The Ed Show for Wednesday, April 6th, 2011

Guest Host: Chris Hayes

Guests: Rep. Barney Frank, Heather Boushey, John Nichols, Heather Boushey,

Jonathan Alter

CHRIS HAYES, GUEST HOST:  Good evening.  I‘m Chris Hayes, in for Ed Schultz.

The president, Majority Leader Reid and Speaker Boehner have been holding talks on the budget in the White House for just over one half hour.  We are told that when that meeting concludes, we may hear from the president and we do expect to hear from Senator Reid.  And we will bring all of their remarks to you live.  So, stay tuned.

We are just days away from a possible government shutdown.  And if the GOP strategy has been to: (a), convince both Democrats and their own base that they are perfectly willing to shut the government down but, (b), avoid a government shutdown, then Republicans may have run straight into part b of that plan.

The president and vice president began their meeting with Speaker Boehner and Senate Majority Leader Reid less than an hour ago.  That meeting is ongoing as of this minute.  Speaker Boehner had said that high level meetings with the president had been, quote, “unproductive” and that both Reid and Boehner realized they would have to do it themselves.  According to that, according to Congressman Michael Rogers of Alabama.

Publicly, Speaker Boehner is decrying the president‘s leadership while insisting that Republicans do not want a shutdown.


REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE:  The president isn‘t leading.  He didn‘t lead on last year‘s budget and he clearly is not leading on this year‘s budget.  Republicans have no interest in shutting down the government.  Shutting down the government, I think, is irresponsible and I think it will end up costing the American taxpayers more money than we‘re already spending.


HAYES:  But now, Democrats, after already ceding rhetorical and actual ground to Republicans on how much might be cut for the rest of this year, may finally have the upper hand in the dwindling hours.  Speaker Boehner has told his caucus this, according to Republican lawmakers who attended a 90-minute meeting last night: “The Democrats think they benefit from a shutdown.  I agree.”

And a new NBC News/”Wall Street Journal” poll may back up that conclusion, a plurality of respondents believe that congressional Republicans would be most to blame for a government shutdown.  The full picture is a bit more complicated because 40 percent believe it would either be congressional Democrats or President Obama‘s fault.

The strange cross pressures Republicans find themselves subject to might best be exemplified by today‘s award winner for talking out of both side of her mouth, Congresswoman Michele Bachmann.  At a Tea Party rally today, she blamed an impending shutdown on Democrats and tried to rally the crowd around that message.


REP. MICHELE BACHMANN ®, MINNESOTA:  Their goal, as they‘ve already stated, is to shut the government down.  That‘s their stated goal, and you know what they want to do?  They want to blame it on you.  They want to say that it‘s your fault.


HAYES:  But it was Congressman Mike Pence at the same rally who more accurately captured the wishes of the Tea Party crowd.


REP. MIKE PENCE ®, INDIANA:  And if liberals in the Senate would rather play political games and force a government shutdown instead of accepting a modest down payment on fiscal discipline and reform, I say shut it down.




HAYES:  Shut it down.  Shut it down.

Earlier in the day, on our own network, Congresswoman Bachmann said this—


BACHMANN:  I firmly believe that by Friday, a deal will be made.  I doubt that we‘ll see a government shutdown in the final analysis.  I‘m not speaking for the Tea Party Caucus or for other members.  For myself, I cannot vote for the current compromise that we‘re looking at.  I don‘t think it is sufficient because primarily it doesn‘t include the defunding of Obamacare.  So, for me and for me only, I can‘t go down that road.


HAYES:  You caught that, right?  There‘s not going to be a shutdown but I can‘t vote for the bill.

As for the truly ugly part of this, how much will be cut in the remaining months of this fiscal year—well, that depend on who you ask.  Some Republican congressmen still insist the final figure will be somewhere between $33 billion and a whopping $61 billion.

The number two Senate Democrat, Dick Durbin, would not confirm that the number has moved from $33 billion to $40 billion.  The brinkmanship of Republicans has already resulted in billions of dollars of cuts just from the continuing resolutions that have already been passed.  It affected highway funding, education programs, programs designed to arrest climate change as well as reductions in a vast array of discretionary spending while, of course, leaving the Department of Defense essentially untouched.

All of this while the official unemployment rate is around 9 percent, stagnating wages and millions of foreclosures continue to hammer middle class families and threaten the very delicate beginnings of an economic recovery.  We may be looking at death for that recovery by 1,000 cuts as I speak.

Let‘s bring in Congressman Barney Frank of Massachusetts.

Good evening, Congressman.


HAYES: What is your feeling right now about what the ultimate outcome of this?  We‘ve sort of been down this road a bunch of times just in this year.  What do you thing political dynamics are at play and are we going to avoid a shutdown?

FRANK:  I don‘t know.  Clearly, John Boehner doesn‘t want a shutdown as he indicated, but the problem is, as I‘ve said before, if the president and Senator Reid were negotiating with speaker Boehner and Senator Mitch McConnell, it would be one thing.  They are, in fact, negotiating with Boehner, McConnell, the white rabbit and the mad hatter.

