updated 1/31/2014 10:12:57 AM ET 2014-01-31T15:12:57

THE LAST WORD WITH LAWRENCE O`DONNELL
January 30, 2014

Guests: Sue Wagner, Nick Hanauer


ARI MELBER, GUEST HOST: The president calls for a year of action and
House Republicans say, OK.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: House GOP members headed to their annual retreat
in Cambridge, Maryland.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: We`re not just the
opposition party. We`re actually the alternative party.

UNIDENTIFIED MALE: Talking strategy, midterms.

UNIDENTIFIED MALE: House GOP leaders head out of town to talk
strategy.

REP. ERIC CANTOR (R-VA), MAJORITY LEADER: To craft an alternative.

BOEHNER: We need to show the American people --

CANTOR: We want to help people.

BOEHNER: The policies that we`re in favor of really will improve
their lives.

UNIDENTIFIED FEMALE: The question is, can anything actually get done
this year.

UNIDENTIFIED MALE: What can we expect to come out of this retreat?

UNIDENTIFIED FEMALE: Now, I don`t think we know yet.

BOEHNER: We know the president`s policies are not working.

CANTOR: We want the president to work with us.

UNIDENTIFIED MALE: Among other topics on the agenda --

UNIDENTIFIED FEMALE: The debt ceiling next month.

BOEHNER: We believe that defaulting on our debt is the wrong thing.

UNIDENTIFIED MALE: Raising the debt ceiling and of course --

UNIDENTIFIED MALE: Immigration.

UNIDENTIFIED MALE: Immigration.

BOEHNER: We`re going to have the conversation today and I`m sure
you`ll hear all about it.

UNIDENTIFIED MALE: It`s not the clearest time a deal, or at least
legislative progress --

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let`s make this a year
of action.

UNIDENTIFIED MALE: -- is actually on the horizon.

CANTOR: I`m hopeful to have a really productive year.]

BOEHNER: We`re not just the opposition party. We`re actually the
alternative party.

UNIDENTIFIED FEMALE: The question is, can anything actually get done
this year? And now, I don`t think we know yet.

(END VIDEOTAPE)

MELBER: Good evening. I`m Ari Melber, in for Lawrence O`Donnell.

You could call this breaking new, House Republicans now say they agree
with the president, well, at least with one hypothetical idea from the
State of the Union.

(BEGIN VIDEO CLIP)

OBAMA: Let`s make this a year of action.

(END VIDEO CLIP)

MELBER: Today, GOP leaders in the House wrote the president saying,
"We don`t agree with all the proposals you outlined in your speech, but
where there is the potential for agreement, we believe it`s critical that
we come together to advance the interests of the American people."

So far so good, but there is a catch. The letter continues, "In that
spirit, we`ve identified four initial areas covered in your speech where
the House has already acted and we believe we can work together without
delay. Now, those four areas are skills training, natural gas production,
workplace rules and federal funding for research."

Now, here`s the key thing. The president`s speech was in the future
tense, a plan of action. This house letter, once you read it closely is
actually in the past tense. It`s about votes they already held on bills
they want the Senate to take up. Not only that, but I think this passive-
aggressive letter doesn`t address, let alone debate the positive economic
agenda the president laid out on Tuesday, raising the minimum wage,
reforming our immigration laws to advance both justice and economic growth,
nor does it really tackle the most fundamental challenge the president laid
out to both parties, that they must do more to make inequality and social
mobility the top domestic priority of our current era.

The evasive letter doesn`t mean, however, that GOP leaders learned
nothing from all this bipartisan criticism of this do-nothing Congress.
After all, the speaker used to talk like this.

(BEGIN VIDEO CLIP)

BOEHNER: We should not be judged on how many new laws we create. We
ought to be judged on how many laws that we repeal.

(END VIDEO CLIP)

MELBER: However, at the party`s legislative retreat in Maryland, just
today, Speaker Boehner emphasized the message of alternatives, not
obstruction.

(BEGIN VIDEO CLIP)

BOEHNER: In order to maximize our year, it`s important we show the
American people that we`re not just the opposition party. We`re actually
the alternative party.

I think Republicans have to do more to talk about the better solutions
that we think we have that will help the American people grow their wages
and have opportunities at a better job and clearly have a better shot at
the American dream.

(END VIDEO CLIP)

MELBER: Joining us now is Alex Wagner, host of "NOW WITH ALEX WAGNER"
here on MSNBC, and former Congressman Patrick Murphy, a former prosecutor
and MSNBC contributor.

Welcome to you both.

Alex Wagner, I don`t want to call message progress, policy progress, I
don`t want to get confused here, but what you just hear from Speaker
Boehner was a little different.

ALEX WAGNER, NOW: Yes, it was. Full stop. Once burned, twice shy.
Fifteen times burned, totally scarred. I mean, it`s good. It is good
rhetorically that the speaker is opening the door to having a proactive
agenda and not just repeal things, but you read that House letter to the
president.

MELBER: Yes.

WAGNER: It`s this sort of pomp and circumstance of we, too, would
like to do things and we agree with you on a few things, including the use
of paper clips as a method of holding papers together. These are very,
very small bore priorities.

