'The Rachel Maddow Show' for Wednesday, May 7, 2014

THE RACHEL MADDOW SHOW
May 7, 2014

Guests: Dave Helling

RACHEL MADDOW, MSNBC HOST: And thanks to you at home for staying with
us on this fantastic night.

In the year 2008, the great state of Missouri got rid of its limits on
campaign contributions. They said anyone could give any amount for
candidates and election issues in that state. And when Missouri made that
issue in 2008, they got -- drum roll, please -- they got their own Missouri
version of the Koch brothers or their own Sheldon Adelson, their own Art
Pope.

Once Missouri said, anybody could spend anything they wanted on
Missouri politics, they got their own homegrown Missouri zillionaire who
thought the policies of the whole s state should be remade in his own
image. And this is a new species in American politics, right? Since we
started getting rid of all the campaign finance rules. We`ve got these
zillionaire guys, all of the country, a lot of them operating in national
politics, some of them operating in just their home state.

But the one that Missouri got, he turns out to be a doozy.

(BEGIN VIDEO CLIP)

REX SINQUEFIELD, RETIRED FINANCIAL EXECUTIVE: You know what, there
was a column written, and I hope I don`t offend anyone, but a published
column who was a farmer judge in Missouri. He now owns and writes for a
newspaper in central Missouri called the un-terrified Democrat. What a
name. And it`s is Osage County, Missouri.

And he starts off and it`s something like this. He said, a long time
ago, decades ago, the Ku Klux Klan got together and said, how can we really
hurt the African-American children, l permanently? How can we ruin their
lives?

And when they designed was the public school system.

(END VIDEO CLIP)

MADDOW: That man`s name is Rex Sinquefield, he`s the conservative
zillionaire trying to use his own money to remake politics in the great
state of Missouri.

He made that remark on tape there in February of 2012 when he
explained it must have been the Ku Klux Klan that invented the public
school system to really hurt African-American children permanently. The
Klan invented public schools. He said that in 2012. He later apologized
for it, saying he was sorry for making that reference.

But after Missouri got rid of its campaign finance rules in 2008, that
guy`s money is the money that has absolutely dominated Missouri
conservative politics ever since. "The Wall Street Journal" profiled him
in 2012. Actually, it was a few months after he made the Klan comments.
"The Wall Street Journal" called him one of the super PAC men, comparing
him to Sheldon Adelson or the Koch brothers.

By then, by the fall of 2012, Mr. Sinquefield had already spent over
$20 million of his own money, all in Missouri, all since they dropped the
campaign spending limits in that state. So, just between 2008 and 2012, he
had already dropped more than $20 million of his own money, with plans to
spend a lot more.

And that kind of money goes a long way in a single state. He said at
the time that his two priorities for things he wanted to change in
Missouri, were schools, which again you heard him say he feared were
invented by the Ku Klux Klan to enslave people, schools and taxes.

In 2012, he personally bankrolled a ballot measure that would have
basically killed all income taxes in Missouri altogether. No more personal
income taxes, no more corporate income taxes. It would get rid of taxes
altogether in terms of income and replace them all with a sales tax.

He got -- he was working on getting that in the ballot, and
unfortunately for him, polling indicated that people in Missouri basically
hated the idea. And when the polling turned out really bad for his ballot
measure on getting rid of all income taxes, he pulled that ballot measure
in Missouri.

But at the time, he said he thought he might be able to get Missouri
to get rid of all its taxes anyway, even without this ballot measure idea
that he had that didn`t work out. And he thought he might be able to get
it done in Missouri anyway, because of something that was going on next
door in the deep read state of Kansas.

Kansas, you probably know is in almost Oklahoma territory when it
comes to how red a state it is. In 2008, President Obama won a grand total
of three counties in Kansas. In 2012, he won a grand total of two counties
in Kansas.

In Kansas, the Republicans control the statehouse by an almost 3-1
margin. They control the state senate, 32-8, and, of course, the governor
is a Republican as well. The governor is former U.S. senator and former
Republican presidential candidate, Sam Brownback, who won election in 2010
by more than a 30-point margin in Kansas.

But now, even in a state that is that red, even after Sam Brownback
won the governor`s race in 2010 by more than 30 points, Governor Brownback
now looks to be at risk of losing his seat this fall. He`s up for re-
election in November. He`s running against a Democrat named Paul Davis,
who was one of those very few Democrats in the Kansas statehouse.

The Real Clear Politics average of polling on that gubernatorial race
shows that Sam Brownback is basically within the margin of error. He`s
within 2 1/2 points of this very little-known Democratic challenger he`s
got.

The last Public Policy Poll in Kansas was in February. It had Paul
Davis beating Sam Brownback by two points. Kansas is so red that Attila
the Hun ought to be able to win an election in Kansas if he only had an "R"
listed after his name on the ballot.

