Guest: Chris Hayes, Paul Krugman
RACHEL MADDOW, HOST: Good evening. What do you think about the
phone? Do you think it was a hoax or do you think it was a real deal?
And thanks to you at home for staying with us tonight.
Nobel Prize-winning economist Paul Krugman will join us for “The
Interview” at just the right time, given the state of the new rules for
Senate John McCain is at odds again with Senator John McCain on an
immigration law that no one can quite believe might actually become law in
And the story of the day comes from the legislature of the great state
of Georgia—which has done something that cannot be adequately explained
in prose. You must see it to believe it. So, we will act it out. I‘m
very much looking forward to that.
That is all ahead.
But, we begin tonight with the opposition to new rules for Wall Street
falling apart after starting out with a full-frontal assault on Wall Street
reform and a sustained public campaign against it, and a promise that every
single Republican would stand united to kill it—today, the top
Republican in the Senate, Mitch McConnell, climbed down.
(BEGIN VIDEO CLIP)
SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: With regard to
financial regulation, it‘s pretty clear now and the majority leader has
indicated to me that serious discussions have resumed. We are all
optimistic that this can be fixed.
(END VIDEO CLIP)
MADDOW: That is a far cry from the “we will kill it at any cost”
message that we were hearing from Senator McConnell before today.
(BEGIN VIDEO CLIPS)
MCCONNELL: That is clearly not the direction the American people
would like for us to go and also not the direction Senate Republicans would
like to go.
Never again, never again should taxpayers be expected to bailout Wall
Street from its own mistakes.
(END VIDEO CLIPS)
MADDOW: That was the top Republican in the Senate last week.
So, what explains why he has done a 180 now? See if you can spot
Mitch McConnell‘s problem here. The first man you‘ll see in this next clip
is Mitch McConnell. The second man you will see is Bob Corker, another
Republican senator. Watch.
(BEGIN VIDEO CLIPS)
MCCONNELL: It will lead to endless taxpayer bailouts of Wall Street
SEN. BOB CORKER ®, TENNESSEE: This fund that‘s been set up is
anything but a bailout.
(END VIDEO CLIPS)
MADDOW: Hard to maintain the talking point that Wall Street reform is
a big bailout when your own party‘s point man on the issue keeps saying
that‘s not true.
Senator Corker today making it crystal clear, he told the newspaper
“Roll Call,” quote, “The things that we‘ve been saying on our side of the
aisle about bailouts and all that, they miss the point.”
So, Republicans in the Senate are trying to stop Wall Street reform
face planted on their own talking point there. Bummer.
Over in the House, Republicans started off trying to make that talking
point work. House Minority Leader John Boehner blasting an e-mail warning
that Wall Street reform would, quote, “empower the federal government to
provide Wall Street with permanent bailouts, courtesy of American
“The Huffington Post‘s” Sam Stein reporting today that even if
Democrats were to take out the part of the bill that some Republicans have
been saying what amount to a bailout, John Boehner admits he would still
call it a bailout anyway.
So, the bill outlaws bailouts. It does not allow them. And if it is
changed anyway to take out the part that some Republicans say it‘s a
bailout, even though it‘s not, they admit they would call it a bailout
anyway. They admit this.
So, like, OK, here‘s a shark. Here‘s John Boehner. Right? Jumping
the shark. Also, here‘s a whale. It has nothing to do with the metaphor,
but it is awesome. Sorry.
OK. Then there is Republican Senator Scott Brown of Massachusetts.
You know, “Senator 41,” the senator who is going to save the day for
Republicans in the Senate lost their main talking point against Wall
Street reform. Republicans in the House were caught bragging about not
meaning what they say about Wall Street reform. But perhaps this new guy
will lead the way, put a telegenic, likable, credible Republican face on
this awkward “siding with the Wall Street banks” things. That‘s not
working out either.
First, you will recall Senator Brown mystified everyone by asking a
reporter from “The Boston Globe” why he should oppose Wall Street reform.
Quoting from “The Globe,” “When asked what areas he thought should be
fixed, Senator Brown replied, ‘Well, what areas do you think should be
fixed? I mean, you know, tell me. And then I‘ll get a team and go fix
A few days later, the senator made his Sunday show debut and explained
his opposition to Wall Street reform this way on camera.
(BEGIN VIDEO CLIP)
SEN. SCOTT BROWN ®, MASSACHUSETTS: The bill that is being proposed
by the banking chairman dramatically affects businesses, Mutual—for
example, Liberty Mutual, Mass Mutual, these folks are caught in that
regulation as well. It‘s going to cost potentially 25,000 to 35,000 jobs.
BOB SCHIEFFER, CBS HOST: Well, wait a minute, Senator, how can you
BROWN: Well, I can say it very clearly because the regulations they
are trying to reel in with some of the risky hedging that bets are doing
also affects companies like I just described in Massachusetts. It‘s very
(END VIDEO CLIP)
MADDOW: It‘s very clear. It‘s very clear that this bill will cost
25,000 to 35,000 jobs in Massachusetts. Nearly 1/5 of all financial
industry related jobs in Massachusetts will go away if this bill passes.