Not energy. Natural gas. I mean, they -- I don`t think they could
stipulate themselves into more of a canyon.

I mean, I think the biggest question, Ari, is whether we see anything
on immigration reform. That`s the big story of today. There are a lot of
question marks hanging over how much they`re going to act.

MELBER: Right. I want to get to this and paper clips versus staples
issue.

And, Congressman, I know you have a position on that. But first --

PATRICK MURPHY, MSNBC CONTRIBUTOR: I`m a staples guy, Ari. I`m going
to be straight with you.

MELBER: Here`s what former speaker, now Congresswoman Pelosi was
thinking about all of this. Take a listen.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), CALIFORNIA: I say to the Republicans, take
back your party. This isn`t who you are, who you have been, what you`ve
done for America, the Grand Old Party. This is an ideological, over the
cliff, extreme element that has captured control of the Republican Party in
the House and dominates the policy making.

(END VIDEO CLIP)

MELBER: Patrick, that`s your former leader there. That`s not just an
opinion she`s voicing. She has some sort of strategic predicate she`s
hoping this will work with, right?

MURPHY: There`s no doubt. I mean, the Republican Party -- this is
not your daddy`s Republican Party. I mean, a lot of Republicans in places
like Bucks County, Philadelphia, where I live, say the Republican Party
left me. I didn`t leave the Republican Party.

My wife is one of them. I have a mixed marriage. My wife is
Republican. She`s with the libertarian wing.

And this Republican Party has time and again they`ve been more evasive
of privacy right, but they also aren`t for equal pay. They`re not for
raising the minimum wage.

The minimum wage is a gender issue, 2/3 of the people on minimum wage
in our country are women. That`s over 18 million women that depend on
that. And the Republicans time on time again are against everything,
against moving the ball forward.

MELBER: Yes. So, I want to go now to the immigration. While the
passive aggressive letter didn`t deal with bigger policy priorities, it
doesn`t mean that`s going to happen. You don`t do much through a messaging
letter, right?

But let me read, Alex, what "Politico" got through a draft document
before it was circulated to House GOP members that says they propose
overhauling immigration laws so undocumented immigrants can gain
legalization if they meet certain requirements, but only when the borders
are considered secure.

Do you read this a shift?

WAGNER: No. OK, I read it as a rhetorical shift. But the "but" is
an important caveat. The border security measures, we had Luke Russert
today on the show and he said that the talk in the caucus right among
Republicans is the Senate provisions for border security, the billions of
dollars of border security money that was going to be directed to securing
the border were not enough for this group of Republicans.

The question is, how much more security, how many more drones can you
have on the border at a time when we`re doing historic levels of
deportation. And then beyond that, Ari, how onerous are you going to make
a path to legalization? How off putting can you make it for the 12 million
undocumented workers?

These are questions -- and to be honest, not just for Republicans but
for Democrats as well.

MELBER: I think that`s right. And the politics of immigration here
are familiar because they echo the politics of our budget battles, right,
Alex? Which is to your point, a lot of negotiating with yourself out of
the White House, you cut the deficit, you cut spending, you agree to
sequester cuts, right? Or you do border security, as you mentioned -- you
can`t mention enough, not that it`s necessarily an automatic good thing,
but it seriously reflects seriousness on the border, the highest
deportation rate ever. Under current law, that is part of what we require.
It`s part of why we want to reform the system.

And then you do that and what do you get, you get Senator Rubio coming
out and saying, I don`t think, Patrick, they`re going to enforce this law,
which means he`s not following the statistics or doesn`t care to.

MURPHY: Right, he was for it before he was against it, Rubio. You
know, if you look at the sheer politics, beside the policy, the Chamber of
Commerce is for immigration reform. Labor is for immigration reform.

WAGNER: Evangelicals.

MURPHY: Right.

And in the policy of it -- $1 billion in deficit reduction, which is
what their whole game plan is, $600 million growth in the economy. It
should be a no-brainer.

But they take victory and they take that victory -- and they take
their victory and they throw it down the toilet. And that`s why it`s the
most unproductive Congress in the history of this nation. This should be a
no brainer.

WAGNER: Can I also say the stipulation in there, their outline of
immigration sort of priorities is a concern that the president not be able
to repeal or change the law or not enforce the border security provisions
as written because -- and that is also important, Ari, because that
reflects this sort of fanatical paranoia that exists within certain corners
of the Republican Party about this president being a tyrant, being someone
that doesn`t play by the rules, being someone that constantly overreaches.
That mentality, you know, is still working -- that is still a functioning
sort of state of mind in the Republican Party.

MELBER: I think, Alex, that`s such an important point you`re hitting.
And Patrick and I know it`s dangerous to start any sentence with "as a
lawyer, this offends me."

But as a lawyer, it does offend me. You were a prosecutor, everyone
knows prosecutorial discretion is an embedded, an inherent part of the
executive power. And you have to make those priorities.

