, I feel like there`s a nexus of sort of petty corruption that`s
expected petty corruption and outright bribery that`s almost expected among
public officials in both parties in both of these states.

SPITZER: You are right and that`s why listening to you introduced
this segment before about the connection between the petty and obviously
corrupt case that Preet announced today, a good case, a powerful case, one
that needs to be brought. And yet, you were saying, the deeper corruption,
a Mary Schapiro going from the SEC, right to the regulative company, and
saying, oh, you don`t need to worry, I`m not going back to government --
she misses the entire point.

The entire time she`s been in government, she was being wooed by these
companies and she reacted to that. I won`t challenge her motives
individually. But people know you want to job. You don`t bring the big
case.

And so, that invidious relationship that has done so much in such a
corrosive way to damage enforcement of a law at that level needs to be
focused upon as you just did, as much we do the case against Malcolm Smith.

MADDOW: But we see that, the SEC with Mary Schapiro leaving, I love
that she thinks that the door -- because the door stopped revolving --

SPITZER: Right, exactly.

MADDOW: -- once she got out, it doesn`t come back in. But it is also
not just in regulatory jobs like that. I think you also see it when
senators leave office, when members of Congress leave office, when they go
work for their biggest campaign contributor, or whoever was paying them the
most attention on their oversight committees. I mean, what is the cure to
it?

SPITZER: Look, you know, I have -- we discussed Mary Jo White a
couple of months ago.

MADDOW: Incoming chair.

SPITZER: Right, incoming chair of the SEC, and I said, look, let`s be
agnostic because revolving doors are better metaphor that diagnoses,
sometimes, people can go back and forth and not be prey to the intellectual
destruction that comes.

I`ll give you an example, Gary Gensler went from Goldman to CFTC, did
a spectacular job. And then there`s the example of Tim Geithner, who was
never in the private sector, who did a horrific job.

And so, it isn`t as easy as you`ve been in the private sector, you got
to go to government, therefore, you will be bad. What really is
determinative is the intellectual integrity of the person on the job.

Now, having said all that, what can be done, buffers? There should be
a five-year mandatory hiatus. You are in government, in a regulated
sector, you cannot work for them for five years. You know, we need to
rebuild the perception of integrity of government, and it will not happen
if Mary Schapiro goes on Monday or Friday from the SEC. Monday, she`s
working for a financial services company. You simply can`t have the public
trust and for good reason.

MADDOW: Well, we do have laws about lobbying. We have laws that
restrict lobbying, and she`s being clear to note I`m not going to lobby for
these companies. I`m banned from that, but she`s going to be steering
those companies and how to get around to the regulatory structure she
helped build.

SPITZER: Precisely. It simply can`t be that you go back and forth
that quickly, and the public will believe that honest decisions are being
made. Members of congress, who on Friday are in Congress, Monday, lobbying
in it firm, even if they`re not individually lobbying, the firm is, they`re
getting revenues, they`re benefiting from their capacity to sit down with
clients and do all the other things.

Lanny Breuer classic example, Lanny Breuer had been a major law firm.
He then went to the criminal division. I think everybody -- not everybody,
his mom would not agree. I will tell you, I thought his tenure at justice,
a disaster. The wrong the cases, they lost the wrong cases, didn`t bring
the right cases. Now, he`s back at the big firm doing the same sorts of
representations.

It simply shouldn`t be that people go back and forth that quickly
because the public looks at and says, no wonder everything is corrupt.

MADDOW: There is a specific cop mentality that should come with being
a regulator, which is what we`re talking about here. But there is also the
bigger issue, which is just not about regulators -- which is about whether
or not it is companies that simply wait out various governments and various
government officials in order to get their way and they buy everybody along
the way.

Is there something structurally that can be done to try to interrupt
that process?

SPITZER: Well, look, the deal of mind in the criminal in the criminal
system is an adjournment is as good as an acquittal, just doesn`t last as
long. In other words, companies know if they wait, their patience is
greater than that of the government official who`s brought the case, who`s
invested emotionally, they`ll leave. Somebody else will look at the file
and say, ah, not my case, who cares?

A couple of things could be done. I think Mary Jo and this isn`t
directly responsive. I think Mary Jo should say, no more, neither admit
nor deny. It`s one of the most corrosive pieces of our failure to regulate
the financial services community.

Time and time again, major companies settle, they pay some money, but
neither admit or deny that they did anything wrong. It proves this is
merely a financial transaction.

