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All In With Chris Hayes, Wednesday, January 28th, 2015

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Show: ALL IN with CHRIS HAYES
Date: January 28, 2015
Guest: Chris Murphy, Julie Fernandes, David K. Johnson, Anya Kemenetz,
James Galbraith



(BEGIN VIDEOTAPE)

CHRIS HAYES, MSNBC HOST (voice-over): Tonight on ALL IN --

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: I`m, frankly, proud
of the fact that the prime minister has accepted our invitation.

HAYES: Boehner and Bibi scored an on-goal, as Senate Democrats
withhold their support for Iran sanctions in the wake of the speaker`s back
door invitation to Netanyahu.

BOEHNER: We have a right to do it, and we did it.

HAYES: The hearing on the Hill.

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: What legal rationale would
be in play that would prohibit polygamy?

HAYES: Republicans on the Senate Judiciary Committee played gotcha as
attorney general nominee Loretta Lynch bids to replace Eric Holder.

Plus, the White House yanks their plan to roll back a college tax
break as reporters who benefit from the tax break stage rebellion.

And forgetting Sarah Palin.

SARAH PALIN (R), FORMER ALASKA GOVERNOR: For it is they who point a
finger, not realizing that they have tripled that amount of fingers
pointing right back at them.

HAYES: More conservatives desert the 2008 vice presidential
candidate. What took them so long?

UNIDENTIFIED FEMALE: I was inspired by her to write a book about
someone who was cuckoo for cocoa puffs. So, don`t ask me.

HAYES: ALL IN starts right now.

PALIN: We can afford no retreads.

(END VIDEOTAPE)

HAYES: Good evening from New York. I`m Chris Hayes.

As Israel prepares to possibly launch a new war with Hezbollah after
two Israeli soldiers were killed today, relations between Israel and the
U.S. appear to have reached their lowest point in recent memory, possibly
in decades. President Obama and Israeli Prime Minister Benjamin Netanyahu
have never been best of friends, but after House Speaker John Boehner
invited Netanyahu to lobby Congress against one of the president`s top
foreign policy priorities, the relationship between the two leaders may
have gotten even worse.

And while the ploy has taken a toll on U.S.-Israeli relations, it`s
resulted in a big political turnaround for President Obama. Less than two
weeks ago, he was on the verge of being handed a major rebuke by the
Republican-controlled Senate on one of his signature initiatives,
negotiations on a nuclear deal with Iran and possible opening of relations.

With the help from the president`s own party, Senate Republicans
looked like they might have the votes to advance new sanctions on Iran
despite the administration`s objections, that sanctions would jeopardize
the ongoing nuclear talks. Well, then, John Boehner and Benjamin Netanyahu
entered the picture and they tried to do an end run around the president,
and now, the whole thing has completely blown up in their faces.

Last week, Boehner announced he had invited Netanyahu to address
Congress on the threat posed by Iran. He explained his rationale in an
interview with "60 Minutes."

(BEGIN VIDEO CLIP)

BOEHNER: There`s nobody in the world who can talk about the threat of
radical terrorism, nobody can talk about the threat that the Iranians pose,
not just to the Middle East and to Israel, or longest ally, but the entire
world than Bibi Netanyahu. This problem is growing all over the world.
And, you know, the president is trying to act like it`s not there. But it
is there. And it`s going to be a threat to our homeland if we don`t
address it in a bigger way.

(END VIDEO CLIP)

HAYES: Netanyahu is scheduled to address a joint session of Congress
on March 3rd, that`s just two days after the American Israel Public Affairs
Committee, AIPAC, convenes for its annual conference in Washington where
they traditionally do a lot of lobbying on the Hill and two weeks before
Netanyahu`s party stands for parliamentary elections in Israel.

The invitation grew into a diplomatic scandal and the White House said
it had not been informed of the invitation prior to its being made,
describing it as, quote, "a departure from protocol." An anonymous U.S.
official is more forthright about the administration`s reaction, talking to
"Haaretz", quote, "We thought we`ve seen everything. But Bibi managed to
surprise even us. There are things you simply don`t do. He spat in our
face publicly, and that`s no way to behave."

To add insult to injury, according to "The Washington Post," the
announcement came just a day after Secretary of State John Kerry met for
more than two hours with Israel`s ambassador to the U.S. who never once
mentioned the invitation from Boehner, or the prospect of a Netanyahu
visit.

Citing the proximity of Netanyahu`s visit, President Obama has said he
will not be meeting with his counterpart while he`s in Washington.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I speak with Prime
Minister Netanyahu all the time. You know, we`re declining to meet with
him, I`m declining to meet with him simply because of our general policy
is, we don`t meet with any world leader two weeks before their election. I
think that`s inappropriate. And that`s true with some of our closest
allies.

(END VIDEO CLIP)

HAYES: Condemnation of the plan to go behind President Obama`s back
has been nearly unanimous. Anti-Defamation League National Director Ed
Foxman who supports new Iran sanctions if talks fail, called the invitation
acceptance ill-advised for either side.

Well, Netanyahu`s own former ambassador, Michael Oren, now a
parliamentary candidate for a rival party, told Israel`s "Y Net News",
they, quote, "created the impression of a cynical political move that could
hurt our attempts to act against Iran."

Even FOX News expressed outrage at Netanyahu`s move.

