updated 1/23/2014 10:58:05 AM ET 2014-01-23T15:58:05

ALL IN with CHRIS HAYES
January 22, 2014

Guests: Bob Herber, Steve Ellis, Deforest Soaries, Lisa Graves, Jeremy
Norquist

CHRIS HAYES, MSNBC HOST: Good evening from New York. I`m Chris Hayes. We
have breaking news tonight on the unfolding scandal in New Jersey. Dawn
Zimmer, the mayor of Hoboken, has said through her office to us that she
has been requested by the U.S. Attorney`s Office to do not do any further
media interviews. Yet another indicator of the serious turn the story has
taken. If she`s going to talk, the U.S. attorney prefers she do her
talking with them.

The Christie administration now facing 20 subpoenas from the State
Assembly, all to his inner circle, in which will have to be produced by
February 3rd. The inspector general of HUD has ordered an audit of the
"Stronger than the Storm" ads and probably most troubling for the Christie
camp, what way very well be the beginning of an inquiry by the U.S.
Attorney`s Office in Newark in response to the explosive allegations from
Mayor Dawn Zimmer.

So it`s not surprising that Dawn Zimmer has become target number one for
those pushing back to defend Chris Christie.

(BEGIN VIDEO CLIP)

FORMER MAYOR RUDY GIULIANI (R), NEW YORK: Mayor Zimmer just shortly before
she made this revelation said that she didn`t believe any holdup in the
funds had anything to do with any kind of retribution for not endorsing the
governor.

UNIDENTIFIED MALE: This is a lady mayor who asked for $127 million of
hazard mitigation money from the governor to give that to her from the
federal money, when the state was only receiving in its entirety $300
million.

UNIDENTIFIED FEMALE: I`m sorry.

UNIDENTIFIED FEMALE: Is there any reason you don`t come on the Megyn Kelly
show.

(END VIDEO CLIP)

HAYES: The "Megyn Kelly" show hounding Dawn Zimmer a couple of days ago.
One Democratic mayor aligned with Chris Christie has also cast these
versions on Mayor Zimmer.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I think this story is farfetched. I`ll be honest with
you.

UNIDENTIFIED MALE: You don`t believe her?

UNIDENTIFIED MALE: I don`t. My relationship with the governor and his
staff has been one of the best.

(END VIDEO CLIP)

HAYES: He didn`t say lady mayor. Dawn Zimmer has alleged the Christie
administration has withheld needed Sandy money for Hoboken in order to
induce Zimmer to fast track an unrelated private development that would be
potentially lucrative for a company that has hired David Samson, the
chairman of the Port Authority and a Christie appointee and one of the
Christie administration`s closest advisers.

The Christie administration`s main counterclaim against Dawn Zimmer is
this, from a statement which reads in part. Governor Christie and his
entire administration have been helping Hoboken get the help they need
after Sandy with the city already been approved for nearly $70 million in
federal aid and target to get even more when the Obama administration
approves the next round of funding.

So $70 million, it appears we have a he said she said situation. Dawn
Zimmer says Hoboken got stiffed, but Christie administration says Hoboken
got plenty of money. Who is right? Let`s look at the numbers. Starting
with the Christie administration`s reference to $70 million, most of that
money is literally a separate stream of funds, $43 million of it is from
the National Flood Insurance Program. It`s nearly automatic, and it`s not
money in anyway controlled by the Christie administration.

Most of the $70 million went to local individuals and businesses as opposed
to the city. It`s an apples and oranges to use a useful cliche or as Josh
Barrow put it. It`s also not responsive to Zimmer`s accusation, which is
that the Christie administration withheld funds under its control as
punishment for Zimmer on pushing their favorite real estate project.

Dawn Zimmer is referring to a separate stream of money, the part the
Christie administration allocated. She`s saying that for example out of
the millions and millions allocated for hazard mitigation. That`s to
prevent places like Hoboken from drowning again, Hoboken got far less than
its fair share.

If the U.S. attorney is indeed looking into possible illegal behavior, the
governor is using taxpayer money, Sandy funds, to expedite a project for
someone well connected and to punish a mayor and it should be noted
importantly, Hoboken citizens, if that mayor proved unwilling to cooperate
and expediting that private project.

Now, it could be true, if Dawn Zimmer`s lying. She said she would take a
lie detector test and the U.S. Attorney seems to be taking her very
seriously. We do now know the Christie administration figure of $70
million is irrelevant to this argument, and actually laughably misleading
on its face.

Here`s what`s been missing in this conversation over the last few days.
This Sandy relief money was from the federal government. Federal taxpayer
money you are watching from Seattle, from Omaha, from Miami. We all pay
for it together and rightly so because we wanted to help the citizens of
New Jersey and New York and all the places that were devastated by
Superstorm Sandy.

