ALL IN with CHRIS HAYES
August 6, 2013
Guests: Jay Rosen, Michael Moynihan, John Cassidy, John Cassidy, Heidi
Moore, Mike Konzcal, Shahien Nasiripour
EZRA KLEIN, GUEST HOST: Good evening, from New York. I am Ezra
Klein, in for the Chris Hayes.
Tonight on ALL IN:
The sale of "The Washington Post" yesterday to billionaire Jeff Bezos.
I have some thoughts. I even feelings about all this since, you know, I
actually work there. That is coming up.
Also tonight, President Obama makes a return to Phoenix to talk about
the great American dream of owning your own home. But I submit, it`s time
maybe to refine that dream and maybe homeownership isn`t for everybody. At
least, it shouldn`t be tax deductible for everybody. And we`ll discuss
But, first, did anything really interesting happen where you worked
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: "The Washington Post" has been sold to Amazon
founder Jeff Bezos.
DONALD GRAHAM: I think every Graham, not only every Graham, but
everybody at the top of The Washington Post Company had the same reaction
when we first started to think about the possibility which was great
surprise, sadness. But the reason we started to think about it, Brook, is
the point of our family`s ownership and we were brought up to understand
this, was always supposed to be that it was good for "The Post."
We knew we could keep "The Post" alive. We know it could survive.
But our aspirations for "The Post" have always been higher by that. So, we
went to see if we could find a buyer.
I have spent 42 years of my life working in this building, basically
all my working career. And I love this place. And I`m really devoted to
its future and its success.
(END VIDEO CLIP)
KLEIN: That`s Don Graham. Don Graham is the grandson of Eugene
Meyer, who bought "The Washington Post" in 1933. He`s the son of Katharine
Graham, the great publisher who led "The Post" to greatness in the
Don Graham, he went to Vietnam. He came back, he worked as a beat cop
in Washington, D.C., then he went to the sports desk. He moved up through
the ranks of "The Post," became the publisher for decades. He now runs the
Washington Post Company. He loves the company, an amazing leader.
That`s Don Graham saying he`s selling the newspaper his family built
to Amazon founder Jeff Bezos and he`s doing it -- he`s doing it because he
thinks it is necessary for the institution to thrive because the business
model that was built around that paper, around "The Washington Post," that
that business model is failing faster than the company`s finances can
That sale was announced on Monday afternoon. I was hosting here
Monday night and I didn`t talk much about it on the show because it was
honestly just too new and I was a bit too shocked and too close and I
hadn`t had time to process it and figure out what it meant.
And I think everybody in "The Post", certainly everybody I`ve spoken
to felt the same way. This all comes, by the way -- it comes the same week
that "Newsweek" and the "Boston Globe" got sold for fractions of their
value 10 years ago.
And I want to talk about these sales for a minute. I don`t want to
give you a big speech, or big take. I don`t have great solutions. I`ll
admit that up front.
I just want to talk about it because I think this is a moment for
people to kind of sit up and really take a look at the often invisible
architecture that under girds and genuinely shapes, it actually shapes
pretty much all the information we get in had this country, not just from
newspapers but all the way up to Google.
I want to start here with a bit of a story. I went to work for "The
Post" in May of 2009. So I`ve not been there that long, just four years.
You walk into that building, or I walk into that building, and it`s not the
prettiest building in the world. I love that building but it`s kind of an
ugly building. They`re looking to sell it. It`s on 15th and L Streets in
But you walk in and see this big type setting machine, and the
history, it just crushes down on you. You see these framed papers like
from the day President Richard Nixon resigned, and you realize that in this
building people acted to change the course of American political history
and American media and news reporting and even letters.
And I can`t -- I can`t tell you how intimidating and how inspiring it
is to walk into that building for the first time and the second and,
honestly, still today.
But when I got there in 2009, the atmosphere was unreal. It was like
a funeral. And that`s because there were these little funerals happening
across the newsroom all the time. You would be sitting there doing your
work and you`d hear kind of somebody tapping a microphone and then you`d
hear speeches and then there would be clapping, and then everyone would get
a piece of cake, and some 15-year veteran of the industry would walk out
the doors for the last time onto 15th Street.
And this would happen sometimes four or five times a day. The
recession, when I came, had just destroyed print advertising and the
Internet had disrupted the whole business, and we were in our fourth round
of buying out these really great journalists, giving them money to leave so
we didn`t have to pay them to do journalism anymore because we couldn`t.
One of my first weeks there, I was in the elevator with a managing
editor and I nervously made some dumb joke about all the cake around the
newsroom. And he told me that in the last round of cost-cutting, we had to
cut the cake budget. We cut the cake budget because we were spending too
much on cake. I remember thinking to myself I really got into this media
thing at the wrong time.
And what was happening there was that this kind of unholy business
model of American journalism was breaking down. We ran a business where
people paid us to run ads saying they had a used piano they wanted to get
off their hands, or there was a job open for a gym receptionist or a
department store was having a sale on shoes. And we took that money and
used it to investigate the president of the United States. That work we
did, that investigating of the president, was so unbelievably important.