And when you get people in there—and by the way, the issue we have here is not simply the number of Tea Party people.  We just heard Michele Bachmann who was seriously delusional, this notion that the Democrats have a goal of a shutdown is just bizarre.  That‘s on par of inaccuracy of the battles of Lexington and Concord into New Hampshire.

But you have more than just the Tea Party themselves but most Republicans who are terrified of losing in a primary to somebody who is a little crazy and this is the problem.  Many Republicans would like to have a compromise but it‘s not clear in the end that their fear of losing to an extremist in a primary will give them the ability to do it.

And from the standpoint of the Democrats, these people won the last election.  I wish they hadn‘t.  They did.  They are entitled to a lot of influence.

They are not, in the American Constitution, entitled simply to write the bill.  Ironically, these Tea Party people seem to think they‘re in England where on election day, if you win a majority in the House of Commons, you are in total control.  But under the American Constitution, we have checks and balance.  You have two-year, four-year and six-year terms.  At any given time, it is people from several elections who have the right to govern.

And so, when you look at the extremism of what they are asking for and the constitutional invalidity of their issue, there‘s a limit, obviously, to what we can do.  And I was encouraged to hear that the public is prepared to give them some of the blame.

So, I honestly don‘t know all the logic, all the rationality is that you don‘t have a shutdown.  But logic and rationality unfortunately are not governing the Republican Party today.

HAYES:  But I want to ask you about this mad hatter dynamic, because that seems like the sort of core of the issue here.  There is—Boehner has this kind of negotiating lever which is borne of precisely that fact.  That‘s a sizable part of his that appears to be quite extreme, unreasonable, perhaps, that people are cowered by these primary threats.

Hasn‘t that already sort of delivered him concrete gains in the negotiating thus far?

FRANK:  No, not necessarily.  That group won the last election decisively.  And so, that‘s what you are seeing.

But it is interesting about John Boehner.  He—I heard him criticize the president for lack of leadership.  The most feckless leader in Washington today is John Boehner.  Time and time again, he has said something and the Tea Party people back him down.

And no, that is not giving him any—as far as we‘re concerned, I think frankly it‘s fear that he‘s going to be driven by these extremists into an unsustainable position and pay a price for it.

HAYES:  Congressman Mike Pence has said that this is not the same environment as 1995.  And that‘s, obviously, the sort of touchstone for everyone in this.

How do you see the politics playing out of this, just in terms of the dynamics of the two caucuses in the House if we actually come down to the brink and there is a shutdown?

FRANK:  Well, let me agree with him in one sense that I think goes against what he would like to do.  And he‘s talking about a shutdown.

We are in several wars.  Now, I wish we weren‘t.  But we should be out of Afghanistan, we should be out of Iraq.  We should not have let ourselves be the primary initiator in Libya.

But when the country is engaged in these wars, shutting down the government is particularly damaging.  Yes, the troops continue to be paid, but a government that‘s coping with the shutdown is hardly what you would want to have at your back if you have troops in the field.

As far as the politics are concerned, I think the Paul Ryan budget has helped us.  The public now understands what the Republicans are trying to get—to end Medicare.  Let me give you a smaller example in the area where I have been concerned, financial services.  Their budget would un-fund in effect financial reform.

If their budget numbers were to pass, the Securities and Exchange Commission and the Commodities Futures Trading Commission couldn‘t do anything about derivatives.  We couldn‘t do anything about what we‘ve put into the bill to try to stop speculation which helps to drive up oil prices.  You couldn‘t get the protection of investors.

And more and more of that is going to be discussed.  I‘m going to have a press conference to talk about it tomorrow.

I think, as people now understand, that what these people are trying to do is, as you said, let defense keep spending money in an almost unlimited way.  Let America be the first responder for the whole world, including for people who ought to be able to defend themselves.  But cut Medicare, make it harder for middle income or lower middle income people to go to college, un-fund financial reforms so that we can—we deregulate derivatives.

I really believe now, most of us are confident that now that the public fully understands the stakes here, they are going to pay a price if their irresponsibility leads to a government shutdown.

HAYES:  Congressman Barney Frank of Massachusetts, proud Massachusetts man who knows his Lexington and Concord—thanks for a lot of your time tonight.

FRANK:  Thank you.

HAYES:  First, it was Bush/Gore, then it was Coleman/Franken.  I‘ll tell you why America will be talking about Prosser/Kloppenburg for weeks to come.

The path to prosperity will lead to fantasy land.  Paul Ryan‘s budget proposal and the fuzzy math that doesn‘t do diddly for the deficit.

We‘ve told you Wall Street speculators to blame for sky-high gas prices.  Now, some of the biggest companies around agree.  Wall Street whistleblower Dan Dicker on why the speculators must be stopped.

Time is up for the FOX News conspiracy hour.  Glenn Beck is getting the boot.


GLENN BECK, FOX NEWS:  What‘s the big, fat chunky guy on TV going to do in his future?


HAYES:  The end of the beck era and why American politics will be better off for it.


