updated 1/6/2014 12:34:09 PM ET 2014-01-06T17:34:09

THE RACHEL MADDOW SHOW
December 18, 2013

Guest: Nick Acocella


STEVE KORNACKI, GUEST HOST: Good evening and thanks for joining us.
I`m Steve Kornacki. Rachel has the night off.

A bill has reached the president`s desk. There is no need to adjust
your television. I know it`s almost impossible to believe, but the United
States Congress tonight has actually done something.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: On this vote, the yeas are 64, the nays are 36.
The motion to concur in the House amendment to the Senate amendment to
House H.J. Res 59 is agreed to.

(END VIDEO CLIP)

KORNACKI: Earlier tonight, the United States Senate had passed that
mouthful of Senate jargon, otherwise known as a budget. As you heard
there, the margin was pretty wide, 64 votes yes, to 36 votes against it.
It`s the same budget bill, of course, that passed the House last week in a
vote that was even more lopsided. The spread there was 332 to 94.

And this makes it the first time since 2009 that a budget has actually
been agreed to. This is admittedly a pretty low bar. It is small ball
bill. It`s not exactly the monumental legislation we`re talking about
here.

But even at that, the fact that there is any budget deal that shows
Congress is being functional in a way that it has not been in a long time.
And part of this budget, at least the math behind this budget was made
possible by something else that happened this year, when the Bush tax cuts
were allowed to expire for the wealthiest Americans.

Maybe you remember the fiscal cliff deal that President Obama signed
to the very beginning of the year. The deal brought a ton of new tax
revenue into the federal government by not only allowing those high-end
Bush tax cuts to expire but also by raising things like the capital gains
attack.

So, President Obama started off this year with the deal to end most of
the high end Bush tax cuts, something he had been trying to do for a long
time. Something he campaigned on in the 2012 election. Now, he is ending
the year with a two-year budget deal that will likely avert another
government shutdown.

So, this is not the most momentous day in the history of the republic.
We`re not going to be looking back at this day 50 years from now and
saying, where were you in December 18, 2013, when Congress passed the
budget?

But this is still a significant budget. Those two deals that bookend
the year, the one in January and the one today, they are important and they
are consequential deals. And yes, this morning, as the Senate was
preparing to approve this budget, the Web site, Politico, was busy asking
this important question, "Which president had the worst year 5? Was it
Obama?"

That headline from "Politico" pretty much echoes perfectly what is now
apparently the majority view of the Beltway media. "Obama`s worst year,"
that was the headline in "The New Republic." "Obama had the worst year in
Washington," according to "The Washington Post." This was "The Daily
Beast", "Worst fifth year ever?" Maybe.

The Beltway media has concluded that President Obama had not just a
bad year, it`s not just a terrible year, but he`s had the worst year of his
entire presidency and quite possibly the worst fifth year that a U.S.
president has ever had.

OK. So, maybe we can take a breath here for a second. I mean, yes,
President Obama has definitely had a challenging year, a trying year, we`re
going to get to all of that in just a moment. But let`s first think about
how this is being framed. Let`s consider some of the competition here for
a minute when it comes to the title of worst fifth year ever for a
president.

For instance, it was in the fifth year of his presidency back in 1958
that Lyndon Johnson who was besieged by war, by domestic unrest, by a
complete collapsed in the incompetence of his leadership that Lyndon
Johnson practically lost the New Hampshire Democratic primary to a gadfly
senator from Minnesota. It was Lyndon Johnson then just months into his
fifth year as president where he had to go on television and make this
announcement.

(BEGIN VIDEO CLIP)

LYNDON JOHNSON, FORMER PRESIDENT: I do not believe that I should
devote an hour a day of my time to any personal partisan causes, or to any
duties other than the awesome duties of this office, the presidency of your
country. Accordingly, I shall not seek and I will not accept the
nomination of my party for another term as your president.

(END VIDEO CLIP)

KORNACKI: That -- that was a bad fifth year for a president.

As we consider all that happened during President Obama`s fifth year,
we could also think about the fifth year that George W. Bush had. The year
five of the Bush presidency was the year of the Harriet Miers debacle,
members of President Bush`s own party helped to derail his own shockingly
unqualified nominee to the Supreme Court. This was not exactly the sort of
news coverage you want to be hearing when you`re in year five of your
presidency.

(BEGIN VIDEO CLIP)

BRIAN WILLIAMS, NBC NEWS: Miers drops out as the Supreme Court
nominee. Tonight, reaction to this stunning turn, what happened and what
happens next.

The votes were not there in the U.S. Senate, and so tonight, the Miers
nomination has been withdrawn. The president will choose again, all the
while knowing he may be just hours away from the untold political damage,
from a grand jury, looking into evidence that some in the White House were
out to smear a man who question the underpinnings for war in Iraq.

(END VIDEO CLIP)

KORNACKI: Did you catch that at the end there? The end of that
segment with Brian Williams, year five of the presidency wasn`t only the
year of the Harriet Miers debacle. It was also the year that George W.
Bush`s own vice president`s top aide was indicted. The Scooter Libby
scandal was blowing wide open during President Bush`s fifth year.