Sam Brownback is apparently no Attila the Hun, because Kansas is
against him. His approval rating as governor is hovering around 33
percent. You think in a state that red, President Obama would have a
terrible approval rating, you`re right, he does a terrible approval rating
in Kansas. But Sam Brownback`s approval rating is even lower than
President Obama`s is.

And some of Kansas`s bad feelings about their governor may be about
all the recent reporting on a big FBI investigation into Mr. Brownback`s
inner circle in state politics, including his longtime chief strategist.
The FBI is reportedly looking into whether there`s pay-to-play corruption
around Sam Brownback`s way of governing in Kansas, whether lobbying dollars
and campaign contributions have been leveraged or even coerced in an
illegal way as Governor Brownback has pushed through his legislative
priorities.

So, that may be part of it, those FBI stories. There have been no
indictments or anything yet, so nobody really knows what that reported FBI
investigation is going to come to.

But regardless of whether team Brownback in Kansas got their favored
policies passed through some illegal means or not, we`ll find out when the
FBI finally speaks about what they`re looking into, whether or not they got
those things, the things they got passed, passed by illegal means, the fact
is, they did get a heck of a conservative agenda passed. And Kansas really
seems to hate that agenda. They seem to hate those policies.

Like, this is from the internals on that Public Policy Poll. Do you
think public schools in Kansas are adequately funded or not? Not, by a 28-
point margin.

Do you think Sam Brownback`s tax plan has been successful or not? Not
by another giant 21-point margin.

Kansas is under complete Republican control. It`s Sam Brownback in
the governor`s office, Republican control in the House, Republican control
in the Senate. Their entire congressional delegation is all Republican as
well.

And even after they had that total Republican control, in 2012, Sam
Brownback went on a campaign of cleansing fire and worked actively to get
Republicans who weren`t conservative enough ousted from the state Senate.
He got nine Republicans in the Senate replaced with more conservative
Republicans.

He`s not only got complete control in terms of party affiliation, he`s
got complete control in terms of conservative Republican affiliation. And
with that complete control, he pushed through the most important item in
his agenda for the state, the biggest tax cut in Kansas history. By some
measures, it is the biggest tax cut of any state in America in multiple
decades.

And when Sam Brownback pushed through that really radical tax plan in
2012 and popularity expanded it in 2013, that was the policy move that got
Rex Sinquefield, the Klan-invented public schools guy in Missouri, that`s
what got him so excited about what might be possible next-door in Missouri.
He called what Sam Brownback did on taxes in Kansas, he said, it was,
quote, "unbelievably brilliant."

Mr. Sinquefield said in "Forbes" magazine that Sam Brownback`s
visionary leadership was, quote, "schooling Missouri on tax policy."

Sam Brownback himself wrote an op-ed claiming that his biggest tax
cuts in history would be a shot of adrenaline into the heart of the Kansas
economy. And his biggest cheerleader, other than himself, was across the
state line to the east in Missouri, this guy, Rex Sinquefield, who wanted
Missouri to get rid of all of its taxes, too. And he thought Kansas`
experiment, Kansas` Sam Brownback government experiment would go so well
that Kansas getting rid of all of their taxes would be such an economic
boon to Kansas that the state next door to the east would have no choice
but to follow suit.

That was the thinking. And that`s how Missouri was going to get to
zero taxes, by watching how wonderfully it worked out in Sam Brownback`s
all-red Kansas. That was the plan.

Turns out what Sam Brownback did in all-red Kansas has turned out to
be a disaster. In January, a big warning flare was fired by the
nonpartisan research service from the Kansas legislature. They found that
cutting all the revenue, cutting all the income out of the state budget
meant -- surprise, that there was no revenue in the state budget. There
was a giant hole where the revenue had been. That was the official state
report in January.

Then, in March, it got much worse, when the Kansas Supreme Court ruled
that by law, by the state constitution, Kansas needed to increase what was
it was spending on public schools, where is that money going to come from.
And then, in April, there was a huge shock in Kansas state government when
the state realized that it was going to be taking in almost $100 million
less that month than it expected for the month of April.

Revenues were already down a half billion year to year since last
year, and then, oops, in April, it turns out, another $100 million they
thought they were getting, guess we`re not getting that. That was last
month. That was April.

And then, last week, the real hammer fell, when the Moody`s credit
agency downgraded Kansas`s bond rating, citing Kansas` relatively sluggish
recovery compared with its peers and specifically calling out Sam
Brownback`s magical thinking around these huge, unprecedented tax cuts, for
which he apparently had no plan for the impact of. Quote, "Eliminating a
tax that`s been in place for many years and has accounted for a large share
of revenue entails risks," says Moody`s.

