updated 1/15/2014 12:09:01 PM ET 2014-01-15T17:09:01

ALL IN with CHRIS HAYES
January 14, 2014

Guests: Barbara Buono, Raymond Lesniak, Richard Smith, David Chen, Bob
Kincaid, Tim Huelskamp, Tara Dowdell, Alex Pareene>


CHRIS HAYES, MSNBC HOST: Good evening from New York. I`m Chris
Hayes.

Mistakes were made. The siren song of scandal-stricken politicians
for generations uttered today from the floor of the state assembly chamber
in New Jersey`s capitol building.

Faced with the awkward task of delivering his annual State of the
State speech today, amid the spiraling bridge scandal, Chris Christie opted
for one of the oldest cliches in the book.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: Mistakes were clearly made, and
as a result, we let down the people we`re entrusted to serve.

(END VIDEO CLIP)

HAYES: The governor addressed the scandal only very briefly at the
top of his speech, but there was one little tidbit of actual news in his
treatment of the bridge scandal. He intends to cooperate with the
proliferation of official inquiries into his administration`s ballooning
traffic scandal.

(BEGIN VIDEO CLIP)

CHRISTIE: Without a doubt, we will cooperate with all appropriate
inquiries to ensure that this breach of trust does not happen again.

(END VIDEO CLIP)

HAYES: Note the caveat there, appropriate inquiries. So, who knows?
We might find out what exactly Chris Christie deems appropriate when it
comes to being investigated.

But probably the biggest news today is a revelation from Ted Mann.
He`s "The Wall Street Journal" who`s been covering this story since the day
his ticked off editors assigned him to figure out why they were stuck in
traffic on their commute to work.

Ted Mann`s big scope today was this photo, as you can see there on the
left, that is none other than Governor Chris Christie. That guy in the
back, that`s David Samson, that`s the chairman of the Port Authority
appointed by Christie and still on the job. After claiming he knew nothing
about the lane closures. This despite the fact documents released last
week show he was on the receiving end of a furious sounding e-mail about
those lane closures on September 13th.

And that guy, that guy on the right there, the one who`s in the midst
of what looks to be a very friendly conversation with Chris Christie, that
is David Wildstein. He`s the one who famously wrote that the bus loads of
schoolchildren stuck in traffic were children of Buono voters, in essence
resigned and pled the Fifth.

And guess when this photo was taken? Yes, September 11th, 2013. That
would be day three of the snarling traffic jam which had long since ignited
outrage from the people stuck in it. It`s an important detail that Chris
Christie was hanging out with David Wildstein on September 11th -- in the
midst of this whole thing -- because this is what Chris Christie said last
week about his contact with David Wildstein.

(BEGIN VIDEO CLIP)

CHRISTIE: I have had no contact with David Wildstein in a long time.
A long time, well before the election.

(END VIDEO CLIP)

HAYES: No, no contact. Does less than two months count as a long
time? Well before the election?

By the way, the governor was trying today to put all that scandal
stuff behind him and focus on his agenda for the state. His record as a
popular governor.

But there`s a thing or two about his record, as popular governor, that
bear some scrutiny as well.

(BEGIN VIDEOTAPE)

CHRISTIE: The bottom line is this. We`re a long way from the finish
line. Challenges remain. I will not rest until every person hurt by Sandy
has their life back to normal. That is my mission.

HAYES (voice-over): Chris Christie emerged from superstorm Sandy more
politically powerful than ever. He was seen as tough talking truth teller
who embraced the president and took on his own party on behalf of the
suffering people in his state.

CHRISTIE: There`s only one group to blame for the continued suffering
of these innocent victims, the House majority and their speaker, John
Boehner.

HAYES: While Christie was coining his image as the one politician who
can get things done, he was getting more than just a PR boost. He was
working to get $25 billion in federal money to hand out in his state,
beginning in an election year.

It was no secret that Christie wanted to win re-election with a big
number.

CHRISTIE: I`m happy to admit that I was trying to run up the score.
That`s what you do in a political campaign.

HAYES: Well, handing out hundreds of millions of dollars in your
state during an election with almost no legislative oversight will help you
win re-election in your blue state by 22 points.

Today, Jersey Democrats announced they would be pushing a bill that
would inject transparency into just how Sandy aid money is being spent.
They`ve tried it before.

Last February, both the House and the Senate passed unanimously a bill
that would have increased the transparency of Sandy funding. You know what
happened? Chris Christie vetoed it, citing redundancies and a waste of
government resources.

The governor`s office has handed out almost $1 billion of federal
money, deciding who gets paid and who gets stiffed. Millions are spent on
an ad to promote tourism in the Jersey Shore, but help has been slow to
other communities.

Case in point: Hoboken, New Jersey -- a town of about 50,000 residents
just a few miles down the Hudson River from Fort Lee.

UNIDENTIFIED MALE: In Hoboken, New Jersey -- now, this is a town
where thousands of people are still trapped.

UNIDENTIFIED MALE: Everything was fine until we saw this river of
water come in.

UNIDENTIFIED MALE: The flooding has just been devastating.

UNIDENTIFIED FEMALE: It is a tough road here in Hoboken.

UNIDENTIFIED FEMALE: Flood waters snaked through the city streets
with ease.