Any sense that justice is being meted out is eviscerated. Here`s a
check, but we`re just doing it to save the litigation costs, we`re not
admitting we did anything wrong. And I think we need to get rid of this
and we need to get the CEO to stand up and say something wrong happened.

I think CEOs should be fired, even if they`re not individually
culpable, if they have overseen a company where there are a multitude of
instances of wrongdoing, second time, third time, three strikes you`re out,
the CEO clearly has not been managing properly. You know, this has to be
thought out in terms of the size of the company a little bit. CEOs should
be fired.

None of that happened under Mary Schapiro. That`s why her tenure at
the SEC, a disaster. Nothing was done.

MADDOW: But she`s going to have a very comfortable landing.

SPITZER: She will be comfortable. As you say, soft landing.

MADDOW: I feel like, in broader American politics right now, if you
look, if you`re trying to understand the enthusiasm for people like
Elizabeth Warren, was has taken such a hard angle on Wall Street, Ed Markey
has taken a hard angle on the oil industry is going to run for another
Senate seat in Massachusetts.

SPITZER: Right.

MADDOW: This is why. There`s a hunger for an emerging, progressive
attitude towards these things that is much sharper elbow than we`ve been
getting.

SPITZER: Simplicity and clarity of purpose, and a statement that
right is right, wrong is wrong --

MADDOW: And the public interest is invaluable.

SPITZER: Yes. That`s right.

MADDOW: Eliot Spitzer, former New York governor, former New York
attorney general -- thank you for being here. Good to see you.

SPITZER: It`s my pleasure. Thank you.

MADDOW: All right. We`ve got more to report tonight on the super
goofy, filthy, Arkansas oil spill, on the special election in South
Carolina, and on that insane situation in Texas involving the murder of the
assistant district attorney and attorney.

Lots ahead. Stay with us.

(COMMERCIAL BREAK)

MADDOW: It`s Election Day. Yeehey!

Now, as you may remember is Jim DeMint. He was a Republican senator
from South Carolina, but then he quit.

This is Nikki Hailey, South Carolina`s Republican governor. When Jim
DeMint quit, she got to pick a replacement. She picked a first term
Republican Tea Party congressman named Tim Scott to go take Jim DeMint`s
Senate seat. That freed up the seat in the House that Tim Scott had been
occupying.

And so, now, it`s Election Day because today, South Carolina
Republicans got to pick who they want to run for that Tim Scott seat in
Congress.

Heading into tonight`s run off, former Republican Governor Mark
Sanford was the favorite. He`s trying to mount a political comeback after
his disgraced by lying publicly about an affair that he was having in
Argentina while he told everybody in the state that he was actually just
hiking the Appalachian Trail.

Governor Sanford was facing former Charleston County councilman Curtis
Bostic.

But the results are now in, and Mark Sanford is the winner of the
runoff and that means he will face Elizabeth Colbert-Busch, Stephen
Colbert`s sister, in the general election for South Carolina`s vacant
congressional seat. That general election will happen on May 7th, which
means we won`t have election music for weeks now. You have to savor this
timpani while you can.

(COMMERCIAL BREAK

(COMERCIAL BREAK)

MADDOW: OK, it`s July 25th, 2010, an otherwise normal summer night in
the city of Marshall, Michigan. And then out of nowhere, boom, an oil
pipeline bursts, sending hundreds of thousands of gallons of crude oil
everywhere, including into the nearby Kalamazoo River.

The oil company that owns the pipeline, a Canadian company called
Enbridge, does nothing for close to 18 hours. And the oil keeps spewing
all that time. The oil spill forces evacuations of all the local
residents. It compromises the drinking water in the area and now, nearly
three years later, the oil company responsible for the spill is still
trying to clean up all the oil.

Almost three years after that pipeline burst, there is still oil in
the Kalamazoo River. That was July 2010.

One year later, it`s July 1st, 2011. It`s nearing midnight in the
city of Laurel, Montana. It is an otherwise normal summer night in
Montana, then again, boom, another oil pipeline. This one owned by
ExxonMobil. It bursts out of nowhere and dumps oil into the previously
pristine Yellowstone River.

Even though local officials warned Exxon that there was dangerous
flooding happening in the area, and even though another oil company shut
down their pipeline in the area because of that warning, Exxon decided to
keep theirs running. And this was the result, July, 2011.