So, Sam Brownback has created a mess in Kansas. And "The Kansas City
Star," they say he is suffering from a political brownout between the FBI
investigation into his inner circle with and his right-hand man, forever,
and into how he got all of these policies passed, the state bond rating
getting downgraded, the governor`s plummeting popularity. They say, you
take it all together, and this amounts to, quote, "new doubts about whether
Governor Brownback`s ability to win a second term in a state that is as red
as any in the nation."

On the same day that Kansas got its bond rating downgraded, in the
neighboring state of Missouri, the governor there, was named Jay Nixon, he
vetoed a Republican proposal to cut Missouri`s taxes the way Sam Brownback
cut Kansas` taxes. Missouri is one of the few states in the nation that
has a solid AAA bond rating. Governor Nixon said, listen, we`re not going
to jeopardize that by doing something as reckless as what Kansas just did
when they flushed their economic prospects down the toilet with a tax thing
like this. Jay Nixon said Missouri Republicans are, quote, trying to
follow Kansas down the fiscally irresponsible path. He said he would not
stand for it and he vetoed the Republican tax cut proposal in Missouri.

But now, now, Missouri Republicans overrode that veto. They have
thereby forced through a Kansas-style fiscal disaster plan for the
neighboring state of Missouri.

Even with a Democratic governor, Missouri has taken a real right turn
under the tender ministrations and the tens of millions of dollars of Rex
Sinquefield, right? The well-funded, newly emboldened Republicans in the
state of Missouri, they blocked Medicaid expansion, which led to this
dramatic protest in the state capital yesterday. The protesters actually
shut down business in the state senate over the Medicaid decision.

Republicans in Missouri are trying to enshrine strict scrutiny for gun
rights into the state constitution. And that may not sound like much, but
that is such a fundamentalist approach to gun rights that it has really
wide implications that have scared other states that have tried this. But
Missouri is steaming straight ahead to put that in their state
constitution.

Missouri is down to one last abortion clinic in the entire state.
This year, Republicans in the Missouri legislature introduced 32 separate
pieces of legislation against that one clinic. They`ve got one abortion
clinic left, 32 bills this session to try to shut down or curtail the
activities of that one last clinic.

With no campaign finance limits anymore and with an eager conservative
godfather funding every step they take further to the right, Missouri is
doing everything it can to try to turn itself into a deep-south style red
state, but with what they just did on this tax issue, did they just make a
decision to follow Kansas off the cliff?

Joining us now is David Helling, political reporter for the "Kansas
City Star."

Mr. Helling, thank you very much for being here. I really appreciate
your time tonight.

DAVID HELLING, KANSAS CITY STAR: Great to be with you, Rachel.

MADDOW: So, what did push Missouri lawmakers to proposal these very,
very deep tax cuts, even as Kansas was really flaming out because of them?

HELLING: Well, part of it is Rex Sinquefield, as you suggest. He`s
been heavily involved for years, Rachel, in trying to push a no-income tax
agenda in the state of Missouri, as you suggest. He`s tried to get that on
the ballot. He`s really a supporter of turning to sales taxes instead of
income taxes.

But part of it is just philosophy. Missouri, as you also point out,
really had a choice about ten years ago, will we be Arkansas and
Mississippi, or will we be Iowa and Minnesota? Missouri, as you might
know, is almost evenly divided between Republicans and Democrats in most
years and then about 10 years ago, it started its slide into conservatism
and it is firmly there now.

So, you put that sort of ideological approach together with Rex`s
money and you get what you got this week in the legislature.

MADDOW: In terms of that path, that sort of decade-long path that you
just described there, is there any equivalent force on the left or to
strengthen the Democrats` hand in Missouri? Is this a transformation
that`s really taken place entirely within conservative politics? Is there
any counter-game?

HELLING: Democrats have a role in Missouri, unlike Kansas where
they`re virtually nonexistent. Democrats in Missouri do have some voice.
Claire McCaskill, of course, is the senator, Jay Nixon the governor, both
Democrats.

Republicans have not done extremely well at the statewide level. They
lost the race for governor. They do have the lieutenant governorship in
the state.

But Democrats in Missouri have a unique challenge. They must appeal -
- if they are to win, they must appeal to rural voters as well as urban
voters in Kansas City and St. Louis and to some degree in Columbia, in Jeff
City. So, even people like Claire McCaskill and Jay Nixon strike a
populist, conservative, in some senses, moderate tone with voters in the
state.

There is no real -- with one or two exceptions, there is no real
progressive movement in the state, and that showed up in the last state
elections for the legislature, the House and the Senate. Jay Nixon has
virtually no working ability in that statehouse at all, Rachel, owner to
sort of convince lawmakers by the sound of his voice, to change their
views. And they often listen to Rex Sinquefield, the American Legislative
Exchange Council, ALEC, also has a heavy presence in Missouri, as well as
Kansas.