This was appropriated by Congress after a huge epic political battle in
which Governor Christie was on the winning right side after an initial feet
dragging by House Republicans.

(BEGIN VIDEO CLIP)

GOVERNOR CHRIS CHRISTIE (R), NEW JERSEY: Last night, the House of
Representative`s failed the most basic test of public service, and they did
so with callous indifference to the suffering of the people of my state.

(END VIDEO CLIP)

HAYES: This is about billions of dollars in federal funds, a poultry
amount of transparency thus far on how it`s being spent and how it`s being
used. We now have a credible accusation that Governor Chris Christie is
using these federal funds appropriated by his office to enrich private
developers and punish political opposition.

If it`s credible enough for a U.S. Attorney to talk to Dawn Zimmer for two
hours on a Sunday holiday weekend, it`s credible enough for a Congressional
Oversight Committee to look into it. Where is Darrell Issa? There needs
to be a federal oversight and accounting of where this money is going and
how it is being dispersed.

Joining me now is Bob Herbert, former "New York Times" columnist, now a
distinguished senior fellow, a progressive think tank, Demos, and Steve
Ellis, the vice president of Taxpayer for Common Sense. Steve, I`ll begin
with you, because you guys, I find the most nonpartisan and credible kind
of government waste group in Washington.

And you and I had a conversation, I remember having you on my weekend show
when the Sandy bill was being fought, and you said, there`s a lot of stuff
in here that shouldn`t be in here, and you also said, there`s not a lot of
transparency about how this money is going to be spent. Do we know how
it`s being used in New Jersey or anywhere?

STEVE ELLIS, TAXPAYERS FOR COMMON SENSE: No, Chris, we don`t. And that
problem is still there, and interestingly enough, the man who`s been tasked
with overseeing it for the federal government, HUD Secretary Shaun Donovan,
I had an opportunity to ask him a question about that very issue last week,
and he said that while we recommended increased transparency in the next
disaster.

So in really isn`t there`s an amount of data available. We`ve been trying
to track it, going through the New Jersey site it`s equally frustrating to
try to figure out barks is our taxpayer dollars actually buying, what we
are getting for that $50 billion that was approved in the Sandy
supplemental.

HAYES: In the case of New Jersey, fair share housing centers had to sue
the Christie administration to get some data to allow them to calculate
racial disparities. It`s amazing to me that we had this huge political
fight about the Sandy money. We were covering it here on the network, the
money got allocated, and again, my concern isn`t that we`re wasting
government money.

My concern is there are people who need the money, there are important
things that must be done to mitigate against future disasters, and I`m not
convinced based on this accusation that we know enough to be able to judge
whether that`s actually happening.

BOB HERBERT, DEMOS: I agree with you, the people who have been forgotten
in this whole situation are the folks who were in trouble as a result of
the storm. The fact of the lack of transparency in terms of how the money
is dispersed is what makes it possible for people to engage in shenanigans
when it comes to disbursing that money. We don`t know what happens because
there`s a Vail in front of it. Think going to follow the money, and we`re
going to find out whether the Christie administration played games with
sandy funds.

HAYES: Steve, you`re in Washington, and you know how dogged certain
members of Congress can be about waste, fraud and abuse. Do you expect
we`re going to see some Congressional hearings? Oversight hearings, the
appointment of an inspector general, someone who has a role to oversee and
transparently account for where sandy money is going, particularly now that
we have a very explosive allegation about its misuse?

ELLIS: Well, I certainly think the inspector`s generals of the various
departments will engage in oversight and accountability. Unfortunately,
Congress didn`t give the Recovery Act Transparency Board that did the
recovery act oversight, they charged them with doing Sandy oversight, they
didn`t give them the teeth they had before, and that`s unfortunate.

Also Congress needs to step up certainly this is a perfect opportunity to
conduct oversight into the administration, and oversight in how they spent
the money. One last thing on this is shocking, when you look at the
numbers, and according to the federal government`s own data, that as of the
end of November, only 16 percent of the money, that 50 billion that was
passed a year ago has actually been spent, has actually been outlaid to
affect people affected by Sandy. It`s outrageous

HAYES: You know, that`s one of the things that`s occurred when you start
to look into New Jersey funding, it`s just the mismatch between the amount
appropriated and the amount that`s gotten to people, and we talk to folks
that are living in a trailer in New Jersey since hurricane happened more
than a year ago.

I want to note something, there was supposed to be a subcommittee hearing
for the office of Homeland Security, about Sandy, lessons learned, what had
happened in the recovery that was scheduled for January 14th, the
republican Chair of that committee cancelled that hearing. It`s been
indefinitely postponed. I`d like to read a statement from Congressman
Donald Paine of New Jersey to ALL IN.