Now, today, Mayflower, Arkansas, city in central Arkansas, just
outside Little Rock. It`s Friday afternoon, this past Friday, and well, by
now, you know the drill. It starts with boom.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: So, that is a pipeline that has busted and has
flooded the neighborhood and is going all the way to the drain at the end
of the street. Luckily, our house is here, which is seemingly unaffected,
but the smell is unbelievable. I mean, look. Incredible. And that is
oil.

(END VIDEO CLIP)

MADDOW: That is oil -- lots and lots of oil.

On Friday afternoon, another pipeline, again an ExxonMobil pipeline,
this one carrying between Illinois and Texas, ruptured underground here in
Mayflower, Arkansas. The rupture sent a thick stream of crude oil
everywhere.

Dozens of residents have been evacuated indefinitely. We`re told the
oil is now encroaching toward Lake Conway, which is a local source of
drinking water.

So far, the oil company says 12,000 barrels of oil contaminated water
have been recovered by emergency responders.

One of the things that has emerged since this spill in Arkansas is
that it turns out this oil pipeline, which is now we know, essentially, a
ticking time bomb lurking underground, this pipeline was mostly unknown to
the residents who live right on top of it. Watch.

(BEGIN VIDEO CLIP)

REPORTER: Mike Oswald (ph) is worried about his mother.

UNIDENTIFIED MALE: No, I didn`t know there was one.

REPORTER: Oswald is like many Arkansans who said they had no idea the
pipeline existed.

Mayflower resident Christian Alexander feels residents should have
been warned. Alexander says he knew nothing about the pipeline.

UNIDENTIFIED MALE: Before we buy the house, you know, what is
underground or what is, where the houses are.

UNIDENTIFIED MALE: Supposed to be a 20-inch pipeline runs from
Illinois to Texas.

REPORTER: Brantley (ph) knew nothing of the pipeline.

UNIDENTIFIED MALE: I had no idea and I`m the fourth of fifth house
from it.

REPORTER: Official from the Arkansas Geological Commission say most
of the pipeline is buried underground expect for places where it crosses a
body of water. They say, though, there are published maps of the pipeline.
After 9/11, details of this location were somewhat depressed.

(END VIDEO CLIP)

MADDOW: So, residents don`t even know until Friday when they learned
about it because it bursts.

Well, all of that is going on in Arkansas, the other big thing going
on in the oil industry, it`s happening simultaneously to this spill in
Arkansas is that in nearby Louisiana, there`s a trial. BP, Halliburton and
Transocean are in court defending themselves at trial that never happens
against charges related to the Deepwater Horizon disaster, which, of
course, is the largest accidental oil spill in history.

As prosecutors have been building that case against those oil
companies, what has emerged in the trial is a pattern of companies
destroying evidence related to the spill. A former BP engineer has been
charged with destroying electronic messages about the spill. BP for its
part is now turning around and accusing Halliburton of destroying documents
in order to hide their role in what went wrong in the spill. Destroying
evidence is a way of slinking out of responsibility.

It is against that pattern from the other nearby oil company disaster
that officials in the state of Arkansas are now gearing up to take on
ExxonMobil. So while they are dealing with this spill physically in
Arkansas, while they`re trying to clean up what`s been spilled and trying
to prevent things from getting any worse, trying to protect the drinking
water -- while they are doing that, the attorney general from the state of
Arkansas has put Exxon on notice, very publicly. The attorney general
demanding Exxon preserve all documents and information related to Friday`s
oil spill in his state.

He says his expectation is that ExxonMobil will come ply with that
question, but that assertion is cognizant with the fact that other oil
companies in the very recent past with even bigger spills have not done
that.

Joining us now is the Arkansas attorney general, Dustin McDaniel.

Mr. Attorney General, thank you so much for being with us tonight. I
really appreciate it.

DUSTIN MCDANIEL (D), ARKANSAS ATTORNEY GENERAL: Thank you. I`m glad
to be with you.

MADDOW: Your office has asked Exxon to preserve documents related to
this accident. We know that in the gulf spill, BP and Halliburton are
accusing each over of destroying documents related to the spill. And on
the Yellowstone spill, documents show that it took twice as long to seal up
that leaking pipeline as Exxon first said it did.

Knowing all of that, are you confident you`re going to get the
cooperation you need from Exxon in this situation?

MCDANIEL: Well, I certainly hope so, but most importantly, I`m going
to let them know on the front end that we expect it and we intend to watch
closely how they respond. I`ve been in close contact with my friends, the
attorneys general of Louisiana and Mississippi as they have been preparing
for the Deepwater Horizon litigation that you`ve been talking about and
they`ve given me some serious points of concern and caution leading up to
that litigation.