(BEGIN VIDEO CLIP)

SHEPARD SMITH, FOX NEWS: It just seems like they think we don`t pay
any attention, and we`re just a bunch of complete morons, the United States
citizens. Like we wouldn`t pick up on what`s happening here.

CHRIS WALLACE, FOX NEWS: For Netanyahu to do something that is going
to be seen as such a deliberate and really pretty egregious snub of
President Obama when Obama`s going to be in power for the next year and
three-quarters would seem to me to be a very risky political strategy for
Prime Minister Netanyahu.

(END VIDEO CLIP)

HAYES: If the visit was designed, in part to boost Netanyahu`s
standing with his own constituents in Israel, that appears to have
backfired as well. "New York Times" reports today, Netanyahu`s visit has
unleashed a wave of backlash in his own country, giving his political
opponents an opening on the campaign trail. "It`s a huge miscalculation",
one Israeli academic told "The Times". "People are now questioning his
judgment."

And when it comes to Netanyahu and Boehner shared objecting,
pressuring Congress to repudiate President Obama on Iran sanctions, they
appeared to have achieved exactly the opposite effect. It`s actually kind
of astonishing, 10 Senate Democrats who support new sanctions just
announced they will now wait to take a vote in order to give the nuclear
talks a chance to progress, precisely the opposite of what both Boehner and
presumably Benjamin Netanyahu wanted.

The earliest they now vote will be March 24th, long after Netanyahu`s
come and gone.

Joining me now, Democratic Senator Chris Murphy of Connecticut, a
member of the Senate Foreign Relations Committee.

Have you ever seen anything like this, Senator?

SEN. CHRIS MURPHY (D), CONNECTICUT: I`ve never seen anything like
this. This is a pretty exceptional breach of protocol. And, you know,
it`s too bad because really all it is, is a breach of protocol. This isn`t
a break in policy. And, you know, it masks the fact that the United States
is still the strongest supporter in the world of Israel, it masks the fact
that we`re standing together in the fight against terrorism.

This quote from Boehner that you played that the president is ignoring
the threat posed to Israel, our allies in the Middle East and the United
States, is ridiculous given the fact we`re spending billions of dollars as
we speak right now leading the fight against ISIL.

And, unfortunately, it politicizes the U.S.-Israeli relationship in a
way that`s not helpful to anybody.

HAYES: So, there`s a sort of significant substantive dispute here,
which I think I believe the president and his people believe it is
possible, they don`t know if it is going -- it will be achieved, but it is
possible and plausible to achieve some kind of diplomatic solution to
Iran`s nuclear program in which they halt any kind of nuclear weapons
program in exchange possibly for something like diplomatic recognition,
which would be a huge sea change in a whole bunch of stuff, right?

And Benjamin Netanyahu, and many Israelis think that is just
impossible. That is not a group you can negotiate with. Many Republicans
and many Democrats in Congress feel that way.

Is that what you see as the fundamental issue at the heart of this?
And where do you come down?

MURPHY: Well, I think it is close to the fundamental disagreement. I
think that the Israelis believe that you could get a deal. But they don`t
trust that the Iranians would hold to it.

There are those of us that believe we can put into place a series of
intrusive inspections that would give us the ability to detect the moment
at which they breach the deal and start moving towards a nuclear weapon.
And it`s much better than the alternative, which is walk away from
negotiations, and effectively leave military action as the only
alternative. So, I think there clearly is an ability to get a deal.

But what the president`s people have been clear about is that they
will not get a deal if we pass sanctions today, as the Netanyahu government
apparently wants us to do. And so, if Netanyahu`s government`s intention
is to scuttle the talks, well, then passing sanctions is a good way to do
it.

Here in the Congress, I think from left to right, we are supportive of
a settlement of a negotiated deal. I think that`s why you`ve seen a lot of
my colleagues pull back from the sanctions bill.

HAYES: Well, that`s optimistic and charitable on your part about your
colleagues, because the fact of the matter is, two weeks ago, I was
actually going through a list. It wasn`t hard to get to 60, maybe even 62,
63 votes for something like this. There`s been a sea change.

It strikes me that part of it is the fallout from the Netanyahu visit.
There are a lot of folks on the Democratic side of this who don`t -- who
appear to not want a deal.

MURPHY: Yes, it`s hard for me to tell exactly how much the Netanyahu
protocol breach had to do with this change, because last year, if you
remember, we were arguing over sanctions as well. It looked like we might
have had close to 60 votes. And when the president started to forcefully
lobby my colleagues, they started to back down. I think that`s what you
saw here as well, coincidental to this protocol issue.

The president was making phone calls, was pitching the caucus, was
speaking the State of the Union speech. When he gets behind something like
this, he`s pretty persuasive. I think that had as much to do with it,
probably a lot more to do with it than the impact of this invitation to
speak before the Congress.

HAYES: Senator Chris Murphy, thank you, sir. Appreciate it.

MURPHY: Thanks.

HAYES: Israeli Prime Minister Benjamin Netanyahu is vowing that
whoever was behind today`s attack on Israeli soldiers near the Lebanese
border will, quote, "pay the full price." Two soldiers were killed, seven
others wounded when their convoy came under missile fire in the Golan
Heights, a disputed area where the boundaries of Israeli, Syria, and
Lebanon converge.