I mean, it`s easy now to look back on Watergate and just let it fade
into the inevitability of history, to just write it into the fabric of our
past as if the garment could have only come out one way, but it didn`t have
to happen. That was a war. And it was a war with the White House that
"The Washington Post" was proving that Carl Bernstein and Bob Woodward were
proving day by day was thuggish and would stop at almost nothing to destroy
(BEGIN VIDEO CLIP)
KATHARINE GRAHAM: The pressure got very, very tough. They would
attack our credibility on every level, and they wouldn`t answer phone calls
from "The Post." They were told not to speak to our reporters. What was
rather ludicrous they were told not to come to dinner at my house.
(END VIDEO CLIP)
KLEIN: That was Katharine Graham herself speaking about the pressure
coming from the White House during "The Post" reporting on Watergate. And
she wasn`t exaggerating. Here is President Nixon giving some of those very
marching orders to his press secretary Ron Ziegler in 1972.
(BEGIN AUDIO CLIP)
RICHARD NIXON, FORMER PRESIDENT: I want it clearly understood that
from now on no reporter from "The Washington Post" is ever to be in the
White House. Is that clear?
RON ZIEGLER, PRESS SECRETARY: Absolutely.
NIXON: Never in the White House. No church service. Nothing which
Mrs. Nixon does. You tell Connie, don`t tell Mrs. Nixon because she`ll
approve it. No reporter from "The Washington Post" is ever to be in the
White House again. And no photographer either. No photographers. Is that
ZIEGLER: Yes, sir.
NIXON: None ever to be in. Now that is a total order and if
necessary I`ll fire you. Do you understand?
ZIEGLER: I do understand.
NIXON: OK. All right. Good. Thank you.
(END AUDIO CLIP)
KLEIN: There`s this great moment from that period where one of
Nixon`s aides tells Karl Bernstein that Katie Graham, the publisher of "The
Post", is going to get caught in a big fat wringer if that story is
published. We published not only that story, we published that quote or
most of it anyway.
(BEGIN AUDIO CLIP)
UNIDENTIFIED MALE: He was talking to a reporter?
UNIDENTIFIED MALE: I think I woke him up.
UNIDENTIFIED MALE: Good notes?
UNIDENTIFIED MALE: Verbatim.
UNIDENTIFEID MALE: He really said that about Mrs. Graham? Now cut
the words and print it. It`s a family newspaper.
(END VIDEO CLIP)
KLEIN: This was a business model. We were taking money from the most
mundane local transactions, from being the way a city`s commerce
communicated with itself and using it to fund this incredible, dangerous,
high-flying history changing journalism. The money that Macy`s was giving
us to advertise sale on dresses was sending reporters to Vietnam. It was
And with the advent of the Internet and Craigslist and all the rest of
it, it began breaking down.
But here`s the thing. What wasn`t really sending anyone to Vietnam
were subscription fees, and this is kind of the dirty secret of not just
the news business but pretty much the entire informational comments in this
country, which is that we don`t pay for it. The consumer doesn`t pay for
It`s not like the business model for candy bars or TVs or purchases of
candy bars and TVs fund the production of candy bars and TVs. It`s paid
for typically by advertisers or by rich people. Either because a rich
person owns it directly or a rich person donates to the nonprofit that owns
This is true for newspapers, but it`s also true 30 for magazines and
it`s true for radio. It`s true for cable news like this program. You`ll
see it when we go to commercials in a few minutes. It`s true for search
engines like Google and Yahoo! It`s true for Facebook.
Think of how often you use a search engine like Google. Isn`t it odd
that you`ve never sent them a check? They`re woven into the fabric, if not
your life, certainly mine and most of the people I know. I don`t think I
would survive 10 minutes in my job if I couldn`t search the net. It`s
vital to me.
Perhaps the most vital services in my life and I don`t pay a dime for
it. But it`s not free. They`re just selling me and you to advertisers and
on some level, God bless those advertisers and God bless the families like
the Grahams and the Sulzbergers who own "The New York Times" and maybe Jeff
Bezos who funded this.
But for all that when you back up, when the machinery comes clear like
this and you begin to see it break down, when you have to see and hear
about the business model, it`s not exactly comforting or pretty it means
the directions in which our informational services evolve from our news to
our search engines, those directions for the most part are the directions
that are either appealing to advertisers or appealing to rich benefactors.
(BEGIN VIDEO CLIP)
BOB WOODWARD, THE WASHINGTON POST: A number of years ago, Eric
Schmidt, the head of Google at the time, the CEO, was here talking.
And I said, well, it`s going to be on your tombstone that you killed
newspapers. And he said, what do you mean? I love newspapers. And I
said, well, you`ve taken all of our money. All of our ad revenue. And
like a good CEO, he said, it`s our money now.
And this is all about money and "The Post" use to be this cash cow
from the advertising revenue. It shifted to the Internet and we can`t
(END VIDEO CLIP)
KLEIN: That`s Bob Woodward, of course. And we don`t know, I think,
what our informational commons would look like if it was supported by the
people who use it or support it through some other mechanism than the ones
I mean, you can take this one example Wikipedia, which is supported by
the people who love it. They don`t pay many employees.
Look, I`m not coming here to you tonight with some big solution. I
don`t know how to fix it. I work for "The Post." I hope Jeff Bezos is as
good as steward of "The Washington Post" as Don Graham thinks he`ll be. I
trust on Graham`s judgment on this. I think a lot of us do.