So, those are the voices they hear. There`s no liberal or progressive
opposition really in this state.

MADDOW: I feel like I have heard that, really, just in my
observations of Missouri politics, particularly with Claire McCaskill on
the federal level. I continue to believe that she would make a very
credible national level candidate for the Democrats.

Not because I agree with her on lots of policies. She`s nowhere near
liberal like I am, but simply because she does talk in populist terms, very
central terms, and she`s made that case, I think it was the Missouri
Democrat way of talking to a big, broad audience.

And that`s why I was so surprised to see Governor Nixon making this
case. Hey, we can`t do this. They just got their bond rating downgraded.
We`ve got a AAA bond rating, we`ve got to hold on to that. That seems to
me like sort of the ultimate fiscal conservative, centrist, kumbaya
message, and yet, it just didn`t go anywhere.

HELLING: Right, and for that matter, Jay Nixon is a big fan in some
instances of tax credits, tax breaks for big business. He tried to get the
Boeing plant to come to St. Louis. He offered a huge package of tax breaks
for that. He gave incentives to the auto companies to stay in the state,
Rachel.

Again, that`s kind of a traditional country club banker Republican
mentality. Give big incentives to big business to create jobs. That`s his
approach. Again, he gets a bit of a pass, because Missouri is just that
kind of a state. It`s hard to believe that an out-and-out progressive
liberal candidate has any chance at the statewide level, and I think Jay
Nixon senses that.

Now, a lot of -- he`s not really popular among some Democrats. For
example, he`s had a sort of a low-level feud with McCaskill for years about
who really control s the party in the state. And Jay Nixon, to a degree,
like McCaskill, really looks out for himself. You know, his own re-
election is more important than electing more Democrats to the legislature
so you wouldn`t have to go through what he just went through.

That`s a criticism you`ll hear of Jay Nixon. But, again, there may be
a lot of self-preservation in that. Missouri, as I suggested, and as you
suggested as well, is much more Southern in its approach to politics than
it is industrial Midwest or in north of the state border.

MADDOW: And as you point out, that was a choice. That outlook was a
choice and it has been a fascinating transformation to watch.

Dave Helling, reporter with the "Kansas City Star" -- I really enjoyed
your reporting on this, Mr. Helling. Thank you fore being here. I
appreciate it.

HELLING: You bet. My pleasure.

MADDOW: All right. There was an event at the U.S. capitol, inside
the U.S. capitol, tonight, available live streaming, on a place you would
not expect to be allowed to live stream events from the U.S. capitol. This
story has not been anywhere today. I find it absolutely astonishing and
that`s next.

(COMMERCIAL BREAK)

MADDOW: Say hello to Father Damien. He was born in Belgium, but he
moved to Hawaii where he served the leper colony in Molokai for nearly two
decades before he himself succumbed to leprosy. Father Damien. He
represents Hawaii.

And then there`s Brigham Young. He`s there representing the great
state of Utah.

The great state of Mississippi decided to send Jefferson Davis,
president of the Confederate States of America.

Montana decided to send Jeannette Rankin, the first woman ever elected
to the United States House of Representatives.

Michigan sent Gerald Ford, as you can see, he`s in period dress from
the 1970s.

Texas sent Sam Houston. Alabama sent Helen Keller. Wisconsin sent
this great one, a fighting Bob Lafollette.

In statuary hall in the United States Capitol, every state gets to
send two statues. It used to not be so tightly regulated, but apparently
by the 1930s, there were so many statues stuck in there, they were stacked
up three deep, and you couldn`t see what any of them were.

So, Congress decided they would impose some order on statuary hall and
set the terms by which the states would get to send stuff, and that
evolved, eventually, to today`s current rules in which every state gets two
statues. And you can switch them out as often as you want to, but at any
one time, every state only gets two.

Congress gets to make the rules for statuary hall, because statuary
hall is in Congress. It`s part of the U.S. capitol building. So, it`s not
just U.S. government public property, it is physically part of the Capitol.
We own it. And Congress controls it.

It`s like the equivalent of the Rose Garden at the White House or the
ceremonial East Room at the White House. It`s an integral part of that
iconic facility, that iconic building, which is both the symbol and the
physical home of our federal government.

Do you know what World Net Daily is? World Net Daily is the further
than out there conspiracy theory Web site that for years now has been the
home to the birther movement, which claimed that President Obama secretly
was not really president, because secretly, he was foreign. And the
president`s real birth certificate would clearly show that he was secretly
born in Kenya!