UNIDENTIFIED MALE: Outside city hall, Mayor Dawn Zimmer showed me
that flood map. More than half her city was under water.

UNIDENTIFIED FEMALE: And everything`s gone?

UNIDENTIFIED MALE: Everything.

HAYES: When hurricane Sandy hit New Jersey in October of 2012, the
town of Hoboken was utterly devastated. Governor Christie showed up on
November 4th to rally the troops.

CHRISTIE: I spoke to the mayor this morning and told her Hoboken is
in the front of my mind and whenever there`s any assistance need here,
we`ll be here to help.

HAYES: Christie received a rock star`s welcome in Hoboken and
promised in person he would do everything he could to help.

CHRISTIE: Everybody`s looking at Hoboken. We now we`re one of the
hardest hit places in the state.

HAYES: But Hoboken has a misfortune of having a Democratic mayor,
Dawn Zimmer. Zimmer told WNYC that when he was asked by Christie in person
to endorse him, she declined, opting instead to remain neutral in the race.

Dawn Zimmer says she asked the state for $100 million in grants to
rebuild her city. She says she was awarded $300,000. That might buy you a
studio apartment in Hoboken.

MAYOR DAWN ZIMMER (D), HOBOKEN, NJ: There`s a lot less, and I was
extremely disappointed. And at the time, I was angry because I felt like
the focus was on the shore. In 20/20 hindsight, in the context we`re in
right now, you an always look back and say, like, OK, it was retribution.
So I think probably all mayors are reflecting right now and thinking about
it. But, you know, I really hope that that`s not the case.

HAYES: We don`t know why Hoboken only received a fraction of 1
percent of the funds they asked for. But if causing a traffic jam in Fort
Lee is one way to punish your political enemies, starving a drowned broken
city of funds is certainly another.

CHRISTIE: I`ve got a job to do. My state has been damaged miserably
by this storm and they expect me to work with everybody to get this job
done. So I hope we put the silliness aside. It`s crazy.

(END VIDEOTAPE)

HAYES: Joining me now: former New Jersey State Senator Barbara Buono,
who ran against Christie for governor on the Democratic ticket last year,
and New Jersey State Senator Raymond Lesniak, also a Democrat.

I want to talk about the Sandy distribution of funds. First, I want
to get your reaction to the State of the State today.

FORMER STATE SEN. BARBARA BUONO (D), NEW JERSEY: Well, what was
notably absent in this state of the state is his bluster we had from last
year. Last year, he advised Washington, D.C., that they should follow the
lead of New Jersey.

HAYES: Take a look.

BUONO: Chris Christie.

You know, in all fairness, he`s in a tough spot. He did the best he
could under a difficult circumstance. He tried to change the narrative,
but the fact of the matter is New Jersey is in crisis. The state of the
state is -- we have a crisis of confidence in our governor. And he really
needs to rebuild and heal that confidence with the people of New Jersey and
with the legislators as well.

HAYES: Is the state of New Jersey in crisis right now?

STATE SEN. RAYMOND LESNIAK (D), NEW JERSEY: We have serious problems.
And what we saw a governor without -- he`s lost his swagger. He`s a kinder
and gentler --

HAYES: You know, the funny thing about this as I watched this is, he
is an incredibly adept political performer --

LESNIAK: Yes, he is.

HAYES: -- at performing sort of this posturing, larger than life kind
of thing. He`s not very good at performing humility. In fact, he`s
terrible at performing humility. That showed today to me.

LESNIAK: Oh, for sure. Also, like, he took credit for bills we
sponsor. He`s not capable of giving anyone else credit. Governor Romney
found that out at the Republican convention.

HAYES: Right. Right. When Christie stood up there and said "I"
about a million times in that street, much to the chagrin we later learned.

There is some amazing data out about the Sandy reconstruction. So
much of what has built Chris Christie has been about Sandy.

One of the things we`ve been following on the show during the election
and throughout and after its aftermath is you`ve got this atmospherics that
surround Chris Christie as the fighter for Sandy money and then you`ve got
the reality. There`s this data that shows racial disparity in Sandy aid,
money that`s been distributed so far. You see right there, the average
percentage of applicants denied if you`re black is 36 percent, Latino, 19
percent. White is 13 percent.

Joining us to talk about that is Richard Smith, president of the New
Jersey state conference of the NAACP.

You guys have been ringing the alarm bell about how this money`s been
distributed for quiet a while now.

RICHARD SMITH, NJ NAACP: Yes, indeed. It`s disturbing. When we look
back, this was supposed to be one of Governor Christie`s biggest assets
during his re-election bid and that was his handling of this tragic storm.
It`s turning out to be one of his biggest liabilities because our concern
is the fact that we have people out there hurting, people still displaced.

When we look at the numbers, when you have 40 percent of African-
Americans being rejected, comparison to 14 percent of Caucasians, that`s
disturbing.

This storm hit everybody. The storm didn`t discriminate. I can`t say
the same what we`re seeing in the numbers when it comes to the funding.

HAYES: Here`s the thing about the funding. We`ve looked into this.
There`s slated to be about $20 billion to $25 billion depending how it all
shakes out -- going to come to New Jersey as part of this total aid
package. Only about $2 billion has come through and $900 million to be
spent.