Lebanese militant group Hezbollah has claimed responsibility,
indicating the attack was retaliation for an Israeli air strike in Syria
ten days ago. That airstrike killed six of Hezbollah`s fighters, including
the son of its deceased military commander, as well as an Iranian general.

While the U.S. State Department counseled against any further
escalation, it also affirmed Israel`s right to self-defense.

(BEGIN VIDEO CLIP)

JEN PSAKI, STATE DEPT. SPOKESPERSON: This is a situation where
there`s been an attack from Hezbollah. Obviously, we condemn that. Is our
preference that there are no more attacks and that the UNSCR is abided by?
Yes. But we also believe Israel has the right to defend itself.

(END VIDEO CLIP)

HAYES: While, Netanyahu has convened his security chiefs to determine
a broader response, Israel and Hezbollah traded rocket and artillery fire
for hours after the initial strike, threatening to end the relative calm
since their last conflict in 2006, and raising fears of yet another war.

I`m joined now by NBC News foreign correspondent, Ayman Mohyeldin.

Ayman, let`s start, obviously it`s impossible to start these things,
but let`s start ten days with the strike that happened in Syria. This is
an Israeli strike in Syria. What happened there?

AYMAN MOHYELDIN, NBC NEWS FOREIGN CORRESPONDENT: We should be clear
Israel never claimed responsibility for it. All indications were Hezbollah
blamed a lot of people, even the Israeli media was widely citing Israeli
security forces, unnamed Israeli security sources claiming that it was
Israel behind it.

In essence, Israel carried out an airstrike on a convoy inside the
Golan Heights, inside Syria. In that convoy was a senior member of
Hezbollah, the son of the deceased former leader who is also to have been
killed by Israel. But in addition to that, was an Iranian general.

Now, according to Israeli sources, they weren`t aware that the Iranian
general was there. It seems the convoy that was targeted was just the
Hezbollah convoy. But it seems to have taken out a substantial figure
within Hezbollah. People have called him a rising star within the
organization.

Now, in the response to that, Hezbollah vowed to carry out
retaliation, and that is what we`re seeing today.

HAYES: We now see Israel weighing whether it`s going to launch
further offensive. Avigdor Lieberman, who`s a sort of far right member of
the Netanyahu cabinet, I saw some quote about, you know, disproportionate
response, I think he said he wanted to promise. We saw something like this
with Hamas rocket fire in the Gaza war last year.

What`s the calculation here? What are you anticipating we`re going to
see happen? There`s precedent in 2006, Israel went to war against
Hezbollah and it was by all accounts a disaster, a political disaster for
the Israeli leadership that launched it.

MOHYELDIN: Well, it was a political and military one certainly. And
I think that early indications is that both sides don`t want a wider war.
They certainly want to establish a deterrent. That was one of the things
that was a casualty in the 2006 war for Israel. Israel has always relied
on the deterrent capability, that no group or country was able to sustain a
long military campaign against it. Hezbollah did manage to do that. So,
in the eyes of its supporters, Hezbollah emerged victorious. But they also
conceded that the cost of that war on Lebanese broader society was
devastating.

So, as a result of that, both sides right now realize that they could
find themselves in a prolonged conflict without a clear victor. So the
early analysis after this is what happened today, in terms of the
retaliation Israel carried out, a few artillery shells, is what both sides
could withstand.

HAYES: And, Hezbollah, of course, has active fighters in what is now
the most insanely complex, horrific war zone in the world, I think we have
to say, which is Syria.

MOHYELDIN: Yes.

HAYES: They are allied with the Iranians and with the Assad regime in
one kind of axis of fighters in that context.

MOHYELDIN: And Hezbollah has also demonstrated its capability of
fighting a guerrilla war against Israel, at the same time against Syria.
It does not want to open a second front against Israel while it is
currently involved in the ongoing fight inside Syria. But at the same
time, they demonstrated with this attack, they certainly have a pinpoint
accuracy in carrying out these types of attacks, in a very limited, but
potentially lethal way against Israeli soldiers.

HAYES: It is yet another reminder of the vanishing probability I
think that that conflict in Syria, what we call the Syrian civil war, stays
within Syria. I mean, it`s already stretched past Syria, but the potential
for it to just explode out of Syria exists at every second.

Ayman Mohyeldin, thank you very much.

MOHYELDIN: My pleasure.

HAYES: All right. We have won the sound bite lottery here at ALL IN
tonight, thanks to the Republicans who attended the confirmation hearing
for Loretta Lynch.

Plus, what would it look like if Occupy Wall Street was put in charge
of the U.S. government? We now have something close to a real-life version
of that. And I`ll explain, ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: There`s a man from the EPA here to see you.
He`s waiting in your office.

UNIDENTIFIED MALE: EPA. What`s he want?

UNIDENTIFIED FEMALE: I don`t know. All I do know is that I`ve been
working two weeks without a break and you promised me you`d hire more help.

UNIDENTIFIED MALE: Janine, someone of your qualifications will have
no trouble finding a top flight jobs and either food service or
housekeeping industries. Are you going to answer that?

UNIDENTIFIED FEMALE: Quick better jobs than this.

Ghostbusters, what do you want?