He said, "I was extremely disappointed the hearing on Hurricane Sandy
relief was cancelled. As many parts of my district are underwater, there
are still too many people in New Jersey have been displaced from their
homes. I fought very hard to ensure New Jersey received federal relief
funding after Hurricane Sandy, and I`m hopeful the hearing will be
rescheduled as soon as possible to ensure that money is being distributed
properly in those who need it most.

Explain to me, Bob, that ideologically the Republicans, who, of course
control committees on the House side should have no problem with these
kinds of oversight.

HERBERT: They should have no problems, but what has really happened, and
we`ve seen it pretty clearly now, even though we don`t have the details is
that there was all kinds of politicking going on in connection with the
Sandy funds. That`s what that whole dance was that Chris Christie did with
President Obama, which is what projected him into the front ranks of the
Republican presidential race as a prospect. There was that video that
amounted to a campaign video that was paid for with Sandy funds that
featured the governor.

HAYES: Stronger than the storm.

HERBERT: And then, of course, we have the allegations with Dawn Zimmer, it
remains to be seen what`s going on here. This whole thing has been
politicized from the beginning, and it goes back to your point about
forgetting the people that were in need, which should have been the number
issue.

HAYES: You mentioned the fact that Christie`s reaction to the storm
afterwards, particularly appearing with the president is what catapulted
him. Amazing pull out, a Rutger`s Eagleton poll showing the
favorable/unfavorable Christie and basically what you see, if we put up
there, you see the huge bump that happens, that`s Sandy. You see the huge
decline that happens, that`s the bridge scandal.

So basically what`s happened, you`ve had this guy, the storm hit, he became
this nationally popular figure, someone who was reaching across the aisle,
and this has completely erased what happened, the political benefit he got
from that, there`s some kind of grim irony in that.

Steve, you said a moment ago about who should step up. Who specifically in
Congress? I mean, it wasn`t the generalized Congress that stepped up to
make sure the recovery act was audited to within an inch of its life.
Someone specifically in Congress should do this, who?

ELLIS: You already mentioned, Chairman Issa has certainly done a lot of
work in government oversight and reform about tracking the money, and also,
the committees should be doing this, they`re the ones that wrote the checks
initially. There`s the Homeland Security and Government Affairs Committee
in the Senate. Those are the committees that I think would be the most
likely and most appropriate to be tackling this issue.

And, you know, the thing is about transparency and accountability, the
truth will set you free, this wouldn`t be a problem, and as Bob said, there
wouldn`t be these shenanigans if it was easy to track where the money goes.

HAYES: Exactly.

ELLIS: And not just that, but it`s a way we can be sure we`re rebuilding
smarter, better. We see where the money is going, and can challenge that
and learn from it in the future.

HAYES: Good luck, if you, like me and our staff today are tasked with
trying to figure out, where, which right here about the money, and good
luck, using the state of New Jersey`s web tools to find that out, really,
good luck. Bob Herbert from Demos and Steve Ellis from Taxpayer for Common
Sense, thank you both.

HERBERT: Thanks, Chris.

HAYES: Thank you. Conservatives say the changes that are meant to fix the
voting rights act will discriminate against white voters. What? That
story is ahead.

(COMMERCIAL BREAK)

HAYES: In 2012, then Governor Bob McDonnell of Virginia gave a speech
where he got pretty sentimental about something.

(BEGIN VIDEO CLIP)

FORMER GOVERNOR BOB MCDONNELL, VIRGINIA: The Virginia way, it`s something
we all talk about a lot. It`s something that all the governors before me
and all the great work that you know that they did, that they recounted for
you, that they did, have all embraced. It`s been a tradition of civility
and cooperation that`s been alive now for two centuries in Virginia.

(END VIDEO CLIP)

HAYES: The Virginia way, alive for two centuries until he killed it by
becoming the first governor in that state`s history to be indicted on
corruption charges. How the Virginia way actually enabled him up next.

(COMMERCIAL BREAK)

HAYES: There are two kinds of states in this great republic of ours,
states where a sitting or former governor has been indicted and states that
have never had a governor indicted. Take the state of Illinois, my former
home, for instance, where governors have a pretty high propensity for
breaking the law. Since 1960, they have elected nine governors, five have
been charged with criminal conduct, four of them prison time with Rod
Blagojevich serving a 14-year sentence.

Then there`s the state of Virginia, until yesterday, Virginia never had a
governor face charges. That`s a streak of 72 governors stretching back to
Thomas Jefferson and Patrick Henry. In fact, Virginia politicos were so
proud of their lack of corruption, they refer to something they call the
Virginia way, an institutional culture that gave rise, to do the work of
lobbying.