But that $900 million that has been spent -- it`s not like the
legislature is voting where that money goes. I mean, that is a check that
sets up in the governor`s office. The governor sets up a process, turns
around says, you get this, you get this.

LESNIAK: That`s his Achilles heel.

There`s a real, real need there. She didn`t endorse him and all of a
sudden that money dries up. There`s something very, very wrong with that.

HAYES: Well, my first thought, too, about this racial disparity
question is, if you end up in a place in which punishment and rewards are
doled out on political favor, that map is going to have a very racially
disparate look, right? Because of the nature of the way party politics
works in this country.

SMITH: Right. That`s correct. And -- I mean, it`s alarming. We do
need to have more oversight. We had an opportunity last week to testify
before Assemblyman Jerry Green about this. And it was unfortunate that we
even had to sue our partners, Latino Action Network, Fair Share Housing
Network, had to sue to get the documents to even tell us whether or not
there was a disparity in the numbers.

HAYES: Here`s $900 million being given out. Federal taxpayer money
come through. Everyone in the country agrees as taxpayers, we`re happy to
give that money to New Jersey because of the devastation of Sandy. I don`t
think anyone in the right mind begrudges that money.

LESNIAK: Or else some Republicans.

HAYES: I said in their right mind. With the caveat on the right
mind.

And you have this money and have to sue to get the data. First, they
don`t want to tell you --

BUONO: They won`t even tell you the criteria.

HAYES: They won`t even tell you the criteria. Then you have
transparency and accountability bill that`s passed unanimously out of both
houses. Now, we`re going to have another one.

Do you think we`re going to see better results with this than we did
last time if, in fact, he has been brought low and humbled --

BUONO: I think so.

HAYES: You do?

BUONO: I do.

LESNIAK: Don`t forget the words. No public discourse.

HAYES: What do you mean by that? Of course, in the e-mail, right.
We can`t have public discourse about this. That`s right.

LESNIAK: Same thing`s going on mere.

HAYES: As soon as it threatened in the e-mail chain threatened to go
public, right, there was an e-mail warning. I don`t know whether it was
Baroni or Wildstein.

LESNIAK: Baroni.

HAYES: Baroni says no public discourse.

BUONO: Gag order.

HAYES: Don`t talk out of school about this. We are going to settle
this in house. You found, your organization, you tried to just get the
data.

You`re not trying to get e-mails. You`re not trying to unravel a
scandal. You`re trying to find out how federal taxpayer dollars for people
in a storm-stricken area are being spent and whether they`re being spent
disparate and you had to sue to get that information.

SMITH: And, Chris, these are not our arms. These are his numbers.

HAYES: Right.

SMITH: We sued, we got the documentation. We reviewed the
documentation. This is what it shows, 40 percent rejection rate of
African-Americans, 14 percent of whites. These are his numbers. So when
he passes it off as an anomaly --

HAYES: Right.

SMITH: -- and then wants to, you know, interject all of the negative
jargon in regards to calling us hack groups, which is just terribly
insulting, especially to the nation`s oldest and largest civil rights
organization in the country. We are not hardly a hack group, and neither
is the Latino Action Network or the Fair Share Housing Center.

HAYES: Here`s the one thing you might see. I think you might see a
little less calling people idiot and calling people hack groups as
subpoenas start to roll out, and this train continues to pick up speed.

Former State Senator Barbara Buono, State Senator Raymond Lesniak, and
Richard Smith of the New Jersey state conference of NAACP -- thank you all
very much.

Coming up, Bridget Anne Kelly of "time for traffic problems in Fort
Lee" e-mail fame is now at the center of the bridge scandal. Chris
Christie fired her. She fled the spotlight.

If she`s not talking, her friends are. We`ll have the reporter that
talked to them, just ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CHRISTIE: I terminated her employment because she lied to me. I am
heartbroken that someone who I permitted to be in that circle of trust for
the last five years betrayed my trust. She was not given the opportunity
to explain to me why she lied, because it was so obvious that she had. I
was lied to.

(END VIDEO CLIP)

HAYES: The woman that Governor Chris Christie is talking about there,
who he stood before the country last week and called a liar, and that woman
is Bridget Anne Kelly who is now at the center of the bridge scandal --
thanks to the uncovering her infamous eight-word e-mail reading "time for
some traffic problems in Fort Lee."

More than likely, Chris Christie`s fate is going to have a lot to do
with what Bridget Anne Kelly does next. And this headline from today`s
print edition of "The New York Times," "Aide fired by Christie is loyal
team player, not rogue operative", contains good news and bad news for the
governor.

Let me explain. The current story Christie would have you believe the
traffic jam at the George Washington Bridge was more or less a rogue
operation taken on by appointees and staff members Christie knew nothing
about. The picture we`re getting of this former deputy of chief of staff,
Bridget "time for some traffic problems" Kelly, indicates that she was not
a rogue operator. That is the bad news for Chris Christie, because it
makes it seem rather unlikely she woke up one morning and decided on her
own to go ahead and screw the people of Fort Lee.

The good news for Chris Christie is that if he was going to survive
this mess, it is crucial that Bridget Kelly has to be a loyal soldier.
That she can`t roll over and start talking out of school about what she
knows and the picture that emerges from "The Times" article is she`s quite
loyal.