Now, when the birther idea fell out of favor on the right for most
people, World Net Daily became kind of a weird amalgam of continued
conspiracy theories about President Obama, but also it`s now the place
where you can get as many DVDs about cane fighting as you can possibly
want.

At World Net Daily, you can also learn all about the blood moons.
What do the blood moons mean? What do they tell us about President Obama
being secretly foreign or Muslim or whatever?

Also, did you know that President Obama is building a Death Star?

Last year, House Speaker John Boehner gave permission for a
conservative pastor from Texas to use statuary hall for an event. The
event was billed as a celebration of the inauguration of George Washington
-- George Washington being sworn in as president for the first time, right?

What it turned out to be, though, was not that. Not what it was
advertised to be. The most memorable highlight from that event was picked
up by the folks at right wing watch. And it was when Congresswoman Michele
Bachmann, she used her time in statuary hall, supposedly for this George
Washington event, she used her time at the podium in statuary hall, to
promote a World Net Daily-sponsored event called, apparently, 911 Pray.

And while she was shouting out World Net Daily and their expected
event that she was also going to take part in, Michele Bachmann also
explained that she thought that not only 9/11, but also Benghazi, were
caused by God being displeased with America. God did 9/11 to us and
Benghazi to us because God was mad at us, because we were bad.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R), MINNESOTA: Our nation has seen judgment,
not once, but twice, on September 11th. And that`s why we`re going to have
9/11 pray on that day. Is there anything better that we could do on that
day?

(END VIDEO CLIP)

MADDOW: Our nation has seen judgment not once, but twice on September
11th.

You know, Michele Bachmann was made a member of the House Intelligence
Committee by the House Republican leadership. And last year, while
promoting a World Net Daily 9/11 pray event, she proclaimed that she
believed that God did 9/11 and also the Benghazi attack to punish America
for our sins. She`s on the intelligence committee.

And she made those comments in statuary hall, because House Speaker
John Boehner allowed that location, allowed statuary hall to be used by
these guys for their crazy Michele Bachmann prayer event.

Well, that event is now happening again. That event is going on this
year, as we speak, right now. John Boehner let them do it again, after
Michele Bachmann did that last year. In fact, they brought Michele
Bachmann back this year as the host of the event.

And if the World Net Daily stuff was not clear enough before, consider
that this year`s the event`s Web site, Washington, amanofprayer.com. It
has a link as to where you can watch the simulcast of this event. You
click that button at the top right of your screen and you are brought to
worldnetdaily.com.

Because when the Republican Party gets control of Congress, they also
get control of all the public resources that are controlled by Congress,
including statuary hall in the U.S. Capitol building, and when they have
control of resources like that, they in turn hand over those resources to
Michele Bachmann telling us 9/11 was done by God because he was mad at us
and the world net daily conspiracy theory Web site about how blood moons
explain Kenya, Muslim, Obamacare.

Your tax dollars at work right now, as we speak, in statuary hall at
the U.S. Capitol.

(COMMERCIAL BREAK)

MADDOW: If you, like me, are a fascinated is follower of
Massachusetts Republican politics, you might have seen something like this
popping up on your Twitter feed last night or today.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: One million dollars.

(END VIDEO CLIP)

MADDOW: If you were seeing a lot of references last night and today
to Dr. Evil and his $1 million ransom -- well, the smoking remains of what
used to be Republican politics in the American Northeast are to blame for
that. It is an incredible story and it is coming up.

Stay with us.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: One million dollars.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MADDOW: This is St. Petersburg in Russia, used to be called
Leningrad. It`s the second largest city in Russia after Moscow. Until
1918, St. Petersburg was the capital of Russia. As a city, it is often
described as the most western place in Russia. It`s a hub of culture and
art and innovation. St. Petersburg is also very pretty.

And once a year, heads of state, business leaders, and executives from
all over the world, they go to St. Petersburg to attend what`s called the
annual International Economic Forum. And for Russian President Vladimir
Putin, that economic forum every year is a big deal. He essentially hosts
it. He`s right there in the center of everything, rubbing shoulders with
all the elites, the conference is super lavish, the conference is super
productive. A lot of deals get signed. Business happens at this event.

This infographic was posted on the forum`s Web site about the 2013
event. More than 6,000 participants, 81 countries represented, more than
100 contracts signed at the gig itself, totaling lots and lots of rubles,
totaling almost $300 billion. That was 2013.

The 2014 forum is set for later this month, May 22nd to May 24th in
St. Petersburg.

Earlier this week, "The New York Times" reported that President
Obama`s advisers were reaching out directly to top executives from American
big companies. Alcoa, Goldman Sachs, Pepsi, Morgan Stanley,
ConocoPhillips, all big multi-national companies that do business in
Russia. And the White House reached out to the executives from those
companies to basically ask them to skip the St. Petersburg thing this year,
to pull out as part of the administration`s efforts to economically isolate
and punish Russia for what it`s been doing in Ukraine.