But this is a fragile foundation on which we`ve built our
informational world, a foundation based on a business model that never made
all that much sense. It was unique in its own way and it is now kind of
failing and then the foundation of rich people who have maybe a lot of good
intentions but their own interests and their own quirks and it`s on this
foundation, it`s on this foundation that we`ve chosen to place almost all
the information that we need to operate as a society.
We`ll be right back.
KLEIN: What does it mean for the future of how we get information
when they are being bought up by billionaires and advertisers? We`ll talk
about that, next.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: It`s a bad time for newspapers as you all know.
The news hole is shrinking as advertising dollars continue to decline. Our
circulation numbers are also down as we compete with a variety of media.
Technology is driving distribution and the Internet is a free source of
news and opinions.
(END VIDEO CLIP)
KLEIN: That was a scene from "The Wire" I will try to get into any
broadcast I ever can in which the editor of "The Baltimore Sun" tells the
staff that because of the Internet, the paper will have to make budget
cuts. We`re discussing the future of journalism and trying to under the
path of the industry considering how much it has changed following the
introduction of digital media.
And joining me now is Michael Moynihan, cultural news editor for "The
Daily Beast." Jay Rosen at New York University and author of "Pressing
(ph)", a web log about journalism. And John Cassidy, staff writer at "The
New Yorker" and a columnist at "Fortune" magazine.
And, Jay, I want to being with you here. So, Jeff Bezos is a guy who
owns a literal rocket ship company. He has a company that makes rocket
ships. He has a clock that is going to run for 10,000 years in the can
desert. And he owns Amazon. He`s a disruptor of industries, and now he is
buying one of these gatekeeper players, an entrenched institution that`s
been around for a long time, the kind of thing that in other times he
Why do you think he`s buying "The Post"?
JAY ROSEN, NEW YORK UNIVERSITY: I think it tells us something about
the scale of the ambition that this generation of entrepreneurs have. I
don`t think they`re simply interested in building huge businesses and
dominating markets, they want to actually change the way we do things. And
if it can be done better, it should be done better, is sort of the motto of
the geeks in Silicon Valley.
And I think for me as I reflected on why Bezos would want to do this,
some of the things you mentioned came up, the fact that he wants to go into
space, the fact that he wants to go into the future with his clock. And
in some ways with "The Washington Post", what he`s doing is buying this
connection to the past as you emphasized in your intro.
So, for me, what stands out about this purchase is this is a man who
wants to do a lot more than sell books and garden tools to Americans. He
wants to change the current of his time.
KLEIN: And, John, you had this post at the "New Yorker" today, and
there`s been a lot of commentary about the sale that is mostly focused on
what he can do for "The Post" at sort of what might be the sort of long-
term philanthropic instincts and your view of it was you call it more
cynical, a bit more realistic, but why do you think he`s buying it?
JOHN CASSIDY, THE NEW YORKER: I called it skeptical. I`ve had a lot
of people like you from "The Post" quite understandably saying and wishing
him good luck and he`s going to invest heavily in the paper. It looks like
it could be a savior coming in.
But I thought it may be time for somebody like myself to just stand
back and say, look, maybe "The Post" can do something for him as well.
This is not just some guy off the street who is buying the paper. He runs
the biggest online retailer in the country, a company that has a lot of
business in Washington. There`s a bill before the House at the moment
about sales taxes in the states which Amazon has massive stakes in. There
are antitrust inquiries, current, past and future which the company is
going to be involved in.
So I think, you know, it`s legitimate to raise the question why he`s
buying the paper, does he have some interest the paper? I don`t know. I
haven`t had a secret interview where he said here is the real reason I`m
buying "The Post."
But I think when any rich, well-connected, powerful businessman buys a
newspaper, it`s incumbent on journalists to take a second look and say,
what`s he really up to?
KLEIN: And I think there ends up being this sort of -- "The Daily
Beast" is driven by daily -- not daily -- Barry Diller who happens to be on
"The Washington Post" board, I should mention. "The Post" has been owned
by the Graham family who owned Kaplan, which in the last couple of years
had very significant interests pending before the U.S. government in terms
of how they would regulate the education business.
This world in which sort of billionaires or hundred millionaires buy
up these big papers get a certain amount of influence in the national
conversation and then have some amount of business interest. It`s not new
but it definitely seems to be sharpening.
MICHAEL MOYNIHAN, THE DAILY BEAST: It`s definitely into the new. As
a matter of fact it`s a rather old thing.
MOYNIHAN: I would say that now there are more checks on this than in
the past. And I don`t mean with regulations and legislation and such. But
if you -- and if Jeff Bezos, the taker (ph) of this paper, started invading
the editorial room and saying you have to run these unsigned editorials
about will how the internet sales tax is going to destroy businesses, the
backlash against that would be enormous. I don`t think -- Jeff Bezos is a
very clever guy and we`ve seen what he`s done over the past 20 years, I
don`t suspect he would do something like that.
You know, this -- I mean, we look at immediately when this happened my
first instinct was to tweet, be very modern about this, to say let`s find
out Jeff Bezos` politics and attack them. That`s the instinct these days.