She, quote, "had always been a royal soldier, never a rule breaker.
She followed the chain of command. She`s not a cowboy."

In fact, our own Steve Kornacki told us he has a hard time seeing
Bridget Kelly as some kind of wayward staff member.

(BEGIN VIDEO CLIP)

STEVE KORNACKI, MSNBC HOST: When I knew Bridget Kelly, she was the
chief of staff to a relatively mild-mannered assemblyman from Bergen
County. I cannot reconcile the Bridget Kelly I knew from those days with
the Bridget Kelly of --

HAYES: Of time for traffic in Fort Lee?

KORNACKI: Yes.

(END VIDEO CLIP)

HAYES: Joining me now, David Chen, investigative political reporter
and former Trenton bureau chief for "The New York Times," the author of the
piece on Bridget Anne Kelly that ran in the "Times" today.

All right. David, I want to read this tweet from a conservative
reporter Byron York.

He says, "With subpoena on the way, Bridget Kelly uses `The New York
Times` to send indirect message of loyalty to Christie." Were you being
used as the bottle in which the message was contained in which Bridget Anne
Kelly`s people were telling Chris Christie, "Hey, I`m still with you"?

DAVID CHEN, THE NEW YORK TIMES: Well, I guess, to a degree, we`re
always used in some way.

HAYES: That`s refreshingly honest.

CHEN: Sometimes we don`t really know. I mean, I think what we tried
to do in this piece was really peel back some of the layers behind this
very mysterious woman, if you will, someone who wasn`t very well known to
most people outside of a very small circle. Steve Kornacki, of course,
knew her, because he knows everybody. Other people in Trenton who worked
there, myself included, did not really know her or really cross paths with
her.

So, you know, she remains a person of great intrigue.

HAYES: So you talked to some of her friends for this story.

CHEN: Yes.

HAYES: And the picture that emerges is that this is not the kind of
person who would be running some kind of off book rogue operation.

CHEN: That has not been her reputation. Certainly. She`s someone
who generally has been known to follow the rules, who likes to sort of
envelop herself in a lot of traditions, a lot of values in terms of family,
in terms of mentors. She likes to go along the true path, if you will.
There was a race she was involved in in which she felt shortchanged in
which he felt the politic was played in a different way. So, that might
have been a transformative experience for her.

HAYES: There`s a quote in Philly.com, "She`s a 4`9" perfectly
pleasant soccer mom, but she could play a 6`10" linebacker if you needed
to. If you crossed her, she could be vindictive." And goes on to sort of
speculate about the origin of this.

I mean, political operatives sort of learn a certain kind of full-
contact toughness as they come through and they also, it seems to any,
adopt the culture of the office that they`re in.

CHEN: Oh, without a doubt. I mean, the person she worked for before,
David Russo, generally known to be quite mild mannered, low key. Governor
Christie, as we know, quite the opposite. You can ask this about anyone
who works for, say, an Andrew Cuomo or Chuck Schumer or Mike Bloomberg in
terms of trying to channel their personalities.

HAYES: Schumer staff members start to talk like Chuck Schumer. I`ve
seen it happen to people I know.

(CROSSTALK)

HAYES: They marry each other.

There`s a very strong, particularly strong personalities like Chris
Christie or Chuck Schumer, you see in their staff, that personality
trickles down as people try in an organization to emulate the boss because
that`s the thing that kind of reflects most kindly on them. You see that.

CHEN: What`s interesting in a lot of e-mails we`ve seen, by the way,
a lot of them have been redacted which adds to the mystery. So, you don`t
know who communicating with David Wildstein or Bill Baroni. But what`s
very interesting about some of them is the sense she clearly is reporting
to someone, and the assumption so far is it could be Bill Stepien,
Christie`s longtime campaign manager, who was let go, if you will, by the
governor.

And, you know, they had a very close working relationship, Bridget
Anne Kelly and Bill Stepien. The question remains whether she listened to
Bill and whether Bill listened to Governor Christie or Bill Stepien or
other people may have come up with this idea themselves. Who knows?

HAYES: Also, my first thought was the job title. It`s deputy chief
of staff. There`s a word there, "deputy." That usually in the word chart
comes below the chief of staff. That was Kevin O`Dowd, now dominated to be
the attorney general of the state of New Jersey.

CHEN: Right.

HAYES: But generally, in the way these things work, when you`re the
deputy chief of staff you run things up the chain to the chief of staff.
I`m not saying that necessarily happened in this case, but that is the way
an organizational chart like that works.

CHEN: Right. She was the deputy chief -- she hasn`t been the -- she
was not the deputy chief of staff for a long time. She was appointed back
in April. She was basically there for the campaign run, I guess.

There was such --

HAYES: Cross-pollination --

CHEN: -- has some degree of politicization to it.

Every office has some degree of politicization to it. But especially
in campaign year when you`ve got a presidential prospect, I mean, you know,
their office was turbo charged in terms of the politics I think.

HAYES: That`s a really good point. David Chen from "The New York
Times" -- thank you so much.

CHEN: Thank you.

HAYES: All right. The latest on the massive chemical spill in West
Virginia and the mysterious company behind it, next.