MURPHY: You have to make those priorities. And you have Jeh Johnson,
who`s now the secretary of DHS, who was the general council for the
Department of Defense. So, he gets security. He has that background.
He`s going to use that discretion and make sure that he keeps our country
safe under the president`s watch to make sure he`s doing the right job.

But, you know, as a social justice Catholic, it`s really offensive the
language that comes out and the politics they`re playing. I mean, when
they say no special -- you know, rules or something, not that they`re
asking for special rules. We`re just looking for a regular legislation, 11
million undocumented workers out in the shadows.

So, they pay taxes. They`re doing what`s necessary to become citizens
and earn their right to citizenship in our great country.

MELBER: And I want to hear one other political point before I let you
guys go, which is from the National Republican Congressional Committee.
They`re feeling bullish. They`re excited.

Congressman Greg Walton, who you know, said today the GOP is going to
pick up seats in 2014 midterm elections. You say, OK, what else is he
going to say, right? He`s not going to say, I plan to lose 10 months out.

But at the same time, we have very significant reports from "Politico"
and elsewhere about the Democratic donor class also seemingly looking at
giving up on the House and just focusing on putting more money in to defend
the Senate.

WAGNER: Yes. First of all, you`ll get differing points of view on
whether anybody actually expects the Democrats to take back the House. I
think it`s probably wise for the infrastructure around the Democratic Party
to focus on the Senate, given how many seats are up for grabs, and the fact
that control of the upper chamber will determine the fortunes of the
president in his next three years.

MELBER: Yes.

MURPHY: But I will say the best defense is a great offense. And the
Democrats in the Senate are going after Mitch McConnell in Kentucky who has
a very tough primary fight against Bevin. And right wingers are supporting
him, and then Allison Grimes. It`s going to have a tough time against
Mitch McConnell.

MELBER: I think you hit the point here, which is we do have a
different calendar. And some of these primaries, which are March and
April, are going to have an undertow, right, on what kind of negotiations
we get out of the Congress. And I`ve never heard that before about the
offense/defense thing.

Did you know that?

WAGNER: It`s just gold nugget, you know?

(LAUGHTER)

(CROSSTALK)

MELBER: Congressman Patrick Murphy, MSNBC`s Alex Wagner -- thank you
both very much for joining us.

And coming up, joining forces to end mandatory minimum sentences and a
tough day in the polls for Chris Christie.

(COMMERCIAL BREAK)

MELBER: The Justice Department announced today it will seek the death
penalty for the Boston marathon bombing suspect Dzhokhar Tsarnaev.
Prosecutors say the age of one of the victims, 8-year-old Martin Richard,
and Tsarnaev`s lack of remorse are some of the reasons for their decision.
Three people died at the bombing site and an MIT police officer was killed
during the man hunt. Tsarnaev has pled not guilty. A trial date has not
been set.

Up next, the last straw of a long time Republican, she quit. We have
the exclusive interview, up next.

(COMMERCIAL BREAK)

MELBER: Many conservatives have credited the Tea Party for energizing
the GOP. Tonight, we may look at how the right flank may also be shrinking
the party.

This story begins in 1985 in Reno, Nevada. There weren`t many young
women running for office then, and even fewer young conservative women.
But Sue Wagner was an exception. After earning a masters in history and
serving as assistant dean of women at Ohio State, Wagner dived into
politics. She won a seat in the Nevada legislature, jumped up to the
Senate in 1980, working on ethics reform, public education and funding for
women`s shelters.

A decade later, many Republicans backed her bid for the number two job
in the state, lieutenant governor, widely seen as a warm-up to a bid to
being Nevada`s first female governor. At the time in 1990, only four women
served as lieutenant governor in the nation.

And then, if you live in Nevada or followed politics at the time, you
may remember when tragedy hit just one day before the primary.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Two statewide candidates in the Nevada primaries
are among five people injured in the crash of a small plane. Sue Wagner,
candidate for lieutenant governor and Bob Seal (ph) were injured when their
plane lost power shortly after takeoff from Fallon, Nevada. One other
passenger was killed in the crash.

(END VIDEO CLIP)

MELBER: Wagner survived that crash and went on to win the general
election by 16 points. The crash continued to affect her, however, as
Nevada politician Brian Krolicki, who was on that plane, has explained.

(BEGIN VIDEO CLIP)

LT. GOV. BRIAN KROLICKI (R), NEVADA: Being lieutenant governor after
the accident, it was difficult for her. Physically, there was a
substantial impairment with a broken bag and fused vertebrae. She fought a
virus in the hospital after the accident. She had vision issues.

So, she was, you know, as tough as she was inside, her body wasn`t
letting her be as tough outside as I know she wanted to be. Just sitting
or standing was difficult. So, just presiding over the senate on a daily
basis was a challenge for her.

But she did it. She did it in a way that no one knew how much pain
she had to be in.

(END VIDEO CLIP)

MELBER: And still, Wagner used that office to back conservation
policies, prison reform and women`s rights. And she never went on to run
for that top job, though many said she was destined for it.