We always have this sort of mustache twisting view of the guy who comes in.
But I -- you know, would think that Jay is right here. The fact he owns a
company that makes rocket ships actually means something to me and he wants
to come in here and he said today that he was very reassured by the
statement that he wants to keep the ethos of the paper and not intervene.
I suspect that that`s actually true. Now, again, it`s just a hunch
but getting deeply involved and being sort of Machiavellian about it, You
know, it doesn`t -- I don`t suspect he`ll do that for a variety of fairly
KLEIN: One of the things so this is a guy with essentially
interplanetary ambitions I mean quite literally. And one of the things I
do find to be a signal of this kind of purchase is that in the past you`ve
had these owners of these papers, in part due to the paper`s business model
which has been substantially local, who are deeply rooted in the community.
So, I mean, the Grahams are deeply in Washington, the Sulzbergers to New
York. I mean, you see this in paper after paper, the Chandlers in Los
Jeff Bezos lives in Washington but not the one where the paper is. He
lives in Washington state. And that to me does feel like something new and
also something potentially important in terms of if you begin seeing sort
of cross state or you could imagine international ownership of these
papers. The local mission they play in addition to their prestige induced
or prestige sort of headlining national and international role could
ROSEN: Yes, that`s the most interesting thing about this, is that he
isn`t somebody who grew in the shadow of "The Washington Post" and is
buying the hometown newspaper or the hometown sports team.
And one of the interesting things about that Amazon is very good at
two things that are really important to the news industry. One is user
experience. They are expert at making it easy for people to buy things.
The user experience for news has never been all that good. It`s not
easy to find your way around "the Washington Post" Web site.
ROSEN: The other thing that Amazon had to pioneer to be good at what
it does is trust. If you don`t trust that your transaction is going to go
through, if you can`t trust your credit card to Amazon, you`re not going to
buy anything there. And trust is the coin of the realm in journalism as
well. So the fact that he`s not buying this to be a big player in town, he
doesn`t have a house that the power players in Washington can come to and
gather around his dinner table. It means that the focus is going to have
to be on the product, on the journalists, and, one hopes, the users.
KLEIN: And I think that one of the interesting questions that ends up
being is, who will be the users of this going forward? But I want to talk
about that when we come back.
KLEIN: Talking about the future of the news business and who owns it.
Still with me are Michael Moynihan from "The Daily Beast", Jay Rosen from
New York University, and, John Cassidy from "The New Yorker".
And, John, I want to go to you. One of the things when you see these
sales over the last week, for a time you could forget how the media was
funded. It somehow got to you every day and for a while you could just
read it online and it was like a fact of life.
I think now we`re seeing there`s actually a business model, right, and
the business model in many cases is failing.
KLEIN: And as the business model fails, it changes either who owns it
or how the news is delivered. I mean, you see on a lot of Web sites
advertising or advertising is harder to distinguish from the actual content
and it`s an enormous amount of our informational resources and now,
(INAUDIBLE), two somewhat odd business models from the resource themselves.
CASSIDY: Yes, I mean, that`s one of the fascinating about Bezos
buying this, because "The Washington Post" sort of emblifies the old model,
more than any of the paper. They have the choice whether to go national or
sort of rely on subscription. They chose to go the other way and rely on
local advertising and really dominate the Washington market which they`ve
always done in northern Virginia and Maryland, et cetera. And that was an
incredibly lucrative and rewarding business model for years.
Warren Buffett bought in, made a fortune on the paper. The Grahams
became this great family and it`s gone to hell because of the Internet.
Everywhere else in Silicon Valley people are saying why would you purchase
a newspaper? That`s dead wood. Then along comes Jeff Bezos, you know,
this little guy who is the great Internet icon, and he says, no, wait a
minute. This paper is worth $250 million.
To me there`s a sort of disconnect there and I don`t know what the
answer is. That`s why I have my interview request in. I wonder, what does
Jeff Bezos say about this? What does he see is the business future of "The
Post"? Not just online, not just the political future.
KLEIN: And one of the genuinely fascinating things about the way this
media has evolved is that people just don`t pay for it. So, we instituted
a pay wall at the post a couple of months ago and there was a lot of sort
of whaling and gnashing teeth. It`s $10 a month.
I have a lot of e-mail from readers who say, look, I can`t pay this.
It`s just not something I can manage. And I get that and it`s actually a
fair amount of money, but it is at the same time the sort of fascinating
bit of the world where I think the news and the way it pays, it`s something
they are not used to paying for it. It would be very weird to go -- well,
I can`t pay for the food. I`d like to see some advertisements on the side
of the candy bar and yet we`ve ended up in this place.
That`s the central weakness of the business model that readers have
not figured out either in the Internet age but to a degree I don`t think
people before it how to get people to pay the cost of the journals they
MOYNIHAN: There is no business model. If you look at a number of
these pieces, my friend Jack Shafer wrote a good one for "Reuters", saying,
you now, Jeff Bezos has this amazing ability to spin technology and he`s an
alchemist and maybe he can bring that to "The Washington Post." A
completely fair point.
It`s not saying he is coming with "X" business model and I`m very
excited about it saying, well, the guy who ships things the next day to you
hopefully can apply something to the news. It`s kind of crazy when you
think about it.