HAYES:  At this very moment, President Obama, House Majority Leader Harry Reid and Speaker John Boehner are meeting in the White House to try to resolve the budget impasse that has us headed for a possible government shutdown by Friday.  We believe there will be some remarks from those gentlemen coming up this hour, and we will bring them to you live.

Meantime, be sure to check out our new blog at  There, you will find links to, Twitter and Facebook.

It‘s a short honeymoon for Congressman Paul Ryan.  Yesterday, the pundits were calling him a hero for his budget plan.  Today, they woke up to find out a lot of it is pure fiction.  The incredibly fast rise and fall of Paul Ryan‘s magical budget, next.


HAYES:  At this very moment, President Obama is meeting with Senate Majority Leader Harry Reid and House Speaker John Boehner to attempt to resolve the budget impasse.  We have word there that will be remarks from some, perhaps all of those gentlemen this hour.

So, stay with us.  We will bring those to you live.

All right, Beltway pundits and Republican establishment members spawned all over Paul Ryan‘s federal budget proposal yesterday.  After a day‘s worth of independent analysis, many are now wondering, what were we smoking?  It‘s likely their hallucinations were due to the fact that the large portions of Ryan‘s budget, the foundation upon which he has laid his self-proclaimed path of prosperity are a complete fantasy.

For instance, his wild claims on unemployment.  According to analysis by the Heritage Foundation that Ryan promoted vigorously, his budget would prompt job loss to plunge immediately.  By 2021, unemployment would be at a utopian, preposterous, historically unprecedented 2.8 percent.  Full employment for the win.

Compare Ryan‘s numbers to analysis by the nonpartisan Congressional Budget Office where unemployment never falls below 5 percent.  Heritage Foundation revived their findings upward today, but they‘re still not in line with the CBO numbers.

How about the authors of the Ryan budget?  The congressman told MSNBC he had bipartisan support for his plans for Medicare and Medicaid.


REP. PAUL RYAN ®, WISCONSIN:  Alice Rivlin and I designed these Medicare and Medicaid reforms.  I mean, I—Alice Rivlin was Clinton‘s OMB director.  She was the vice chairman of the Federal Reserve in the Clinton administration.  She‘s a proud Democrat of the Brookings Institution.  And so, these entitlement reforms are based off of those models that she and I works on together.


HAYES:  Not so fast, says Alice Rivlin.  She told Ezra Klein in “The Washington Post” that Ryan‘s elimination of Medicare as a fee-for-service program was too much for her.  Quoting Rivlin, “That‘s a reason for me saying very strongly that I don‘t support the version of Medicare premium support in the Ryan plan.”

What about Ryan‘s biggest boast that his budget plan would substantially reduce the deficit?  Considering that his plan permanently extends the Bush tax cuts, reduces the top income bracket by 10 percent, and burdens seniors, the disabled and children with higher health care costs, the CBO estimates that Ryan‘s plan will actually increase the deficit in the next 10 years.  Under current projections, debt held by the public will grow to 67 percent of GDP by 2022.  Under the Ryan plan, the public debt would reach 70 percent of GDP in the same time frame.

Now, the good news for Ryan is the CBO does project his plan would bring down the deficit over the long term.  The bad news is he could only do so by shifting a ton of Medicare costs on to the backs of private citizens.

Joining me now is Heather Boushey, a senior economist at the Center for American Progress.

Heather, thanks for joining me.


HAYES:  What stuck out to you?  Paul Krugman had a blog post today where he talked about the three unicorns in the public.  What‘s sort of stood out to you as the most unrealistic aspects of what he built into the model?

BOUSHEY:  Well, you already mentioned, the unemployment numbers.  I mean, they are just—they are way out of whack.  But what‘s really interesting about them is that when you compare his—their data and, you know, Ryan got his numbers from the Heritage Foundation, their numbers only predicted employment was a little over the level that it‘s rising right now.  So, in fact, it‘s only a little better than doing nothing.

And the last time that the Heritage Foundation told us that a supply side economic policy would be better than doing nothing was in the early 2000s when we did those Bush tax cuts and they were wildly wrong in that case.  They overestimated job creation by 6.2 million in the 2000s.  So, if they are overestimating job creation this time, you can probably expect that they‘re going to be way off again.

HAYES:  So, the Heritage—the same sort of modelers, right, at the Heritage, when Bush was proposing the tax cuts, ran it through and came up with these announcements that there‘s going to be, you know, free turkeys for everyone, basically.  And those free turkeys never materialized is what you‘re saying.

BOUSHEY:  Not only did the free turkeys not materialized, but things got a heck of a lot worse.  So, it was far worse than it would have been had they done nothing in the 2000s.  And I think that‘s what we‘re looking at today.

This kind of budget is going to be bad for employment.  Not only will we not see the kind of gains they are predicting but it‘s likely to very bad.

But let me talk about one other thing.  The second unicorn, I think, that just popped out at us is they expect that the investment in residential—in residential structures in new homes, will be twice the pace as what it was during the housing bubble.  And so, when you look at how they expect the economy to grow, they expect us to go back to the 2000s, and, of course, not only is that bad policy, but it‘s also not going to happen.