This week, "The Reno Gazette Journal" reported that former Lieutenant
Governor Wagner is leaving the Republican Party. The first woman
lieutenant governor in Nevada, a life long Republican announced to a
reporter she isn`t a Republican anymore. In fact, she told the paper,
"It`s grown so conservative and Tea Party-oriented and I just can`t buy
into that. I`ve left the Republican Party and it`s left me at the same
time."

Joining us now is Sue Wagner for her first television interview as an
independent. Welcome.

SUE WAGNER, FORMER NEVADA LT. GOV: Thank you, Ari.

MELBER: Why did you switch parties?

WAGNER: Well, I switched because it was just too conservative for me.
I have been somewhat liberal my entire life. My dad was very active in the
party in Maine where I was born.

In those days, a long time ago, the New England Republicans tended to
be more moderate and liberal and that`s the way I was. I never really felt
terribly left out in Nevada politics, although I was somewhat, but it has
become so apparent nationally that I don`t -- I don`t fit in anymore
anyway. And I don`t believe -- I hardly agree with anything that they do.
I mean, literally.

MELBER: Yes, and you cited the Tea Party there in some of your
statements. As I mentioned, the Tea Party is credited for some kind of
grassroots enthusiasm. What do you think the Tea Party represents. What
about it do you think is problematic for the GOP?

WAGNER: I think that it`s actually stilted the party. I think the
party would not be -- I would hope that it would not be as bad as it is now
without the Tea Party element. It seems like that, I will mention the
speaker of the House and other leaders just don`t seem to until just
recently had enough courage to stand up to the Tea Party members.

And I think that`s been very unfortunate for the party and for people
such as myself who have just had too much.

MELBER: And in looking over your career, what`s also interesting was
there was a time when not only as a moderate, but as we mentioned, as a
young woman in at a time when neither party had many women in statewide
office, you were being recruited and groomed. And some of your stances on
other issues, like the environment, were very different than what the
Republican Party seems to tolerate today.

I want to point out that in 1988 GOP platform, for example, was much
more in line with where you were at. It says, and I`m reading, "We brought
record numbers of enforcement case against toxic polluters, established
wildlife refuges in 21 states and territories." Republicans in `88 saying
that they would fight to protect endangered species and support strong
enforcement of our environmental laws.

We took a look at the Nevada GOP platform today, the party you`re
exiting. And it says that the party strongly opposes any laws,
regulations, or legally binding actions that diminish the ability of the
mining industry to access minerals and it opposes the designation of
additional wilderness areas, national monuments, wildlife refuges or
wilderness study areas in Nevada.

That`s a long ways from not only where you were in the office but from
where the Republican Party was. What`s wrong with having some, you know,
protected lands in Nevada?

WAGNER: You know, it blows my mind, Ari. The fact that just in the
last three or four weeks, we`ve noticed what`s happened in the state of
West Virginia and the chemical outpouring in the rivers. And the fact that
the Republican Party, I won`t say unanimously, but to a large extent oppose
the Environmental Protection Agency. That just boggles my mind.

I mean, it`s those kinds of things that I think are things that I just
absolutely cannot support. I was very involved in the nature conservancy.
I passed a law that`s been used extensively in Nevada, conservation
easements, and I`m sure it`s used in other states as well.

And as you mentioned, I was involved in prison reform. I think the
one thing that really jumps out at me and has been ever since I`ve been in
the legislature, I would call myself a feminist. That --

MELBER: Let me ask you, do you think self-identified feminists are
still welcome in today`s GOP?

WAGNER: No, probably not at all. I know some of my friends wouldn`t
even identify themselves today as a feminist. I do. I think the one thing
that just is so hypocritical is the Republican Party is so opposed to
government involvement in our lives in any way except for a woman`s body.
That to me -- it just blows my mind.

MELBER: It`s strong words but I know that`s what a lot of people
feel. Interesting coming from, once a rising leader in the party and
obviously still engaged on the issues.

Thank you, Sue, for sharing some of your thoughts tonight.

WAGNER: Thank you very much for having me. I always watch MSNBC.

MELBER: Thank you. Good to know. All right, have a good night.

WAGNER: (INAUDIBLE)

MELBER: You got it.

Coming up, we are going to talk about the difference a few months can
make for Governor Chris Christie.

And later, the lament of the 1 percent.

Stay with us.

(COMMERCIAL BREAK)

MELBER: In "Spotlight" tonight, Governor Chris Christie`s reversal of
political fortunes.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: I got 61 percent of the vote in
the state of New Jersey in a blue state that had just re-elected Barack
Obama a year ago by 17 points. That was nearly a 40-point turnaround
between voting for a Democrat at the top of the ticket and voting for a
Republican. You know, getting 51 percent of the Hispanic vote, I`m very
proud of that. I`ve worked hard with the African-American community. I
worked hard with seniors and students. And all of those people came out
and voted in large numbers for us on Tuesday. So people can say whatever
they want, but the numbers speak for themselves.

(END VIDEO CLIP)

MELBER: That was Governor Chris Christie just days after his
landslide victory in New Jersey, making the argument that he can appeal to
a wide range of voters. In other words, making the argument that
Republicans should pick him.