And there was also something called hurricane Katrina, which was not
also a disaster of epic, tragic proportions, but also through his
leadership that President Bush never really recovered from.

(BEGIN VIDEO CLIP)

WILLIAMS: Today, the president of the United States visited this
region, and while he was here, one of the major radio station that was
broadcasting chose not to broadcast his remarks, saying at one point
nothing he could say could ever help them deal with the dire situation
unfolding live in streets of New Orleans, where people were still dying
during his visit.

(END VIDEO CLIP)

KORNACKI: Hurricane Katrina, Scooter Libby, the Iraq war, Harriet
Miers -- now, that was a bad fifth year for a president.

There was also in the five year, by the way, when something called the
Saturday night massacre happened during the Nixon presidency, in terms of
devastating year five developments, this probably takes the all-time cake.

(BEGIN VIDEO CLIP)

ANNOUNCER: The tonight show will not be seen tonight so we can bring
you the following NBC report.

UNIDENTIFIED MALE: Good evening. The country tonight is in the
middle of what may be the most serious constitutional crisis in its
history. The attorney general has resigned. Elliott Richardson who was
appointed attorney general only last May, in the midst of the Watergate
scandal, has quit, saying he can`t carry out Mr. Nixon`s instructions.
Richardson`s deputy, William Ruckelshaus has been fired. Ruckelshaus
refused in a moment of constitutional drama to obey a presidential order to
fire the special Watergate prosecutor.

That`s a stunning development and nothing even like it remotely has
happened in all of our history.

(END VIDEO CLIP)

KORNACKI: I know, I know, that`s not exactly a botched health care
rollout there, but that was pretty bad.

As was the moment during the fifth presidency when Richard Nixon had
to go on national television and say this.

(BEGIN VIDEO CLIP)

RICHARD NIXON, FORMER PRESIDENT: In all of my years of public life I
have never obstructed justice, and I think, too, that I can say that in my
years of public life, that I welcome this kind of examination, because
people have to know whether or not their president is a crook. Well, I`m
not a crook. I have earned everything I`ve got.

(END VIDEO CLIP)

KORNACKI: Year five of the Nixon presidency was when the Watergate
scandal just blew wide open, when all of the dirty criminal details just
came gushing out. That year was essentially the beginning of the end for
Richard Milhous Nixon.

Oh, by the way, it was during his fifth year that this happened.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Good evening. Spiro Agnew became a private
citizen today. And less than one hour after his resignation as vice
president became official, he was convicted of a criminal charge of tax
evasion.

(END VIDEO CLIP)

KORNACKI: Having your vice president resign and then get criminally
convicted on the same day, having that be number seven or number eight on
your list of problems of president, now, that is the definition of a bad
fifth year in office for a president.

That`s apparently not quite as bad as the fifth year that President
Obama is having, at least according to a certain strain of conventional
wisdom.

Look, there is no doubt this has been a disappointing year in a lot
ways for the president. He failed to get a background checks bill through
Congress earlier this year. Immigration reform, it got through the Senate,
but it`s been stalled ever since it was in the House. There was the whole
government shutdown, the botched health care law.

There is also an open question as we approach the end of the year, how
the country is ultimately going to interpret all of this. Was this just a
failure of President Obama? Was it a failure of Republican intransigence
in Congress? Was it a failure of President Obama and Republicans? That`s
a question that has not yet been answered and may not be answered until the
full mid-term elections, if even then.

But right now, this is where things stand heading into the end of the
year.

President Obama`s approval rating now has reached the lowest level of
his presidency. The Republican Party is now as unpopular among all
American people as it has ever been. That is the result of year five. It
has not gone good or been good for anyone in Washington.

What does that mean for what happens now and what happens ahead in
year six?

Joining us now is Perry Bacon. He`s a veteran political journalist
and the political editor for NBC`s TheGrio.com.

Perry, it`s a pleasure to have you with us.

PERRY BACON, THEGRIO.COM: Thank you, Steve.

KORNACKI: Thanks for joining us.

So, I really couldn`t help but go back to the archives and we have
Spiro Agnew, and we have George W. Bush, and we have Lyndon Johnson,
because, you know, I think it`s important to see a little context here and
say, you know, there is bad year fives, and then there`s what we`re talking
about here for President Obama. And I think maybe one place to start, as
you look at year five for the presidency, we highlighted some of the things
that didn`t happen. We can get into those in a second.

There were also things that did happen and that are in the process of
happening this year that maybe aren`t getting a lot of attention when we
start talking about how bad it`s been.

BACON: Let me name three. You knocked about one. The president
pushed for years to get taxes on the wealthy increased. He succeeded in
January, the first time since `93 which you had a real tax increase on the
rich.

He pushed hard to have the repeal of the Defense of Marriage Act.
That happened, Supreme Court did. It was very elated by that.

You have this Iran agreement where he talked for years about we wanted
to negotiate directly to the countries, one eventually reached some kind of
deal where Iran stops building the nuclear weapons program. That may
happen at the end of the year.