HAYES:  You know, one of the things that I think hasn‘t—there‘s two things I think haven‘t been highlighted enough.  One is the massive amount of tax cuts that are in this, right?  I mean, what kind of order of magnitude are we talking about in terms of what the tax cuts are and who are they there for?

BOUSHEY:  Well, the real kicker here is that they are going to cut the tax rates for the richest 2 percent of us, down to 25 percent.  And they‘re going to keep revenue neutral.  So you know what that means?

HAYES:  Figure that out.  Right.

BOUSHEY:  Yes.  That means the taxes are going up for everybody else.

So, they‘re going to cut spending on all these things that boost incomes for middle class families.  They‘re going to lower taxes for the wealthy.  And they‘re going to increase taxes for everyone else.

This sound like where we‘ve already been in the 2000s.  And it didn‘t work then and it won‘t work now.

HAYES:  Finally, I want to ask you about the cuts that are—Medicare is getting the most attention because this would abolish Medicare.  And, rightfully so, it‘s getting the most attention.  But a lot of the savings is coming from, essentially, a big amount of hand-waving, right?  I mean, he‘s basically saying, OK, we‘re doing this very specific thing with Medicare.  But there‘s a discretionary side.  How did those cuts happen, right?

I mean, isn‘t it basically him just sort of drawing a line downwards?

BOUSHEY:  It‘s a deep, dark line downwards.  And—I mean, it‘s not clear.  You know, we have some details.  We don‘t have all the details yet.  It‘s not clear exactly how he‘s going to do all of this.  But it is certainly the case that this is not going to be good for middle class families.

HAYES:  Heather Boushey from the Center for American Progress, economist—thank you so much.  I really appreciate it.

BOUSHEY:  Thank you, Chris.

HAYES:  Wisconsin is back in the national spotlight.  Wisconsin Assistant Attorney General JoAnne Kloppenburg declared victory over Sarah Palin-endorsed Justice David Prosser.  John Nichols of “The Nation” is here to tell us this fight is far from over.

And big banks come out on top yet again.  Wait until you hear who let them off the hook this time.  That and possible word from the president or Senate Majority Leader Harry Reid or John Boehner, up next.


HAYES:  At this very moment, President Obama is meeting with House—

Speaker of the House John Boehner and Senate Majority Leader Harry Reid.  They are attempting to resolve the budget impasse that has put the government on the brink of its first shutdown in years.  We are told that there will be some remarks from some or all of those gentlemen after the meeting is concluded, probably quite shortly.  So stay tuned.  We will bring those remarks to you live.

Now it‘s time for “The Takedown.”

For years, the country‘s mortgage providers have done everything they could to make money, truth and consequences be damned, assessing hidden late fees, forging documents, foreclosing on people who paid their mortgages.  In other words, totally shady, fraudulent stuff.

So, what happened was that all 50 state attorneys general decided to join forces and investigate these banks, suggesting at one point a $20 billion penalty.

Now, in my humble opinion, that seems like far too little considering how much the banks have raked in and just how epidemic their illegal behavior seems to have been.

Here‘s how Jamie Dimon, the CEO of JPMorgan Chase described these predatory practices: “Some of the mistakes were egregious and they are embarrassing.  But we made a mistake and we‘re going to pay for that mistake.”

Well, here‘s how much the banks are going to pay for it if federal regulators get their way: zero dollars.

According to a document leaked today, it appears that federal regulators have bypassed talked with the state A.G.s and decided to cut their own deal with the banks.  This proposed deal includes no fines.  Instead, the banks will be asked to do little more than swear they‘ll never do it again.

In other words, their penalty for breaking the law will be a pledge not to break the law in the future.  Imagine for a moment all the people accused of robbery in this country who would happily take the same deal.  Worse, the deal takes the pressure off of the banks by deflating the cause of the state attorneys general who were and hopefully still are talking about actual monetary penalties and reform of current practices.

So, essentially, the regulators, agencies charged with protecting the public interest are issuing what amounts to a get-out-of-jail-free card for the banks they are supposed to be regulating.  In fact, I‘d call this nothing more than a legal bailout for the big banks.

Everyone associated with this in the Federal Reserve, the Office of Comptroller of the Currency and the FDIC ought to be ashamed of themselves.

To amend Mr. Dimon‘s statement from earlier—yes, the banks made a mistake.  But we are going to continue paying for it.  And that‘s “The Takedown.”

It is the end of an era on cable news television and for political discourse in this country—a requiem for the chalkboard coming up.

And Governor Scott Walker takes another shot at the people of Madison, Wisconsin, because the election didn‘t go his way last night.  John Nichols, my colleague at “The Nation,” will bring us the latest on a possible recount.  He‘s next.


HAYES:  That shot on your screen is a live shot outside the White House.  Inside the White House, President Obama, House Speaker John Boehner and Senate Majority Leader Harry Reid are having a meeting to resolve the budget impasse, which has brought us to the brink of a government shutdown which will take place on Friday, unless a deal is hammered out. 

We‘ve heard that some or perhaps all of those men will be speaking when the meeting breaks up, which should be shortly.  And we will certainly bring those remarks to you live. 