(END VIDEO CLIP)

HAYES: "Ghostbusters" is set for a remake out July of next year and
it will feature all female leads, sort of a different gender dynamic from
the original, as you see there. Kristen Wiig, Melissa McCarthy, Kate
McKinnon and Leslie Jones, who are you going to call now.

There`s been some Twitter backlash the remake from people who say the
new cast will destroy their manful childhood memories. But most people and
I should stress this, most people like me are completely stoked for it.

Also, battling ghosts may be dangerous, but apparently not as bad as
working in Silicon Valley.

(COMMERCIAL BREAK)

HAYES: Hearings begun today for President Obama`s nominee to replace
Eric Holder. If confirmed, Loretta Lynch, the top federal prosecutor in
Brooklyn will be the first black woman to serve as attorney general of the
United States in its history. Lynch is also the first Obama cabinet
nominee to go before the Senate since Republicans won control of it back in
November.

And as Senator Patrick Leahy is quick to point out she is well liked
across the ideological spectrum.

(BEGIN VIDEO CLIP)

SEN. PATRICK LEAHY (D), VERMONT: Bill O`Reilly on FOX called you a
hero, and said, quote, "You should be respected by all Americans for
standing up to gross injustice."

(END VIDEO CLIP)

HAYES: There is one dominant theme in today`s hearing that had little
to do with Ms. Lynch`s own record, and everything to do with the record of
her would-be boss.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: I would like to remind my
colleagues that the president`s immigration policies are not seeking
confirmation today. Loretta Lynch is.

(END VIDEO CLIP)

HAYES: That`s an adorable try, Senator Schumer, but that`s not
happening. The issue of immigration, specifically President Obama`s
executive actions on immigration, which have the legal blessing of the
Department of Justice, was so central in today`s hearing, it was the very
first question.

(BEGIN VIDEO CLIP)

SEN. CHUCK GRASSLEY (R), IOWA: I ask you, do you believe that the
president has the legal authority to unilaterally defer the deportations in
a blanket manner for millions of individuals and the country illegally and
grant them permits and other benefits, regardless of what the U.S.
Constitution immigration laws say?

LORETTA LYNCH, ATTORNEY GENERAL NOMINEE: I don`t see any reason to
doubt the reasonableness of those views.

(END VIDEO CLIP)

HAYES: Also at issue, the man who approved the president`s executive
action on immigration, the current attorney general.

(BEGIN VIDEO CLIP)

SEN. JOHN CORNYN (R), TEXAS: Let me just stipulate, you`re not Eric
Holder, are you?

LYNCH: No, I`m not, sir.

CORNYN: You wouldn`t consider yourself to be a political arm of the
White House, as attorney general, would you?

LYNCH: No, Senator, that would be a totally inappropriate view of the
position of attorney general.

(END VIDEO CLIP)

HAYES: While the immigration issue certainly dominated the hearing,
it wasn`t the only line of questioning Lynch faced from the Republican
majority.

(BEGIN VIDEO CLIP)

GRAHAM: What`s the legal difference between a state -- a ban on same-
sex marriage being unconstitutional, but a ban on polygamy being
unconstitutional? Could you try to articulate how one could be banned in
the Constitution and the other not?

LYNCH: Well, Senator, I have not been involved in the argument or
analysis of the cases that have gone before the Supreme Court. So -- and
I`m not comfortable undertaking legal analysis without having had the
ability to undertake a review of the relevant facts and the precedent
there.

SEN. JEFF SESSIONS (R), ALABAMA: Do you believe, and do you support
legalization of marijuana?

LYNCH: Senator, I do not.

(END VIDEO CLIP)

HAYES: The content of some of the questions aside of the tone of
today`s hearing seemed pretty cordial. At it stands, Loretta Lynch needs
the votes of at least three Republican members of the judiciary committee,
and all the Democrats to send her nomination to Senate floor. Right now,
the chances of receiving enough votes seems pretty good.

Joining me now, Julie Fernandes, former deputy assistant attorney
general for civil rights at the Department of Justice, now a senior policy
analyst at the Open Society Foundation.

All right. You worked at the DOJ. I thought Loretta Lynch herself
quite well and basically was unflappable as Republicans tried to flap her.

JULIE FERNANDES, FORMER DEPUTY ASSISTANT ATTORNEY GENERAL: That`s
exactly right, Chris. She was a rock star. She was who she is, a
prosecutor, a law and order person, someone who cares about following the
law, understanding her role as a potential attorney general in the
executive branch. This is really one of the most qualified nominees for
attorney general that we`ve seen.

She`s been twice a U.S. attorney. She has a record on terrorism
prosecutions, as well as a range of other high-profile criminal and civil
matters. They couldn`t touch Loretta Lynch today.

HAYES: They did not lay a glove on her, metaphorically.

But there is something interesting about this, the role of attorney
general, which there`s some sort of really fascinating constitutional
ambiguity. Attorney generals in the president`s candidate, but there`s
this tradition of independence. I think what the senators were trying to
get at, you know, in good faith, I think it`s a genuine line of inquiry,
just where she will rank in that. I mean, what is the right answer? Is
that a not settled matter?

FERNANDES: Well, I think for the most part -- I mean, look, first,
they were using this hearing as your piece indicates to really kind of
grandstand on their negativity directed --

HAYES: Grandstanding at a Senate hearing? Get out of here.