But not even three months after his re-election, a new poll shows
Governor Christie`s argument may be weakening. His favorability rating is
now underwater. Just 35 percent of Americans view him favorable. Among
Democrats, that drops to 29 percent.

Responses to both the federal and state subpoenas issued in the bridge
investigation aren`t due until next week.

As the investigation continues into what Governor Christie knew or
didn`t know about this bridge scandal, the political damage is already
unfolding. A same poll show, for example, that more Americans believe the
bridge lane closures are part of a broader problem with Christie`s
leadership, while 43 percent say this was an isolated incident.

And there are signs that his potential 2016 rivals are finding ways to
mention the scandal without, you know, quite mentioning it.

Here`s Senator Rand Paul last night.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You invited Governor Chris Christie to a beer
summit --

SEN. RAND PAUL (R), KENTUCKY: Oh, no, no. We`re all one big happy
family.

UNIDENTIFIED MALE: Is that right? It`s all over?

PAUL: It`s all under the bridge. I mean --

UNIDENTIFIED MALE: It`s all under the bridge?

PAUL: We`re all getting together now.

UNIDENTIFIED MALE: No pun intended.

PAUL: We are all getting together now. We`re going to be a big happy
party, I think.

(END VIDEO CLIP)

MELBER: Joining me now is MSNBC`s Steve Kornacki, host with "UP WITH
STEVE KORNACKI", and Eugene Robinson, columnist for "The Washington Post"
and MSNBC political analyst.

Welcome to you both.

Steve, let`s start right there with Senator Paul. How did you read
that exchange?

STEVE KORNACKI, UP: Well, I mean, of all the sort of intraparty
troubles Chris Christie has had, there have been well documented things in
the last year, no one has irked him more individually than Rand Paul. It`s
probably a mutual thing. This isn`t the first time I`ve seen Rand Paul
kind of enjoying this moment.

It`s a critical moment for Chris Christie, because it -- what`s
fascinated me so much about this is, it is the most ultimately local thing,
ultra local, ultra petty thing that`s turned into a national story.

MELBER: Well, Steve, you know they say, all traffic is local.

KORNACKI: All traffic is local, all politics are local, all scandals
are local, I guess. But it really is amazing when you`re taking a national
poll on lane closures of the Washington Bridge and you really are talking
about someone who just a month or two ago I thought was a very plausible
candidate for the Republican nomination in 2016. I actually I was one of
those people who wasn`t buying into the thing that he was doomed with the
right. But I think this is changing that equation pretty quickly.

MELBER: Yes.

And you know, Eugene Robinson, Watergate analogies are perilous
because we know that President Nixon was directly involved and we do not
know that here. But it would not be a reach to point out that Watergate
also started with something that seemed local and contained and it was not
ultimately.

EUGENE ROBINSON, COLUMNIST, THE WASHINGTON POST: Yes. I think most
scandals start with something that looks small and then a think mushroom or
not, depending. And we don`t know if this will mushroom.

But politically it certainly has for Chris Christie. And you know, as
he said, the numbers speak for themselves. And the numbers in this poll
suggest that his number one calling card for the Republican nomination, the
number one argument for Chris Christie which is that he can win those
independent votes. He can even attract some sort of some Democrats,
perhaps. It seems to fall apart, that support. Obviously, it wasn`t very
deep, and seems to have evaporated with this first hint of scandal. So if
he can`t do that, what can he do for the Republican Party?

MELBER: Well, and I think that goes to something that Steve has
talked about in his reporting, which is, you know, of course it`s more
likely to evaporate if it`s not built on principle, right? Not built on
pure political passion, but rather on a political electability argument.

Decades ago, politicians would rarely speak overly like this, right,
on a Sunday show and say I`m the most electable. Other people like me so
you should like me. It is a transparent argument. We know everyone uses
this meta politics nowadays. So, we hear those kind of arguments.

That is declining for him. And yet when you look at the calendar,
Steve, of this investigation, right, it may take a long time to complete.
And usually the most important target of an investigation, or potential
target is interviewed near the end, right? And yet we were looking today
at some of the corollaries here from other Republican candidates who formed
exploratory committees. You know, Herman Cain formed his in January 2011.
Pawlenty, March 2011. Bachmann, 2011. Romney April, 2011. He doesn`t
have that much more time if he wants to keep up with when the positioning
usually begins.

KORNACKI: Well, his has already begun. I mean, Mitt Romney formed
his committee in April or March or wherever in 2011. Mitt Romney began
running for president in 2006 and didn`t stop running until he conceded in
November 2012.

Chris Christie, functionally, has been running for president for some
time now. you know, he opted not to put his name on the ballot for
Republican nomination in 2012, but when he gave that press conference in
Trenton at the end of 2011 and said I`m not going to be running in 2012, he
began running for 2016 at that moment.

So for functionally, Chris Christie, I can say, is a candidate for
republican president nomination right now. Just functionally, I consider
Rand Paul and Ted Cruz and Scott Walker and a lot of these other guys. And
so, the damage that he has talking on right now, it`s not that there`s a
gap of time between now and when he has to start running. You have this
sort of invisibly called the invisible primary that is playing out right
now.