In the meantime, we turn our attention to the great state of Wisconsin, where an off-year state extreme court election is sending reverberations throughout the entire American political system.  This afternoon, little known Wisconsin Assistant Attorney General Joanne Kloppenburg declared victory over longtime conservative State Supreme Court Justice David Prosser. 

The Associated Press shows Kloppenburg received 740,090 votes and Prosser received 739,886 votes.  The margin is 204 votes.  Under Wisconsin election law, Prosser has three days after the official results have been tallied to request a recount.  Wisconsin election chief Kevin Kennedy believes a recount will be completed by May 15th

The reason, of course, the eyes of many activists are glued to Wisconsin is because of the historic assault on collective bargaining rights launched by the state‘s Republican governor Scott Walker and his legislative allies, and the remarkable progressive grassroots mobilization that‘s come together in response. 

Walker‘s law, which was finally passed last month, is being challenged in state court and will very likely end up in front of the State Supreme Court. 

Which is part of the reason activists on both sides in the state and outside focused their energy on this race.  The other reason was that it‘s the first statewide election since the state‘s politics blew up. 

Kloppenburg addressed the media late this afternoon and somewhat surprising said she doesn‘t think her win was about Governor Scott Walker‘s attack on collective bargaining. 



were not voting for me because I had already decided issues related to the collective bargaining or any other issue that might come before the court.  All of the heightened politicking and exchange of ideas and political disagreements that took place in the legislative and executive branches over the last month did underscore for people how important it was to have an independent and impartial court. 

And that‘s why they voted for me. 


HAYES:  Governor Walker wasn‘t nearly as kind in his response to last night‘s election results.  He said, quote, “I think it‘s pretty clear that you have two very different worlds in this state.  You have a world driven by Madison and a world driven by everybody else in the state of Wisconsin.”

Walker is bitter because the city of Madison overwhelmingly supported Kloppenburg.  And he‘s way off the mark about the rest of his state. 

Get this.  Last fall, Scott Walker rode into the governor‘s mansion by winning 59 of Wisconsin‘s 72 counties.  Last night, Kloppenburg won 19 of the counties Walker won just months ago.  Many of the rural counties that voted for Walker in northern and western Wisconsin were some of this biggest surprises for Kloppenburg. 

This race was maybe our first look at Citizens United in action as well.  Kloppenburg had all the momentum of the unions and grassroots organizers, who had filled the streets of Madison, as well as the capitol over the last couple of months.  Prosser had lots and lots of money. 

According to an analysis of outside spending by the Brennan Center, pro-Prosser groups spent a whopping total of almost 2.2 million dollars, nearly one million more than outside groups who supported Kloppenburg. 

Those numbers are bound to go up when David Prosser files has request for recount, which he is expected to file some time tomorrow. 

Joining me for more on the potential for a recount in Wisconsin, let‘s bring in my colleague from “The Nation” magazine, the one and only John Nichols.  Mr. Nichols, how are you? 

JOHN NICHOLS, “THE NATION”:  It‘s a very good night when I can be on with my friend and colleague, Chris.  Thanks so much for having me. 

HAYES:  All right.  So, you know, a lot of people were watching, biting their nails last night as this remarkably close election came and there‘s the results.  And I think everyone had the feeling of being on a knife‘s edge of like total jubilation at victory or crushing defeat.  Even though the difference is only 200 votes, how important was it for Kloppenburg to declare victory today, do you think? 

NICHOLS:  It was very important.  Look, I‘ve covered a lot of recounts in my life, the Florida recount back in 2000, the Minnesota recount with Al Franken in 2006-2007.  And every political player says that one of the most important things to do, no matter how narrow the margin is, is to declare victory.  Because then when your opponent seeks the recount, you just say, sore loser. 

And the fact of the matter is, this is a very close race.  Either candidate, whoever was behind, was going to ask for the recount.  But I will emphasize something here.  And you got the heart of it there, Chris. 

Those out state counties, particularly a lot of those rural counties that voted for Kloppenburg, those places take a lot of pride in how they count their ballots and how it‘s done.  There‘s a reason why we didn‘t know the results until midday today.  That‘s because some of those northern and western Wisconsin counties, they go to sleep at night and then they come in in the morning fresh, so they can count the ballots well. 

So I have a feeling that Miss Kloppenburg‘s numbers might well hold. 

HAYES:  I wonder what you think the results say about the—this remarkable progressive mobilization we‘ve seen in response to Walker.  On one hand, it looks like a victory.  They essentially ran the same election with the same candidates, right, for state Supreme Court justice five months ago.  And there was a 30-point margin, right, that Kloppenburg lost by. 

At this point, it also looks like this is a bitterly divided and polarized state.  How widely—what kind of lessons can we draw from this result? 

NICHOLS:  Well, six months ago, nobody in Wisconsin knew who Joanne Kloppenburg was except her family and friends.  Six weeks ago, no one in Wisconsin thought she was a viable candidate for statewide office.  Last night and today, we find out that she has apparently beaten one of the senior political figures in the state, a long-serving justice on the state supreme court, who was also the speaker of the state assembly. 