To echo Mr. Schieffer here, “Wait a minute, Senator, how can you say that?”
What is it based on?
When pressed by “The Boston Globe” to produce any basis for those
rather shocking numbers, Senator Brown manned up and said, “I stand by them
and there will be larger numbers nationally.”
His staffers then cited a study done by a group called the Business
Roundtable. The problem, as “The Globe” points out, that Business
Roundtable study, quote, “did not provide any Massachusetts specific
So again, where‘s the basis for “the 25,000 to 35,000 jobs are going
to be lost in Massachusetts” claim?
Senator Brown then told “The Globe” that the number was based on,
quote, “my speaking with the industry leaders over the last month or so.”
His office elaborated that he got this estimate from the chief
executive of one of the companies he mentioned on TV, Mass Mutual, which is
headquartered in Springfield, Massachusetts. Except that Mass Mutual told
“The Globe” that the company didn‘t give Senator Brown any projected job
losses associated with the bill. What they gave him was their estimate of
how many jobs were lost in the Massachusetts financial sector to the
recession. They told him that was about 33,000 jobs.
And even that totally unrelated number, it turns out was—again
quoting from “The Globe”—“dramatically inflated, the company
acknowledged.” Nonetheless, Mass Mutual telling Scott Brown erroneously
that 33,000 jobs were lost to the recession somehow turned into this—
(BEGIN VIDEO CLIP)
BROWN: The bill that‘s being proposed by the banking chairman
dramatically affects businesses, Mutual—for example, Liberty Mutual,
Mass Mutual, these folks are caught in that regulation as well, and it‘s
going to cost potentially 25,000 to 35,000 jobs.
(END VIDEO CLIP)
MADDOW: Just out of thin air. There‘s a number. I heard that
number, once about something. On national television—just thin air.
Scott Brown declares that nearly 1/5 of Massachusetts bankers will lose
their jobs if Wall Street reform passes.
When we asked Mass Mutual for a clarification today, they sent us this
statement, which is classic. Quote, “We are one of many financial
institutions that have discussed the proposed financial regulatory reform
bill with Senator Brown.”
We asked them to clarify and like add some detail. That‘s it. That‘s
all they‘d give us. But at least they got back to us.
I cannot say the same thing for Senator Brown. We also called his
office today for a clarification on his “1/5 of Massachusetts bankers will
lose their jobs” declaration. And they asked what show we were calling
from, and then we told them, and then they never called us back. It‘s not
really anything new with them. They never, ever call us back about
anything even when they say they were going to.
Like a teenager in love, we shall wait by the phone patiently,
impatiently, whatever. At this point, we‘re just excited to find out what
he is going to make up next.
Joining us now is Chris Hayes, Washington editor of “The Nation”
Chris, thank you so much for joining us tonight. Good to see you.
CHRIS HAYES, THE NATION: Good to see you, too, Rachel.
MADDOW: So, what happened to the unified Republican opposition to
Wall Street reform?
HAYES: Well, I‘m not quite sure it was ever quite as strong as they
projected. But I basically think there‘s two things happening. One is
that the politics just aren‘t very good. I mean, Noam Scheiber in “The New
Republic” has a really good piece about how this reform is actually gotten
a little stronger recently. And one of his sources says, compares it to
what happened to Sarbanes-Oxley back in the early part of the decade and
when WorldCom came out, it really strengthened the push behind Sarbanes-
Oxley because you couldn‘t say anymore it was one-off.
And they said it was the same with this Goldman Sachs SEC charge. And
you‘re going to see more charges down the pike. I mean, from everything we
know, it looks Countrywide might be next. There are other firms that might
be in the crosshairs of regulators. All of that is reminding people of
exactly who the villains are in this drama. And I think that‘s making the
politics much more difficult for the GOP.
MADDOW: But then, we did see in the Republicans initial pass at this,
we saw that their strategy against this was not to say we‘re siding with
the bad guys and hey, they‘re not that bad. They said, this is a—what
it is, a bailout bill—yes, it‘s a bailout bill.
MADDOW: Totally disassociated from the facts but they were willing to
go there anyway. That talking point has fallen apart.
Do we yet know what the sort of next basis of opposition is going to
be or do you really think this means they‘re just not going to oppose it?
HAYES: Well, it will be really interesting to see. I mean, in that -
in that respect, what you just pointed out and the Corker clip you
played, Corker played a really interesting role here because, I think, you
know, Bob Corker and I have different views of the future of financial
regulatory reform. But he did something that Chuck Grassley did not do
during health care reform.
Remember, Chuck Grassley was one of the main interlocutor of the
Democrats and at that same time, he was going back to his constituents and
essentially reaffirming the death panel lie. What Corker did today was he
actually, I think, in good faith, said, no, that‘s not true. That‘s not
the way the bill works. In doing that, I think, is a fundamental signal of
a kind of good faith investment in the policy outcome which whether you
agree with him on policy or not, it‘s just the threshold needed to actually
legislate. That being present, I think, actually makes a difference.