The last thing is the president really wants to push through liberal
judges. And by changing the rules of the Senate, something pretty
controversial, he convinced the Senate Democrats to do that, now he can
appoint people, judges and executive branch folks, as well, with just 51
votes. That will make a difference in the next three years.

KORNACKI: So, when you look at it. You know, the "Politico" thing
today saying this is the worst fifth year ever. And we have to be honest,
the poll numbers for the president right are down. They haven`t been this
low for most of his presidency.

What do you chalk it up to? Is it residual frustration from the
shutdown? Is this because of the Web site? What do you attribute it to
when you see numbers like that?

BACON: I think there are two issues. One, the president talked about
it during the campaign, he used the phrase "the fever is going to break".
He talked about how he thought the Republicans would start working with him
and Washington would start working again.

And you have to say the evidence is, Americans are frustrated
Washington is not going stuff. Immigration reform blocked, gun control
legislation blocked, the government shutdown, these are not the president`s
own fault. The Republicans are acting the same way they did in 2011 and
2012.

But Washington is definitely not moving. You can`t just say the
president`s health care rollout was important because this president is one
who was until now known for being confident. You may disagree with him,
but this is an issue where it appears there was some, just malfeasance and
bad government, the kinds of that happened during the Bush era, for the
first rear their heads here.

And that you saw the polls directly drop during the heath care
rollout. That`s the biggest thing from the year where you say, this is the
one thing they could have avoided and they did not.

KORNACKI: And yet here we are, now, we`re moving from November, the
month when everything went wrong with health care, into December, when
there are stories about some successes, there are stories about enrollment
numbers screening. You know, the system actually starting to work a little
bit now. So, it seems like there is still an opportunity to turn that
around.

But let`s talk about where it may be going, where the Obama
presidency, where his relationship with Congress may be going as we look to
the year 2014, because we have this budget agreement tonight. We have the
Senate passing it. We have the House passing it last week.

We also have -- wow, look at this, they came together, we have a
budget. We have a disturbing conversation from Paul Ryan on the Sunday
shows over the weekend, where he took the issue of the debt ceiling. He
basically said, that`s coming up in March, and Republicans are not
expecting to just approve another debt ceiling increase without getting
something for it. That is the whole recipe for the debt ceiling
brinkmanship that brought on so much crisis before.

Is that a bluff, or are we just going to be heading back to the kind
of governing for the month ahead?

BACON: It`s something in between. They`re not -- the Republicans are
very weary of having another government shutdown style experience where
their poll numbers shut down. And their view is the health care rollout
has been so bad this is their issue for 2014. They don`t want to muddy the
message too much.

So I think that is pretty much a bluff, they will push for some
changes, but it was not going to be a 2011 style, the president has to
agree to a huge amount of deficit reduction or else. They`re not going to
have that same gun at the head. They learned a lesson. The strategists I
talked to in the GOP in the GOP say they`re very wary of another situation
where their poll numbers tumble.

The president, at the end of the day, during some kind of impasse,
always has the bully pulpit and you can`t leave. And John Boehner does not
have that in the same way.

KORNACKI: That`s why I just -- I`m so hesitant. I love talking about
history. I love trying to put things into a historical context on the
spot.

But I`m just imagining a world five, 10, 15 or 20 years from now when
let`s say the Affordable Care Act works. Let`s say it was deemed a
success, then we will look back on year five of the Obama presidency and we
will talk about how this hugely successful part of the social safety net
was created in year five. We`ll talk about whether it was the worse ever.

So, it can be dangerous to make these historical assessments but
they`re very interesting to talk about.

And, Perry Bacon, political editor for NBC`s TheGrio.com -- thanks so
much for joining us and being a part of that tonight.

While we are looking back, one of the most unforgettable stories of
2013 has to be the biggest election this year, one in the commonwealth of
Virginia. And today, it officially ended and it ended in a way that makes
it even a bigger deal. That is next.

(COMMERCIAL BREAK)

KORNACKI: So, I need to get something off my chest about the whole
Chris Christie bridge grid saga. I`m going to give you the latest
developments in this incredible story. That`s just ahead.

(COMMERCIAL BREAK)

KORNACKI: Six weeks and one day after the polls closed across the
commonwealth of Virginia, we finally are ready to declare an uncontested --
a winner in the race for attorney general in that state. This was the last
major election of 2013 that was still outstanding until today.

And the winner, as you can see, is Democrat Mark Herring. He will
become the next attorney general of Virginia. On election night, Herring
finished ahead by just 165 votes, out of more than 2 million cast.

They started the recount this week in Virginia, and by day two,
Herring lead grown to 800 votes. And then today, just this afternoon, on a
third day of that recount, Republican Mark Obenshain raised the white flag
and conceded the election.

Obenshain`s lawyer had previously raised the possibility that he might
press on even after the recount, but that was before the recount began,
quintupling his deficit in the race. We don`t have the final numbers to
report yet like we said, that recount is still ongoing.

