All In With Chris Hayes, Wednesday, April 23rd, 2014
Read the transcript from the Wednesday show
ALL IN with CHRIS HAYES
April 23, 2014
Guests: Howard Dean, Allyson Schwartz, Chris Kromm
CHRIS HAYES, MSNBC HOST: Good evening from New York. I`m Chris
There is a brand-new set of polls out today, possibly the most
significant of the 2014 cycle, and it shows something that many political
observers would have never anticipated just one month ago.
Not only is Obamacare working, there is mounting evidence it is
winning. And it`s winning in the hardest place for it to win, the hardest
place for Democratic candidates. It is winning in what could be considered
the geographical epicenter of the Tea Party. It is winning in the heart of
red America in the deepest recesses of anti-Obama politics.
In four Southern states, "The New York Times" polled high-profile
Senate races, in North Carolina, Kentucky, Arkansas, and Louisiana, all
four Democratic Senate candidates are either in the lead or in the case of
the Democrat trying to unseat Senate Minority Leader Mitch McConnell, in a
statistical dead heat.
In Arkansas, the political obituary had already been written for
Senator Mark Pryor, running for re-election in a state that President Obama
lost by 24 points in 2011, 24 points! And Senator Pryor, of course, voted
for the Affordable Care Act. But he`s beating his Republican challenger,
Congressman Tom Cotton, by 10 points. And you will recall that Congressman
Cotton is a huge opponent of Obamacare.
But here`s the thing about Arkansas: more than 150,000 people in that
state got access to health care through the private option, the state`s
version of the Medicaid expansion ushered in by Obamacare. And even Tom
Cotton, House Republican, Tea Party Tom Cotton is disassembling about
whether he would get rid of the private option in Arkansas when he fantasy-
This is dynamic is one we are seeing in the polling again and again.
In Kentucky, a state Barack Obama lost by 23 points, Senate Minority
Leader Mitch McConnell was in the fight of his political life against
Democrat Alison Lundergan Grimes. McConnell is ahead by one point.
But the Democratic governor in that same state, Steve Beshear, who
cannot run for reelection, he has a 56 percent job approval rating.
Beshear has been one of the most outspoken advocates of Obamacare anywhere
in the country and certainly in the American South.
The state has enrolled more than 400,000 people in Obamacare, 82,000
of those through its highly successful state exchange and 330,000 through
Now, compare Governor Beshear`s popularity to the fortunes of a
fellow Southern governor, Bobby Jindal. Not only did Jindal not set up a
state insurance exchange and refused Medicaid expansion, his state is
actually suing MoveOn.org because it had the temerity to point out on a
billboard that Jindal is, in fact, blocking the Medicaid expansion for
The state is claiming a violation of trademark rules, because the
billboard cheekily uses Louisiana`s tourism logo.
Governor Bobby Jindal`s approval rating stands at a very limp 40
And in that very same state, Louisiana, a state that President Obama
lost by 17 points, a state that is no friend to liberals, Senator Mary
Landrieu, thought to be one of the most threatened Democratic incumbents of
this election cycle, holds a commanding lead over her likely opponent,
Congressman Bill Cassidy. In fact, leads all her opponents` polling
In an interview yesterday, Landrieu said she would campaign
aggressively against those who would repeal Obamacare.
I have to say, I am now increasingly convinced we have finally
arrived at the crucial political turning point. The moment when Obamacare
has traveled so far from the abstract demon to actual reality, that the
politics are starting to play out exactly as the laws proponents suggested.
And candidates, instead of running from the law, can go on offense.
And just as the political winds seem to be shifting away from rote
Obamacare opposition, a major unforced error from one of the law`s biggest
opponents. The Koch brothers-backed Americans for Prosperity trying to
show Mark Udall, showing him alongside President Obama in an ad, using
footage from Obama`s visit to the state after the deadly Aurora movie
theater shooting in 2012.
But even without that kind of tasteless mistake, opponents of
Obamacare are finding, the wind is no longer at their back.
Joining me now, former governor of Vermont, and former chairman of
the DNC, Howard Dean. He is now a consultant to McKenna Long & Aldridge,
and Democracy for America.
What do you think of the thesis? That we have finally -- everyone`s
been saying this from the beginning, Bill Clinton, all the House Democrats,
Senate Democrats saying, pass it, it`s going to be rough, people aren`t
going to like it, you get it there, people start having health insurance,
the politics are going to change.
And I, myself, have not wanted to undersell how much people don`t
like the law because the polling says they don`t like the law. You`ve got
to listen to people.
I think it`s starting to change now.
HOWARD DEAN, FORMER DNC CHAIRMAN: I think that`s right, and I think
it was predictable.
You know, by the time they get done with this, in the next few
months, roughly, one out of 20 Americans are going to be insured through
this bill. And that means it`s pretty likely that somebody is going to
know everybody -- Americans are going to know somebody who got their
insurance through Obamacare. Now, this is -- when you know somebody with
the insurance --
HAYES: That`s a great point.
DEAN: -- most of the time, they`re going to say, oh, it works OK.
Sometimes they`ll say, oh, I had a terrible time. Most of the time, I`m
going to say, you know, I have insurance, I never would have had this
opportunity if it wasn`t for Obamacare. I`ve got to say, I may not like
Obama, but I like Obamacare. Once you get to that position, we win.