(COMMERCIAL BREAK)

HAYES: Some rare good news out of West Virginia today. Some folks
are allowed to once again drink the water. Not a headline I thought I
would ever be reading. But as that happens, there is still so, so much we
don`t know about the chemical leak that started this all, and the company
responsible.

(BEGIN VIDEO CLIP)

TONY HAYWARD, BP CHIEF EXECUTIVE OFFICER: First thing to say, we`re
sorry. We`re sorry for the massive disruption it`s caused their lives.
There`s no one who wants this thing over more than I do. I`d like my life
back.

HAYES (voice-over): There was no shortage of well-deserved outrage
directed at BP and its partners after they spilled millions of barrels of
oil into the Gulf of Mexico. But at the very least, we know who BP is.

The same cannot be said for the chemical company responsible for the
massive toxic spill in West Virginia, the one that took out the water
supply of 300,000 people, about 1/6 of the state. It has a name and logo
that seems to have sprung fully formed from an "Onion" article, Freedom
Industries.

We know that the company produces specialty chemicals for the mining,
steel and cement industries, including the coal cleaning agent named 4-
methylcyclohexane methanol that spilled into the Elk River, which can cause
vomiting, diarrhea and other health problems.

After 7,500 gallons of the stuff leaked from a breached tank into a
river, residents began noticing a distinctive smell.

GOV. EARL RAY TOMBLIN (D), WEST VIRGINIA: One indicator of the
contaminated water is the licorice odor of the water.

HAYES: So, just who is Freedom Industries?

They say they were formed in 1986, though filings indicate it was
founded in 1992. It has only existed in its current form for two weeks,
after a complex merger with three other companies.

UNIDENTIFIED MALE: Thank you very much.

HAYES: This is the guy who has been speaking for the company, Gary
Southern, who has been identified as Freedom Industries` president.

SOUTHERN: Look, guys, it has been an extremely long day. I`m having
a hard trouble talking at the moment. I would appreciate it if we could
wrap this thing up.

HAYES: But Freedom Industries` web site actually lists a different
man, Dennis Farrell as the company`s president, which is weird. We haven`t
heard from Farrell, but the woman reported to be his girlfriend, Kathy
Stover-Kennedy, offered a spirited defense of the company on her Facebook
page the day after the spill.

"I`m not asking for anyone`s sympathy, but a little empathy wouldn`t
hurt." She wrote. "And just so you know, the boys in the plant made and
drank coffee this morning. I showered and brushed my teeth this morning
and I am just fine."

As of Monday, more than 150 people had been treated in emergency rooms
for exposure to the chemical. The lack of concern expressed by Stover-
Kennedy appears to reflect the posture of Freedom Industries as a whole at
the outset of the spill. According to the "Charleston Gazette" the state`s
Department of Environmental Protection only discovered the leak after
complaints about the smell from area residents. And how was the company
trying to stop it, with a cinderblock and 50-pound bag of absorbent powder.

(END VIDEOTAPE)

HAYES: We had a lot of questions about freedom industries. We called to
try to get some clarifications. The company declined to respond to any of
our questions including the one asking who, exactly, is the president of
Freedom Industries?

Joining me now, Bob Kincaid, radio broadcaster and co-founder of the
Appalachian Community Health Emergency Campaign. Bob, I know when the
Upper Branch Mine disaster happened, people knew that company, knew Don
Bankenship, sort of a legendary figure in West Virginia. Do people in West
Virginia, Charleston area, do they know Freedom Industries? Had they
thought of this company? What are folks saying down there about the people
that appear to be the perpetrators of this?

BOB KINCAID, RADIO BROADCASTER: Chris, I don`t think anybody had any
idea that Freedom Industries even existed. It looks like the West Virginia
Department of Environmental Protection barely even knew that Freedom
Industries existed. There are far more questions about this company than
there are answers.

For instance, how is it that a company gets incorporated by a
convicted cocaine dealer, which is the case here? And then goes on to be
able to cite a toxic chemical plant a mile and a half away from the public
water supply?

HAYES: Just so we`re clear here, that people don`t think this is a
wild accusation, I`m reading from the "Charleston Gazette" about one of the
co-founders of the company, according to documents filed with the state in
2005, federal prosecutors charged Kennedy, who is one of the co-founders,
with failing to pay the more than $200,000 income taxes.

In 1987, he pleaded guilty to selling between 10 and 12 ounces of
cocaine according to report. As to your second question, this is the thing
that`s so remarkable about this. You have this chemical company that has
tons of chemicals sitting in big, big industrial-sized tanks and they are
on a river that is being used to suck intake into for a water supply. How
did this ever pass any kind of regulatory muster?

KINCAID: Chris, it didn`t. It didn`t pass muster because muster is
not something the state of West Virginia does. If you are even remotely
tied to the coal industry in this state, which this company is by providing
this chemical to the coal industry, for prepping the coal in the hills and
hollers where it`s mined around here, then just about all things are
possible for you.

This is the tip of an iceberg that reaches down into our mountaintop
removal communities and leads to a much, much larger overarching potential
disaster that has been emerging in this area for a decade and a half.