But because it moved the results so dramatically and so lopsidedly in
the Democrat candidate`s favor, the Republican candidate is now admitting
defeat.

So, we get to dust off that election night music one last time for
2013 and we get to tell that Mark Herring is the projected race in the race
for attorney general of Virginia. And now I know, you may be thinking, the
attorney general race in Virginia, two candidates people may not have heard
of, a lower tier race in just one state. Really is not that big of deal,
is it? Except maybe for die hard political junkies.

Well, not so fast because this one is big, it means a lot. For one
thing, it gives Democrats in Virginia control of all the state-wide elected
offices there for the first time since 1969. Both of Virginia`s U.S.
senators are Democrats. And now comes January, the Virginia attorney
general, the Virginia lieutenant governor and the Virginia governor will
also be Democrats. This has not happened for 44 years.

And this was in a state that was basically just a Republican bastion,
just a generation ago -- a state that is now the premiere swing state in
America. The Democrats just locked down a monopoly in the elected offices.

This is also a case of Democrats defying history. You have to go back
all the way to 1973, 40 years ago, to find the last time before now that
Virginia has picked a governor from the party that occupies the White
House.

That`s why, at the start of this year, conventional wisdom said that
Republican Ken Cuccinelli was going to win the governor`s race. All of
that history said it will be a Republican year in Virginia. And then,
Democrats chose a very unpopular candidate, Terry McAuliffe, as their
nominee. But now that is Governor-elect Terry McAuliffe.

There is really not a modern precedent for what`s happened in
Virginia, calling into question the basic assumptions in politics in this
era. Back in 2008, when Barack Obama became the first to win Virginia
since LBJ in `64, he did it by assembling an ascendant overlapping,
intertwined coalition. He won with liberal professionals and black voters,
city dwellers, Latinos, college students, union workers.

That coalition, that Obama coalition carried him in Virginia and it
carried him across the nation. It was a new day in politics, we said, a
new day of that new Obama coalition.

But then, the very next year, that coalition vanished. The generation
that helped to sweep Barack Obama into power did not show up in the 2009
election, instead, Virginia gave the Republicans a clean statewide sweep.
The governor, the attorney general, all of them elected in 2009, all of
them Republicans just a year after Obama carried the state.

And in 2010, the same thing happened again. This time, the national
red tide washed over Virginia. The Republicans came to the 2010 mid-terms
with five of Virginia`s 11 congressional seats. They emerged with eight of
them. Democratic voters, that Obama coalition did not show up. It crashed
again in 2010.

This didn`t happen just in Virginia either. But it became a truism in
politics, that the Obama coalition, all those young voters, those non-white
voters, inspired to turn out for the first time ever in many cases. Those
voters would show up when Obama was on the ballot. They`d be there for him
in 2008, they`d be there for him in 2012.

But take Obama off the ballot and they disappear. That`s why going
into the election this year in Virginia, all the conventional wisdom the
Democrats had, at the top of the ticket, a horrible terrible candidate in
Terry McAuliffe, they were running with control of the White House. So,
that says they should never win in Virginia. And President Obama was not
going to be on the ballot. So the Obama coalition was not going to show
up.

So, of course, Ken Cuccinelli was going to be the governor, no matter
how extreme his position. And, of course, Republicans were just going to
sweep all those other offices in Virginia. That`s what the political world
expected. That was supposed to be the story of American politics in this
age.

But now, here we are at the end of the year, bringing you the news
tonight that Democrats have officially swept Virginia, that the Obama
coalition did show up, even without Obama on the ballot. Those voters
showed up and produced this crazy, never saw it coming, Democratic sweep of
the old dominion.

African-American voters turned in large numbers in this election in
Virginia. African-American women in particular. Their votes deny the
socially conservative Republican slate to victory that just by the odds was
supposed to be theirs.

The conventional wisdom said the Obama coalition was not going to show
up but it did. And as of today, we know that they have chosen to put a
Democrat in every single statewide office, partly that happened because
Virginia itself is changing. It`s changing enough that Democrats now have
a change even in off-off years.

But if Virginia is a bellwether state, and it is, definitely,
absolutely a bellwether state, and this can`t be happy holiday news for
Republicans because the question has been whether Democrats could win big,
could win at all without Barack Obama on the ballot.

And that means 2014, that means 2016, that means every election going
forward, because Barack Obama is not going to be on the ballot again.

Could Democrats win without Barack Obama? That was the question at
the start of this year. And the answer to that may now be: go ask
Virginia.

(COMMERCIAL BREAK)

KORNACKI: Remember when President Obama picked former Utah Republican
Governor Jon Huntsman to be his ambassador to China? Governor Huntsman was
widely regarded as a good choice -- smart, experience, fluent in the
language. Also, Jon Huntsman was widely regarded as a potential threat to
President Obama`s reelection. That is what is known as a win-win for the
president.

Today, we have a new pick to be ambassador to China, and maybe, just
maybe, other of the president`s well calculated attempts to win twice.

Stay tuned.