But now that Bob McDonnell has been hit with a multiple count indictment,
charged with repeatedly asking a Virginia executive for loans and gifts, in
exchange for helping out his company, the Virginia way may be less about
noble civility and more about stuff like this.

Maureen McDonnell noticed a watch and asked what kind it would be, she
would like to get one for her husband. After Williams agrees to buy the
watch, Maureen McDonald instructs him to have Virginia governor engraved on
the back of the Rolex. I guess it beats the Virginia way.

Even if every one of the counts is true, it`s unclear if the governor and
his wife broke any Virginia state laws. McDonnell`s request to postpone
his initial court appearance was denied, which means he`s scheduled to be
indicted on Friday.

Joining me now, MSNBC contributor, Josh Barro, the politics editor at
"Business Insider." You and I were going back and forth last time on
Twitter about this indictment? It`s a bunkers document.

JOSH BARRO, MSNBC CONTRIBUTOR: It`s a very entertaining read. I mean, the
funny thing -- you talk about the Virginia way. I think the one thing in
this that`s hopeful to Virginia is that it seems like what Bob McDonnell
was doing here was basically extracurricular. There are states where a
politician would any you have to get involved in corrupt dealings like this
with powerful business people in the state to run the state.

But this didn`t really seem to have a lot to do with the general thrust of
Virginia politics. It was just the McDonnells wanted fancy stuff. This
guy wanted some promotion for his products and they allegedly got together
--

HAYES: So you`re taking the position this is not an indictment of the
Virginia way, this is an outlier kind of thing?

BARRO: Right.

HAYES: I would say that, you know, in the "Washington Post" has an
editorial today basically saying, this does say the ethics laws are a bit
too lax. We had a reporter on last night who was basically saying, there`s
not much in the way of laws guiding gifts from friends, right? That`s what
-- that`s the loophole that allegedly was being exploited in this
relationship.

BARRO: Right. I mean, it`s something that`s unseemly that feels like it
should be illegal if the allegations are true. Good thing that it would be
illegal under federal law, but I don`t think it`s necessarily an indictment
of the overall political culture in the state. Now that said, Terry
McAuliffe is the new governor of Virginia who is going to be task with
coming in and cleaning up this mess. I don`t know how well that votes for
setting a new tone of ending influence peddling in the state.

HAYES: "The National Journal" I thought had an interesting point today.
It said the American political system makes it easier for the wealthy to
prevail. The McDonnell case shows the flip side is -- in U.S. politics not
having enough money can carve out a (inaudible). I mean, you have this
desperation on the part of the e-mails desperation from the McDonnell`s
that they need more money.

It`s not more money to feed their kids. It`s more money to keep up certain
appearances, to have certain status indulgences, to wear certain kinds of
outfits. Maureen McDonnell asked Johnny Williams for $50,000 loan. She
told him that she could help Star Scientific if she needed William`s
financial assistance.

You have them being taken out to the private golf outings, in the club that
Williams is a member of. During a round of golf, they charged
approximately $2,380 to Johnny Williams` account including approximately
$1,200 in greens fees, $410 in merchandise at the pro shop and $270 in food
and beverages.

The $410 in merchandise at the pro-shop is my favorite detail. The guy`s
paying for you to go play golf, it`s extremely expensive, and while in the
pro shop, you`re grabbing fleeces off the rack because it`s someone else`s
credit card?

BARRO: Apparently! I think the insecurity this points to and you can also
see in the e-mails Maureen McDonnell talking about how they ran up all this
credit card debt.

HAYES: An unconscionable amount, she says.

BARRO: Yes, and so you know, the governor of Virginia makes, you know, a
few multiples of the typical family income in the United States. He`s an
affluent person, but you come into the position, you can surround yourself
with people who are much wealthier than you. You feel even though you have
this objectively high family income, you are failing to keep up with the
Jones, and that`s how you get someone who feels they`re not succumbing to
the pressures.

HAYES: It`s a really important point is that the job of a politician in
America in the year 2014 is to expend a huge amount of time around
extremely rich people. That`s who you spend time around. If you are
around rich people all the time and apparently if the complaint is to be
believed, you see them as your peer group, and you feel like you need Louie
Vuitton shoes and Oscar Delarente dresses and you know, Ferraris at the
vacation house so that you can be peers of them.

BARRO: And Different politicians deal with this in different ways, a few
admirably manage to find a way to live within their means while doing this.
A lot of them either become wealthy before they go into politics or they
have spouses who make a lot of money. In some cases they have spouses who
make a lot of money as lobbyist while they are serving in the government.
I don`t think any of these are particularly healthy ways to deal with this.
One thing, I would like to pay especially governors, a lot more money than
we pay them now.