And the fact of the matter is that I think what we saw here is a remarkable mobilization in the streets in February and early March, doing something that we rarely see in America, turning very quickly—pivoting into a political force, taking that energy from the streets, putting it at the doors.

And I got to tell you.  This is a lesson that ought to be learned in states like Ohio and Michigan and all the way up the political food chain to the White House. 

HAYES:  Let me ask you this final question: in terms of channeling that energy, this was the first election since everything blew up in Madison.  Now we‘re going to get these recount elections.  What comes next in the state in terms of these political battles? 

NICHOLS:  I think you mean the recall elections? 

HAYES:  I‘m sorry, the recall elections. 

NICHOLS:  Yes.  You know, we‘re all doing that today, Chris. 

Everybody‘s confusing recount and recall.  All these re words. 

But the fact of the matter is that if indeed Kloppenburg wins, as I do think is very likely now, even through the whole recount process, that‘s going to supercharge the recall process.  When—you know, this movement in Wisconsin has been based on kind of winning each day. 

This movement should never have done as well as it has by all political rules.  And yet, we‘re six weeks into the fight.  The governor still has not implemented his legislation.  Now it appears that someone aligned with him has lost a major post.  That energizes the movement and keeps it going. 

So I think, you know, from strength to strength, the recalls now look like they will do better than ever.  And I think another one may be announced tomorrow. 

HAYES:  John Nichols of “The Nation” magazine, whose roots in the state of Wisconsin go back over 100 years, if I‘m not mistaken, thank you for joining us tonight. 

NICHOLS:  Thanks, Chris. 

HAYES:  Rising gas prices are not just a problem for the little guy anymore.  Now big businesses like Starbucks and Virgin Airlines are feeling the pain as well.  And they place the blame squarely on Wall Street speculators.  We‘ll talk with a Wall Street whistle blower about what we need to do to make our markets work.


HAYES:  In a moment, we will be hearing from President Barack Obama at the conclusion of a meeting he has just held with Speaker John Boehner and Senate Majority Leader Harry Reid.  Those three men getting together in the White House tonight to try to avert a government shutdown.  The government, of course, has been funded by what‘s called continuing resolutions ever since last year when no budget was passed. 

And now President Obama stepping up to the podium in the White House. 

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I‘m going to just have a few quick remarks.  We just had a productive meeting with Speaker Boehner, as well as Majority Leader Reid.  We discussed the impasse that we‘re currently at with respect to the budget.  And I thought the meetings were frank. 

They were constructive.  And what they did was narrow the issues and clarify the issues that are still outstanding.  I remain confident that if we‘re serious about getting something done, we should be able to complete a deal and get it passed and avert a shutdown. 

But it‘s going to require a sufficient sense of urgency from all parties involved.  It means that people have to recognize that a government shutdown has real consequences for real people. 

There was an interview that was done tonight on one of the nightly news networks.  A man from Kentucky named J.T. Henderson.  He said he‘s counting on his tax rebate because his family has been scraping by.  And he might not get it if the government shuts down. 

So J.T. said if he could can speak directly to all of us in Washington, he‘d tell us that all of this political grandstanding has effects as it trickles down to normal, everyday Americans.  I could not have said it better myself. 

A shutdown could have real effects on everyday Americans.  It means that small business owners who are counting on that loan to open their business, to make payroll, to expand, suddenly they can‘t do it.  It means folks who are potentially processing a mortgage, they may not be able to get it. 

It means that hundreds of thousands of workers across the country suddenly are without a paycheck.  Their families are counting on them being able to go to work and do a good job.  There are ramifications all across this economy.

And at a time when the economy is as—still coming out of an extraordinarily deep recession, it would be inexcusable given the relatively narrow differences when it comes to numbers between the two parties that we can‘t get this done. 

So my expectation is that folks are going to work through the night.  In the morning, I will check in with the respective staffs of the speaker and the majority leader, as well as my team here. 

If we haven‘t made progress, we‘re going to go back at it again.  And we‘re going to keep on pounding away at this thing, because I‘m absolutely convinced that we can get this done.  There is no reason why we should not be able to complete a deal. 

There is no reason why we should have a government shutdown, unless we‘ve made a decision that politics is more important than folks like J.T.  Henderson.  That‘s not why we‘re elected.  That‘s not why we were sent here. 

And I want to meet the expectations of the American people in terms of delivering for them.  All right?  Thank you very much, everybody. 

HAYES:  President Obama addressing the press corps after a meet with House—Speaker of the House John Boehner and Senate Majority Leader Harry Reid to resolve the current budget impasse.  The president saying it would be, quote, inexcusable, if they were not able to avoid a government shutdown, saying the staffs of the respective sides would will be working through the night.  He would be checking in tomorrow. 

And also I think I have with me Heather Boushey of the Center for American Progress.  The president really sort of hammered home this point that I think maybe has been not quite emphasized enough, which is the actual cost of the shutdown.  There‘s the political consequence of the shutdown, which we talk about a lot.  Who‘s going to get blamed?  There‘s actual costs.  What does a shutdown look? 