(COMMERCIAL BREAK)

KORNACKI: So, I`m known around this building for a few things, one,
obviously is my incredible sense of fashion. That is a joke. I still need
help tying ties.

Another thing I`m known for is how I easily I get lost. I told the
story a bunch of times in first day here, I got off the subway, I ran up
the stairs ,I was all excited, I took a few turns, came out on the street
and found myself looking straight at that, the FOX News Channel.

I get lost trying to get to this building. I get lost trying to get
around this building. It is just part of my reputation, I guess.

The other thing I am known for in this part, though, is how do I put
this -- my very obsessive, maybe unhealthy interest in the bizarre
political world of one state, New Jersey.

And yes, for the past few weeks, there has been an utterly bizarre,
utterly fascinating, totally, completely, thoroughly Jersey story playing
out. And it`s also a national story. It`s a threat to Chris Christie`s
image. It`s a story where every revelation seems to raise ten new
questions.

I know you have heard about it. How those lanes on the George
Washington Bridge were mysteriously ordered closed a few months ago. How
the closure utterly paralyzed the town whose Democratic mayor hadn`t
endorsed Christie`s reelection campaign. How the closures were the idea of
Christie appointee. How Democrats say it was all a plot to punish that
Democratic mayor for not playing ball.

How two Christie appointees have now resigned. How they and others
were probably be under oath soon. How there is more, maybe a lot more that
we`re still going to learn more about this, and how the million dollar
question -- was this a political payback plot that Chris Christie himself
had any knowledge of, how that question hung over it.

Rachel has talked about it on this show, so is Chris Hayes, so have a
lot of my other colleagues here -- maybe all of them at this point, all of
them except me. The one guy more than anyone else here at MSNBC who should
be talking about this incredible, only in New Jersey story.

Well, we`re going to talk about it today. But there is a reason I
waited this long, I need to explain it first.

Basically, I need to provide you with some disclosure here and this is
not going to be your run-of-the-mill disclosure statement. The one of the
guys who was at the heart of all of this, the guy who ordered the lanes
closed, the guy who Democrats say was trying to punish the mayor who did
not support Chris Christie -- well, I know that guy.

His name is David Wildstein and he`s played a pretty big role in my
professional life. I used to work for him. He gave me my first big break.
You could say I owe my career to him. I`m going to explain this to you.

It was the summer of 2002. I just graduated from college. I`ve gone
to L.A. with some friends. I failed miserably.

And I was back in Massachusetts. I wanted to get into political
journalism. I was also broke. I also had no leads.

I used the cliche about how the rejection letters were piling up, but
I wasn`t even getting rejection letters to every news outlet I reached out
to, I just didn`t exist.

And then, one day, when I was close to giving up, I saw a listing for
a site in New Hampshire, to cover the primary up there in 2004. There were
a million political news sites out there. But remember, this was 2002, the
idea was exotic. The listing came with an AOL address, I was curious, I
was excited, I was desperate.

I wrote a long e-mail and poured out my heart, pretty much, explaining
how interested I was in politics, how badly I wanted to write about it for
a career. How much this opportunity would mean to me.

The ad was vague. I didn`t know who was on the other end of the e-
mail. The response came a few days later, the New Hampshire job was
filled. But they had another site. It was their main site, it was in New
Jersey. There was an opening there. They asked if I was interested.

Well, I was a Massachusetts kid and knew nothing about Jersey, but you
bet I was interested. The email was signed by someone named Wally Edge
(ph). Which sounded like a funny name, and it turned out there was a
reason for that. The site, it was called politicsnj.com was an anonymously
owned Web site. Wally Edge was the owner`s pseudonym. He`d taken it from
a former New Jersey governor from a long time ago named Walter Edge.

The site was about two years old back then. It had really taken off
in political circles. The guy who ran it had great sources, unmatched
institutional knowledge.

The newspapers were barely playing the online game back then. He was
way ahead of them. And now, he wanted to go mainstream. He wanted a real
reporter, someone with a real name to put on the site to do real reporting,
to be accountable in real life.

I had my interview with Wally online. It`s something I`m always going
to remember. I was staying with my aunt and uncle. My little cousin
helped me set up AOL instant messenger, so I could talk to this mysterious
guy.

He quizzed about politics, and I guess I did well enough because he
offered me the job. It paid almost nothing, there were no benefits, and I
didn`t hesitate to say yes.

And something I never regretted. For the next three years, I lived
and breathed New Jersey politics. I lived and breathed New Jersey and
loved it. I didn`t cover it out of the statehouse like most reporters. I
covered the county bosses, I covered the turf wars, I covered the machine
battles, that`s where the real action was. That`s what the real action.
It`s for the real decisions that matter were made.

Every state is unique, but they don`t play politics anywhere else the
way they do in Jersey. I never went to grad school but I like to tell
people I got a master`s degree in practical politics in those three years.

When I started that job, Wally helped to tell who people were. He
helped fill in back stories. He suggested angles to pursue, all on instant
messenger, of course. Mostly he gave me autonomy, I knew what I needed to
cover, I learned how I wanted to cover it and I did it and he didn`t
interfere.