MELBER: Looks pretty visible to us.

KORNACKI: Game changers in the party are making decisions and having
conversations.

MELBER: Let me go to Gene on that. You know, double barreled
question. Do you agree with Steve`s, you know, this being a functional
candidacy? And second, do you think the Republicans in Washington will
view it that way?

ROBINSON: Absolutely. Everybody views this as a functional
candidacy. And he has this high profile position as head of the Republican
governors. He`s in a position to talk to the big money people and he`s
been doing that. And so that`s in a sense, in essence, the first primary.

What sort of reaction and reception does he get from the people who
are going to bank roll the successful primary candidates in the next
election? And, you know, so we need to look for indications of whether
these people are going to stick with him or back away.

MELBER: Exactly.

And Steve, from your reporting, which has obviously been picked up a
lot of places, "The New York Times" picked up some more of your reporting
this week in a pretty large story. How much of that -- this is hard for
you having broken some of the story, but how much of this becomes a long-
term drip, drip, drip story for Chris Christie. Because the national media
has decided this is a significant way to understand his administration.

KORNACKI: Well, it`s not just literally about the bridge story. I
mean, one of the stories that`s getting a lot of attention right now is the
decision to fire a prosecutor out in Hunterdon County out in western New
Jersey. This is a story that supposedly to quash an investigation that was
making Republicans uncomfortable in that part of the state.

Well, this is a story that was reported on page A-1 in "the New York
Times" back in the fall and nobody noticed it at all. This was the story
that was reported extensively in New Jersey. Nobody noticed or cared about
it at all. It`s now being -- in this new atmosphere where I think people
after watching that performance that Chris Christie gave at his press
conference a couple of weeks ago, it was a first time, I think, on a mass
scale that people looked at Chris Christie and said, you know, I don`t
think this guy is leveling with us. I think it is main people more see
this is increased people`s appetite and made people more receptive to
stories about Chris Christie that previously they were have to ignore
because they thought they knew him. They thought they knew what kind of
leader he was and they basically liked the kind of leader he was. And
trusted the kind of leader he is.

Now, I think that`s off the table. And that`s the danger here. Any
story that comes out now, even stories that`s previously been reported is
being viewed in a totally different way.

MELBER: Right.

Well, and Steve, if that analysis is correct, it goes to something
positive in the body politic, potentially even the media, which is that he
gave a virtuoso stylistic performance in that presser. Many people
observed that. And yet if you`re right, if people could see past that
bluster and still raise questions.

KORNACKI: He gave a great performance. I decided to fire her. OK,
did you ask her why she did it? No. No amount of style, no three-hour
filibusters when it comes to basic logic.

MELBER: Right. Some unanswered questions there.

Steve Kornacki, Mr. New Jersey and Eugene Robinson, no offence when I
call you Mr. Washington, thank you both for joining us.

And a reminder, you can see Steve Kornacki`s show on weekend mornings
at 8:00 a.m. eastern.

Coming up for us, are we about to witness the beginning of the end of
mandatory minimums?

(COMMERCIAL BREAK)

MELBER: The city of New York will settle the lawsuit over stop and
risk. Mayor Bill de Blasio announced that agreement today.

The settlement means the reforms that a Judge Shira Sheindlin called
for last summer will begin in August of 2013. The Judge Sheindlin ruled
that stop and frisk was unconstitutional. The Bloomberg administration
appealed that ruling and the reforms were thus blocked. One of the
plaintiffs in the case, Nicholas Perk, whom was stopped and frisked
multiple times by the NYPD appeared, as you may remember on "the Last Word"
last year after the initial ruling.

(BEGIN VIDEO CLIP)

NICHOLAS PERK, PLAINTIFF: These aren`t just minor inconveniences.
These are, you know, very hostile situations. And, you know, for years it
has been down played that these are minor inconveniences. And I think, you
know, by the judge ruling and her findings that this is something that`s a
problem in these communities. And, you know, it needs to be dealt with in
a productive way.

(BEGIN VIDEO CLIP)

MELBER: And it is being dealt with here in New York. Now up next, we
have, and this is for real, a good thing happening in the U.S. Senate.

(COMMERCIAL BREAK)

MELBER: And now we turn to some very new developments in an old
story.

Unlike most countries in the world, the U.S. hands out very long
prison sentences for nonviolent drug offenses. We imprison a larger share
of our residents than Russia, Cuba, Rwanda, and, well, name any country and
the comparison stands because we currently imprison more of our residents
than any other nation.

Since 1990, that number has more than doubled regardless of the rate
of crime. And that`s largely because of the war on drugs and mandatory
minimum sentences. Many criminal justice experts have called for that to
change. So has President Obama and his attorney general Eric Holder. And
Democrats in Congress, and lately so have some very independent, very
libertarian members of the GOP.

Mike Lee has been working with Dick Durbin and Senators Rand Paul and
Cory Booker broached the subject just last month pledging to make 2014 the
year they take on the failed war on drugs.