HEATHER BOUSHEY, CENTER FOR AMERICAN PROGRESS:  You know, there‘s a variety of costs.  Certainly, the federal government does a lot of things that affect people‘s everyday lives.  We heard about it in the segment, as the president just said, you know, people wanting their tax refunds.  It‘s not clear whether or not the IRS will be able to do all that processing if the government shut down. 

You‘ve got whether or not people can get their visas.  You‘ve got whether or not people can get loans from the Federal Housing Authority.  You‘ve got, you know, a wide variety of ways—

HAYES:  Grand Canyon. 

BOUSHEY:  Yeah, parks will be closed.  You know, the National Zoo will be closed, the Smithsonian.  There‘s a wide array of ways that this affects each and every one of us in our daily lives. 

HAYES:  There was also an article I read today that looked back at the last shutdown, and said not only were there costs in terms of people not getting services, but there were actual accounting costs, in terms of it costs money to shut down the government and then open it back up again for business.  You have to go back and pay people, et cetera. 

The estimate I saw for the last shutdown was quite a bit of money.  I think it was on the order 1.5 billion dollars total for just the kind of logistical costs of this.  There‘s a certain irony, right, in terms of talking about—we‘re having this budget-saving debate.  We‘re going to do something that‘s going to end up costing more money. 

BOUSHEY:  You know, and not having an agreement right now is also costing us money.  So, you know, certainly if things shut down, then you do have those kinds of costs that you are talking about.  But right now, you‘ve got state governments, you‘ve got folks out there that need to make decisions who can‘t. 

You‘ve got, you know, people who are depending on contracts or money coming in.  They can‘t plan.  They can‘t budget with these continuing resolutions.  So this is a problem that‘s been ongoing and is actually costing us more money in its current form.  And it‘s only going to get worse if we have a shutdown. 

HAYES:  The president made mention of exactly this issue in terms of imperiling the economic recovery.  And obviously the recovery, to the extent there is one, is quite weak and fragile by all observers‘ accounts.  What are the risks here in terms of what this would do to an economic recovery if we did get a shutdown? 

BOUSHEY:  The last thing our economy needs right now is for people to not be spending, right?  You‘re going to have a lot of folks that aren‘t going to be working.  Even if they do get those paychecks at some point, they‘re going to stop spending.  Maybe they can‘t pay their rent.  They‘re not going to be buying things.  They‘re going to put off buying that home or that car, do whatever it is that they would do in their normal lives. 

That‘s going to have an effect on the economy.  It‘s going to slow economic growth.  And it‘s not going to be good.  So, you know, you‘ve got this budget conversation going on, which also has big economic implications.  We don‘t want to be cutting too much spending over there. 

But certainly this stall in spending that we‘re going to see from any shutdown is going to dampen economic growth. 

HAYES:  I‘ve been told at the moment we will be hearing from Senate Majority Leader Harry Reid—not that gentleman right there—and Speaker of the House John Boehner with some remarks about the meeting they just had in the White House with President Barack Obama. 

If you‘re just joining us, President Barack Obama has just addressed the press corps after a meet with Senate Majority Leader Harry Reid and Speaker John Boehner to attempt to resolve the budget impasse that has brought the government to the brink of a shutdown. 

Currently, as scheduled, the funding for the government will run out on this Friday.  And if we do not get a new continuing resolution or an actual budget to fund the government for the next six months, we would be looking at a government shutdown. 

I‘m discussing the implications with my guest here from the Center for American Progress, Heather Boushey.  I believe we have Jonathon Alter— actually, we have Senate Majority Leader Harry Reid and John Boehner with us now. 

SEN. HARRY REID (D), MAJORITY LEADER:  It was very honest.  We‘ve narrowed the issues significantly.  And we‘re going to continue working.  Our staffs are going to work through the night.  The speaker and I will get back together tomorrow morning and see how they did and continue. 

I have confidence we can get this done.  We‘re not there yet, but hope lies eternal. 

REP. JOHN BOEHNER ®, SPEAKER OF THE HOUSE:  We did have a productive conversation this evening.  We do have some honest differences.  But I do think we made some progress.  But I want to reiterate there‘s no agreement on a number.  And there‘s no agreement on the policy writing. 

But there‘s an intent on both sides to continue to work together to try to resolve this.  No one wants the government to shut down.  We‘re going to continue to work throughout tonight and tomorrow.  Thank you. 

HAYES:  Looks like we‘re not going to get any questions from Senate Majority Harry Reid and House Speaker John Boehner, who just met with President Obama to attempt to resolve the budget impasse, addressing reporters after the president had addressed reporters from the White House. 

The president in his remarks said that a shutdown would be, quote, inexcusable, said there‘s no reason we should not be able to get a deal, stressed that both parties would be working through the night, and also hammered home the plight that would befall a lot of Americans if the government were actually to shut down, citing one Kentucky man who is awaiting his tax rebate. 

Tax rebates just one aspect of the government that would come to a close on Friday unless a deal is hammered home.  With me now to discuss it, Center for American Progress economist Heather Boushey.  I believe we have Jonathon Alter on the phone.  Is that correct? 