MADDOW: Do you think that means that Bob Corker ends up being a
Republican vote for financial reform? Do you see anybody else out there
who‘s a likely pickup, as they say?
HAYES: Well, look—I mean, it‘s the same group of people—it‘s
possible it gets enough. I mean, the one thing I would say, just to sort
of balance out the good news of Bob Corker acting semi-responsibly is that
progressives should really scratch their heads and wonder: if you can pull
a bunch of GOP senators on to this bill, whether the bill is as good as
it‘s being billed.
I mean, that should really make you question the actual content of the
bill. You wonder if the GOP is able to sort of come onboard this bill, if
it‘s going to offer the kind of fundamental change after the biggest crisis
in 80 years, that‘s really necessary.
MADDOW: On the issue of Scott Brown, Chris. He is turning to be a
hoot as a senator.
HAYES: That was Palin-esque. I mean, that was amazing.
MADDOW: You just try—you try to diagram the sentence, and it‘s
like, wow, this is way above my pay grade. But—I mean, he‘s been
interesting so far, mostly because he keeps getting caught cold making
stuff up and then refusing to take it back even when he gets really nailed
on it. But I wonder if Scott Brown could be a constructively engaged
Republican on this. I mean, there‘s a possibility that he really just
doesn‘t understand what he‘s voting on and what he‘s talking about, and so,
he‘s not going be constructive because he‘s not capable of it.
MADDOW: But there‘s also the possibility that he just came across
poorly in his interviews and he might actually be interested in working
with Democrats. Do you have a sense of which it is?
HAYES: Well, look, the president and the White House clearly thinks
it‘s the latter, right? Because the president is calling him from Air
Force One today. And, you know, they got his vote on the jobs bill, which
is one of his first votes, which signaled, I think, to people that, yes,
you know, this is someone who might vote his state constituents desires
rather than, you know, the tea party sort, et cetera.
I mean, what‘s clear is that it‘s not just Scott Brown—a lot of
people in the United States Senate, I can tell you from doing some
reporting on this, have no clue about this bill. They have no clue about
financial reform. They have no clue about what‘s good and what‘s bad.
They are getting their talking points from leadership.
If you grab any of them, and this is actually on both sides of the
aisle and ask them about the details of this bill, they wouldn‘t do a lot
better than Scott Brown. So, I think it‘s going to be one of this
decisions that ultimately the leadership is going to be making at the top
that‘s going to filter down.
MADDOW: That is so depressing—so depressing. I will tell you, I
have found that—what you just described on the financial reform
legislation, when I have talked to senators, not staffers but actual
senators, off air, off-camera, off the record, about filibuster reform, I
have found the same thing. A shocking level of just basic ignorance on
what it is that they do for their jobs.
MADDOW: It‘s sometimes amazing.
HAYES: A lot of it is—there‘s a lot of specialization which takes
place. So, if you‘re dealing with an issue with a sitting legislator and
it is not their committee, you know, they‘re not—that‘s not something
they‘re going to have a really deep command of, particularly when you‘re
dealing with something as complex as this.
MADDOW: Good reminder, very depressing.
Chris Hayes, Washington editor of “The Nation”—thank you for your
time tonight and for using interlocutor in a sentence so well. Appreciate
HAYES: We always try to bring it. Thank you, Rachel.
MADDOW: Thank you.
MADDOW: It was a great night to mark the return to this show of Nobel
Prize-winning economist Paul Krugman. Given the new big fight on Capitol
Hill and Goldman Sachs and the economy, it feels like he is here in the
nick of time.
And what do you call an angry gathering of armed people spouting anti-
government rhetoric on the anniversary of the Oklahoma City bombing? By
their account, it‘s called a lovefest. And at this lovefest, one of them
talked about wanting to tar and feather me.
MADDOW: Washington, D.C. has by far the most interesting license
plate in the country. See, it says there on the bottom, “taxation without
representation.” That is not a salute to the Revolutionary War and the
colonist. That is the current status of residents of Washington, D.C.,
Washingtonians pay federal taxes but they have no voting
representative in the federal government. And their best chance in years
to rectify that injustice today went kaput. D.C.‘s nonvoting delegate to
Congress, Eleanor Holmes Norton, pulled a bill that would have given D.C.
an actual vote in the House.
Even though Democrats thought they might have been able to pass that
bill this year, gun rights supporters had attached to it what they a poison
pill amendment. The amendment would have gutted D.C.‘s locally passed gun
laws. The amendment was drafted by the NRA.
Eleanor Holmes Norton describe what it would do as, quote, “a person
in the district would be able to walk on the streets carrying an assault
weapon slung over her shoulders or with concealed weapons. D.C. might not
be able to ban guns at public and charter schools.” She added, “These
provisions are so over the top, they are unworthy of serious
So, the majority—black majority, Democratic-leaning residents of
Washington will continue to be taxed by the federal government without
being allowed to elect a voting representative in that government. And
it‘s because pro-gun politicians from other states think they should make
decisions for D.C. about public safety instead of letting D.C. decide for
And somehow, someone, somewhere will try to tell you those politicians
are acting in a way that should be called conservative. If that‘s true,
then the word conservative has lost all meaning.