All right. Rand Paul has introduced a bill with liberal Patrick Leahy
to drastically reform mandatory minimum minimums. Paul didn`t just make
the conservative argument here either that these harsh drug laws are
expensive and ineffective, he also said they discriminate against the poor
and minorities. You may recall Lawrence O`Donnell flag that recently.

(BEGIN VIDEO CLIP)

LAWRENCE O`DONNELL, MSNBC ANCHOR, THE LAST WORD: You heard a
Republican senator quoting an ACLU report on how the war on drug visits
disproportionate suffering on black men, an ACLU report. You just heard a
Republican senator say, quote, "there is no justice here."

(END VIDEO CLIP)

MELBER: And as Lawrence was getting at, Paul wasn`t only right to
join this reform effort, he was politically independent. The war on drugs
may be a policy failure, but it`s been a political winner for many, many
candidates in both parties. From Nixon`s law and order crackdown in 196 to
George H. W. Bush`s campaign crime obsession in 1988, running on mass
incarceration was often a winning message.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I pledge to you the wave of crime is not going to
be the wave of the future in America.

UNIDENTIFIED MALE: As Governor Michael Dukakis vetoed mandatory
sentences for drug dealers. He vetoed the death penalty. His revolving
door prison policy gave weekend furloughs to first degree murderers not
eligible for parole. Now Michael Dukakis says he wants to do for America
what he`s done for Massachusetts. America can`t afford that risk.

(END VIDEO CLIP)

MELBER: Now, that`s politically interesting. There`s nothing easy or
automatic about the Obama administration or Congress stepping up here. And
I`m not just talking about speeches or press releases to you tonight.

In the biggest story you might not have heard about today, the Senate
Judiciary Committee took up a key bill to reform these very mandatory
minimums, sponsored by libertarian Republican Mike Lee and Democratic whip
Dick Durbin. They debated it and marked it up. The amendment that would
process -- that process would clear for a house floor or Senate floor vote.
The bill would cut some drug-related mandatory minimums in half and apply
recent reductions in to people serving time on old charges.

The ACLU calls this the most significant piece of criminal justice
reform to make it to the Senate floor in several years. And for the first
time last year, attorney general Eric Holder also endorsed this bill, which
we discussed in our interview last week. And when the mark-up was done
today, the Senate judiciary committee passed this bill. Not by a party
line vote, not by a narrow vote, by a vote of 13-5. And Republican Mike
Lee, to his credit, was out there working with Mr. Holder at a hearing just
yesterday on this issue.

(BEGIN VIDEO CLIP)

SEN. MIKE LEE (R), UTAH: Thank you, general holder for joining us
today. I appreciate the support you expressed earlier for the smarter
sentencing act. I appreciated the opportunity to work with Senator Durbin
on that and welcome the support of my colleagues as we try to move forward
in a way that makes our law enforcement efforts more effective.

(END VIDEO CLIP)

MELBER: And when I interviewed the attorney general last Thursday, he
also addressed the reality of how these sentencing laws operate.

(BEGIN VIDEO CLIP)

ERIC HOLDER, U.S. ATTORNEY GENERAL: This mass incarceration happens
with a cost. If you look at the way it impacts certain communities, and
let`s be honest about this, communities of color, where young men who
should be the future of these communities are taken out, labeled, then have
inabilities to obtain good employment, to be the kinds of productive
citizens they can be. People have to be held accountable for individual
decisions that they make, but need to have proportionate penalties.

(END VIDEO CLIP)

MELBER: That`s important. The disproportionate impact of these laws
adds injustice to inefficiency. We know that. We can see that. In fact,
government data shows African-Americans are the least likely to receive
relief from these mandatory minimum sentences.

And while many Washington politicians are locked in battles that
require pretending they don`t see the same things, or see the same America,
this is actually an area where the moral imperative and the politics are
connected. I believe that. And in that spirit, to echo President Obama`s
attorney general tonight, we give the last word to Senator Paul.

(BEGIN VIDEO CLIP)

SEN. RAND PAUL (R), KENTUCKY: If I told you that one out of three
African-American males is forbidden by law to from voting you might think I
was talking about Jim Crow 50 years ago. Yet today a third of African-
American males are still prevented from voting because of the war on drugs.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MELBER: Did you know that one percenters actually feel threatened by
all this talk of inequality in the U.S.? Well, that`s up next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The truth is, and you
know this in your own lives, and you see it in your neighborhoods and among
your friends and family. Even though the economy has been growing for four
years, even though corporate profits have been doing very well, stock
prices have soared, most folks wages haven`t gone up in over a decade. The
middle class has been taking it on the chin, even before the fastball
crisis. Too many Americans working harder than ever just to get by, let
alone get ahead.

(END VIDEO CLIP)

MELBER: That was President Obama today hammering his priority from
the state of the union this week. Republicans in Congress may disagree,
but it turns out their constituents share quite a bit of the president`s
analysis.