HAYES: And the thing I`d really do is pay staff, particularly state staff,
much, much more money. What we are seeing is the governing elite and the
financial and economic elite converging on the same point. MSNBC
contributor, Josh Barro, thank you.

BARRO: Thank you.

HAYES: Conservatives are calling the changes to the voting rights act
racist against white people. I`ll explain next.

(COMMERCIAL BREAK)

HAYES: Is the voting rights act racist? That may sound preposterous on
its face, it`s the argument conservatives are making. The new bipartisan
legislation introduced in Congress to revive the voting rights act the
Supreme Court killed last year. Conservatives have to declare which side
they`re on.

And today we learned that Texas Republican Senator John Cornyn is on the
side against voting rights. He told the Dallas morning news that the new
proposed legislation, which would require federal oversight of elections in
Texas and three other states, quote, "discriminates us against taxes,"
which means what exactly?

Well, discriminates against Texas is just a rhetorical hop, skip and a jump
away from the old right-wing talk radio cry of reverse racism, which is, I
should note, exactly the emerging conservative line against this new voting
rights legislation. A piece at "National Review" thunders about the color
conscious agenda of the left, capital L, and condemns the bill because it
features racial classifications and offers protections from minority voters
it withholds from non-minority voters.

Hans Vacofsky, a man who spent more or less his entire career trying to
restrict voting rights trumping up wildly exaggerated accusations of
widespread voting fraud told the "Washington Times," the bill specifically
excludes white voters. They`re basically giving a get out of jail free
card to black elected officials in the south where they can discriminate
all they want against white voters.

If you find something uncomfortable and nasty in the vision of the southern
blacks running wild over white voters you`re not alone. But it`s also just
not based in fact. Shocker President Obama`s election commission released
a report today, which tells us voter fraud incidents have tried to push
have used to push restrictions are rare.

Fraud is rare, but when it does occur, absentee ballots are often the
method of choice. The best empirical accounting we have of this comes from
a Justice Department study that found between 2002 and 2005, they found 40
voters out of 197 million votes cast for federal candidates were indicted
for voter fraud.

Take a look at that, it represents 197 million and that little dot is the
40 cases of voter fraud. You can`t see it because we can`t show you what
40 out of 197 million looks like, because it`s so small it`s basically
invisible. The problem with our voting system isn`t reverse racism or
voter fraud. It`s the rude Goldberg like complexity that puts obstacle
after obstacle in front of people who want to exercise their most basic
democratic rights. On election night 2012, President Obama vowed to fix
it.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: I want to thank
every American who participated in this election. Whether you voted for
the very first time or waited in line for a very long time. By the way we
have to fix that.

(END VIDEO CLIP)

HAYES: The president met with that ten-member bipartisan commission he
appointed to fix that, which offered a list of recommendations to fix our
broken system, one prominent voting law expert called the report one of the
most effective and credible documents on meaningful voting reform issued in
many years.

Joining me now is Reverend Soaries Jr., the senior pastor of the First
Baptist Church. He`s the former chairman of the U.S. Election Assistance
Commission, which was created by Congress in 2001 in the wake of the 2000
election debacle and was the first federal agency to watch over voting
issues. Reverend, it`s good to have you here.

We had a national moment after the 2000 election. We passed the help
America vote act. We`re going to fix it. You were appointed the chair and
what happened?

REV. DR. DEFOREST SOARIES JR., FORMER CHAIRMAN, U.S. ELECTION ASSISTANCE
COMMISSION: Well, at that point it was clear that fixing it meant buying
new machines, and so my job along with the three commissioners was to sign
checks equaling $2.3 billion to help states buy equipment that had not been
certified and for which there was no prototype. Once we bought the
machines, essentially the White House and the Congress lost interest in
EAC.

And what was reported today by this new commission in large measure points
back to the work we had done when we did any work, but in the Bush
administration and the Obama administration, the seats on the commission
were never filled, which means that there`s a staff going to work every day
with no commission, which means they can`t make any decisions at all.

HAYES: There`s been if the staff is going to work every day.

SOARIES: With no commissioners.

HAYES: No commissioners.

SOARIES: A bipartisan commission with no commissioners.

HAYES: I guess we`re moving on to something else.

SOARIES: So when the president announced this new commission, it made me
wonder why the White House had not appointed people to the commission.
Now, having said that, there`s such impact in Congress, and bickering over
partisan positions, it`s no wonder the Democrats and the Republicans cannot
come to a consensus around voting because they just before they get elected
they believe in everything. When they were elected they believe the system
must be good because after all they were elected.