FERNANDES: So, that`s what that was about.

But it is a real interesting question, constitutional question, that
for the most part, attorneys general have had the view, at least for many,
many years, that they`re independent of the president in the critical part
of their being able to enforce the laws fairly and to be able to enforce
the laws nonpolitically. It is an important tenet of those who sit in that
chair, to know that their job is to follow the law, even if the president
disagrees. Because the president is in a political position that is in a
different -- of a different kind than someone who`s charged with actually
law enforcement.

Law enforcement is serious business, and she knows it. And having the
power of a prosecutor is a very, very important and kind of sacred power.
And she gets it. And that`s why that role is different, from like Health
and Human Services, or the Department of Education.

HAYES: So, here`s my question. Talk about her being a prosecutor. I
think Eric Holder has one big legacy, one is on voting rights, where the
voting rights division is amazing, you worked in the voting rights division
in a previous administration. The other I think is beginning the
conversation and the institutional shift away from the kinds of crime and
punishment policies we`ve seen in this country for 30 or 40 years.

And my question is, you put a life-long prosecutor in that job. Does
she carry that forward?

FERNANDES: I think that`s the best person to carry that forward,
Chris. I feel like those folks who have been working in prosecution,
working in the system as long as Loretta Lynch has, they understand that
there is something broken in the system. They understand, I think, more
than outside observers do, that the system needs to work to prosecute
people, and put folks in jail who need to be in jail. But to understand
that putting people in jail for long periods of time, under harsh mandatory
minimums or under unfair drug laws is not the way it`s really going to make
us all safer.

So, I think a career prosecutor is the best person to understand why
we need criminal justice reform, and someone who`s a partner with law
enforcement. The only way we get true reform of our criminal justice
system is to be partnering with police officers, police executives and the
communities, and bring everybody together to kind of make sure that we`re
safe, but we`re also fair.

HAYES: Julie Fernandes, former deputy assistant attorney general --
thank you.

FERNANDES: Thank you.

HAYES: Sarah Palin`s speech this weekend, not a sentence I utter that
often on this show, but I`m making exception now, at the Iowa Freedom
Summit -- well, it reminded a lot of people, actually not a lot of people,
it reminded me of this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Anything can be a slam, a poem, if you say it like
this. Pointless.

(END VIDEO CLIP)

HAYES: You`ll see what I mean, next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PALIN: Racism, sexism, whatever. Really, it`s kind of Orwellian
observing how that works, that rule of Saul Alinsky`s, no doubt, that the
left employs. Disgusting charges from the left that -- reverse them. For
it is they who point a finger, not realized that they have tripled that
amount of fingers pointing right back at them. We can afford no retreads,
or nothing will change, with the same people, the same policies that got us
into this status
quo. Another Latin word, status quo, and it stands for, man, the middle
class, everyday Americans are really getting taken for a ride.

HAYES: A little sampling of what I call red state slam poetry from
Sarah Palin that`s been turning a lot of heads.

That speech from the Iowa Freedom Summit over the weekend might just
represent the end, officially, of the Sarah Palin bandwagon. The rambling,
semi coherent, free verse rant has precipitated a rush of fresh
conservative criticism.

Leading the way, an early Palin supporter, Matt Lewis, who writes for
The Daily Beast under the headline "You Betcha I Was Wrong About Sarah
Palin", qoute, "she squandered her opportunity for greatness, and instead
became a fad... Maybe her early critics saw some fundamental character
flaws, some harbinger of things to
come- that escaped me".

Charles C.W. Cook, of the National Review, writes of what he call`s
Palin`s slow and unseemly descent into farce.

Washington Examiners, Byron York, cleared a slue of Conservative
activists and Iowa Republicans slamming the speech, including one who said,
quote, "Her shelf-life, even with the most conservative voters in our
party, seems to be near the end".

Even Fox news host, Sean Hannity, got a little tough with Palin last
night when he asked her about the speech --

SEAN HANNITY, FOX NEWS HOST: You also got criticized for the speech
by a lot of people, even some of the people in the crowd that tend to be
supporters of yours. And then did the teleprompter go down? Did you have
trouble with the copy?
Was there any moment in the speech that you had any difficulty, because
people have been so critical?

SARAH PALIN: Well, you know I don`t read the praise and I don`t read
the criticism, because I know how you guys, or how the media in general
works.

HAYES: The Sarah Palin phenomenon is a little like the Iraq War, in
that politicos who have been dining out on being wrong about her for years.

Nichole Wallis became a household name in politics for her role in
bringing Sarah Palin to the threshold of power, potentially a heartbeat
away from the presidency, and then, very publicly, realizing what a
disaster that whole enterprise had been.

JAY LENO: So when she was interviewed by Katie Couric, and it was a
question
seemingly not that insurmountable. What newspapers do you read?

NICHOLE WALLIS: Yeah. She blamed me for that one.

LENO: Should you have prepped her on something like that?

WALLIS: Probably.

LENO: Yeah.

HAYES: So, hey, welcome to everyone who is years late to the plain,
obvious wisdom that was staring us all in the face the entire time, that
Sarah Palin has no business being President of the United States, or Vice
President of the
United States. Welcome aboard. You`re not alone here in the real world.
Many of us did not need six whole years to arrive here.