So I`m trying to learn from some of their lesson so that the people of
Arkansas don`t have to relive some of those issues.

MADDOW: Part of what I want to ask you about, I`m just thinking -- I
guess I`ve been thinking about sort of regulatory capture and how good the
government is at fighting industries that obviously are experts in their
own fields when these fights need to happen. Obviously, oil companies deal
with litigation over spills all the time. They`re the companies that cause
them, but you have to deal with everything. And you say there`s no reason
for you to be expert on this particular -- this particular type of
litigation or these particular types of companies.

What kinds of advice are you getting? What things are you learning
about how to deal with these companies and their infinite resources and all
their experience in this?

MCDANIEL: Well, you`re absolutely right. I`m no expert in this kind
of litigation, but what I have spent my time as attorney general doing is
standing up for the people of Arkansas against out of state, multinational
companies that have limitless resources that have found ways to take
advantage of the people of Arkansas.

And we`ve been very successful in standing up for ourselves. We`re a
small state, but we are a strong, especially when we are looking out for
one another.

So I want to know how long was that rupture releasing oil into the
ground before it finally saturated the ground so much before it came up
above the surface. I want to know what the chemicals are in the mixture of
this Wabbaseka crude that is also been released into our environment. I
want to know what they`ve done to cap it. I want to know the history of
the inspections of the pipeline. I want to know who`s going to secure the
pipeline.

And as you said, it is a serious learning curve. For instance, I had
no idea that the Department of Transportation regulates America`s oil
pipelines. The DOT is in charge of this investigation, not the EPA,
certainly not the state, Department of Environmental Quality, so we`re
having to figure out whole new regulatory alphabet soup.

And the attorney general`s office in Arkansas, as I said, tends to be
ahead of that curve and not behind it.

MADDOW: One of the things people have focused on in terms of national
attention to the spill in your state is the type of oil. And as you say,
there`s big learning curve for all of the technical aspects of this. But
there are these reports this is tar sands oil, that it`s a lower grade oil
than you might expect from another, I guess, more typical spill.

Does that turn out to matter at all to your investigation in terms of
how you`re pursuing this?

MCDANIEL: It may or may not matter to the nature of the
investigation. It certainly is going to matter with the nature of the
clean-up. This product wasn`t even considered to be oil, per se, until
recently. And only recently as technology reached the point to where it`s
cost effective to break down the sands and add solvents and transport this
substance to be refined and it`s particularly pungent. It`s particularly
hard to clean up. It`s very viscous.

So I would think that the expense is going to increase and that the
length of time for the clean-up as you mentioned, the Michigan spill, so
we`re obviously very concerned about that. Will that impact the nature of
the investigation? No. We`re going to be aggressive in asking for
information as soon as tomorrow from Exxon.

And to their credit, I must say, so far, they`ve been cooperative.

But I think we are just the beginning of a long process.

MADDOW: Arkansas Attorney General Dustin McDaniel -- thank you so
much for your time tonight and you`ve helped me understand a lot of stuff
about this that I did not understand before in terms of how you move
forward. Good luck. Stay in touch with us on this, sir.

MCDANIEL: Thank you.

MADDOW: Thank you.

All right. Here`s a money question: how much does it cost to not
think big? That`s straight ahead.

(COMMERCIAL BREAK)

MADDOW: There appears to be significant news regarding the murder of
Kaufman County Texas district attorney Mike McLelland and his wife. Since
the McLellands killings were discovered Saturday, speculation about who
committed the crime, who killed them, is centered on a possible connection
to the Aryan Brotherhood of Texas, which is a white supremacist prison gang
who`s activities have been prosecuted by Kaufman County D.A.`s office.

Two months ago, it was Mike McLelland`s deputy, the assistant D.A.,
Mark Hasse, in the same county, who was shot and killed in a parking lot
outside the Kaufman County courthouse. He was killed at a time when
sources say he was, quote, "heavily involved in investigating the Aryan
Brotherhood of Texas."

Mike McLelland who was Mark Hasse`s boss, who was the man responsible
for finding Mark Hasse`s killers, D.A. Mike McLelland talked to the
"Associated Press" after his deputy`s killing about the possibility that
the Aryan Brotherhood of Texas might have been responsible for the Hasse
murder.

So speculation about this particular prison gang maybe having
connection to these two murdered Texas prosecutors, that speculation has
been based on both widely known circumstances of the activities of that
office and also on the words of the Kaufman County D.A. himself, prior to
his own murder.