HAYES: In terms of the recommendations today, they do harkin back some of
the work you did, and they are participate essentially two of the most
prominent elections, from the Republican Democratic Party heading it, and
two things I thought are no-brainers. Modernized process by expanding
voter registration this is the biggest thing. How many times do people,
and I`ve been one of them that go to a place, and they don`t have there`s
been some mismatch, why can`t we get this done? This seems like the
simplest thing.

SOARIES: Because we keep focusing on the what, and that of the report is
indisputable. We should have voter registration lists so if you live in
new york, you can`t vote in New York in the morning drive to New Jersey and
vote in New Jersey and then fly to Florida and vote. Who is going to make
this happen, and at the core of this discussion, Chris, it`s the same issue
that`s at the core of the voting rights act discussion.

That is states` rights, our system is voting is still based upon an 18th
Century model where people identified with their state more than they did
their nation. And so in 1787, I would be a New Jerseyan, not so much an
American. It is now 2014 and very few people identify with their state
over and against their country.

We are Americans, we have no American system of voting, we have states
systems of voting processes and this report gets at that, but it doesn`t
really finish the discussion in terms of how to really repair that breach.

HAYES: What I`m hearing from you, getting month, making our voting system
more modern, efficient, user friendly and better, expanding the number of
people that can vote isn`t a question of policy, it`s a question of
politics.

SOARIES: It`s a question of politics and power. Who has the power to do
what, and Congress walks right up to the edge but will not violate states`
rights because there`s a cooped of quid there. Secretaries of state from
both Partisan want to keep their power. Each local jurisdiction wants to
keep its power.

We have 8,000 voting districts and voting systems in this country. Mexico
does it better, India does it better, Eastern European countries with new
democracies do it better. We are the leading democratic country with the
worst democratic process in the world.

HAYES: Reverend Dr. Deforest Soaries, thank you for sharing your
perspective. It`s fascinating as always.

SOARIES: Thank you, Chris.

HAYES: All right, coming up, you`ve heard of Alec, the one stop shop for
corporate interest to get legislation like passed in state houses around
the country. Tonight, we`ll tell you how they do it. We`ve obtained
documents that show how they operate and why they are so successful, our
exclusive reporting ahead.

(COMMERCIAL BREAK)

HAYES: Nothing has illustrated the need for federal voter rights acts like
the states under Republican control who have done everything in their power
to restrict access to the vote in ways that have profoundly
disproportionate ratio and partisan effects.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Voter I.D. is going to allow Governor Romney to win the
state of Pennsylvania, done.

(END VIDEO CLIP)

HAYES: The fact of the matter is that the most reactionary, aggressive and
destructive policies in the country right now aren`t coming from Congress
as broken as Washington is, divided government has led to a stalemate. If
you want to see what full out unapologetic and unhindered right-wing
governance looks like, go to a state like North Carolina and Michigan which
we covered here.

There are 23 states right now under one party Republican rule and several
of them have super majorities, which means any right-wing policy idea or
favor for industry that someone dreams up can become reality. And there`s
a secretive group dedicated to doing just that, dreaming up conservative
pro corporate legislation to put into the hands of the newly empowered
vanguard of the right. We`ll pull back the curtain on them ahead..

(COMMERCIAL BREAK)

HAYES: If you`re a corporation or a think tank and you want to get a piece
of legislation signed into law. You`re going to have a tough time on
Capitol Hill, the two parties have split power and gridlock has become
routine.

The story is very different at the state level as Republican Ed Gillespie
recently told the "New York Times," people who want to see policies enacted
are moving their activities to the states and away from Washington.
There`s a sense you can get things done.

The best, purest way for those on the right to get things done, to move
legislation from a computer screen into the hands of sympathetic lawmakers
and eventually get it passed into law, through the organization called the
"Americans Legislative Exchange Council." Tonight we go all in on ALEC.

(BEGIN VIDEOTAPE)

FORMER PRESIDENT RONALD REAGAN: ALEC has forged a unique partnership
between state legislators and leaders from the corporate and business
community. This partnership offers businessmen the extraordinary
opportunity to apply their talents to solve our nation`s problems and build
on our opportunities.

HAYES (voice-over): For more than 30 years a private tax-exempt
organization called the American Legislative Exchange Council, ALEC, has
brought state lawmakers, conservative think tanks and corporate interest
together to write model legislation to be introduced and passed in state
houses across the country. The group was co-founded by conservative
activist, Paul Wirick.

UNIDENTIFIED MALE: I don`t want everybody to vote. As a matter of fact
our leverage in the elections goes up as the voting populous goes down.

HAYES: ALEC counts nearly 2,000 state lawmakers as members, nearly all of
them Republicans along with hundreds of corporate and private interests,
among them AT&T, ExonnMobil, Pfizer and Comcast, the parent company of
MSNBC.