And basically it worked. I learned a ton. I made more than my share
of mistakes but I did a lot of work I`m proud of, too. We got the
credibility that Wally wanted when he hired me. I even ended up co-hosting
a show on New Jersey politics. There you see a clip of it, like from 2004
or something.

When I started, Wally offered to share his real identity with me, but
I refused. I figured that everyone was going to be asking me who Wally
Edge was and I wanted to be able to honestly tell people I had no idea.

It was only when I was leaving that site after three years, I finally
gave in. So, we met at a steakhouse in north Jersey. Actually, it`s a
steakhouse that`s not far from the George Washington Bridge. And he
introduced himself.

I always figured he was an older guy, I thought he was a retired
reporter maybe in his 70s. That was my guess, everyone I talked to before
that had guess, too, there were all sorts of theories on who Wally Edge
was.

But when he introduced himself to me in person that was the first time
I had ever heard the name David Wildstein. I had no idea who he was. He
was in his mid-40s. He`s a life long political junky. He`d even been a
mayor of the town in New Jersey, in Livingston. It`s Chris Christie`s
hometown. He`d been a major there in his 20s.

We had dinner. It was nice. We shook hands, soon off I was off to my
next job at "Roll Call" down in Washington. That was in 2005, eight years
ago.

I went on to D.C., I went to a few other places. I finally landed
here.

Wally ended up selling the site, and going back into politics, taking
that job with the Port Authority, the job where he gave the order to close
those bridge lanes.

We stayed in touch periodically in all those years. When I got hired
here at MSNBC, I sent him a note. I told him I`d never forget he took a
chance on me when no one else would, the job that`s been an incredible
opportunity and I`d always appreciated it.

That`s exactly how I will always feel, that`s exactly I will always
feel.

This is why I have been torn as this story exploded. It`s an
incredible story, a riveting story, a story I`m just as anxious to explore,
to ask questions about, to get answers about. But before I can get
answers, I need to first get everything you just heard off my chest.

I haven`t spoken with David Wildstein about this story, and I have
read and seen everything you`ve read and seen about what he did and what
the implications of his action could be.

It`s been weird to see somebody I know in the middle of something like
this, but as they say in New Jersey, it is what it is.

So, I wanted to honor the fact this guy played an important role in my
life, and how I got to where I am today, that`s never going to change. But
this is also a big story, and now, I want to talk about it.

OK. So, the story has hit the 100-day mark like round numbers in this
news biz, it`s been 100 days without an explanation for the bridge shut
that caused that massive traffic jam. But it was yesterday when this mess
really hit its mark. Yesterday, the press coverage o the story went
national. And so did the investigation, the U.S. Senate Committee on
Commerce, Science and Transportation launched a federal investigation into
the bridge controversy.

And the Department of Transportation launched their own, with several
local investigations on their way, the principal officials who have already
resigned have retained legal representation, which to be fair make sense
considering the subpoenas asked that they give their testimony under oath.
With the assistance of their lawyers, the witnesses have been given an
extension until next Monday to answer the state subpoenas.

Meanwhile, the local press is not letting up. New Jersey`s largest
newspaper "The Star Ledger" editorializing today that quote, "These guys
knew they were up to no good. There is no other reason they would have
tried to hide it."

Even though this is my first chance to talk about it, the story is
already huge with big political consequences.

To discuss it further, we have joining us now Nick Acocella. He`s the
editor and publisher of Politifax New Jersey. It`s a weekly insider news
report on New Jersey politics.

Further, full disclosure, Nick, I used to live in Hoboken. You were
my neighbor there, fully got it off my chest.

I want to talk to you more than anything else to talk to you about
this tonight because you know New Jersey and the players and the
personalities in this better than anyone.

And I`ll start with -- I think people know the basics here. The
question everybody is asking as they look at this, lane closures, a mayor
who wouldn`t endorse Chris Christie`s re-election, a nightmare traffic in
this mayor`s town, a nightmare for this mayor -- is there any reason to
suspect that this is something that Chris Christie was aware of it?

NICK ACOCELLA, POLITIFAX NEW JERSEY: I have seen no evidence for it.
And nobody has seen evidence of it. There has been a lot of speculation.

My guess is that he didn`t, because you can say a lot of things about
Chris Christie, and they probably have all been said. But he is not
stupid. And this was really stupid, this was (INAUDIBLE).

I mean, this was two guys trying to figure out how they would
retaliate for what, we don`t know, because we don`t know what Mayor
Sokolich did. I mean, did he once promise to endorse Christie and then
renege? Or did they just not --

(CROSSTALK)

KORNACKI: This is the mayor of Fort Lee, New Jersey.

ACOCELLA: We don`t know. We don`t know.

KORNACKI: And that is one thing I think, is there any indication that
the mayor of Fort Lee is going to be subpoenaed and is going to testify?