HAYES: And part of this has to do with the politics of repeal,
specifically, right? Because there`s this -- well, what`s the alternative?
And you see in "The New York Times" polling, Arkansas, Kentucky, Louisiana,
those folks are against repeal, despite the fact that approval for law is
not gangbusters. It remains low.
DEAN: For a long time, I`ve been predicting that Mary Landrieu, Kay
Hagan, and Mark Begich in Alaska are going to win, which is going to put a
really difficult chance or opportunity in front of the Democrats.
HAYES: In front of the Republicans to take it.
DEAN: In front of the Republicans to take, they`re really going to
And the reason I do that is because Mary Landrieu is a really
experienced politician. And she, today, for the first time, of any
Democrat in the South, said, I`m going to campaign on not repealing
Obamacare. That means other Democrats are going to do this.
And they`re going to go after these guys who all voted to deny
Medicaid and all these -- hundreds of thousands of people with no health
insurance, because of that. They`re going to go after these candidates,
these Tea Party people like Tom Cotton and the guy, Cassidy, and all these
people, after them for voting no, no, no, and let`s take it away.
And when somebody has breast cancer and they get health insurance,
which they were denied for years because of Barack Obama -- well, all of a
sudden, those guys are on defense. And when you`re playing defense in
politics, you are losing. And that`s what`s going to happen to the
Republicans. They`re going to be playing defense and a lot of them are
going to lose.
HAYES: The Mark Begich ad uses exactly that example. I also think
it`s interesting, I want to show you a clip of an ad, I think it`s an
Americans for Prosperity ad if I`m not mistaken --
DEAN: You mean a Koch brothers ad?
HAYES: There are a lot of funders, Koch brothers are one. Going
after Democratic candidate Gary Peters in Michigan for his support of the
Affordable Care Act, and get this, hitting him from the left. Take a look.
(BEGIN VIDEO CLIP)
AD NARRATOR: Congressman Gary Peters says he`s standing up to health
insurance companies. The truth? Peters voted for Obamacare, which will
give billions of taxpayer dollars to health insurance companies.
(END VIDEO CLIP)
HAYES: I don`t know -- I mean, it`s an amazing -- now the idea is
the problem with Obamacare is that it`s not single payer, apparently, in
the eyes of Americans for Prosperity.
DEAN: Yes, that`s not going to get them anymore. Look, the Koch
brothers are smart and they have a lot of money. But at the end of the
day, you can`t win if you`re one of the 1 percent. This is the Romney
problem, 47 percent of the people don`t do any work in America and they`re
all living off all hard work.
It`s an upside-down world. People don`t like the Koch brothers, they
know what they`re about, and I don`t think this kind of an ad is going to
HAYES: Finally, I want to ask about this idea. Republicans are
upset Obamacare doesn`t help more people. You keep seeing this moving
target about what the problem with the law is, now they`re saying, they`re
That`s like, well, yes --
DEAN: Chris, this is as if the Republicans were trying to get people
to forget that they shut the government down. They can`t do it, they can`t
rebrand themselves. It`s impossible. They`re in big trouble.
And they`re going to have to find out another line of attack and it`s
pretty late. They have pretty much bet the farm on this.
HAYES: That`s right. That`s the farm, and once you take that away,
it`s unclear what they`re running on.
Former governor of Vermont, Howard Dean, always a pleasure.
DEAN: Thank you.
HAYES: All right. Joining me now is someone who`s in the trenches
doing this, Congresswoman Allyson Schwartz. She`s Democratic candidate for
governor of Pennsylvania.
And, Congresswoman, I want to play your ad, which, for governor.
You`re running against incumbent Tom Corbett, Republican. And this is your
ad, explicitly touting Obamacare.
Take a look.
(BEGIN VIDEO CLIP)
REP. ALLYSON SCHWARTZ (D-PA), GOBERNATURIAL CANDIDATE: I worked with
President Obama on the Affordable Care Act and getting health coverage to
all Americans. It was my legislation that said, insurance companies can no
longer deny coverage for kids with pre-existing conditions. It`s something
I`m proud of, because it also closed the gap in prescription drug coverage
for seniors. Tom Corbett has decided not to take the Medicaid money.
As governor, I will take the Medicaid expansion, because 500,000
Pennsylvanians need health coverage.
(END VIDEO CLIP)
HAYES: I thought the most interesting line in that was, "my
legislation," right? Everyone wants to own something that`s working
SCHWARTZ: Well, we want to -- from my point of view, my point in
that add is I want to own something that`s working.
HAYES: And what do you think the politics are specifically on the
Medicaid expansion? You tout the Medicaid expansion. You talk about
500,000 people. It`s been blocked by the Republicans.
Do you think there`s traction there politically, or do people think
that`s a kind of abstraction for some other folks?
SCHWARTZ: I`m sorry, I can`t tell what -- anyway.
HAYES: I think we appear to be having audio problems.
Congresswoman, are you there? Can you hear me now?
SCHWARTZ: I`m sorry, I can`t hear you exactly and someone has to fix
that. I`m happy to talk about what we`re doing here and the fact that I
make a very clear statement and certainly one of the conversation I`m
trying to have with voters is the fact that the Affordable Care Act is
making a difference in the lives of Pennsylvanians, 8 million Americans
have gotten health coverage.