The chief executive of ConocoPhillips did agree to skip out. The
chief executive of Alcoa and the chairman of the United States Russia
Business Council, they canceled their planned appearances late last week.
The chief executive of Goldman Sachs, he is still listed as a confirmed
participant at the forum as of today, but apparently he`s not planning on
attending. That`s according to a company executive that privately told
"The New York Times" that, quote, "There`s almost zero chance that the
Goldman Sachs chief will go to Russia unless the Ukraine situation suddenly
reverses course."

And the thing is, if all these American companies just pull out,
especially this close to the event, some of the biggest and richest
companies in the world snubbing Russia like that and saying, nah, I`m not
coming anymore, that would be really embarrassing for President Putin. He
personally, proudly intends the forum each and every year and makes sure
he`s in all the pictures.

Well, today, it turns out the weirdest and most unexpected thing
happened. Speaking at the Kremlin, President Putin announced that he is
changing course on Ukraine. He`s pulling back the tens of thousands of
Russian troops that he had posted on the eastern border of Ukraine.

He`s also calling for the planned secession referendum for Ukraine to
be called off, just five days before the planned vote. He also reportedly
said the upcoming presidential election in Ukraine is a step in the right
direction.

And that`s insane. That is a remarkable U-turn, because just days
ago, they were saying the prospect of a presidential election in Ukraine is
absurd.

Vladimir Putin`s comments today came after a meeting about the
situation in Ukraine that he had with the president of Switzerland. Mr.
Putin came out of that meeting changing his tune about Ukraine. And now,
the Swiss president is reportedly the man being tasked with drafting a road
map aimed at resolving the Ukraine/Russia crisis.

So far, the United States and NATO both say there`s no tangible
indication that Russian troops have actually moved away from the border.
But after the sanctions of Russian officials and executives, after the
planned move this week to make life miserable and expensive for all Russian
banks, beyond the individual banks that were already sanctioned, after
pressure by the White House for U.S. executives and companies to not
attend, to not show up at Russia`s annual big business capitalism pageant
in St. Petersburg, did Vladimir Putin, did Russia just blank? Blanksky? I
don`t think that`s what it means.

Does this surprising rhetoric from president Putin today mean that the
American-led international pressure on Russia is working? Is it possible
that he`s bluffing?

Joining us now from Donetsk in Ukraine is NBC News chief foreign
correspondent, Richard Engel.

Richard, it`s great to see you. Thank you for being here.

Let me ask you right off the bat if you believe that Vladimir Putin is
actually moving his troops?

RICHARD ENGEL, NBC NEWS CHIEF FOREIGN CORRESPONDENT: No one here in
Ukraine seems to believe that Vladimir Putin has changed his mind and is a
giving up on Ukraine, doesn`t want to have influence here, and is accepting
the revolution that took place in Kiev. The Ukraine government in Kiev
called it, quote, "utter nonsense."

The question is, did he blink? Did he have -- was he -- did he
succumb to pressure, or is this some sort of tactic? And the Ukrainian
government and analysts we`ve spoken to believe that this is a tactic.
That he`s trying to portray himself as a peacemaker.

He didn`t just say that he would withdraw the 40,000 to 50,000 troops
on the Ukrainian border. He said he`d already pulled them back, which is
very bizarre, because that is incredibly easy to verify. You just call up
the satellites and look down, and people we`ve been speaking to from the
CIA and the Pentagon have done just that. And when they look down, the
troops are still there.

The militias, which are in the square behind me, just a few hundred
yards behind these trees, they were confused by what is going on today.
They don`t know -- are they still going to be having this referendum in a
few days, calling for independence?

They want to join up with Russia, but if Putin says don`t do it, then
why would they be holding the referendum to join with Russia if Russia is
saying -- well, maybe we won`t take you.

So, it was a very confusing move by Vladimir Putin, but the Ukrainian
government and U.S. officials think it was certainly a ploy.

MADDOW: Richard, in terms of the situation on the ground and,
obviously, there`s been a lot of violence there recently, and the tension
has boiled over into some scary situations in terms of just the riskiness
of being there. Do you get the sense that this will make tensions, I
guess, get worse, simply because it introduces this element of uncertainty
as to what happens next, and who`s on whose side? Or will this calm things
down, do you think?

ENGEL: I don`t think it`s going to calm things down, because we have
a very volatile calendar ahead of us. And if you look at the schedule of
events over the next few days and few weeks, there`s a lot of potential
flashpoints.