I mean, you see "The Atlantic", a good example of this. A great
magazine, a great Web site, one I visit every day, desperate in some ways.
Granted, they do other things. They have events that make them a lot of
money. So, desperate in some way they were doing this sponsored content.
They were trying this out and one of the big ones that they did was the
KLEIN: And, they are still doing it.
MOYNIHAN: And, they are still doing it.
MOYNIHAN: The scientology one paid for by the church of scientology,
and it looked like an "Atlantic" piece. Now, it was labeled and it was
clear when you read it, that it was an advertisement for scientology.
But, that is desperation at this point. I mean people still -- Bezos
gets people to buy electronic books because there was never a culture of
getting free books on the internet. You paid for them. You paid reduced
rate but not significantly reduced.
And, then online, I talk to younger people and the younger people in
our newsroom, they find the idea of paying for news totally baffling. And,
I read four print newspapers a day. I love print. I read books in actual
book form. And, I would be very upset if this all went away. But, I buy
my news and it`s a different world.
JAY ROSEN, AUTHOR, PRESSTHINK: But, let`s remember before the 1830s
news was limited to the commercial and trading classes because it was very
expensive. And, it wasn`t until people cut the price making it not free
but almost free that the whole idea that you could inform the great mass
public came about. So, there`s a lot of value to free or almost free news.
The value is that most of the public can read it.
ROSEN: And, while I certainly sympathize with you and your colleagues
that you need salaries, you need to be paid, let`s not pretend that there
isn`t huge public and social value to news that is freely available.
KLEIN: And, I think that one of the great ironies of this period is
at a time it`s been very tough for many journalists is probably it`s never
been a better time to be a news consumer through the amount of news you
can now get --
ROSEN: That is right.
KLEIN: -- which is more than at any other time. We are going to have
to leave it there. I am sorry John. Michael Moynihan from the "Daily
Beast," Jay Rosen from New York University, and John Cassidy from the "New
Yorker," thank you all very much for being here. And, we will be right
back with Click#3.
KLEIN: Homeownership should not be the definition of the American
good life anymore. And, I`ll explain why coming up. But first -- first --
I want to share with you the three awesomest things we saw on the internet
today. We begin with a meteorologist who forgot to rise with the sun.
Al Roker has been delivering his trademark brand of weather forecast
for nearly 40 years. In fact, Al`s presence on television has become so
reliable. What happened today was a shock. Al Roker did not make it to
his early, early, early morning television show.
The weather channel`s "Wake Up With Al" was sans al when it went to
air. Al twitted, "After 39 years it happened, I overslept and missed the
show. I missed the "Wake Up With Al." Will be on time for "Today." And,
indeed, he was on time for "Today." Shaking off the cobwebs and explaining
his tardiness to the world.
(BEGIN VIDEO CLIP)
AL ROKER, NBC METEROLOGIST: My phone didn`t go off and somebody said
what`s your backup? And, then I said, "For 39 years, I didn`t need one."
MATT LAUER, NBC HOST OF "TODAY" SHOW: You didn`t one.
SAVANNAH GUTHRIE, NBC "TODAY" SHOW: Exactly!
LAUER: You missed the "Wake Up With Al" this morning?
ROKER: Yes. Yes. Yes. Then we changed the name to, "Al, Wake Up."
(END VIDEO CLIP)
KLEIN: It`s good to see Al in such good spirits. We`ve all been
there, buddy. The second awesomest thing on the internet today. At least,
our future robot overlords will be adorable. For years, the Pixar`s
beloved trash compacting robot "Wall-E" existed only in animated form.
But, thanks to a model builder out in California, now moving and
talking scale replica of Disney`s famous gear head. The handy work was
done by a Mike McMaster, a charter member of the worldwide R2d2 builder`s
chub. He built Wall-E to life completely from scratch.
(BEGIN VIDEO CLIP)
MIKE MCMASTER, BUILDER OF PIXAR`S WALL-E REPLICA: My right hand does
all the driving and then my left hand manipulates the head. And, so we can
look about 270 degrees. He can pitch up, pitch down. We can move the
eyebrows with the gear switch. And, then, of course, I have remotes on the
sides that cue up the sounds.
(END VIDEO CLIP)
KLEIN: Not only does Wall-E get to enjoy life on this earth as
opposed to the garbage planet from the movie, Dreamers of the world came to
rejoice over the prospect of the cutest robot summit the galaxy has ever
And, the third awesomest thing on the internet today. It is Bizarro
World`s Granton. Ten years ago, auditions were held for the American
version of the sitcom "The Office." And, now, we can see what it would
have been like if Seth Rogan got the part of Dwight instead.
(BEGIN VIDEO CLIP)
SETH ROGAN, HOLLYWOOD ACTOR: Urine is sterile. Did you know that? If
you`re in the field, you can clean a man`s wound by taking a wiz on it.
That is in the First-Aid books written by the Red Cross.
(END VIDEO CLIP)
KLEIN: You can see famous folks auditioning for "The Office" like
Eric Stronestreet from "Modern Family," "Parks And Recreation`s" Kathryn
Hahn, "Harold And Kumar`s" John Cho and Adam Scott, who really would have
made a pretty great Jim.