HAYES: Explain to me what the relationship is in the state of West
Virginia between the industry and the regulators. It does seem to me like
a classic case of capture, in terms of the politics. I thought it was very
notable that you had the governor and the senator speaking to me, Joe
Manchin, immediately rushing to just tell people, don`t -- this was not the
coal companies, this was a separate company, it was a chemical company.
That`s pretty revealing to me that the priority number one seemed to be to
make sure people don`t blame the coal industry.

KINCAID: For West Virginia politicians, be they Democrat or
Republican, Chris, it is a matter of coal yesterday, coal today, and coal
forever. The fact of the matter is, Earl Ray Tomlin, the governor of this
state, rejected a plan three years ago that very well would have prevented
this disaster from even happening.

HAYES: What was that plan?

KINCAID: It was prepared by the United States Chemical Board. It was
similar to a plan that was put forward and put into place and I believe
Contra Costa County, California, and in June of 2011 -- they were presented
with the plan in January 2011, and by June 2011, the Tomlin administration
had said, no, thank you.

HAYES: And this would have been some kind of heightened incentive of
regulatory rules for inspections of the myriad chemical companies dispersed
throughout the state that are providing chemicals to the coal industry or
getting coal from the mountaintop removal process.

KINCAID: That`s my understanding, yes.

HAYES: Radio broadcaster, Bob Kincaid, thank you so much. Appreciate
it.

KINCAID: Thank you, Chris.

HAYES: The war to preserve the sacred incandescent light bulb, and
other conservative follies, ahead.

(COMMERCIAL BREAK)

HAYES: OK. Let`s say you are a superrich guy living in Wisconsin,
divorced and paying child support. Now, you`d like to pay a lot less in
child support because you`re worth about $30 million with an income of $1.2
million, which means you have to pay, like, $216,000 a year in child
support. What can be done to ease you of this unwieldy burden?

Well, here are some steps you might take if you just happen to be a
big republican donor. First, find the member of your state legislature
like this guy, Wisconsin state rep, Republican, Joel Kleifish and have him
introduce a bill that would, I don`t know, let`s say, cap child support
payments at a much lower level than what you`re paying now, get rid of the
asset evaluations so they don`t look at that $30 million in the bank and
just base the number on annual income.

And then, here`s the trick, allow judges to revise past settlements
and implement the law retroactively to reduce payments for people like you,
rich guy, Republican donor. The Wisconsin state general report that is
exactly what multimillionaire business owner, Michael Zenga did.

The journal obtained e-mails from Zenga to Kleifish and others
instructing the lawmakers on how to write the bill. Quote, "Please have
the drafter make these specific changes." after the "Journal" blew up his
spot, Kleifish announced he would withdraw the bill which, makes this a
good day for journalism and the people of Wisconsin, a bad day for rich,
divorced right wing dads everywhere.

(COMMERCIAL BREAK)

HAYES: There`s one thing we`ve learned about the Tea Party Congress is
it`s not very good at governing. It`s not even very good at delivering on
its main promises to its supporters.

(BEGIN VIDE CLIP)

SENATOR TED CRUZ (R), TEXAS: And you`re here because now is the
single best time we have to defund Obamacare.

(END VIDEO CLIP)

HAYES: What it is good at is screwing with people`s lives, cutting
program that people need and delivering victories to the tiny subset of
ideological zealot that inhabit the common threads of right wing blogs and
watch Fox News 16 hours a day. Case in point, the war to preserve the
incandescent light bulb, you haven`t heard of this? You`re missing out.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Are you capable of picking out your own light
bulb?

UNIDENTIFIED MALE: But the bill does one thing, Madam Speaker. It
controls the type of light bulbs that all Americans must use throughout our
fruited plains.

SENATOR RAND PAUL (R), KENTUCKY: But you don`t favor a woman or a
man`s right to choose what kind of light bulb, what kind of dishwasher,
what kind of washing machine. I really find it troubling this busy body
nature.

REPRESENTATIVE MICHELE BACHMANN (R), MINNESOTA: What light bulbs
you`re supposed to use. That`s why I introduced the light bulb freedom of
choice act. President Bachmann will allow you to buy any light bulb you
want in the United States of America.

(END VIDEO CLIP)

HAYES: The phasing out of the incandescent light bulb began in the
Bush administration. As technologies developed allowing us to get exactly
the same amount of light with anywhere between 1/30th and 1/3 of the power
while also saving customers lots of money and reducing carbon emissions, a
win/win/win.

Somewhere along the way the right wing decided that they were going to
go to the mat to defend the honor of old light bulbs. Like a political
party basing its platform on the betamax standard. Today, they got a
victory. The House and Senate unveiling their huge $1 trillion omnibus
spending bill with lots of important details we`ll be covering as it works
its way through the legislative process.

What is not in the omnibus spending bill is a defunding of Obamacare.
What is in there is this, the sorry old light bulb. Lest you think
preserving the incandescent bulb is the only big victory in this bill,
don`t worry, the Vatican Embassy has also been saved.

Wait, you didn`t hear about the plot to kill the Vatican Embassy?
Well, remember this? This was literally a one-day story ginned up by the
right wing that the Obama administration was going to kill the Vatican
Embassy. Does that sound implausible? That`s because it was implausible.