And here in Pennsylvania, we have a governor who is refusing, really,
to take the Medicaid expansion. And 500,000 people in Pennsylvania are, as
a result, unable to have access to health coverage. We need a governor
who`s going to actually take on this challenge, that`s going to work to
make the Affordable Care Act work in Pennsylvania, will implement it, will
make it a priority. And my experience in fighting for health care, both at
the federal level and certainly in previously when I was in the state
Senate, I will make this a priority.
I will make sure that Pennsylvanians benefit from the Affordable Care
HAYES: There is, of course, a difference -- and I hope we got audio
problem figured out -- there is, of course, a difference between running on
this in Pennsylvania and in a state like Louisiana, because Pennsylvania is
a state that Barack Obama carried.
But even in Pennsylvania, the law has had an uphill battle in terms
of what its actual approval rating is.
SCHWARTZ: Well, again, I`m not going exactly on approval ratings
here. I`m going on what I believe is so important for Pennsylvanians and
what I hear on the campaign trail. What I know is that many, hundreds of
thousands of -- it`s about 160,000 Pennsylvanians, as best as we know it,
and the governor is not being very helpful here in giving the numbers, have
signed up and gotten insurance and that`s important.
Others, many hundreds of thousands of more have been able to benefit
from the fact that we are holding insurance companies accountable to making
sure it`s meaningful coverage, covering the health care that we need that
many seniors, millions of seniors are benefiting from the prescription drug
coverage and preventative care. And of course, the legislative I worked
on, I worked on many aspects of the Affordable Care Act, but making sure
that insurance companies can no longer deny coverage to children with pre-
existing conditions -- well, millions of people, millions of children are
benefiting from that.
So the point here is that good policy, I believe, makes good
politics. That Democrats and Republicans and independents -- well, when
they need health care, they don`t use a political label. They go to the
doctor, they go to the hospital, they need that health coverage.
And it should not be an economic hardship for them to get that
coverage or that care. And that`s why this works politically, because it
actually matters in people`s lives for them to have health coverage.
HAYES: Congresswoman Alyson Schwartz, running for governor in
Pennsylvania -- thank you so much.
Coming up, remember this amazing scene from Michael Moore`s "Bowling
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: No one has a right to tell me I can`t have it.
That is protected in our Constitution.
UNIDENTIFIED MALE: Where does it say handgun is protected?
UNIDENTIFIED MALE: No, gun. We should -- every citizen --
UNIDENTIFIED MALE: It doesn`t say gun. It says arms --
UNIDENTIFIED MALE: What is arms?
UNIDENTIFEID MALE: Could be nuclear weapons --
UNIDENTIFIED MALE: Not these -- that`s right, could be a nuclear
UNIDENTIFIED MALE: Do you think you should have the right to have
weapons grade plutonium here on the farm?
UNIDENTIFIED MALE: We should be able to have anything --
UNIDENTIFIED MALE: Should you have weapons grade plutonium?
UNIDENTIFIED MALE: I don`t want it.
UNIDENTIFIED MALE: Should you have a right to have it if you did
UNIDENTIFIED MALE: That should be restricted.
UNIDENTIFIED MALE: Oh, oh, so you believe in some restrictions?
UNIDENTIFIED MALE: Well, there are what wackos out there.
(END VIDEO CLIP)
HAYES: That guy is the brother of Terry Nichols, one of the men
convicted in the Oklahoma City bombing. Well, there`s actually someone who
is to the right of him on the Second Amendment, and that guy is running for
Senate in North Carolina. I will introduce you to him, next.
HAYES: There is something you have to see this Sunday, and it does
not involve Lannisters or drapers.
(BEGIN VIDEO CLIP)
HAYES: Next time on "Years of Living Dangerously."
UNIDENTIFIED MALE: That extra foot of sea level, didn`t make Sandy
UNIDENTIFIED MALE: How long before the rest of Christmas Island end
up looking like this?
UNIDENTIFIED MALE: There`s no oxygen left in the room in Washington
right now for another big debate.
HAYES: At what point does this become the priority?
UNIDENTIFIED FEMALE: Not a day goes by that I don`t relive that last
half hour with my family.
UNIDENTIFIED MALE: Every day I go to work, I`m fighting with
someone, sometimes my own party.
UNIDENTIFIED MALE: It`s conclusive.
UNIDENTIFIED MALE: The evidence is clear.
(END VIDEO CLIP)
HAYES: All right. The first episode that I was privileged enough to
do for the Showtime serious, "Years of Living Dangerously," well, it airs
this Sunday at 10:00 p.m. Eastern. You definitely want to check it out.
HAYES: Might be the most watched upcoming senate race in the country
and it`s happening in North Carolina. It is particularly being closely
watched by outside conservative groups, who are heavily invested in
defeating Democratic incumbent, Kay Hagan.
The Koch-backed Americans for Prosperity have already spent $7
million running ads against Hagan, more than they`ve spent in any other
state. The reason they`re bombarding Hagan is because there`s no
Republican nominee yet. The two front-runners right now are Tom Tillis,
the speaker of the North Carolina House, arguably one of the most right-
wing state houses in the country, and also the establishment favorite.