(BEGIN VIDEO CLIP0
ADAM SCOTT, HOLLYWOOD ACTOR: If we can supply it to them and if they
can purchase it -- I`m boring myself just talking about it -- so that`s, I
can`t -- I can`t even.
(END VIDEO CLIP)
KLEIN: You could have. And, before Steve Carrel and Michael Scott
they almost went to miss their shows, Bob Odenkirk.
(BEGIN VIDEO CLIP)
BOB ODENKIRK, HOLLYWOOD ACTOR: We play hard and we work hard.
Sometimes we probably play hard when we should be working hard. And,
that`s probably my fault, but -- Fire me.
(END VIDEO CLIP)
KLEIN: "Die Hard" fans know that Bob Odenkirk was actually cast in
the role of Michael Scott before being yanked in favor of Carrel. There`s
a "That`s what she said," joke in there; but, I will leave that one alone.
You can find all the links for tonight`s Click#3 on our website,
allinwithchris.com and we would be right back.
KLEIN: Welcome to sunny Phoenix, one of the epicenters of the
nation`s foreclosure crisis, which is now actually seeing something of a
housing market recovery. It`s for that very reason President Obama chose
Phoenix as a backdrop for a big policy speech on housing and addressed an
issue that doesn`t get a lot of play from elected leaders or talking heads,
"Renting a home."
The president was greeted by an Arizona Governor, Jan Brewer, on an
Arizona Tarmac. His prepared remarks made news even before he delivered
them. The president endorsing a senate bi-partisan plan to wind down
mortgage giants Fannie Mae and Freddie Mac noting the days of a guaranteed
government bailout are, well, not over but numbered.
(BEGIN VIDEO CLIP)
PRES. BARACK OBAMA, UNITED STATES OF AMERICA: Yes. For too long
these companies were allowed to make huge profits buying mortgages knowing
that if their bets went bad, taxpayers would be left holding the bag. It
was heads we win, tails you lose. And, it was wrong.
(END VIDEO CLIP)
KLEIN: There was also broad five-point plan Mr. Obama advocating on
behalf of responsible homeowners supporting a 30-year fixed rate mortgages.
He even lobbied for immigration reform. After all, immigrants, you know,
can buy homes, too.
But, there was a tension in President Obama`s speech. A tension we
think is pretty interesting here. Part of it was from the old hymnal that
the pre-housing crisis playbook, where the very definition, the very
definition of what it meant to succeed in America, to achieve the American
dream was to own a home.
(BEGIN VIDEO CLIP)
PRES. BARACK: A home is the ultimate evidence that here in America
hard work pays off, that responsibility is rewarded. You know, I think
about my grandparents` generation. When my grandfather served in World War
II, he fought in Patten`s army.
When he got back, this country gave him a chance to go to college on
the GI Bill, but it also gave him a chance to buy his first home with a
loan from the FHA. To him and the generations of Americans before and
since, a home was more than just a house. It was a source of pride and a
source of security.
(END VIDEO CLIP)
KLEIN: That`s talk that we`ve heard for years. You might recall
George W. Bush`s ownership society. But, then the president addressed the
fact not everyone can or even should buy a home and suggested a re-
examination of current policy affecting renters.
(BEGIN VIDEO CLIP)
PRES. BARACK: In the run-up to the crisis, banks and governments too
often made everybody feel like they had to own a home even if they weren`t
ready and didn`t have the payments. That`s a mistake we should not repeat.
Instead, let`s invest in affordable rental housing. Let`s bring together
cities and states to address local barriers that drive up rents for working
(END VIDEO CLIP)
KLEIN: Those aren`t big policies the president previewed in renting.
They`re not on the scale of, say, ending the fact that people who buy a
home get a huge tax break and people who rent one get nothing.
But, there is evidence that there is now finally friction around the
idea that every American should always and everywhere be a homeowner.
Joining me now is Heidi Moore U.S. Financing Economics Editor for "The
Guardian" newspaper. My friend Mike Konczal, a fellow with the Roosevelt
Institute and a columnist for "Wonkblog, blog editor, and Shahien
Nasiripour, Chief Financial and Regulatory correspondent for "The
And, Shahien, I wanted to begin with you. The five-point plan the
president laid out today did, as a sort of coherent vision for where the
housing market should go from here, did you think it helped? Did you think
it made sense?
SHAHIEN NASIRIPOUR, CHIEF FINANCIAL AND REGULATORY CORRESPONDENT FOR
"THE HUFFINGTON POST": I mean, I think the plan makes sense. What I think
you spotted the inherent tension in what he was stating and that there is
this -- he mentions rentals as, you know, being kind of a decent, honorable
thing that our society should encourage.
However, he holds up homeownership as kind of the most tangible
cornerstone of middle class life. And, so I don`t think the administration
has clearly come to grasp with how much they should encourage rentals and
how much they should direct government policy to encourage homeownership.
And, until they resolve that inherent conflict, I don`t think that they are
ever going to be able to present a coherent and cohesive plan to attack the
-- you know, the housing problems that we all face.
KLEIN: Heidi, I feel there are two pieces to that inherent conflict,
right? There is the political piece, which is that ownership is it is like
literally the other thing. When you say, Apple pie and you say mother and
you say homeownership.