MADDOW: It‘s Earth Week at MSNBC. Saving our planet‘s future is up
to all of us. For simple things that you can do live greener and help the
environment, go to Green.MSNBC.com. Green matters here.
(BEGIN VIDEO CLIP)
UNIDENTIFIED SPEAKER: This is not a hatefest. It is a lovefest.
It‘s a lovefest.
So, turn around, go to the person next to you and high-five them
because you are the Special Forces. You are the elites of the American
guns right movement, which without the gun rights movement, there would be
OK. Now, there‘s a certain reporter made comments, Rachel Maddow—
and I have to say to her: it‘s a good thing that this is a lovefest,
otherwise, we‘d tar and feather you.
(END VIDEO CLIP)
MADDOW: There were two would be armed pro-gun rallies in and near
Washington coinciding yesterday with the 15th anniversary of the bombing of
the Alfred P. Murrah Federal Building in Oklahoma City. That shout-out you
just heard to THE RACHEL MADDOW SHOW there came during the rally that was
in Washington, D.C. That‘s the one where people weren‘t actually armed
because if they were armed, that would have been against the law in D.C.
But demonstrators in Virginia were very much armed. They gathered
initially on national parkland were—thanks to a law signed by President
Obama earlier this year—expanding gun rights in national parks, it was
perfectly legal for them to carry weapons. It must have been sort of
bamboozling and frustrating to the people who were there to complain about
their gun rights being impinged by President Obama that they were only able
to be there in that way because he expanded their gun rights.
That said, as you can see, there weren‘t actually all that many people
at either of this pro-gun rallies. Several estimates put dozens at the
armed rally in Virginia and hundreds at the unarmed rally in Washington,
Those low numbers though didn‘t stop an actual member of Congress from
turning out to address this teeny tiny group of people with empty gun
holsters at the Washington rally.
(BEGIN VIDEO CLIP)
REP. PAUL BROUN ®, GEORGIA: Fellow patriots, we have a lot of
domestic enemies of the Constitution and they are right down the Mall, in
the Congress of the United States. And right down Independence Avenue in
the White House, it belongs to us. It‘s not about my ability to hunt,
which I love to do. It‘s not about the ability for me to protect my family
and my property against criminals, which we have the right to do. But it‘s
about—it‘s all about us protecting ourselves from a tyrannical
government of the United States.
(END VIDEO CLIP)
MADDOW: That‘s what we‘re going to use our guns for.
That wasn‘t just some random guy at the rally. That was a congressman
Congressman Paul Broun of Georgia—his remarks on the occasion of the
15th anniversary of the bombing in Oklahoma City that killed 168 people
that was carried out by an anti-government extremist.
Leading up to that grim anniversary, President Clinton delivered a
speech in Washington reflecting on the response to the Oklahoma City
bombing at the time and what we can do as a nation to prevent such a thing
happening again. To that end, the former president remarked on the
difference between criticizing the government and inciting violence against
the government and people who work for it.
(BEGIN VIDEO CLIP)
WILLIAM J. CLINTON, FORMER U.S. PRESIDENT: We can‘t let the debate
veer so far into hatred that we lose focus of our common humanity. It‘s
really important. We can‘t ever fudge the fact that there is a basic line
dividing criticism from violence or its advocacy.
What we learned from Oklahoma City is: not that we should gag each
other or that we should reduce our passion for the positions we hold, but
that the words we use really do matter because there are—there is this
vast echo chamber and they go across space and they fall on the serious and
the delirious alike. They fall on the connected and the unhinged alike.
(END VIDEO CLIP)
MADDOW: Those remarks and President Clinton echoing them in a written
op-ed in the “New York Times” have proved to be upsetting for some
commentators on the political right.
(BEGIN VIDEO CLIP)
SEAN HANNITY, FOX NEWS HOST: So I guess, you can‘t be critical. You
can‘t say socialism exists. You can‘t be critical of government.
I thought this was the highest form of patriotism when the criticism
was aimed at George W. Bush. Something‘s happened. I must have missed it.
What happened here?
REP. MICHELE BACHMANN ®, MINNESOTA: Well, apparently, it‘s hate
speech when it‘s on the right and it‘s not hate speech when it‘s on the
left. So, you know, go figure where that comes from.
(END VIDEO CLIP)
MADDOW: Rupert Murdoch‘s “New York Post” editorial board took this
line one step further, not just criticizing President Clinton for
cautioning against inciting language, but actually blaming the Clinton
administration for the Oklahoma City bombing, saying, quote, “McVeigh never
cited talk show hosts as inspiration. Rather, he pointed a finger at
Clinton‘s own administration. Oklahoma City ‘was a retaliatory strike,‘
McVeigh wrote in a letter to the media, ‘a counterattack from the
cumulative raids and subsequent violence and damage that federal agents had
participated in over the preceding years including, but not limited, to
It‘s “The New York Post” explaining how really, if you think about it,
the Oklahoma City bombing was the federal government‘s fault.