He`s endorsed by Karl Rove`s American Crossroads, who has run ads for him
in the state and by the Chamber of Commerce who are officially backing him.
And then there`s Greg Brannon, the Rand Paul and Mike Lee-endorsed
Tea Party gadfly who thinks that Marx`s communist manifesto is the law of
the land, the Second Amendment extends to nuclear weapons, and our system
of government is something like Nazism.
(BEGIN VIDEO CLIP)
GREG BRANNON, NC GOP SENATE CANDIDATE: I know when people use the
word "socialism." You know, what`s Nazis? National Socialist Party. So
the government and private business merged together, eliminate competition,
and dictate our lives. These words mean something.
(END AUDIO CLIP)
HAYES: These words mean something.
Last night, Tillis and Brannon, along with two other Republicans,
squared off in the first primary GOP debate of the cycle.
Now, here`s a little context for that debate. It took place, of
course, in North Carolina. A state whose current governor is a Republican,
Pat McCrory, who worked for Duke Energy, the largest utility in the
country, for 29 years.
So, he`s a Duke guy. A recent study found that McCrory`s campaign
received $98,000 from duke energy from 2000 to 2012, more than any sitting
Now, the name Duke Energy probably sounds familiar to you. That`s
because they`re the company that spilled almost 40 tons of toxic ash and
water into a North Carolina river earlier this year, which was, I should
note, just their latest spill in the state. The state is now under federal
criminal investigation regarding the relationship between Duke and the
state`s environmental bureaucracy.
That investigation is related to allegations that North Carolina`s
regulators have colluded with Duke Energy in the past. And get this --
yesterday, Duke goes to state lawmakers and tells them that to clean up all
of the company`s coal ash, it would take decades and cost up to $10 billion
with its electricity customers likely footing nearly all the bill.
OK, so that is backdrop for last night`s Republican primary debate,
which was held in Davidson University`s Duke family performance hall. And
you will never, ever, ever, ever, ever guess what the GOP`s best and
brightest in Duke`s home state had to say about climate change.
(BEGIN VIDEO CLIP)
MODERATOR: Is climate change a fact? Mr. Harris?
UNIDENTIFIED MALE: No.
MODERATOR: Ms. Grant?
UNIDENTIFIED FEMALE: No.
MODERATOR: Mr. Brannon?
BRANNON: No. God controls the climate.
MODERATOR: Mr. Tillis?
UNIDENTIFIED MALE: No.
(END VIDEO CLIP)
HAYES: Joining me now, Chris Kromm, executive director of the
Institute for Southern Studies, a progressive media, research, and policy
center based in North Carolina.
And, Chris, this Duke scandal, the connections between Duke Energy,
McCrory`s administration, it seems to me that it is blowing up in the local
media in North Carolina. It hasn`t quite reached the national spotlight
yet, but it`s casting a huge shadow over this campaign.
CHRIS KROMM, INSTITUTE FOR SOUTHERN STUDIES: Well, Chris, North
Carolina`s Senate candidates may be out of touch with science, but they`re
right at home in North Carolina`s current political Republican leadership.
This is a state that I think was known nationally for its faith and
belief in science. You heard about it, leading universities, the research
triangle park. But today, denial of science, especially climate science,
has become a near article of faith amongst Republican leaders.
And I think it really starts at the top, with Governor McCrory. This
is a person who worked for 28 years at Duke Energy. He benefited from the
last two campaign cycles, over $1 million in campaign contributions from
Duke, which is the largest utility in the world. He still owns stock in
Duke Energy, although we`re not sure how much.
But that interest, that influence that you see from energy interests
in the state is reflected at every level of government today, and
especially, I think, you saw it in the reaction to one of the biggest coal
ash disasters in the country that happened this spring, and inaction that
you`re seeing from the government, state government in response to the
HAYES: I`m really interested about the dynamics in this race,
between Tillis and Brannon. I mean, Tillis is really part of the
establishment there. He`s House speaker, he`s connected to this
conservative government, that has become quite unpopular in the state,
Brannon is this kind of outsider gadfly. Who do you think Kay Hagan
wants to win this primary?
KROMM: Well, I think there`s no doubt they would see Brannon as a
Godsend. But it is interesting, you look at that issue about climate
denial. You might expect that to be a position that`s held by Brannon,
someone who`s equated food stamps with slavery, who`s said that local
property taxes, he`s equated them with the Holocaust. He`s rubbed elbows
with some 9/11 truthers.
That`s the kind of view you might expect from someone from that Tea
Party fringe. You might expect it from Heather Grant, who`s one of the
other candidates, who believes that the Second Amendment extends to owning
a cannon in your backyard.
But Tillis is supposed to be the establishment candidate, right?
KROMM: And so for him to be openly endorsing this position, but he
has a problem, which is the fact that he also puts himself out there as the
leader of the conservative revolution in North Carolina. And I think what
you`re really seeing is it`s getting to the heart of a big problem, which
is that Republicans in this state, they know that where the money is is to
take these extreme positions on issue after issue.
So denying climate science, I`m sure, delighted the Koch brothers,
who have invested, like you said, $7 million in attacking Kay Hagan, and
their energy industrialists billionaires. But when it comes to mainstream
voters who are concerned about whether the government is serious about
addressing an issue like this, there`ll be more concerns when you get to
the November elections.