On Friday, the 9th, that is victory day, when Russia celebrates its
victory in World War II against the Nazis. And here in eastern Ukraine and
across Russia, they are planning on holding big celebrations. All of the
pro-Russian nationalists are going to come out. That is a potential
enormous flashpoint. It is a point of pride for the Russians here, who
have been wearing the same armbands and colors that were symbolic of the
Russian victory over the Nazis.

And this whole conflict is being couched in that World War II ideology
that once again, Russians and pro-Russian nationalists here in Ukraine are
fighting the Nazis, who took over in Kiev. So, that`s a potential big
flashpoint.

Then this referendum was supposed to take place just on the heels of
Russia`s equivalent of V.E. Day. Will it take place or not is now an open
question.

But if there`s big clashes on Friday, then you could see a situation
where Putin said, look, I did my best, I pulled back troops, I was calling
for peace. Now, look at the violence on the ground. It`s not my fault.
It`s those Nazis in Kiev who didn`t want to pick up this gauntlet of peace
that I`ve thrown down.

MADDOW: Fascinating. You`re exactly right in terms of the, what
comes next, that will be the real verification of what this means.
There`s, of course, also the possibility that Vladimir Putin himself
doesn`t know what comes next. That he maybe is playing checkers and not
chess here. But the story is fascinating.

NBC News chief foreign correspondent, Richard Engel -- Richard, thank
you for staying up until the dead of night to be with us. I really
appreciate it, man.

ENGEL: Not a problem.

MADDOW: Thanks. All right. If you think running for elected office
is a racket. One of the best arguments you`ll ever hear to support that
theory is coming up. I swear.

Stay with us.

(COMMERCIAL BREAK)

MADDOW: One of the stories that we have followed on this show is the
not inconsiderable spectacle of huge freaking explosions all over the
United States and Canada. This one was outside Castleton, North Dakota, in
December.

The following month, there was also this one in New Brunswick in
Canada, at a place called Plaster Rock. That one was not even as bad as
this one in Canada last summer. This was the one in Quebec that killed 47
people and destroyed most of a town. Then, there was this one, just last
week, in Lynchburg, Virginia.

In all of these cases, the explosions were so huge and the fires
burned so hot that the local authorities basically couldn`t fight these
fires. These fires were un-fightable with normal firefighting equipment
and normal firefighting expertise.

So, in all of these circumstances, the firefighting first responders
had no option but basically just to let them burn. And in all of those
giant explosions producing huge, un-fightable fires, the thing that blew up
was one of these, at least one of these -- a rail car carrying oil. In
most cases, it was oil specifically from the Bakken Shale formation in
North Dakota.

All oil is flammable. That`s kind of the point, right? But oil from
the Bakken Shale in North Dakota is even more flammable than normal oil, so
much so that this car, this type of rail car, which is the workhorse of the
industry of shipping stuff by train, it apparently cannot safely transport
all of this oil that we`re now producing hand over fist in this country.

At least it cannot transport that kind of oil without this happening
way too frequently. And no matter where you live in America, this pertains
to you, because whether you live in a small town or in a city or in the
suburbs or out in the middle of nowhere, if you have ever seen a trail
rumble through your town or anywhere near your town, and you know you have,
odds are nowadays, that unless it`s an Amtrak train or you live in
Disneyland and it`s the monorail, odds are that if that train that you`ve
seen anywhere near your town is carrying any freight at all, it is carrying
oil. And it`s carrying it in one of these prone-to-explode tin can rail
cars that people are now calling the Ford Pinto of rail cars.

The number of rail cars full of oil shipped in the United States went
from less than 10,000 in 2008 to more than 400,000 last year. These things
are everywhere, and all of a sudden. And even the industry admits that
these cars are not a safe way to transport oil.

Well, there has been a new development on this story today that we`ve
been covering for a few weeks now. Just one week after the huge fireball
in downtown Lynchburg, Virginia, that happened last Wednesday, one week
from that, today, the federal Transportation Department announced,
unequivocally, that these cars should no longer be used to ship oil that
comes from the Bakken Shale in North Dakota.

These cars make up about 70 percent of the fleet of rail cars that we
have got in the United States. So if, as of today, these cannot be used
anymore, that`s a really big deal. Not just for the threat of your
downtown blowing up like a wartime conflagration the next time one of these
bomb trains rolls through your town, but also for the industry, which,
again, this is the workhorse rail car of the industry, and the industry
does not want to spend the money to upgrade ten of thousands of rail cars
to stop the risk of this.

It remains to be seen if the oil companies will pay attention to this
voluntary directive today from the Transportation Department. What the
Obama administration announced today is a safety advisory. It doesn`t
require anything by law, but it does tell the oil industry and the rail
industry that what they`ve been doing, shipping this oil all around the
country, is unsafe and they should stop doing it.