But you`re just in time for Palin to start threatening to run for
President again. Just like perennial poster, Donald Trump, and both Palin
and the Donald, played major roles in our special all in 2016 fantasy
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HAYES: Number nine. Oh my goodness.

UNKNOWN MALE VOICE: It`s the All In 2016 Fantasy Candidate Draft, and
it`s going to be epic. Tomorrow night at 8PM.


(COMMERCIAL BREAK)

HAYES: I want you to take a look at this photo for a second, all
right. It`s the kind of photo we`ve seen dozens, hundreds of, across the
world in the last few years as the era of crisis and protest. Cops in riot
gear scuffling with a protester, the older man in the middle, the one with
the cop shielding his face.

Now, that picture was taken in Greece in 2013 and the protester, in
the picture, his name is Nicos, and here`s how the story ends. That
protester, the guy you can see here being screamed at by a police officer,
has risen from member of Parliament to Minister of the Interior of Greece,
which now makes him the head of the Greek Police and the boss of those
cops. True. And that is due to the most seismic political victory we`ve
seen in Europe probably since the E.U. was created. A victory that, as that
picture would suggest, is kind of like the occupy movement taking over the
actual reigns of U.S. government.
On Monday, forty year old Alexis Tsipras was sworn in as Greece`s new
Prime Minister after his party Syriza won thirty six percent of the vote on
Sunday`s election and formed the governing coalition with a small, central
right party.

The Wall Street Journal calls Syriza, qoute, "a radical leftist
party". Which, might cause you to roll your eyes, considering what the
journal deems leftist here in America. But Syriza really is the radical
left. It`s the real deal.

The party name is an acronym for words that literally translate to
quote "collation of the radial act". And Tsipras, the party`s new leader
and the new Prime Minister, is a committed leftist, about atheist, who
named one of his sons after Che Guevara.

So how did that guy end up in charge? Well, it`s because for the past
few years Greece has been going through a massive depression, a wrenching,
humiliating, devastating depression, in front of all of our eyes. And
that`s not a hyperbole.

Unemployment rates in Greece is nearly twenty six percent. Roughly the
same rate as in America`s Great Depression. Youth unemployment over fifty
percent. The nation is in the midst of what Syriza accurately describes as
a full blown humanitarian crisis.

And, here`s the thing. It is a crisis that was chosen. It is a crisis
that is basically need imposed on Greece by the European Union, which
forced Greece to accept huge posterity cuts in exchange for two hundred and
seventy billion dollar bailout to pay off it`s debts. That included a
twenty two percent cut in the minimum wage, pension cuts that drove many
elderly into homelessness and poverty.

The austerity measures have certainly not seemed to help the Greek
economy, which has seen GDP plunge thirty percent below where it was before
the financial crisis. And now, the Greeks, they have finally had enough.
They said enough. And they`ve elected a government that has vowed to
reverse the austerity cuts, subsidize electricity and food stamps for three
hundred thousand people, offer free health care for the unemployed, and,
crucially, write off a large part of Greece`s approximately three hundred
and sixty three billion dollar debt to the great consternation of Europe`s
central bankers and the world financial market. And the world is now
wondering, all looking to Greeks, not just whether Syriza can pull that
off, and how Europe is going to react, but whether the success of the
leftist movement in Greece has the potential to spread across Europe.

Joining me now economist and professor James Galbraith of the
University of Texas-Austin. In 2013, he published a paper with his former
colleague, a man by the name of Yanis Varoufakis, who is the new Greek
finance minister, about how to bring Greece and the EuroZone back from the
brink.

All right. Professor, basically Greece had huge debt. They couldn`t
pay those debts. The crisis -- you know, the crisis happened. Their
revenue sank. They had huge debts. They needed someone to bail them out.
The European powers came in and said we`ll give you this if basically you
waterboard your own economy.

What does Greece do now?

JAMES GALBRAITH, UNIVERSITY OF TEXAS-AUSTIN: Well, two points. The
bailout was not a bailout of Greece, it was a bailout of Greece`s creditors
who otherwise would have suffered swinging (ph) losses.

The condition for doing that, which were accepted by the previous
Greece government -- Greek government, were punitive in character and led
to the consequences that you described.

And so what happened in Greece, as you say, was that the population
basically decided that it had enough, enough pretense -- of the pretense
and enough of the inflicted pain.

And the other thing that happened here was that the alternative
movement gained credibility over the last couple of years, really
progressively, as it developed a credible program and as Alexis Tsipras
showed really impressive degree of political skill. I`ve seen him in
difficult situations, just remarkable how effective he is.

So what do they do now is they sit down with their European partners
and they have a reality-based discussion about what is going on in Europe,
what is going on in Greece. And that will be a big change in the climate
of governance in Europe, because no government in Europe is attempted to do
that up until now.

HAYES: Can Greece just walk -- I mean, Argentina years ago -- you
know, countries that are going through these kind of crises they have a few
things they can do. They devalue their currency, but Greece never had that
option because it`s on the euro, which hurt them. They can write down the
debt. They can basically say we`re not going to pay the debt. Argentina
did that last decade.

Can Greece just say, hey, bondholders, sorry you`re out of luck but
we`re going to not -- we`re going to make sure our 80-year-olds aren`t
literally starving in the streets and dying.