HAYES: And then Tillis has got his own problem, he`s got his own
scandal developing. I thought I was reading this wrong. Two of his aides
were having affairs with lobbyists, and they were different ones. There
were different marital affairs with married lobbyists, including his chief
of staff. Am I getting that right?
KROMM: That`s exactly right, and that came out in 2012, but it`s
getting repeated now by other Republican candidates, as well as Democrats
in North Carolina, reminding people about this scandal that surfaced, where
not one, but two of Tillis` staffers did admit to having affairs with
lobbyists, who were lobbying his office as house speaker.
And even more interesting, that Tillis, who is someone who is adamant
about cutting unemployment benefits to North Carolinians, didn`t feel the
same about those two staffers. And in fact, using taxpayer money, gave
them nearly $20,000 in severance payments after they had to be dismissed.
HAYES: Chris Kromm from the Institute for Southern Studies, watching
what is one of the most fascinating races in the country, thank you so
KROMM: Thank you.
HAYES: Coming up right now, if you are in the middle class, it may
actually be better for you to live in Canada, Sweden, Norway, Finlands, or
the Netherlands than here in the U.S., and I`m going to tell you why, next.
HAYES: Further developments today in the case of Vice News
correspondent Simon Ostrovsky, who has not been seen since early Tuesday
morning. He is one of at least three journalists currently missing or
being held in Ukraine. According to "The New York Times" today, quote,
"The self-declared separatist mayor of Slaviansk told reporters the
journalist, Simon Ostrovsky, had been detained for reporting what he said
was false information that was destabilizing for us, but that he was being
Simon has brought us some of the best journalism since the crisis in
Ukraine erupted. We have been relying on him here on this show for his
incredibly insightful reporting.
(BEGIN VIDEO CLIP)
SIMON OSTROVSKY, JOURNALIST: This guy is known as the surgeon. He
is the leader of a Russian biker gang and he`s come here to support the
pro-Russian forces. The interesting thing is he knows Vladimir Putin
UNIDENTIFIED MALE: This is the first president I can remember who deserves
respect and who I am not ashamed of.
OSTROVSKY (through translator): And why does the Crimea self-defense
force have the right to stop me from filming? Show me a document. Your
only document is your gun. Are you going to shoot me with it or just beat
(END VIDEO CLIP)
HAYES: We are still unclear about the conditions under which Simon is
being held. We do know we have not heard from Simon.
And, today, State Department spokesperson Jen Psaki was asked about
(BEGIN VIDEO CLIP)
JEN PSAKI, STATE DEPARTMENT SPOKESWOMAN: I can express deep concern
about the kidnapping of a U.S. citizen, journalist in Slavyansk, Ukraine,
reportedly at the hands of pro-Russian separatists.
We likewise condemn the taking of any hostages, including journalists,
in Eastern Ukraine. We call for their immediate release.
(END VIDEO CLIP)
HAYES: We will continue to monitor Simon`s situation until he is
returned home safe and sound, which, as I said last night, should be
HAYES: For years, the American middle class was the best-off middle
class in the world, meaning, if you were part of the American middle class,
you were getting more money in your pocket after taxes than middle-class
folks in England or Canada or Germany or any other country, for that
That is no longer the case. And that`s a pretty big deal. It`s big
enough to be front-page news in "The New York Times" yesterday. And the
disparity between American middle-class incomes in other countries is
Median incomes in both Britain and Canada are up almost 20 percent,
while the median American income has barely budged, 0.3 percent. That
means 14 years without a raise. However, don`t worry. All is not lost,
because the American rich are still the richest rich people in the world.
But it`s that gap between how well the folks at the very top are doing
and how poorly the middle class is doing that`s becoming a defining
political issue of our time. And it`s created an undying, bottomless
thirst among Americans for someone to speak to this truth, to say what is
obvious, that our economic system is broken, that the rich are getting
richer, and everyone else is getting left behind, and that the game is
rigged and getting more rigged every day.
The demand for some sort of public errant of the increasingly unequal,
unjust distribution of wealth and income in this country is so intense,
that currently sitting atop Amazon`s bestseller list is an incredibly
dense, nearly 700-page book about the economic future and history of
inequality written by this guy.
(BEGIN VIDEO CLIP)
THOMAS PIKETTY, AUTHOR, "CAPITAL IN THE TWENTY-FIRST CENTURY": I
think there`s been some illusion, some collective illusion, including in
France and maybe in the United States, today as to how much forces of
growth in itself can bring a more equal distribution of wealth.
(END VIDEO CLIP)
HAYES: Thomas Piketty`s "Capital in the Twenty-First Century" has
skyrocketed in the top of the bestseller list, improbable as it may seem,
because people want to understand an economy that seems inexplicable to
And it`s that same desire that`s created a huge political vacuum, a
vacuum that keeps trying to draw this woman into the presidential race.
(BEGIN VIDEO CLIP)
SEN. ELIZABETH WARREN (D), MASSACHUSETTS: We can choose to support
billionaires, or we can choose to support kids who are trying to get an
education. The way that we spend our money as a country should reflect our
(END VIDEO CLIP)
HAYES: Elizabeth Warren has made a career of fighting for the middle
class, for broadly shared prosperity and affordable education, against
rigged games on Wall Street and the domination of the 1 percent.