They weren‘t the only voice on the right to go there and to also lash
out at President Clinton.
(BEGIN AUDIO CLIP)
RUSH LIMBAUGH, RADIO HOST: Let me ask President Clinton what words
caused Timothy McVeigh to act? Name one. I want to know what words and
who spoke them. All I‘ve ever heard is that Timothy McVeigh was outraged
over the government invasion led by Janet Reno of the Branch Davidian
compound in Waco, Texas, and the Murrah Building was blown up on that exact
date two years later. McVeigh was inspired by anybody‘s words, he was
inspired by Mr. Clinton‘s deeds.
(END AUDIO CLIP)
MADDOW: If you want both violence-inciting language and the
sympathetic explanation of Timothy McVeigh‘s motivation to bomb a United
States federal building and kill people in it, look no further than the
Second Amendment March, the one held yesterday in Washington, D.C. on the
anniversary of that bombing.
(BEGIN VIDEO CLIP)
LARRY PRATT, GUN OWNERS OF AMERICA: I look around. It is so good to
see all these terrorists out here. Janet Napolitano, she figured as
governor of Arizona that we didn‘t have a border problem. But she knows
who the real enemy is.
And Bill Clinton has been running cover for her, too. Watch out how
you guys speak out there. You know, words can have consequences.
Remember Oklahoma City? Yes, I do. And I also remember the Waco
barbecue that your attorney general gave us. Thanks a lot.
We‘re in a war. The other side knows they‘re at war because they
started it. They‘re coming for our freedom, for our money, for our kids,
for our property. They‘re coming for everything because they are a bunch
(END VIDEO CLIP)
MADDOW: It is strategically easier to complain about being accused of
inciting violence unfairly when you are not at the time speaking to a crowd
carrying signs threatening to shoot the president.
We‘ll be right back.
MADDOW: The interview tonight is Paul Krugman, Nobel Prize-winning
economist and columnist with the “New York Times.” Mr. Krugman you are the
person I most want to talk to right now about Wall Street and the economy.
Thanks very much for your time.
PAUL KRUGMAN, NOBEL PRIZE-WINNING ECONOMIST: Sure. Good to be on.
MADDOW: So Goldman Sachs - huge earnings announced today right after
the SEC charged them with fraud. We know that Goldman fraud case is sort
of maybe changing the politics a little bit around Wall Street reform. How
important is what they are accused of?
KRUGMAN: Well, I mean, the specific thing is not that big and the
question - basically, they are accused of setting up things, you know,
investments that were designed to fail so that important clients who were
betting they would fail could make money.
That sort of thing - we don‘t know how widespread it was. We
don‘t know how big a deal. It certainly didn‘t cause the crisis, but it
may have made things worse and mostly, it just, you know - it gives you a
picture of our really rotten financial system which is a critical part of
the whole story of financial reform.
MADDOW: Is there anything in the financial proposal - financial
reform proposal that‘s out there now that would prevent the kind of fraud
that Goldman Sachs is accused of?
KRUGMAN: It is not clear. I have been actually having a hard time
figuring this out which probably means that the answer is no.
I mean, the proposals that are out there would make it - would
require that derivatives - and I can‘t explain that because they are
complicated which is the point in a way - that they be traded a lot more
openly, more transparently on recognized exchanges, which would have made
this kind of thing more visible and possibly headed it off.
But probably, it needs to be tightened up. But I think, again,
the main thing is not so much would the reform specifically prevent this
thing as it is a reminder that Wall Street bankers are not your friends and
cannot be trusted to do the right thing.
MADDOW: You wrote recently that the financial sector has essentially
become a racket, that it‘s essentially predators and prey. And you are
either one or the other right now.
When you mention that derivatives are hard to explain and that is
the point - they are complicated and that is point - do you think that the
generation of complex financial instruments in the last generation in Wall
Street has in part been to stay ahead of regulation, to stay ahead of even
due diligence by the people involved at the sort of lower end of the food
chain in finance?
KRUGMAN: Yes. I mean, it is starting to look - I mean, you know,
they were sold. These complex things were supposed to diversify risk.
They‘re supposed to make the system safer. It has now been glaringly
obvious that they actually increased the risk, that they concentrated it,
that they created lots of promises that couldn‘t be honored in the clinch.
So, yes. I mean, it is kind of a running game we have here.
Now, people talk about - well, we mustn‘t stop financial innovation. And
then you say, well, name a financial innovation that has clearly been
beneficial and you are not allowed to use ATMs.
And usually, that stops the conversation because nobody can come
up with anything that was clearly a good idea in all of this, you know,
vast proliferation of stuff.