A recent Pew poll finds 65 percent of the Americans say the gap
between the rich and everyone else has grown in the last decade. And
there`s no big polarization here. That`s pretty interesting. This
includes 61 percent of Republicans and 68 percent of Democrats. Now, maybe
that consensus scares some louder members of the one percent. Because
"Politico" is reporting that the cofounder of one of the nation`s oldest
venture capital firms fears a possible genocide against the wealthy.

Presidents of Manhattan (INAUDIBLE) say the progressive mayor didn`t
plow that you are streets as a form of frosty revenge. And the cofounder
of home depot recently warned the Pope that he should pipe down about
economic inequality. The nation`s wealthiest denizens of the (INAUDIBLE)
slice of the one percent, "Politico" reports appear to be having a
collective meltdown.

Joining us now to unpack some of this is venture capitalist Nick
Hanauer.

Nick, I hope you don`t mind me saying this, but it is probably
reported that you have founded some very successful companies. You have
quite a bit of money by any measure. Let`s start right there. Do you feel
under attack?

NICK HANAUER, VENTURE CAPITALIST: Well, no, but I do understand why
some of these folks are melting down. And, you know, it all comes down to
this. I mean, I`ve been talking about economic inequality for a while.
And what I have learned is it a super emotional issue for people. And
that`s because, you know, when one of these folks calls themselves a job
creator, you know, it really sounds like what they`re doing is describing
the economy, but they`re doing something, which is much more important and
different, which is that they`re really making a claim on status,
privileges and power.

And, you know, when you start talking about the problems of
inequality, you are threatening a particular way of understanding where
prosperity comes from, you`re threatening the orthodox or trickle down view
that, you know, if you pour money into rich people like ingredient,
prosperity for everyone will sort of squirt out.

MELBER: Let me jump in and see if I`m understanding you, Nick. It
sounds like you`re making a distinction between having a lot of money and
having the status of being seen as a productive or super special member of
the economy.

HANAUER: Yes. Yes. And I think that people are freaking out
because, you know, if you accept the orthodox view, rising inequality is a
feature of prosperity. It`s how you know the know the country is getting
better.

But if you see the economy in a more, you know, realistic way, you
know, rising inequality clearly represents a death spiral of falling
demand. This is what President Obama was talking about. A few people are
getting richer and richer and everyone else is getting worse off.

I mean, the problem is that the real economy actually does resemble
the game of monopoly. When one person has all the money, the game is over.
And of course, this is perfectly charming when you`re playing with a few
friends, but in a real economy, that`s a very serious problem.

MELBER: Right. And you are hitting on something there, what you just
said. That the metric, right, according to a sort of one percent, or
right-wing dogma, the very metric of success relates to the idea that there
should be drastically increasing inequality, as if that doesn`t also
correspond to our tax policies, the way we distribute power politically,
and economically.

Let me play with you someone who disagrees as part of this which is
Venture capitalist Tom Perkins.

HANAUER: Right.

(BEGIN VIDEO CLIP)

TOM PERKINS, VENTURE CAPITALIST: I don`t feel personally threatened,
but I think that a very important part of America, namely the creative one
percent, are threatened. The one percent are not causing the inequality.
They are the job creators.

(END VIDEO CLIP)

MELBER: Your response there?

HANAUER: Well, there you have it. I mean, you know, and what Tom is
saying there is that one percent of the people in the country matter and
the other 99 percent don`t. And that`s a very orthodox view.

But the problem, of course, is that while, you know, the people who
are entrepreneurs in great companies are a very important part of the
economy, if no one else has any money, who will buy the stuff, right? This
is the problem.

You know, it`s just this ridiculously sort of insular way of looking
at the world to presume that the one percent mean everything and no one
else has any value in the economy. And nothing could be further from the
truth.

Tom`s view represents the orthodox view that thriving middle class is
the consequence of prosperity. It`s people like him who create the middle
class and nothing could be further from the truth. We now, I think, can
see very clearly that a thriving middle class is the source of growth and
prosperity in capitalist economies. It`s where entrepreneurship comes from
and it is where the demand comes from that drives the economy in general.

MELBER: And briefly, do you think the state of the union emphasis on
social mobility was a step forward here? And does it relate to the
hysteria that you`re documenting?

HANAUER: Yes. I mean, I think that President Obama focusing
attention on the lack of mobility increasing inequality, you know, issues
like the minimum wage are crucial to moving the country forward. And look,
I am one of those one percenters who are actually 1/100 of one percenters.
You know, I believe that capitalism and the right to make a lot of money.
But we have to bring the economy back into balance. We have to have an
economy that works for every American, not just one percent of us.

MELBER: Yes, that`s what`s striking about some of your work here and
some of the talks you`ve given around the country, the middle out frame.
When you use that word privilege or status, it goes to that one percent
pride, which is an interesting and sometimes disturbing part of this.

Nick Hanauer gets the" Last Word."

And here we are finished for the evening. I am Ari Melber in for
Lawrence O`Donnell. You can mind on twitter @AriMelber or you can find me
tomorrow on MSNBC at 3:00 p.m. on "the Cycle" with Krystal Ball, Abby
Huntsman and Toure.

And now, "All right, IN with Chris Hayes" is up next.

END

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