Again, it was a Bush administration initiative to save costs by
consolidating the separate building that now houses the Vatican chancery
into the embassy complex that`s rather large in Rome out of which would
operate the Italian embassy and a separate building for the Vatican
Embassy.

Guess what`s buried in this Omnibus bill language barring the Obama
administration from closing down the chancery and saving taxpayers` money
by consolidating two buildings. Congratulations, "Drudge Report," this
budget delivered for you.

Joining me now is Republican Congressman Tim Huelskamp. Congressman,
can you explain to me the light bulb obsession?

REPRESENTATIVE TIM HUELSKAMP (R), KANSAS: That`s not a major issue in
the bill. I`m still going through that. That`s one of the things that
conservatives I think can agree with folks like yourself. We should know
what`s in a bill and 1,582 pages and there is a little something about
light bulbs and little something about the embassy.

But there`s plenty of other items in there, but what isn`t in the bill
is that there`s a $600 billion deficit when we pass that bill and that`s
what I think most sides agree on is going to be a major problem if we
continue to run these massive deficits.

HAYES: Are the deficits falling at the fastest rate since the 1950s?

HUELSKAMP: Repeat that question?

HAYES: The deficit is falling at the fastest rate since the 1950s?

HUELSKAMP: Well, because it went up at the fastest rate in history.
We`ve had four straight years of trillion-dollar deficits. We`re at $600
billion, Chris, which is bigger than any Republican deficit beforehand. At
the end of the day, it`s not Republican or Democrat debt. We just cannot
continue to spend at record amounts and we`re still taking in record
amounts. That`s my concern. We`re spending too much money.

HAYES: Understood. Just so we`re clear on the benchmarks here, the
record amount is in dollars, right? As a percentage of GDP, it`s not a
record?

HUELSKAMP: That`s true. During World War II, I think it was even
higher. At the end of the day, we still have $17.3 trillion deficit. I
don`t think we can go on and continue to borrow. The president thinks we
can. He presented budgets for five years that never balanced. We continue
to do that.

HAYES: Wait a second. Congressman, you don`t think we can continue
to borrow. Do you think we should cut -- we should have a budget that is
$600 billion lower than the current proposed budget so there is zero
deficit?

HUELSKAMP: I think we can get there. That`s the difference. There
are folks in this town on both parties, Chris, that never want to balance
the budget. They firmly believe, actually there are economists who think
it`s OK to run a deficit in perpetuity. The president thinks that as well,
but no, we passed budgets on the House floor that would get us to balance
in four, five, six years. Getting the balance tomorrow is not going to
happen.

HAYES: Do you know how many years since World War II ended that we
have had either budgets in balance or surplus?

HUELSKAMP: About two. There was (inaudible) in the White House. The
last time we actually cut the budget year to year so it`s kind of long time
--

HAYES: That is a wonderful piece of home-state pride there, but how -
- I mean, when you look at this, when you talk about the specter of these
deficits, when you talk about how terrible spending is and then you turn
back and you look at the history of the American Republic since World War
II and say only two times have we had budgets balanced or in surplus.

Do you think the other 48, 58 years were some horrible gamora of just
absolute moral degradation and American weakness, or do you think actually
it turns out we could run deficits every year and still be a pretty groovy,
powerful country?

HUELSKAMP: I don`t think we can run deficits forever. That`s where
we disagree. That`s where the president and I disagree. They think you
can run deficits forever. There really is a component to this and this is
to be discussed. Is it right to borrow money today that we expect our
children and grandchildren to pay off, I don`t think so.

If you want to spend that money, go out, raise taxes. The president
won`t do that. The Democrats in the House and Senate, they won`t raise
taxes to pay for this spending. Republicans won`t do that, either, and so
this is a multiparty problem where they`re spending more than they`re
taking in.

HAYES: I`m glad you`re honest about that. In terms of where I come
from, I`m happy to see taxes go up quite a bit, actually. But if you`re
really saying it is immoral or it`s bad policy to borrow money, right? So
you`re saying we are going to run a $600 billion deficit with this. We
can`t borrow money. You`ve got to come up with $600 billion in cuts. What
do you want to cut that`s going to come up to $600 billion?

HUELSKAMP: Well, actually, if we cut 1 percent a year for the next
six years, we`d actually be in balance. It`s called the penny plan.
That`s very difficult to do. The budgets we`re talking about now are what
they call this discretionary spending. The entitlement spending are the
reforms we need to talk about because Medicare, Medicaid, Social Security,
Obamacare, if nothing is done about them, we can talk all day long about
the trillion dollars, spending on discretionary that`s been flat for a
number of years.

It`s entitlements that we have to talk about. There`s very serious
desire. There`s not very much desire to actually find a way to reform
entitlements, to secure and save Medicare forever. There`s a huge
disagreement about Obamacare. Obviously the president loves it. Obviously
there`s no way to pay for it. We`re going to have to borrow to pay for
that. Those are the issues that Washington is not looking at in this
discussion of appropriations.

HAYES: There is a way to pay for it. In fact, I see it in the taxes.
Congressman Tim Huelskamp, thank you for coming on tonight. I appreciate
it.

HUELSKAMP: You bet.

HAYES: All right, we`re going to talk about how modern conservatism
functions at the con, with the marks being conservatives themselves after
this.