MADDOW: Well, it has made a very small number of people dramatically,
dramatically wealthy in a short period of time. The Wall Street
billionaires aren‘t just the firms. They are the individuals, the hedge
fund managers and so on.
KRUGMAN: That‘s right.
MADDOW: And in terms of their efforts to stay unregulated, is it - I
mean, do you think it‘s really just to keep the con going so they can keep
essentially dupes out there that they can relieve of their money? Or is it
because they do think that there is something that could be useful for the
KRUGMAN: Well, you know, everybody - nobody thinks he is a villain.
Everybody imagines that they are doing something good. So I would imagine
that most of these people sincerely believe that what they do is good for
the country even as they - some of them are quite deliberately duping
people, you know, a little bit of double think there.
But the point is that they are - you know, they‘ve got this
incredibly lucrative business which is of questionable, arguably negative
value to the economy but absorbs a lot of resources and pays them a lot of
money. So of course, they are trying really, really hard to defend it.
MADDOW: What is good, do you think, about the proposal for Wall
Street reform that‘s out there right now? What is the most important thing
that the proposal that‘s out there now would do to protect us from a
financial crisis happening again?
KRUGMAN: OK. Well, you know, there is actually - there are four
different things. Probably, the most important is thing - resolution
authority. You know, we had a stable financial system from the mid-1930s
to about 1980 based around the FDIC insuring deposits, but also regulating
banks and having the ability to seize a bank if it‘s basically going under,
protect the depositors and clean out the other guys.
We did not have that in clear legal form. So when we were having
debates about bank - nationalizing weak banks in early 2009 - you know, it
is a highly debated issue. But one thing that was a real problem was, it
wasn‘t clear exactly where the authority was for something that was
You know, an ordinary, you know, Jimmy Stewart‘s bank you knew
how to seize. But Citigroup - it wasn‘t quite clear what the legal
authority was. So this would bring us back to - partly at least to this
kind of system that did so well for about 45 years. That is the biggest
Regulation of derivatives, forcing them into the open and to
exchanges where you can see what is happening is a big thing. Protecting
consumers is a big thing. Requiring that banks have higher capital if they
basically have more stockholders‘ money at stake and not so much borrowed
money - that‘s a big thing.
All of those would - you know, are they enough to prevent another
financial crisis? We don‘t know. But they would certainly help. They
would certainly make it less likely and less severe when it happens.
MADDOW: When the president who is not a president who is given to
threatening vetoes willy-nilly - when he recently threatened to veto
financial reform if it doesn‘t regulate derivatives, do you think that was
the right move?
KRUGMAN: Yes, it was, because, you know, this is - you don‘t want a
cosmetic reform. You want something that‘s real. And derivatives is now -
what I hear, is the sticking point. They actually - you know, for what
it‘s worth, the administration people - they think that Republicans are
going to cave on consumer protection because they think it isn‘t going to
be that big of a deal.
They will probably, in the end, cave on resolution authority.
But they‘re going to try and hold out to keep those derivatives, basically
to keep the racket going. So this is where the sticking point is and he is
prepared to hang tough or at least so he says.
MADDOW: We have been talking a lot about the politics, trying to
understand, not only the substance of the Republican opposition but also
its likelihood of successfully stopping (UNINTELLIGIBLE).
KRUGMAN: You are wasting your time on the substance thing. There is
no substance. I mean, it‘s entirely - you know, there is no coherent case
there. But yes, the politics. Sorry. Go ahead.
MADDOW: No, that‘s exactly what I was going to ask you. I mean, can
you help? How has the Republican Party been making either criticisms on
the existing bill or proposals for what they would do instead that makes
sense to you as an economist?
KRUGMAN: No. I mean, it is - well, first of all, it‘s obvious that
they are actually, you know, huddling with the bankers, huddling with Wall
Street to figure out ways to stop this thing and then proclaiming that what
they‘re doing is really preventing future bailouts of Wall Street.
But no, there has been nothing there. I mean, if there has been
no proposal - the only thing they have been doing is claiming that
resolution authority is just setting you up for future bailouts and we
should just promise not to have future bailouts.
And as I‘ve written, it‘s just like saying that we have solved
the problem of fires by abolishing the Fire Department and then that people
will know that their buildings are burned down and so they won‘t let it
happen. It just not - it is not coherent. It is a dangerous idea, if
MADDOW: Nobel Prize-winning economist and columnist with the “New
York Times,” Paul Krugman. I always feel very lucky when we can get you to
be on the show. Thank you for making time for us.
KRUGMAN: Thanks a lot.
MADDOW: Thanks. So there is a love story to tell tonight. It
matches the new very conservative Sen. John McCain of Arizona and what is
described as the country‘s most retrogressive, mean-spirited and useless
anti-immigrant law. In politics, as in the 1970s, love the one you‘re
with. Stay tuned. We‘ll be right back.
MADDOW: So it‘s been a long time since the day‘s headlines demanded a
new installment of THE RACHEL MADDOW SHOW transcript-based, reenactment
theater. But today is the day. It takes place in the state legislature.