HEIDI MOORE, U.S. FINANCING ECONOMICS EDITOR FOR "THE GUARDIAN"
NEWSPAPER: And, the policy piece of it, which is if an enormous amount of
what I think could call the middle class, you know, social state is devoted
towards giving subsidies for homeownership and kind of to get at the policy
you need to get at the politics. And, the politics on that are really
MOORE: Yes. This is a huge fight that Obama is picking and God help
him in getting somebody on his side. It`s true that there`s a bipartisan
bill introduced by Robert Corker and Mike Warner that would eliminate
Fannie Mae and Freddie Mac. And, the role of Fannie Mae and Freddie Mac is
to guarantee mortgages, so that people can have affordable mortgages.
But, the problem with that is if you eliminate Fannie Mae and Freddie
Mac, where do you get mortgages? You throw them over to the banks and
that`s what Obama wants to do. The banks just aren`t going to take that
same kind of risk without that policy and that social aspect of needing to
provide affordable homeownership. They just want to make a profit.
KLEIN: And, to make that real tangible, Mike, because I think it is
always worth because I think people here at Fannie Mae and Freddie Mac, and
there are all these cute names for very complicated housing agencies, but
without Fannie Mae and Freddie Mac, I think it`s fair to say their prime
contribution to American Life is that the 30-year fixed rate mortgage would
not exist in nature, it is too much risk.
The private banks would not be handing these out to most homeowners
that they essentially exist there. In additional to the fact that they
give this big tax break for buying a house, you get this kind of government
buyback of the loan, which is what allows these incredibly long-term,
stable, secure and very, very advantageous loans you could not get on the
private market to exist.
MIKE KONCZAL, FELLOW WITH THE ROOSEVELT INSTITUTE: Absolutely. So,
you know, you see every country has some form of market that involved --
our government involvement in the markets. I want to go back and talk
about the rental for a second. The GSE also played a very outside role in
the rental markets.
KLEIN: And the GSEs are the Fannie Mae and Freddie Mac.
KONZCAL: Fannie Mae And Freddie Mac.
KLEIN: So, these are Government Supported Entities.
KONZCAL: Absolutely. So, they played a very important role in the
rental markets especially during a crisis. They were back stopping
essentially 80 to 90 percent of the rental markets. So, this reform will
impact renters just as much as it impacts people who actually have
Now the 30-year fixed rate mortgage, there`s a big debate about
whether or not that should exist going forward. In fact that`s one of the
crucial debates. You know, there are a lot of advantages to a 30-year
fixed rate mortgage. It contains costs and makes costs very predictable
for families especially with volatile interest rates.
It puts a lot of the interest rate risk on the government and on the
banks and the people who own the instruments rather than on households,
which, you know, causes a lot of problems for households trying to balance
financial risk. And, it also by spreading out the funding, it makes it a
little less boom and busty. It makes it a little less as columnist would
say less likely to have these very short, jagged, subprime like loans,
which we saw in the 2000 with the constant resets and A.R.M. rates.
KLEIN: And -- Heidi, do you want to jump in there?
MOORE: Yes. Absolutely. And, also, what this does is that it makes
Obama beholden to Wall Street. And, Wall Streets is not ignorant of the
value of the rental market, which has been growing and growing --
KLEIN: What do you mean when you say, it makes them beholden the Wall
Street, in what way?
MOORE: Well, he needs the banks to cooperate with his plan. If he
wants to get rid of Fannie Mae and Freddie Mac, he needs the banks to take
up all of that slack to potentially agree to accept losses on mortgages.
One of the bills in congress right now, the senate bill, asks banks to take
the first 10 percent of losses on mortgages.
And, you say loss to a bank and they just have posttraumatic stress
disorder about the financial crisis. They don`t want to sign up for that
if they can get a government subsidy. So, he needs to convince them that
they are all on the same side, which they are not.
And, there`s no enlightened self-interest so that he can really pitch
to them to work with him. The other thing is that banks have not been
ignorant of the power of the rental market, which has taken over because
it`s so hard for people to borrow for a mortgage.
And, so they have already started to securitize rentals, the same way
they use to bundle mortgages and you know sell those bundles off. They are
now doing that with rentals. So, what you see is that it`s really hard to
keep Wall Street at bay and keep the market for housing fully controlled.
KLEIN: And, Shahien, I want to ask you about the big policy that
basically dares not to speak its name, but I want to do it when we come
(BEGIN VIDEO CLIP)
PRES. BARACK: It`s important for us to encourage homeownership, but a
lot of people rent and there`s nothing wrong with renting. We have to make
sure that we are creating affordable opportunities when it comes to rental
(END VIDEO CLIP)
KLEIN: Shahien, one of the things that I find interesting about this
whole debate is that you have this situation where Fannie Mae and Freddie
Mac, we`ve talked about a bit, and they kind of operate abstractly. And,
most Americans never come into contact with them.
The policy that kind of enrages me a bit and really gets any economist
you speak to mad is the mortgage interest deduction. And, every, you know,
American taxpayer knows about that one. It`s incredibly, incredibly
popular. But, I want to show you that graph because it`s also to a degree
people don`t realize incredibly regressive.