(CROSSTALK)

ACOCELLA: While it was happening, he wrote a letter to Bill Baroni,
who was Wildstein`s senior --

KORNACKI: This is the other Christie appointee -- v

ACOCELLA: Appointee at the Port Authority and he wrote a letter
saying this is nothing but retaliation. And then he later recanted that
letter. But nobody specified what they were retaliating against. And I`ve
seen no indications that the assembly transportation committee is going to
call them. We`ll see what the national transportation -- federal
transportation committee is going to do. I don`t know.

I`m very curious about what his role in this was.

KORNACKI: And when you say that you don`t suspect, you suspect that
Christie was not aware of it and it was something cooked up by Wildstein
and by Baroni, I think the question this raises, giving the grief this
caused Chris Christie right now, when you look at Chris Christie`s reaction
to this, he is not out there throwing him under the bus, he is basically
taking their side in this. If he didn`t know about it and it is causing
him that much grief, tell me what it is about Chris Christie that can do
this.

ACOCELLA: I watched Chris Christie perform before he was U.S.
attorney and launched his career. I first met him when he was -- he
couldn`t get elected freeholder in Morris County. He doesn`t throw people
under the bus who are his friends. He`ll run you over and back up over you
if you`re his enemy, but he will not -- but he doesn`t throw his loyalists
under the bus. You know, wait for this to play out. What is he going to
say?

He can`t say they were rogue operators, which I suspect they were. He
is going to let it play out.

KORNACKI: So what do you suspect will happen? We talked about how
each of these two appointees, my former boss, and Bill Baroni, have lawyers
now. There are subpoenas for them to testify under oath. I don`t know who
else is going to be called to testify under oath. Do you expect in the
next few weeks when this testimony takes place, we are going to learn a lot
more about it?

ACOCELLA: We`re going to learn a lot more when we have the whole
story. I`m not really sure. You know what testimony is like. People
dance around things. They take the narrowest path to answering questions.

I mean, Ed Foye, the executive director of the --

KORNACKI: This is the guy from the New York side.

ACOCELLA: The New York side, he`s appointed by Governor Cuomo, he has
hinted there may be a criminal act to do what they did. If that is the
case they have to be very careful. I don`t know, I`m not a lawyer, I`m not
going to judge that.

But it was dangerous, it was dumb. And if it was criminal, boy, they
have big problems on their hands.

KORNACKI: All right. Nick Acocella, from Politifax New Jersey --
thanks for making the trip across -- did you take the George Washington
Bridge?

ACOCELLA: No, you can`t take George Washington Bridge, there is a big
gate across, the George Washington Gate Bridge.

KORNACKI: There it is, the oldest suffix in American politics.

ACOCELLA: Right.

(CROSSTALK)

KORNACKI: There are high stakes and American politics involved with
President Obama`s pick to be ambassador to China. We`re going to get to
them, stay tuned.

(COMMERCIAL BREAK)

KORNACKI: This is Democratic Senator Max Baucus of Montana. He has
held his seat since 1978. He announced last year that he is finished with
the Senate and he`s not going to be running for re-election in 2014. Max
Baucus has long been a more conservative thorn in the liberal side of the
Democratic Caucus, but he is a Democrat, nonetheless, having control of
that chamber.

So, to observers to grand political chess board that is the Senate
math of the United States, Baucus` retirement has been considered a huge
opportunity for Republicans to pick up a seat on the way towards regaining
control of Congress`s upper chamber. Republicans are going to need a net
gain of six seats if they`re going to take back the Senate next year, and
Montana is one of seven states that went from Mitt Romney in 2012 election
but that also have a Democratic senator whose seat is up in 2014.

To illustrate why Baucus` retirement was such a boost to Republicans,
just look at this poll from last month. The leading Republican candidate
for the open seat was ahead of his two leading Democratic rivals, the
current lieutenant governor and former current lieutenant governor by 15
and 17 points.

Now, this is still Max Baucus. But as for this afternoon, he is
suddenly President Obama`s choice to be the United States ambassador to
China. It`s a hugely consequential position.

You can recall that former Utah governor and Republican presidential
hopeful Jon Huntsman was President Obama`s pick at the beginning of the
first term for this job. The selection of Huntsman was widely understood
not only as a quality appointment but as a political move, because Huntsman
was seen as a potential rival to Obama in 2012, and would have to overcome
his service with Obama and the Obama administration with Republican primary
voters and that was something when Huntsman ran was never able to do.

So, consider this about the pick of Max Baucus for ambassador to
China, assuming that he is confirmed for the post and that he leaves the
Senate sometime before 2014 elections. His seat in the Senate is going to
be filled by the appointment of Montana`s governor. And that governor is a
Democrat. His name is Steve Bullock.

And the Democratic Governor Steve Bullock is almost certainly going to
tap another Democrat to take Baucus` place, which means that the Republican
Senate candidate in Montana is not running for an open seat in 2014 instead
up against an incumbent. It doesn`t necessarily mean that Democrats are
going to hold the Montana Senate seat in 2014, not at all. But it does
complicate the Republican`s task there.