Her focused and relentless campaign against economic inequality is
what makes so many people want her to run for president, because politics,
like nature, abhors a vacuum. And right now, the truth is, there`s a
political vacuum where genuine, bracing assault plutocracy is concerned.
Joining me is Charlie Pierce, writer at large for "Esquire" magazine,
political blogger for Esquire.com, who has got a fantastic profile on
Elizabeth Warren in the May issue of "Esquire."
And my first question for you, Charlie, watching Rachel last night,
watching the interview with Rachel and Twitter, what is it about Elizabeth
Warren that people love so much? There is some quality that is bringing
something out in people, and you followed her around. What did you find?
CHARLIE PIERCE, "ESQUIRE": Well, first of all, congratulations to you
and your wife on the new arrival.
HAYES: Thank you.
PIERCE: I think that, basically, you know -- and I think I make this
point in the story in "Esquire" -- she gets the same effect out of golly
that Lyndon Johnson used to get out of curse words.
When she says golly, I mean, there`s an evident sincerity and almost a
kind of happy warrior thing to her. I mean, she does -- she`s not
preaching gloom and doom. She`s preaching danger and she`s trying to teach
the lessons that we should have learned from the economic collapse, but
she`s not doing it in such a way that you feel gloomy after having talked
HAYES: That`s right.
There`s something about her. And you talk about her in the piece as a
teacher, that actually the key thing to understanding her, understanding
her political efficacy, understanding her appeal is that what she has done
more than anything else, for decades, is teach, and that her gift in
politics is, in a time of sort of a lot of complex anxiety, being able to
explain and teach voters.
We had a -- during our interview, we were talking about how -- and I
don`t know if this was your experience with it. But my experience with the
economic meltdown in 2008 was, all of a sudden, I woke up one morning and
the entire financial system was on the brink of falling into the ocean.
I didn`t know how it happened. I didn`t know what a credit default
swap was. I didn`t know what a collateralized debt obligation was. I
mean, those things all happened offstage. She has the ability to explain
them to you in such a way -- as she always said, she always said that the
parts of your credit card, the regulations on your credit card from the
credit card company should be as easy to understand as the instructions for
PIERCE: What she does is she makes what the financial services
industry did to this country, and actually to the world, as understandable
as the directions for your toaster.
HAYES: There`s an amazing anecdote.
She`s got a book out, and that`s why she was on Rachel`s show last
night. She`s promoting this book. And there`s an amazing anecdote in it.
And she talks about having a meal with Larry Summers. Of course, he was a
top economic adviser to the White House. Larry Summers took Warren out to
dinner in Washington, and, she recalls, told her she had a choice to make.
She could be an insider or an outsider, but if she was going to be an
insider, she needed to understand one unbreakable rule about insiders.
They don`t criticize other insiders. I -- my jaw was sort of agape at that
exchange. And it`s sort of -- I felt like, if it`s true, and this is a
first-person account, it kind of told you everything you needed to know
about why people love Elizabeth Warren and maybe why they don`t feel so
warmly towards Larry Summers.
PIERCE: Oh, to have been a fly on the wall at that table.
PIERCE: I`m amazed that the rolls didn`t start flying, because, as we
know, in Washington, the only way that one insider talks bad about another
insider is anonymously to one of us.
HAYES: Yes, to one of us, right.
PIERCE: Yes, exactly.
But, yes, I don`t -- I mean, I think she -- obviously, she`s one of
100 senators. So, that puts her in an exclusive club.
But I do not believe that -- there are some people who, some -- I
guess some artists who we love because they don`t -- they not only don`t --
they not only don`t recognize the limits. They don`t see them at all.
PIERCE: And I don`t think she sees the limits of the membership of
the club. Yes, I don`t think she understands what you`re not supposed to
HAYES: I think that`s right. She is going about being senator in a
way as if she isn`t senator, and she`s not scared of not being senator.
Charlie Pierce from "Esquire," thank you so much.
PIERCE: Thanks, Chris.
HAYES: Coming up, author Michael Lewis is out with a book about the
newest way Wall Street is pulling a fast one over all of us, literally. He
will be my guest ahead.
HAYES: The Dow Jones industrial average closed above 16500 points
today. And while that was a slight dip from yesterday, the market is still
up more than 150 percent since the low point of the recession.
Now, a blockbuster new book from one of America`s bestselling authors
brings word that, while all that wealth was being generated, a whole lot of
the money was being skimmed off the top.
UNIDENTIFIED FEMALE: Now to the economy and a high-fly week for the
UNIDENTIFIED MALE: It was a very good day on Wall Street.
UNIDENTIFIED FEMALE: Another good day on Wall Street.
UNIDENTIFIED FEMALE: This could be a really bad day on Wall Street.
UNIDENTIFIED FEMALE: A bad day on Wall Street.
UNIDENTIFIED FEMALE: Having a good day on in the markets.
UNIDENTIFIED MALE: Not a great day for the market.
UNIDENTIFIED MALE: You can`t be involved in this market in the short-
term, because it`s too nutty.
HAYES (voice-over): Every time you tune into the financial news, you
hear about what happened in the market that day.