GALBRAITH: Greece can take steps that will help protect those 80-
year-olds. As far as the debt is concerned, that`s a negotiation. It`s a
negotiation with a great deal at stake, including the future of the
Eurozone itself.

The Greek government is committed to the euro, and to the future of
Europe, but it requires for that commitment to be successful, that the
European partners also take finally a realistic view.

And I think, you know, this is the challenge before the new Greek
government. What is impressive about it to me is that this is a government
that does have the capacity to make -- to carry that point, to get that
point across in the face of the position that has been taken by the Germans
and French and others.

HAYES: Your former colleague is now the finance minister. He -- in
the previous job working at a video game company, where he was the in-house
economist, essentially running the monetary policy and currency of video
game world that had to have a unified currency. This guy is now going to
run Greece as a heterodox thinker. And he`s someone who`s come from the
margins, you know, some crazy lefty, to now the center in the sense that
lots of people are saying what Europe has done to Greece is crazy and maybe
this guy has the solution.

GALBRAITH: Well, Yanis Varoufakis is not crazy at all. The
consulting job you mentioned was a relatively brief but very interesting
one conceptually.

What he is, is one of the world`s most prominent experts in the theory
of games, which is after all the mathematics and economics of strategic
interaction and negotiation. So this...

(CROSSTALK)

GALBRAITH: ...exceedingly well prepared for this particular job. And
he has also been -- I mean, I got to know him because he was the protean
figure after the crisis in all of Europe for clarity in expressing what was
going wrong, why things were not going to work and why there needed to be
an alternative.

He`s probably written millions of words on that in the last four
years.

HAYES: Promising, promising and exciting times. James Galbraith,
thank you.

All right, one of President Obama`s major proposals from the State of
the Union may have just set the record for shortest lifespan of any
proposal ever. What it was an why it died so very quickly ahead.

(COMMERCIAL BREAK)

HAYES: Has it ever occurred to you that campaign coverage is too
often just like sports coverage? Well, tomorrow night we`re taking that to
the extreme with the premiere of our very special All In 2016 fantasy
candidate draft. Tune in again right here 8:00 eastern to see what I mean.
It`s incredible amounts of fun. Trust me, you do not want to miss it.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: And let`s close the loopholes that lead to inequality by
allowing the top 1 percent to avoid paying taxes on their accumulated
wealth. We can use that money to help more families pay for child care and
send their kids to college.

(END VIDEO CLIP)

HAYES: That sounds sensible and harmless enough. Well, it`s one of
the president`s major State of the Union policy proposals, and it just set
the record
this year for shortest-lived idea by dying before it even made it onto the
page.

A White House plan would have effectively ended 529s, the accounts
that allow savings for college to grow tax free. The idea was to put the
money from that program into another college tuition tax credit, the
administration says more
effectively targets middle class and low-income families.

Unfortunately for the economists at 1600 Pennsylvania, the backlash
was both strong and immediate.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: We begin tonight with President Obama`s proposed
assault on popular college savings accounts.

KARL ROVE, REPUBLICAN STRATEGIST: The president last night said we`re
going to take the savings that you`re putting away tax-free for your kids`
college education, and when you draw it out and write the tuition check,
we`re going to slap a tax on that.

UNIDENTIFIED MALE: My grandmother used to tell me not to cut off my
nose to spite my face. And it seems like that`s exactly what`s happening
here.

BILL KRISTOL, CONSERVATIVE COLUMNIST: Do Democrats want to run on
taxing middle class American who use 529 accounts?

(END VIDEO CLIP)

HAYES: But it wasn`t just TV news hosts and pundits who were
outraged, journalists of all stripes took to Twitter to express their
dismay. Karen Tumulty of the Washington Post tweeting, quote, "still eager
to learn which childless person at a think tank convinced the White House
that their #529proposal was a
good idea.

Ben White Politico saying, quote, "I suppose it`s pointless to get too
worked up about the proposed 529 plan change as it has got no chance of
becoming law."

Now just to put this debate in perspective, 97 percent of people in
the United States do not have the 529 college savings plans, according to a
government accountability office report.

And the 3 percent who do are on average, guess what, much wealthier
than those who do not.

The report found the typical family who used the accounts had median
total financial assets 25 times higher than families who didn`t have 529s.

What the White House didn`t realize is that the people who make up the
chattering class are probably the people who most likely to actually use
529s. And after less than a week of opposition to the plan from all
corners, including John Boehner and reportedly Nancy Pelosi, the White
House scrapped the plan before it was even officially released.

But here`s the thing about the proposal, the White House was right to
want to end that tax shelter. And I say this as someone who, like the
president, dutifully uses it year after year. More on why they were right,
next.

(COMMERCIAL BREAK)

HAYES: Joining me now Anya, education reporter for National Public
Radio, the author of "The Test: Why our Schools are Obsessed with
Standardized Testing but you Don`t Have to be;" and David K. Johnson,
Pulitzer prize-winning investigative journalist, lecturer at Syracuse law
school and my go-to on everything tax related, not my actual taxes,
although maybe I should consult you on that as well.

All right, David, this to me is so much part of a broader thing, which
is that we -- this is how we solve problems in America. It`s like, oh,
college is too expensive, we`ll create some tax deferred account where you
can put money in.

It`s like, oh, healthcare expenses are catastrophic. You can have a
health savings account.