It`s a huge benefit for richer people. It`s almost nothing for poor
people who don`t intend to buy houses. And, so what it means, in effect,
is that poor people who are renting houses end up subsidizing in taxes.
Richer people buying very, very large houses and yet it is this wildly
popular part of the tax code that for all the talk of tax reform, for all
the republicans say about cleaning up the code and getting rid of sort of,
you know, these deductions, you never hear anybody even consider touching
NASIRIPOUR: Well, you have to look at the interest groups that have a
huge stake in this debate. You have the national association of realtors,
the home builders, the mortgage bankers, even just the regular -- the banks
themselves that dabble in real estate.
I mean no one wants to get rid of the home mortgage interest deduction
because it subsidizes a huge part of American housing. And for them, for
policymakers to even consider scaling back the mortgage interest tax
deduction would hugely impact the American housing market and all these
related and ancillary industries. And, they`re not going to want to give
that up without a fight and so it`s just too politically toxic in
KLEIN: I think that`s correct but Heidi, I kind of think that is only
part of the truth here, which is if the America -- We have a tendency to
blame everything on interest groups, right? It`s the bad interest groups
keeping this policy. But, the American people, you polled the mortgage
interest tax deduction. It`s a whole lot more popular than anybody in
And, it`s connected to this cultural belief we have that fundamentally
what is the American dream is getting to buy your house. And, so the
American government should be helping you achieve the American dream. But,
you know, so we end up subsidizing a bunch of richer people. It is a
really perverse way our politics works on this particular issue.
MOORE: Yes, absolutely. And, I would say that the American dream is
actually not the mortgage interest part but the tax deduction part. It`s
really hard to take away tax deductions from people and they like the idea
that it`s there for them theoretically even if they are not using it.
And, so it is almost seen as a perk, not quite an entitlement, but you
know the thing about Americans is they always feel like they are going to
move up through social classes and so they may not be using the mortgage
interest rate tax deduction right now, but they think one day I`ll be rich.
One day, I`ll buy a bigger house and that thing will come in handy. Why
should I get rid of it?
KLEIN: But one of things that creates, Mike is that I think that we
end up sort of talking about this a lot in terms of its kind of front-end
effect, right? Its effect on individual homeowners. But, you have all
these incentives, from the mortgage interest and this tax deduction to
Fannie Mae and Freddie Mac to get people who are kind of on the margin of
renting and buying and may be even before that margin when they should be
renting to buy.
And, that creates a different world for the industry. You build a lot
more houses that are to be bought instead of to rent. So, even people who
want to rent end up not being able to find the kind of housing stuff that
you would need to raise a family particularly in a lot of urban centers and
then you end up having a situation where they need the mortgage interest
tax deduction and Fannie Mae and Freddie Mac. And, the politics of it,
just kind of begin to feed on it self such that homeownership becomes
absolutely, you know, entrenched as this incredible bias in American public
KONZCAL: Right. It`s like if one person stands up at a stadium,
they`re fine but when everyone stands off, no one is better off. And, so
mortgage interest deduction going into the housing market raises prices in
such a way that it kind of gets eaten into whatever benefit you got in the
It is kind of like the health care deduction. This is in a middle
class state where that accidentally became very important. It has actually
was never designed as a specific housing program. It just kind of fell
into the income tax code when it was adopted. I think studies are pretty
clear that it doesn`t actually benefit homeownership. Most of it is soaked
up at the very top end in part because you have to deduct. The more you
pay in taxes, the more the benefit is.
KLEIN: All right, so if you just take the standard deduction you
don`t get it.
KONZCAL: Yes. And, then, you know, if you have a huge mortgage
payment, then you know, you obviously get more value out of it. So, kind
of like health care deduction, it`s something that has become central to
how we -- you know, employer provided health care deduction, it has become
so central to how we see middle class life and I think we are going to have
to approach it to scaling it back at the top and slowly rolling it back
over years, which I think is starting to become a consensus approach.
KLEIN: And, Shahien, quickly, is there -- you`re very engaged in this
fight going on in congress. Is there an actual prospect for anything to
happen in congress this year in housing?
NASIRIPOUR: No. No. I mean I`m sorry to be so blunt, but there`s
nothing that is going to happen before 2014. I mean, there are too many
differences between the democrats and the republicans. And, not only that,
there are too many differences between -- you know, folks in the Republican
Party, between senate republicans and house republicans, between tea party
republicans and those who are more friendly to corporate interests.
There is virtually no prospect for anything advancing before the 2014
election. So, largely, this is kind of an intellectual debate where we
start the discussion and hope to pick it up some time after 2014, maybe
before 2016; but, honestly, who knows?
KLEIN: Well, we do like intellectual discussions here on "All In."
Heidi Moore from "The Guardian" and Mike Konzcal from the Roosevelt
Institute and occasionally Wonkblog, and Shahein Nasiripour from "The
Huffington Post," thank you all very much. That is "All In" for this
evening. The "Rachel Maddow" show with the great Rachel Maddow, starts
right now. Good evening, Rachel.
RACHEL MADDOW, MSNBC HOST OF "RACHEL MADDOW" SHOW: Now, I feel like I
have to live up to that. Thank you very much, Ezra.
KLEIN: No Problem. No pressure.
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