UNIDENTIFIED MALE: I`m going over the top right here. Buy. Buy.
Buy. I`m buying the market right here, right now.
HAYES: But the market you picture in your head, the one you probably
picture looking something like this, is a relic of the past.
Today, the market exists mostly on a bunch of computers in New Jersey,
computers that can execute millions of trades in incomprehensibly tiny
periods of time. It`s called high-frequency trading, and according to
author Michael Lewis, it has given rise to the systemic rigging of the
market, in which people pay for proximity to the computers, in order to
gain split-second trading advantages, allowing a small group of vested
interests to engage in what is effectively computerized scalping.
MICHAEL LEWIS, AUTHOR, "FLASH BOYS": The market moves at the two
speeds, one speed for people who pay for access to the exchanges, who put
their trading machines right next to the black boxes that are actually now
the exchanges, and everybody else. And we`re everybody else.
HAYES: Almost everyone on Wall Street is making money from high-
frequency traders skimming off the top, according to Lewis, including the
big banks and the stock exchanges themselves.
Lewis` new book, "Flash Boys," centers on a trader named Brad
Katsuyama who decided to fight back. Katsuyama created a new exchanged to
eliminate the scalping. And he outraged some of his peers in the process.
UNIDENTIFIED MALE: The first thing I say, is Michael and Brad, shame
on both of you for falsely accusing literally thousands of people and
possibly scaring millions of investors in an effort to promote a business
BRAD KATSUYAMA, TRADER: I believe the markets are rigged.
UNIDENTIFIED MALE: OK, so there you go.
KATSUYAMA: And I also think that you`re a part of the rigging. If
you want to do this, let`s do this.
HAYES: The defenders of high-frequency trading are not taking Lewis`
book lying down, deeming it "a broad generalization that lumps the vast
amount of good market behavior in with a few bad actors."
But now the New York attorney general, FBI, and Justice Department are
conducting investigations into the unfair market manipulation that Lewis
ERIC HOLDER, U.S. ATTORNEY GENERAL: We are determined to follow this
investigation wherever the facts and the law may lead.
HAYES: But if you`re looking for a Wall Street that isn`t rigged in
some way, well, don`t hold your breath.
HAYES: I`m going to the author of "Flash Boys, Michael Lewis, next.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Michael Lewis` book "Flash Boys" that has been
getting a lot of headlines.
UNIDENTIFIED MALE: It`s the book that Wall Street can`t put down.
Michael Lewis has raised an uproar with "Flash Boys," his indictment of
UNIDENTIFIED MALE: This book may really change the landscape.
UNIDENTIFIED MALE: High-frequency trading now thrust back into the
public eye, with critics arguing the trading method cons ordinary investors
out of billions of dollars.
(END VIDEO CLIP)
HAYES: All right, we`re back.
And joining me now is the aforementioned Michael Lewis, author "Flash
Boys: A Wall Street Revolt."
Michael, it`s great to have you.
How did you find your way into this story?
LEWIS: It began with kind of idle curiosity about a Goldman Sachs
high-frequency trading programmer named Sergey Aleynikov who left Goldman
and was arrested by the FBI for stealing Goldman`s high-frequency code.
And he ends up -- I think it was when he was thrown in jail, for,
what, seven or eight years, I just started -- I just wondered how on earth
the only person from the financial -- from Goldman Sachs after this
financial crisis who gets thrown in jail is the person Goldman Sachs wanted
thrown in jail.
So I started to just poke around that story and I went looking for
someone who could explain high-frequency trading for me, because it was
this new term of art. And that led me to the main subjects of the book.
HAYES: Explain -- now I`m going to ask you to do the thing that
basically is what you do in the book, and what Brad Katsuyama, who is the
hero of your book, has to go around the country doing to everyone else,
which is to explain.
Explain what high-frequency trading is and why -- what is wrong with
it, if there is something wrong with it.
LEWIS: So, as I say, it is a term of art. It`s a catchall for all
sorts of things.
But, I guess, broadly speaking, it`s trading at very rapid speeds,
using computers, in the newly automated financial market place. There`s
nothing wrong with that, in and of itself. It`s -- the problem is, as the
market went into computers and went off the floor of the New York Stock
Exchange, built into it was this scalping activity.
And the scalping activity is -- it is true it`s a subset of all high-
frequency trading, but as Brad Katsuyama finds out, it`s a pretty big
subset. So, we`re talking about certainly billions of dollars a year. How
many billions, I don`t know.
HAYES: So one of the things that struck me in the book is there`s
this gap between the people who are in on this and who are learning about
And it was almost hard for me to believe this gap, in the sense that
you have got the exchanges on one hand, who are literally auctioning off
physical proximity to their servers to these high-trading frequency
outlets, so that they`re closer than the other people and they could buy
stuff before other people and sell it at a profit, which is basically the
scalping you`re talking about.
And while that whole world is existing, there`s all these
sophisticated investors and all these smart people who are working full-
time in finance who have no idea it`s happening.
LEWIS: It is incredible -- well, in the first place, it`s -- the
markets change very quickly.
And, yes, it is unbelievable that any market participant pays an
exchange for faster feeds, so they can basically know prices before
everybody else, and that that`s OK. But it is also incredible that big
investors aren`t more aware of what`s going on in the market.