Oh, no one has daycare in America, well, you can put $5,000 into a
daycare savings account.

Oh, no one has retirement security, well, you`ve got your 401(k).
It`s like the way we solve every problem is through the tax code with these
kinds of programs that tend to benefit essentially the upper middle class
and above.

DAVID K. JOHNSON, JOURNALIST: This is -- you get a two-fer if you`re
a politician if you do this.

I gave you tax relief and I solved your problem even though you
haven`t done that.

And the 529 plan is an example of what we call an upside down subsidy.
If you`re going to subsidize somebody it should be somebody in need, right.
I mean, we don`t need to give subsidies to Bill Gates or Warren Buffet,
although we do give them subsidies.

And in this case the subsidy went to people like Michelle and Barack
Obama, multimillionaires who put almost a quarter million dollars into a
529 plan for their daughter`s future education. Prudent thing for them to
do, not particularly good use of our tax money.

HAYES: Yeah, it`s insane. I mean if you have someone -- you know,
someone who is paying 50 percent marginal taxes in the top bracket a
millionaire and they put, you know, $20,000 into accounts, they just saved
$10,000, OK.

If you take someone who is not making that much money and manages to
get 2,000 bucks they put in, you know, the subsidy for them is like $500,
$600.

So, you know, this is how this program works.

JOHNSON: But politically although 70 percent of the gains go to
people in the top 5 percent, the untaxed gains when you take the money out
and you spend it on tuition, politically there`s a lot of people in the
middle class. And there are a lot of people in the low six figures who are
able to get their congressperson or staff member on the phone and say,
what?

HAYES: And who I will say who have genuine economic anxiety, Anya,
and I want to come to you on this. I mean, have genuine economic anxiety,
because if there`s one thing in America growing faster than health care
spending, the only thing that beats health care spending is tuition, right.

So people are like what the heck am I going to do? I mean, there is
increasing college tuition and fees. It`s growing at just an astounding
rate. And so this is kind of -- it`s like this is the solution, but it`s
not really the solution.

JOHNSON: And Chris, when I went to college it was free.

HAYES: Right, exactly. And it`s no longer.

Anya.

ANYA KAMENETZ, AUTHOR: Well, you know, there`s kind of a doughnut
hole in how we subsidize college, because lower income families do take
advantage of the Pell Grant and financial aid, and middle class families
are entirely free of any of that kind of help and that`s why they cling to
the 529, even though they were recently -- you know the idea that you`re
going to save enough money to actually pay for a community college is
totally off the chain. It`s not happening.

HAYES: Right. I mean, that is the point is that when you look at the
actual
savings rate of Americans, right, we`re doing all these things to subsidize
savings. No one`s saving money. I mean, the -- America does not have a
particularly robust savings rate. And even if you were saving, and you had
huge returns, there`s no way you`re making up the increase in tuition
costs, right?

KAMENETZ: I did the calculator on the way over. I have a 3-year-old
daughter, $300,000. I don`t have that kind of money laying around. Not in
the best case scenario. Come on.

HAYES: This is perfect. It`s like, OK, well, we`ll give you your tax
subsidy on your savings money so you can afford your $300,000 tuition.

KAMENETZ: At the public school, too.

HAYES: Right.

So, then what is the solution? Like, OK, wipe away this, right.

KAMENETZ: Yes.

HAYES: People, I think we want people to go to college. I think it`s
useful, good. The vast majority of people in America don`t go to four-year
colleges, which is something that gets completely left out elite discussion
where it`s like, oh, my kid is going -- no, that`s okay.

What should the solution be?

KEMENETZ: I`m hoping that this was a brilliant ploy by the Obama
administration to distract attention from the free community college plan.
Because I think free community college, the idea that we extend the public
franchise of higher and actually make it free for two more years to
actually help everyone get that degree is a brilliant idea.

And folding that into...

HAYES: Interesting.

KEMENETZ: ...the public cost structure, then we can...

HAYES: You think this is basically a policy false flag?

KEMENETZ: I hope they`re that smart. I really hope they`re that
smart.

(LAUGHTER)

HAYES: It`s impugning (ph) (inaudible).

Well, David, I mean, it`s also an illustration to me, right, it`s a,
an illustration of middle class and upper middle class anxieties about the
pillar parts of what people think as sort of social mobility. But it`s
also an example of why it`s very hard to, quote, reform the tax code.
Everyone wants to talk about reforming a tax code. This was a relatively
small little thing. It didn`t last five days. I mean, it was killed
faster than they could even print it out.

JOHNSON: Well, as you pointed out, clearly, the White House staff did
not think this through well. And it`s unfortunate that the president even
brought this up, because the rest of his speech was designed to, you know,
put a trap out there for the Republicans on tax issues, and the president
was trying to push the idea that we need to up the level of education for
people.

And free community college would be one of the smartest things we
could do
both for young people, and people who return to school later in life. It
would give us a lot of technical workers that we need. And some people
will go on, as I
did, to go to college and to graduate school, after going to community
college.

So it`s very unfortunate that they didn`t think this one through and
just junk it before it got into the State of the Union Address.

HAYES: Anya Kemenetz and David K. Johnson, thank you both for being
here. I really appreciate it.

That is All In for this evening. The Rachel Maddow show starts now.

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

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