If they don`t stop doing it, then the next question is whether or not
the administration will go one step further, like Canada has, and make this
change into law. Make it binding. If it`s no longer a safety advisory,
but a binding rule, if they do that, expect the oil industry to start
wailing like a roomful of kindergartners seeing their moms walk away from
them on the first day of school.

The safety advisory to stop the bomb trains went out today. Now,
let`s see how the oil industry responds. Watch this space.

(COMMERCIAL BREAK)

MADDOW: The State Senate and the Statehouse in the great commonwealth
of Massachusetts look like this. Not an encouraging sight to behold if you
are a Republican in Massachusetts. The current governor of Massachusetts,
Deval Patrick, is also a Democrat. That`s him on the top left there.

But Massachusetts isn`t a dyed in the wool Democratic state. As you
can see here, before Deval Patrick, Massachusetts elected Republican
governors for 16 straight years. You can be a Republican and win statewide
in Massachusetts.

And this year, Massachusetts Republicans think they might have a shot
at winning the governorship again. The candidate is a guy named Charlie
Baker, sort of the consummate insider. He`s served in state government.
He has business bona fides, his dad worked for Reagan and Nixon.

Mr. Baker has ran for governor before, and even though he didn`t win
this year, his likely Democratic opponent will be Martha Coakley, who you
may remember lost her race to Scott Brown in her last statewide contest
when she was running for Senate. Republicans think mostly because of that
Scott Brown loss, that they`ve got a shot at beating Martha Coakley.

So, Massachusetts Republicans think they`ve got a candidate in this
guy Charlie Baker, who can maybe win the state for their party this fall.
They`re feeling optimistic for the first time in a long time.

And so, inevitably, here`s where things get weird, because it turns
out that there`s a bizarre intraparty fight right now playing out among
Massachusetts Republicans, which threatens to hurt Charlie Baker`s run for
governor. It goes back to the Republican nominating convention in March.
At that convention, the Republicans decided by a huge margin that they were
going to pick Charlie Baker to be their candidate for governor. He got
more than 80 percent of the vote.

But there was a runner-up, a Tea Party candidate named Mark Fisher,
who got just under 15 percent of the vote, depending on how you do the
math. And the reason why that`s important is that 15 percent in
Massachusetts is an important threshold. If a Republican candidate for
governor gets 15 percent of the vote at the party`s nominating convention,
then maybe the nominee doesn`t get picked at that convention and maybe
there has to be a statewide primary and any candidate who gets 15 percent
or more will get a spot on that primary ballot.

So, for the past couple of months, the Tea Party guy has been fighting
the state party, arguing that the math was wrong. He did break that 15
percent threshold, and he should get a spot on the Republican primary
ballot in September.

The state party`s been refusing. They`re standing firmly behind
Charlie Baker. And you can see why, right? In lots of states, obviously,
Tea Party candidates have been dragging establishment Republicans further
and further and further to the right in these primary battles, right?

You know where that would be particularly disastrous for a Republican
establishment candidate. Massachusetts, right? The last thing the
Massachusetts Republican Party needs is to have their gubernatorial
candidate bogged down in a primary battle with the Tea Party guy, who`s
going to drag the whole conversation to the right and into crazy town.

But the Tea Party will not let it go. The Tea Party candidate has
sued the state Republican Party over wanting that spot on the primary
ballot. His lawsuit was set to go to trial this June. And the Republicans
in Massachusetts have been trying to work this out behind closed doors.

But then yesterday, the amazing news broke that the Tea Party guy has
offered to drop his whole lawsuit if only the state Republican Party will
pay him $1 million, to which the lawyer for the state party responded, no.
Massachusetts Republican Party`s attorney explained to the Tea Party guy`s
attorney, quote, "I advised you and your client, as well as my own clients,
that in layman`s terms, buying people off the ballot is illegal."

According to press reports, the Tea Party guy`s attorney responded to
that by essentially saying, OK, so it can`t be a million bucks. How about
$650,000? We will negotiate.

So, that`s what the Republican Party in Massachusetts is dealing with
right now. They`ve got a candidate suing them for a spot on the primary
ballot, who it turns out is allegedly willing to forget the whole thing if
they just fork over somewhere between $650,000 and $1 million.

Here`s the most amazing thing about this whole fight. As of today,
the Massachusetts Republican Party is saying, we give in. They still
cannot give this guy $1 million, because that is still illegal, but they
are willing to give him a spot on the ballot as a Republican candidate in
their primary.

So, no, you can`t extort us, literally, but you can totally be one of
our candidates. The Massachusetts Republican Party has always been kind of
amazing, but today, they just got fantastic. Primary day, September 9th.

Now it`s sometime for "THE LAST WORD." Have a great night.

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

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