However -- and it is a huge however today -- that speculation about
the prison gang has been starkly interrupted today by new reporting about
the murders which suggests an entirely different possibility. It is "The
Los Angeles Times" reporting tonight that someone in an entirely different
case is also, quote, "emerging as a person of interest." This is according
to a law enforcement source.

That person is reportedly a local official who lost his job in a
corruption scandal and who made numerous threats thereafter, including
threats of retaliation against the two prosecutors who have now been killed
in Kaufman County.

Mark Hasse and Mike McLelland are just the 12th and 13th prosecutors
in this country murdered in the last 50 years. This sort of crime is very
rare in our country. And tonight, it remains unclear who is responsible in
Kaufman County, Texas.

We will report developments as law enforcement tries to solve this
mystery. Watch this space.

(COMMERCIAL BREAK)

MADDOW: You could argue it started with President George H.W. Bush,
Poppy Bush, who was not exactly Mr. Science, but who nevertheless signed
the first check as president for the Human Genome Project. The idea was to
map our DNA, map all the chromosomes, the very basic biological stuff that
makes us human.

The project was first shepherded by the Department of Energy. They
called it the National Laboratory Gene Library Project. That later became
the more universal Human Genome Project.

Funded by the U.S. government, this thing became one of the most
important intellectual endeavors of our time. This was a nonpartisan
thing. A decade later, President Clinton announced a major breakthrough.
They had finished the first rough draft of the human genome.

Because we the public funded the project, the data it produced is free
and available to anyone who wants it, property of everyone. You can get a
free poster for your dorm door if you want, or you can use it to research
new treatments for cancer or sickle cell anemia.

As a country, we set out to map the human genome and we map human
genome. And with all of that publicly funded publicly available data, we
set the table for future scientific progress.

They say it produced $140 in economic results for every dollar that we
invested in that project.

Well, today, President Obama announced a new project, the Brain
Initiative. Scientists will be mapping the stuff between your ears so we
can finally understand how the individual cells and regions of our brains
work and how they work together. The idea again is to think big, to use
the new tools we have for looking at the human brain and to make even
better tools to create a new and better map of the human brain and its
functions.

Then, we make that map publicly available so scientists in all fields
can use it to work on, say, Alzheimer`s, or autism, or schizophrenia.
Right now, the map of the human brain is filled with blank spots the size
of Texas. We know that this man`s Parkinson`s disease makes it really hard
for him to walk. But when that same man with Parkinson`s can ride a
bicycle like he`s a 10-year-old with no problems at all, that we don`t
understand. That`s a mystery.

If we understood the brain better, we could offer more help to people
with brain injury, like so many veterans coming home from our wars with
signature injuries from the wars. If we understood the brain better, maybe
we could offer replacement limbs that just work.

Like the first President Bush 20 years ago, what President Obama is
calling for is for the nation to think big. We can do that if we want to.
We have done it in the past.

Or we can think small. This photograph was taken a couple weeks ago
in Columbus, Indiana. Because of budget cuts imposed by Congress, Head
Start programs around the country are having to kick preschoolers out of
class. The "A.P." caption to this photo says the man is listening to the
names of families that have just lost their place in preschool in his town.
They decided which kids got to stay in Head Start by lottery. They drew
the names out of a fish bowl in Columbus, Indiana, and Franklin, Indiana.

Thirty-six kids got booted from Head Start in those towns, because
their names were not picked and because Congress decided to impose
arbitrary life changing nickel and dime budget cuts that are technically
called the sequester. But for those kids in Indiana are just called no
more preschool for you.

Despite real world harm from those cuts, Republicans in Washington
have seen the sequester as a political victory, because even though they
didn`t particularly want the sequester, Democrats really didn`t want it,
and anything Democrats don`t want must be a good thing. Of course,
generally speaking take a buzz saw to the federal budget fits the
Republicans larger ideological stance, which is that government must always
do less if it wants to do better. Government doing less is better at face
value.

So, in that ideology, Republicans coming up with a way to cut Head
Start is more important than, say, Head Start itself. But this is the two
levels at which this big decision is operating. Do we believe less
government is always better? Do we dislike government doing anything?

If so, austerity. If not, can we both protect the things we do now,
like letting kids in Franklin, Indiana go to preschool, and think big,
ambitious, think mapping the human brain. Can we still do big things?

Now it`s time for "THE LAST WORD WITH LAWRENCE O`DONNELL."

Have a great night.

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

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