(COMMERCIAL BREAK)

HAYES: The omnibus bill is one example of how modern conservatism
functions as a con game with the marks being rank and file conservatives
themselves. But that has nothing on the Senate Conservatives Fund, which
is funding Senate Minority Leader Mitch McConnell`s primary opposition.

A new poll out today has McConnell up by more than 20 points over Matt
Bevin, backed by the Senate Conservatives Fund. So the SCF is not doing
great in that respect, but it is doing great in this respect. It raised $9
million last year and with no board of directors to steer it, it has paid
the consulting firm of the guy who started it about half a million dollars.

It`s also paid $143,000 over three years to a luxury design firm to
renovate office space in Washington townhouses as well as hundreds of
thousands of dollars, you`ve heard that right, hundreds of thousands of
dollars` worth of conservative commentator, Mark Levin`s book to hand out
to donors as freebies for their contributions.

Side note, ever wonder why number one on "The New York Times"
bestseller list is always some random right winger? Ding, ding, ding,
ding. Joining me now to discuss this, political strategist, Tara Dowdell
and Alex Pareene, political writer for "Salon" who wrote about the Senate
Conservative Fund today.

I am well acquainted with the land of the conservative con job. But
even by those standards, this is pretty breathtaking.

ALEX PAREENE, SALON: This is a breathtaking one. Usually when
there`s a group that`s raising millions of dollars, which is what the
Senate Conservatives Fund did during the last shutdown. They`re devoting
it to things a political organization should be devoting it too and they
have some people in charge of being like here`s where the money should go.
This is basically a guy and his friends saying this is what we`re going to
do with the money, one guy and a couple of his buddies, we`re going to
throw it at these guys who have no chance of winning.

HAYES: And also that have paid his own consultant for half a million
dollars and spent $143,000 renovating townhouses.

PAREENE: Yes.

HAYES: OK. Make the case for me that all of political consulting is
a giant -- I`m serious.

TARA DOWDELL, POLITICAL STRATEGIST: I cannot do that. In all
seriousness, these "Super Pacs," and I would actually partially disagree
with you. I think there are a lot more functioning like this.

HAYES: Yes, that`s a good point.

DOWDELL: They become golden parachutes for people, ex-staffers, and
disgruntled members of the party who are now having a chance to go after
the establishment. And what`s so fascinating about this is that you`re
right, people don`t know that this money is going primarily to hook up
various people.

HAYES: That`s right. This is what`s fascinating to me. When
Citizens United happen, right, it was like the biggest beneficiaries are
like the bad (inaudible) and Koch brothers. No, the biggest beneficiary is
the consultant class particularly on the right, right? Where there`s this
entire universe of people that are going to be able to feed off this
trough. There`s no transparency.

Your right wing uncle who you love dearly, but just like gives you
Rush Limbaugh talking points every day who`s sending his $20 check, it`s
going into a pocket of some design firm in Washington that is being paid to
renovate a townhouse. This is a bonanza for them.

PAREENE: Yes, and having the money go -- you know, there`s sort a
cycle, your right wing uncle sends money to a group because he hears from
his favorite talk radio host that this is the best group that`s going to
destroy liberalism forever. He sends the money in and then people --

HAYES: Let`s say that host is Mark Levin.

PAREENE: Let`s say, hypothetically --

DOWDELL: For instance.

PAREENE: For instance, might be Mark Levin. Mark Levin goes on his
show and says, Senate Conservatives Fund, they`re the best ever. Couple
years ago, it was Americans for Prosperity who are the best ever and
Americans for Prosperity a few years ago had a promotional deal with Mark
Levin.

HAYES: Wait, what`s the promotional deal?

PAREENE: They were paying him to say they are the best organization.

HAYES: Right.

DOWDELL: But here`s the issue, though. A lot of people -- the sad
irony is that people don`t care because as long as these groups are doing
what they want them to do, you know, I call it the business of hating on
President Obama. That`s become this business. If you`re going after the
Democrats going after the left, they don`t care but --

HAYES: About the results, about some sort of performance.

DOWDELL: But when they start to lose, as that starts to happen, then
you`re going to see a demand for transparency from the groups. You saw it
a bit with the Romney campaign. Remember how much money, he paid
consultants three times as much as President Obama and lost.

HAYES: And there was a lot of finger pointing and recriminations
afterwards. One of the things I think that happened in Democratic
politics. There was a moment of accountability particularly after 2004
with John Kerry. This was a big issue for the net roots. Who are these
consultants and why are they getting paid so much money? I think there is
a space for that to happen on the right, but the people that would bring
that accountability are the same Tea Party hucksters who are now pushing
for groups like the Senate Conservatives.

PAREEENE: That`s the problem is that the people who are fighting
against the party establishment have ensconced themselves in groups devoted
to raising a lot of money to fight the party establishment. The results
aren`t really there.

HAYES: OK. I want to keep our eyes on this in the -- as the election
year rolls out because I think there`s going to be more and more of these
groups popping up and more and more of them, when you see that you can be a
part of this hustle, more and more people are going to start signing up.
Political strategist, Tara Dowdell and Alex Pareene from "Salon," than you
both.

That is "ALL IN" for this evening. "The Rachel Maddow Show" starts
right now. Good evening, Rachel.

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

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