SENATOR TED CRUZ (R), TEXAS: I`ve been privileged to work with ALEC in the
federal government, I`ve been privileged to work with ALEC when I was back
in Texas the Texas Public Policy Foundation, leading the Tenth Amendment
Center, and I am proud to stand with ALEC today.

HAYES: ALEC`s working groups have churned out hundreds of pieces of model
legislation that reflect a vision of government working hand in hand with
business. They crafted bills rolling back environmental laws, protecting
corporate tax breaks and weakening gun control, legislation that has proven
pretty easy to pass in 23 states that are completely controlled by
Republicans.

ALEC helped craft SB-1070, Arizona`s draconian anti-immigration law. It
orchestrated the introduction of voter I.D. laws across the country that
made it harder to vote. It even worked with the NRA to bring Florida`s
controversial stand your ground law to more than a dozen other states.

Outrage over "Stand Your Ground" ignited a campaign, which successfully
pressured Coca-Cola, Amazon, Kraft, Wal-Mart and many other companies to
cut ties with ALEC. The group has since refocused its attention on
economic issues and it remains enormously powerful, just last month, ALEC
held a policy summit in Washington, attended by Paul Ryan, Ron Johnson and
Ted Cruz who had this message for the faithful.

CRUZ: My advice to ALEC is very, very simple, stand your ground.

HAYES: ALEC would not let members of the media into task force meetings to
watch lawmakers and business interests craft their model legislation. But
ALL IN has obtained records of those meetings and further gatherings that
provide a window into how the organization operates and why it`s been so
effective.

Some of what we reviewed has been put online by ALEC, posting much of its
model legislation last year after leaks and outside pressure. Last year,
for example, ALEC considered a model bill that would allow state
legislators to replace candidates directly on the ballot. Next to the
candidates nominated by the parties, in order to chip away at the direct
election of centers enshrined in the 17th Amendment.

Another piece of model legislation, the civil rights act eliminates
affirmative action. While the climate accountability act requires regular
state audits that can be used to defund efforts to reduce greenhouse gas
emissions. ALEC is about more than just model bills. They also take
actions that look a lot like lobbying. Last year, as the "New York Times"
detailed, an ALEC lawmaker in Ohio wrote to a colleague, to relay ALEC`s
concerns about a bill that would make it easier to recover money from
businesses that defraud the state.

The bill was reworked to address ALEC`s concerns. Unreleased documents
reviewed by ALL IN paint a portrait of an organization in which industry
and government is in near complete harmony. One that enshrines that
relationship by requiring that its task forces are chaired by one
representative from the business community and one by the government!
Here`s Michael Wetly telling lawmakers to put an op Ed in any paper in your
district talking about the positives of the Keystone XL pipeline.

The idea was to create a ground swell of support for keystone at the local
level that appeared to be organic. Documents show Representative Ken Ivory
of Utah asking him just how patient Canada will be as America struggles to
understand that energy is essential to life. It`s one small exchange, but
it reflects the bigger pictures that emerge in these documents.

The key to ALEC`s success is that it makes the lives of harried state
lawmakers much, much easier. They don`t have to wonder what their
corporate donors want, industry representatives are happy to tell them.
They don`t have to worry about drafting carefully worded legislation. ALEC
is ready to hand it over. All lawmakers have to do is fill in the blanks.
If they aren`t sure how to vote on some obscure issue, they can check with
ALEC.

REPRESENTATIVE JOHN BOEHNER (R), OHIO: The private sector engagement is
really what I think makes this the organization that it is.

HAYES: It`s a great deal for conservative lawmakers that don`t want to get
bogged down in the drudgery of governing. It`s a terrible deal for the
rest of us.

(END VIDEOTAPE)

HAYES: We reached out to ALEC to see if someone from the group wanted to
come on in the show tonight. They turned us down, but ahead we have a
state senator who is a member of ALEC, but left the organization and
someone who`s been tracking the group and understands exactly how it get
things done, just stick around.

(COMMERCIAL BREAK)

HAYES: Joining me now is Lisa Graves, the executive director of the Center
for Media and Democracy, publisher of ALEC Expose. She`s been covering
ALEC as much as anyone in the country, and Nebraska State Senator Jeremy
Norquist, a Democrat who was a member of ALEC for a few years before
leaving the organization.

Lisa, to play devil`s advocate against myself for a moment, we`ve made ALEC
out to be quite a powerful entity. What about people who say, this is like
a million other trade groups and people get together for all kinds of
stuff, and they`re not that powerful, what do you say to that?

LISA GRAVES, CENTER FOR MEDIA AND DEMOCRACY: Well, ALEC brags that it has
more than 1,000 bills introduced each year, and 20 percent of them have
become law. I think the way that ALEC is most different from other groups
is that through ALEC on those task forces you mentioned, ALEC legislators
and ALEC corporations vote as equal. They vote together, you can see the
vote, the public sector voting on bills that change our rights.