If Republicans fail to pick up what until this afternoon everyone
thought was a gimme for them in Montana, their odds of controlling the
Senate go from difficult to plausible to really, really long.

Safe to assume that none of this was a mystery off to the Obama
administration when they offered Max Baucus his new job.

(COMMERCIAL BREAK)

KORNACKI: The Winter Olympics in Sochi, Russia, start in exactly 50
days. The Olympic torch leading up to them has already been an extravagant
two-month affair. By the time it lights the caldron in Sochi, 14,000 will
have carried it on its way. People have carried the flame on foot. They
have carried it on horseback. They have carried it on snowmobile, on
water, by water.

It`s been the longest, most ambitious torch relay ever. But it has
not been without some problems. Look at this former Russian bobsledder
carrying the flame, the torch drips flames, and his jacket catches on fire.
Now, don`t worry, he was not injured there. That`s why we can show it to
you.

The very same thing happened to two other torch bearers. This is how
we learned that there may be a shortage in Russia of non-fire dripping
torches.

Also, some times the flame never supposed to go out, some times it has
gone out. People had to relight it on the fly. Fortunately, there is
apparently no shortage of lighters in Russia.

Torch relay has been a frustration in Russia. Like any host country
they want everything about their Olympics to go seamlessly. More than
want, Russia needs everything to go seamlessly because this is a country
that could use a dose of good PR right now on the global stage. That need
could explain the most recent news out of Russia.

Regular RACHEL MADDOW show viewers will remember that end of the
summer, this Greenpeace ship was on a mission to oppose oil drilling
beneath, in -- the sea above the Arctic Circle -- excuse me -- when this
happened. A handful of Greenpeace activists from the ship tried to board
the big new Russian oil platform. The Russians responded by turning fire
hoses on the protesters, trying to knock them off the rig.

And the Russian coast guard arrives. They opened fire. They shot at
the protesters. No one was killed or injured. But the Russians held
everyone at gun point, and started taking the Greenpeace activists into
custody.

These are the Russian coast guard officers, in military uniforms, and
balaclavas, brandishing guns and also a knife. They all happened at the
Russian oil rig. The next day, the Russians boarded the Greenpeace ship.
From a helicopter, they rappelled down on to the boat wearing those
balaclavas, guns in hand. They arrested all 30 people on the ship.

They brought them back to land. They threw them all in jail in Russia
and they threatened them with charges of piracy and hooliganism. It`s the
charges that could lead to seven to 15 years in Russian prison.

After a few weeks, the Russians released the activists on bail. But
they were still going to stand trial. They were still looking at serious,
hard prison time, until today.

At 4:00 p.m. today, when the Russian parliament passed amnesty bill
that extend amnesty to those charged with hooliganism, which means that the
Greenpeace activists, the Arctic 30 they are called, they will likely be
freed.

The amnesty bill is also likely to free punk rock protest group Pussy
Riot. In 2012, they staged a protest performance against Vladimir Putin.
And three members were arrested. They were charged with hooliganism. And
two of them have been serving their sentences since then, but maybe not for
long after today.

This is the kind of gesture a country makes when it knows the world is
watching when it wants to make a good impression on the world. To make it
so that their worst problems are their torch problems, I mean, that`s the
idea of what Russia is trying to do here.

Exempt there is another problem that Russia hasn`t addressed. It
didn`t address today. It`s a big persistent political problem. The
Russian government is radically anti-gay. It`s basically against the law
in Russia to be openly gay. President Putin has done nothing to change
that in the run-up to the Olympics despite a loud international outcry.

And so, enter the Obama administration. Yesterday, the White House
announced its delegation to the Sochi Olympics. It does not include the
president, does not include the first lady, does not include the vice
president or any former president or any real high profile political figure
of any sort. It does however include the former secretary of the
Department of Homeland Security, Janet Napolitano. Some one who is not
even currently in the cabinet or any elected position.

It also includes the U.S. ambassador to Russia, a presidential
assistant, a deputy secretary of state, a handful of former U.S. Olympians,
including two athletes who are openly game. There`s tennis star Billie
Jean King, and ice hockey Olympian Caitlin Cahow.

We`re not sending any high profile politicians to the games but we are
two sending two openly gay athletes. That is the statement that America`s
government, that our government, has decided that it wants to make.

In a lot of ways, this is a new experience for Russia. This is a
proud country at many times in its history has been happy to ignore, to
defy, to thumb its nose at conventions of the rest of the world. That can
change a little bit when you invite the planet over for a couple weeks.

That does it. Rachel is going to be back here tomorrow night.

You can see more of me on my show "UP". That`s this weekend on MSNBC,
starting 8:00 a.m. Eastern Time.

And 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

Copyright 2013 CQ-Roll Call, Inc. All materials herein are protected by
United States copyright law and may not be reproduced, distributed,
transmitted, displayed, published or broadcast without the prior written
permission of CQ-Roll Call. You may not alter or remove any trademark,
copyright or other notice from copies of the content.>


WATCH 'THE RACHEL MADDOW SHOW' WEEKDAYS AT 9:00 P.M. ON MSNBC.