It involves areas of human anatomy that I‘m very uncomfortable talking
about and it has a big surprise ending. That is coming up.
But first, a couple of holy mackerel stories in today‘s news.
The new immigration bill that has now passed both the House and Senate in
the State of Arizona has been described by its opponents as, quote, “harsh
and mean-spirited,” as “one of the harshest assaults on basic civil rights
in recent American history,” and as “the country‘s most retrogressive,
mean-spirited and useless anti-immigrant law.”
All of that sounds like hyperbole. It sounds a bit over-the-top,
a bit blustery until you read the actual bill and you realize, “Oh, my
stars, what country did this come out of?” SB 1070 in Arizona makes it a
crime to not be carrying papers that document your citizenship or
The bill directs police officers to arrest anyone on the, quote,
“reasonable suspicion that they are here in the U.S. illegally.”
Reasonable suspicion - meaning, you know, they look jet-lagged or they are
suspiciously familiar with the metric system or maybe they prefer soccer to
If you don‘t look like what an Arizona police officer considers
American, that police officer can stop you on that suspicion alone and
arrest you if your papers are not in order. Papers, please. The bill has
all but been endorsed by Sen. John McCain of Arizona.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-AZ): There is a fear amongst some people,
particularly the further away you get from the border of the, quote,
“invasion” that they are experiencing.
I am convinced and I believe with all my heart we need a
comprehensive approach to immigration reform. That means securing our
borders but it also means a temporary worker program that works.
(END VIDEO CLIP)
MADDOW: I‘m sorry. Very embarrassing. We seemed to have played the
wrong tape. Yes. Mislabeled. I‘m sorry. That was definitely
presidential candidate John McCain. Here‘s the John McCain that is running
for re-election now in Arizona - totally different guy, it turns out.
(BEGIN VIDEO CLIP)
MCCAIN: The state of Arizona is acting and doing what they feel they
need to do in light of the fact that the federal government is not
fulfilling its fundamental responsibility to secure our borders.
It‘s the people whose homes and property are being violated. It
is the drive by - the drivers of cars with illegals in it that are
intentionally causing accidents on the freeway.
(END VIDEO CLIP)
MADDOW: You know that freeway? The Republican governor of Arizona,
Jan Brewer, has five days to decide whether or not she is going to sign
this remarkable bill. If she does, she will earn herself a place in the
history of civil liberties in America. Her picture will be there under the
phrase, “Papers, please.”
And finally, an update on the Icelandic volcano and its ash cloud
that has crippled global air travel and has created some of the most
beautifully stirring images of the year.
First, the good news - British airports and air space reopened
today. The very first plane to land at Heathrow in almost a week was a
British Airways flight from Vancouver. Throughout Europe, about half of
today‘s scheduled departures will get off the ground.
And as of this evening, in addition to Britain, at least some
airports have opened in France, Italy, Ireland, Germany, Austria, the Czech
Republic, Russia and the Netherlands.
Planes are able to fly now because the ash cloud is lower,
allowing any high-altitude jet that can fly at least 20,000 feet to fly
above it. So that is the good news.
Now, for the bad news - the airline industry estimates the
volcano and its subsequent ash cloud of doom has cost more than $1 billion
because of 95,000 canceled flights. Also, this volcano is not the only
volcano in town. There is another much bigger volcano in Iceland that, if
you go by the historical pattern, may very well erupt in the next six
I know that is a weird thing to predict and there is no guarantee
here, but this other bigger volcano has done so every single time the
smaller volcano erupted in the last 2,000 years.
Little volcano first - that‘s the one that‘s already erupting
now. Second volcano within six months - every time for the last 2,000
years. Invest in trains now and teleconferencing and “I hate Icelandic
volcanoes” t-shirts to be sold in airports.
MADDOW: Coming up on “COUNTDOWN,” Keith‘s special guest is Democratic
Congressman Raul Grijalva of Arizona. He is now calling for a boycott of
his own state because of the new “papers, please” immigration legislation
And just a minute on this show, we have a new episode of THE
RACHEL MADDOW SHOW state legislature, transcript-based reenactment theater.
Probably our best episode ever. That‘s next.
MADDOW: Georgia is on the cutting edge. Don‘t let anybody tell you
differently. Georgia, at least their state legislature, is way ahead of
the game. Georgia state legislature is so completely done with addressing
problems that do exist. They have moved on to preemptively addressing
problems that do not exist, namely the government implanting microchips
into people against their wills.
Even though no one is actually being involuntary implanted with
microchips by the government, the Georgia state legislature is working
proactively to make sure that anyone who wants to do such a thing will know
it wouldn‘t be OK in Georgia.
Georgia‘s Microchip Consent Act of 2010 is sponsored by two state
senators who are both named Chip. No, I‘m not kidding - Chip Pearson of
Dawsonville and Chip Rogers of Woodstock, both Republicans. So the two
Chips, microchip bill makes the implantation of a microchip into a human
being against his or her will a misdemeanor.