And one of the things that attracted me to the story was just that,
was that this guy, this Canadian guy at the Royal Bank of Canada, who
himself -- finds himself on the wrong end of this, who sees that the market
has gotten rigged in some way and he`s trying to figure out how, ends up
explaining it to the biggest, you know, mutual funds and hedge funds in the
And I think the reason for that is that these investors, you know,
they don`t really -- they`re not built to spend their time figuring out how
the market`s structured. They spend their time thinking about whether they
should buy IBM or Intel, you know, doing research in companies.
The idea that the structure of the place itself has got this
systematic scalp built into it, I think it just didn`t -- it didn`t occur
to people. Having said that, they all knew something was afoot, in that
they just didn`t know what it was. They knew that somehow the market was
anticipating what they wanted to do in new ways and they didn`t know why.
HAYES: Yes, there`s this kind of ghostly experience that Brad
Katsuyama has, where he`s going to go buy something, and he goes to buy it
and then suddenly it`s a little more expensive.
And, basically, what you lay out in the book is that someone has
gotten in between his buy order and the stock, gone and -- buy it
themselves, marked it up, and turned around to sell it to him, which is
what the profit model for these enterprises are.
LEWIS: And it`s interesting. You talk -- you know, so as one big
hedge fund manager put it, he said, I knew there was this problem, but I
thought I had a different problem. I thought someone was leaking what I
wanted to do from my own shop into the marketplace before I did it.
So that`s the flavor of the problem. The flavor of the problem is
that, because they have special access to market information, high-
frequency traders are able to anticipate big orders and take advantage of
But to figure out how they do it, and exactly how the market`s rigged
was a product of not just Brad Katsuyama, but a team of like 35 very smart
people from all parts of the marketplace working for years on this to
figure out how it all was pieced together.
HAYES: So there`s this question in the book. It`s very clear who
benefits, right? The big question is, who suffers?
And I read this review, a critical review from Felix Salmon, where he
basically says his problem -- the issue he takes with the book is that you,
for narrative purposes, have to make good guys and bad guys. He says, "For
Lewis` purposes, the banks and the high-frequency trader upstarts all have
to wear black hats, and while IEX" -- that`s Brad Katsuyama`s outfit --
that`s his new exchange -- "and a few noble other fighters fight for, well,
whom? The answer, if Lewis is honest, is very rich investors."
Is this a battle between one set of rich people and another set of
rich people, in which we don`t have any purchase?
LEWIS: No, it`s foolish.
And, in fact, you know, it`s very funny. The idea that you -- I queer
the narrative so that there are good guys and bad guys is nonsense. There
are facts on the ground that arrange themselves into the narrative.
And so this is who pays for the arrangement we have. Every stock
market order is basically one way or another sold to high-frequency traders
to exploit. So if you are trading through E-Trade or TD Ameritrade, the
order flow, your orders are sold by E-Trade or TD Ameritrade to some high-
frequency trader, who pays for the right to trade against it. That can`t
be good for you.
Now, it`s true that, for individual investors, you`re talking about
pennies on -- a penny a share. And the scalp is very small, but who --
where are the savings of individual people in America? They aren`t -- it
isn`t just a guy in his underpants trading at E-Trade. It`s in mutual
funds. It`s in insurance companies. It`s in pension funds.
So big investors actually are small. They are collections of little
investors. But, to me -- look, for me, the bigger issue, almost bigger
than the scalp, whatever it is, how many billions of dollars get scalped
unnecessarily out of the market by this arrangement to preserve Wall
Street`s revenues is small next to the instability and the complexity of
the system that has to be created to sustain the scalp.
And that`s the real problem, is that we have markets that are very
shaky and wobbly.
LEWIS: We have flash crashes and IPOs that go wrong and outages at
exchanges and so on and so forth.
You get a less trustworthy market generally, and we all pay a price
HAYES: And this is now -- and that, I thought, was a really
interesting takeaway, considering the sort of three books you have written
about Wall Street, "Liar`s Poker," "The Big Short" and now this.
"The Big Short" is in some ways about the dangers of complexity, the
dangers of obscurantism on Wall Street, when a small group of people know
what`s going on and a lot of people don`t know what`s going on.
And I wondered if, do you think what`s happening with high-frequency
trading is a difference in degree or of kind? Is this just the latest way
in which the market`s rigged, or is this something new in the way Wall
LEWIS: I think, broadly, it`s of a piece with what led to the credit
crisis, in that a lot of unnecessary complexity that is dreamed up to
create an advantage for insiders at the expense of outsiders.
And I think that, if you back away from it, the reason this is
happening is that technology has reduced greatly the actual need for what
Wall Street has historically done, which is intermediate, that we actually
-- all investors can meet together in a single black box without the
benefit of a middleman`s, you know, bringing them together.
And the inside, the financial system has responded by dreaming up ways
to kind of preserve revenues. And so the subprime mortgage collateralized
debt obligation is one creature. The structure of our stock market is
another creature. And the point is, the complexity serves that purpose.
LEWIS: It serves the purpose of disguising the interests of insiders.
HAYES: Michael Lewis.
The book is "Flash Boys."
Great thanks, Michael. Really appreciate it.
LEWIS: Thanks for having me.
HAYES: That is ALL IN for this evening.
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