We don`t know of any other organization that has that sort of behavior, I
think it`s wrong for our elected officials to debase themselves and give
special interest groups an equal state, including to think tanks. The
think tank`s in the states that are peddling this ALEC corporate agenda.

HAYES: Just so people have grounding. Overall, 24 percent state
legislators are ALEC members. In some states like Iowa it`s 100 percent.
South Dakota 100 percent. Arizona 49 percent. Oklahoma 47 percent. There
are a lot of members and that brings me to you, State Senator. Why did you
join ALEC and why did you decide to leave?

STATE SENATOR JEREMY NORQUIST (D), NEBRASKA: Well, they have a very robust
recruiting effort. Chris, they have at least one member in every state.
In my case, it was a conservative Democrat in a rural district who put his
arm around me and said, you are not going to agree with them on everything,
but there are policies you`re going to agree with them on. They`re a right
of center think tank. You`ll find policies that will work.

At that time, we had 46 of our 49 members of our legislature were members
of ALEC when I signed up, and then really it didn`t take long to see what
their real agenda was, in 2010, it was Obamacare is going to destroy
America. We need to nullify the federal affordable care act. They were
really prepared right after the 2010 election, to take advantage of the
swing and legislative outcomes of those elections.

And they started right away with the tax on private sector workers,
attempts to private ties education, stand your ground law, ways to take
away people`s rights to vote, seeing that legislative agenda, it was clear
that I wanted to be no longer affiliated with the organization.

HAYES: Lisa, how?

NORQUIST: And in our legislature, we -- sorry.

HAYES: Lisa, I`ll get back to you on that. How are they funded?

GRAVES: Well, ALEC says it is the largest voluntary group of state
legislators in the country. We discovered that 98 percent of ALEC`s
revenue comes from sources other than legislators that corporations and
foundations. Some of those corporations are privately held like Koch
industries. We know that Google and some of these other high-tech
companies have joined ALEC.

While more than 90 corporations and nonprofits have left as a result of a
national coalition effort there are numerous corporations that remain and
are pushing bills like labeling bars to keep us from knowing where our food
is coming from.

HAYES: I should say, the Koch brother said we feel the say way as MSNBC`s
parent, we support them. State Senator, you were saying about how ALEC now
is received in Nebraska whether there has been a turn in opinion as it has
been more publicized particularly nationally in the wake of the Trayvon
Martin shooting?

NORQUIST: That`s right, we`ve gone from 46 members of our unicameral down
to a handful now and it just parallels what`s happening nationally and the
biggest concern obviously, the policies are extreme, I guess they have the
right to debate those in the public square, but the biggest concern is just
the absolute lack of transparency here.

When a lobbyist comes and approaches me about legislation, I know who
they`re representing. I know who their client is. ALEC is a faceless
organization and it`s allowing these corporate interests to duck and cover
and hide from really stepping into the public square and putting their
ideas forward.

HAYES: Lisa, I think what you put your finger on before is it is exactly
why I find this really important and disturbing story. There`s a bunch of
citizens in our capital who believe abortion is wrong and want to see it
become illegal. I disagree with them. These are our passionate believes
as citizens and we want you to loosen to us. What`s happening in ALEC is
different.

Where am I on telecommunications policy? Where am I on labor policy and
then you go to an ALEC meeting and you get told by a company that has a
vested interest in that policy, this is where you should be on this policy.

GRAVES: ALEC is a pay to play operation in which some of these legislators
are getting free trips. They are called ALEC scholarships that these
corporations pay to get them in the room. These corporations pay a premium
to have a seat and a vote on these task forces where they actually vote as
equals with our elected officials.

And these elected officials many of them come back to their states and
introduce these bills without changing a comma and so it really circumvents
the public role in our democracy and these corporations don`t have the guts
to testify before these legislatures and asked for their bills instead of
trying to do it behind closed doors by voting secretly with our lawmakers.

HAYES: I think that`s the key point. If you want something from your
state legislators, come out in public, say what you are asking for and why
are you asking for it and make your argument publicly. Lisa Graves from
the Center for Media and Democracy and Nebraska`s State Senator Jeremy
Norquist, thank you both.

GRAVES: Thank you. Thank you so much.

HAYES: That is ALL IN for this evening. "THE RACHEL MADDOW SHOW" starts
right now. Good evening, Rachel.

RACHEL MADDOW: Good evening, Chris. Thanks my friend. And thanks to you
at home for joining us. Happy Wednesday. I have to tell you in advance
that we are tracking a developing story tonight.

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

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