The legislation has already passed the State Senate. And just a
few days ago, it was brought before a key committee in the State House.
And that‘s where lawmakers heard about six minutes of testimony
from a woman who, in the words of “Atlanta Journal-Constitution” columnist
Jim Galloway, quote, “began to lead the assembled lawmakers down a path
they didn‘t want to take.”
The woman told them - actually, you know what? We debated sort
of all day about how to tell the story. And I have to tell you, there are
details in this story that I am not capable of saying out loud even when
nobody is watching, because I get all blushy and -
So there‘s I think only one good way to tell the story in its
entirety - by acting it out, using people who look and sound nothing like
the real ones in a setting totally different from the one where it
So here with a cut-down version of arguably the most awesome six
minutes of Georgia House Judiciary Committee history of THE RACHEL MADDOW
SHOW players with the new episode of THE RACHEL MADDOW SHOW state
legislature transcript-based reenactment theater.
“CHAIRMAN”: Does anyone else wish to speak to the committee on this?
UNIDENTIFIED MALE: I‘m a resident of De Kalb County. And I‘m also
one of the people in Georgia who has a microchip. And I‘ve been talking to
the different legislators and trying to get help and trying to outlaw the
implants - microchips.
They infringe on issues that are fundamental to our very
existence. Our rights to privacy, our rights to body integrity, the right
to say no to foreign objects being put in our bodies, specifically the
right to refuse microchips being put into our body by the government.
The right to work without being tortured by co-workers who are
activating these microchips by using their cell phones and other
electronics devices. Microchips are just like little beepers.
If you will, imagine having a beeper in your rectum or in your
genital area, in the most sensitive area of your body and beeper number
displayed on billboards throughout the city.
KENT JONES, MSNBC: Ma‘am, did you say you have a microchip?
UNIDENTIFIED MALE: Yes, I do. This microchip was put in my vaginal-
JONES: And you‘re saying this was involuntary?
UNIDENTIFIED MALE: Involuntary - yes. I‘m in a U.S. Appeals Court
right now. This case has been going on for the last eight years.
UNIDENTIFIED MALE: Who implanted this in you?
UNIDENTIFIED MALE: I feel like mine is -
UNIDENTIFIED MALE: You don‘t know who did it?
UNIDENTIFIED MALE: Yes, I‘m one of the federal government research
with this microchip.
UNIDENTIFIED MALE: And who in the federal government implanted it?
UNIDENTIFIED MALE: This - it‘s the Department of Defense, and this is
the court case that is coming before the U.S. Appeal court.
UNIDENTIFIED MALE: Thank you, ma‘am.
MADDOW: Ladies and gentlemen, THE RACHEL MADDOW SHOW players. OK,
though, it‘s not over. Do you want to know what happened after that? The
committee voted to approve the bill. Not kidding, they voted for the bill.
Not kidding. End scene.
MADDOW: Volcanoes, earthquakes, bizarre heat waves, windstorms,
killer ash clouds. With the news of natural phenomena starting to read
like the plot of a bad science fiction, pestilence and plagues movie, we
need to turn to our post-rational science correspondent for a little
explanatory help. Hi, Kent Jones.
JONES: Hi, Rachel. There‘s been astonishing scientific breakthroughs
JONES: Thanks in part to noted geologist Rush Limbaugh.
MADDOW: Oh, no.
JONES: Yes, yes.
(voice-over): Scientists may think they know what caused the
Icelandic volcano eruption. But clearly, they‘re not familiar with the new
RUSH LIMBAUGH, CONSERVATIVE RADIO TALK SHOW HOST: A couple days after
the health care bill had been signed into law, Obama ran around all over
the country and said, “Hey, I‘m looking around here. It hadn‘t opened up.
No Armageddon out there. The birds are still chirping.” I think the earth
has opened. God may have replied -
UNIDENTIFIED MALE: Health reform again brought to you by Nancy
LIMBAUGH: Earth has opened up. I don‘t know whether it‘s a rebirth
JONES: Fascinating. When God wants to punish America for its
socialist excesses, he‘s unleashing hell in Iceland. Meanwhile, in Iran, a
senior cleric has a bold new hypothesis about what causes earthquakes,
quote, “Many women who do not dress modestly lead young men astray and
spread adultery in society, which increases earthquakes.” And all this
time we‘ve been chasing tectonic plates. Hemlines, people, not fault
And finally, using the same thought processes Rush Limbaugh and
the cleric used upon their conclusion, scientists now believe that the
gradual warming of the earth and the flowering of dormant plants is not
caused by a seasonal tilt of our planet towards the sun. The coming of
spring is actually caused by Mitt Romney. Everything we know is wrong.
MADDOW: I love that God might strike us down and make British people
not able to fly anywhere, all for health reform.
MADDOW: Very focused.
MADDOW: Yes. Thank you, Kent. Appreciate that. That does it for us
tonight. We‘ll see you again tomorrow night. “COUNTDOWN” with Keith
Olbermann starts right now. Good night.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
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