JONATHAN ALTER, “NEWSWEEK”:  Yes, I‘m here with you. 

HAYES:  What did you make of that?  John Boehner looked like he was on a roller coaster ride that was making him nauseous. 

ALTER:  Well, you know, I think he is in a very tight spot.  He‘s caught between what he has been trained to do through many years in politics, which is to cut deals and move the process forward, on the one hand, and the Tea Party on the other hand. 

And the Tea Party constituents and all the freshmen who are very connected to the Tea Party, they are willing to go right to the brink and maybe over the brink.  And they don‘t seem to care too much if there‘s a shutdown. 

I spoke to some Tea Party representatives just today.  And they seem to be, you know, perfectly fine with the government shutdown.  So when that‘s conveyed to the leadership on the Republican side, you‘re going to get this kind of situation. 

HAYES:  Jonathan, how much do you think the specter of 1994 or 1995, I guess, sort of that December, weighs on John Boehner and the strategists in the leadership of the House on the Republican side?  Because I think the received wisdom about that was that Gingrich stared down Clinton.  The government shut down and Republicans took an absolute beating. 

How much do you think that‘s factoring into their calculations here? 

ALTER:  I think it‘s weighing heavily on them.  But the freshmen don‘t know anything about that.  And a lot of them were not in politics or paying attention to politics at the time.  So it might as well be, you know, the Civil War or the American Revolution to them.  It‘s history. 

And it‘s not dissuading them from taking a very hard line on this.  So you have a group in the leadership for whom this lesson is very fresh, and a group of freshmen for whom it‘s irrelevant. 

HAYES:  If you are joining us now, we are covering breaking news here at MSNBC.  President Obama, Senate Majority Leader Harry Reid and Speaker of the House John Boehner have just concluded a 90-minute meeting in the White House.  The intent of that meeting was to come to some kind of agreement to avoid a government shutdown, which is currently scheduled for Friday if no deal is reached. 

After the meeting, President Obama spoke to the press corps in the White House.  He emphasized the possible cost of a shutdown to ordinary people and said failure to get a deal would be inexcusable. 

Senator Reid and Speaker Boehner gave some very brief comments as well.  I‘m joined here by Heather Boushey from the Center for American Progress.  We have Jonathon Alter on the telephone. 

Heather, I want to catch people up to speed on where we are with this budget right now.  What happened was there was no budget passed last year.  And so the government‘s been funded by what are called continuing resolution.  What is a continuing resolution? 

BOUSHEY:  Well, when Congress doesn‘t pass a budget, then they have to

they have to keep the government going.  So they pass what they call these continuing resolutions that basically keep in place the spending pattern that was typically from the previous year.  Sometimes they make some changes, but typically it‘s, whatever we were doing before, we‘re just going to continue to spend the money.  Maybe we‘ll make some changes, but it‘s for short term. 


And the important thing is it‘s not actually going through the budget process.  You know, when the federal government passes a budget, the committees get involved.  It goes through all of the different mechanisms that it needs to do, all of the shenanigans of democracy.  And that‘s not happening. 

So Congress hasn‘t really sort of had that conversation about how they want to spend our tax dollars and made their decisions.  And that‘s what a continuing resolution is.  We can‘t decide, so we‘re going to put this stop gap measure. 

HAYES:  Yet there have been cuts.  I think that‘s one of the things that gets lost in this discussion.  There have been quite significant cuts.  This strategy of brinkmanship from the Republican side has been effective, so far, wouldn‘t you say, in getting some cuts? 

BOUSHEY:  It certainly has been effective.  I mean, so each time they‘ve done one of these continuing resolutions over the past few months, they‘ve cut a little here, a little here.  And it‘s certainly adding up.  And it does appear that they‘re going to get to their goal, in terms of the 60 some odd billion dollars that they want to cut, you know, through this kind of process. 

In that sense, they appear to be winning the battle. 

HAYES:  And I should note that that 60 billion dollars, which was their goal, we‘ve already cut around 30, I think, in terms of what has been passed through these continuing resolutions.  Thirty billion dollars, A, is a lot of money.  B, it‘s actually an absolute reduction from last year. 

So not even a reduction from the president‘s baseline, which is 40 billion more, because we remain in a very dire economic situation.  If you take it from the president‘s baseline, if you are saying have the Democrat comes over to the Republican side of the table, they‘ve actually reduced what their ask was by 70 billion. 

BOUSHEY:  Certainly.  And so we‘ve already moved a long way in the Republicans‘ direction. 

HAYES:  Jonathan, are you still there? 

ALTER:  Yes, I am. 

HAYES:  You know, I want to ask you about this.  It seems to me that there‘s one level at which you can look at the situation Boehner is in and say that he is in a difficult spot, because he essentially has—you know, he‘s got a deal that he could make or sort of has to make or is dispositionally inclined to make.  And then he has this Tea Party Caucus. 

But you can also look at it as that—the credibility of the Tea Party Caucus‘ willingness to go to the brink, to shut the government down, has actually given him a lot of negotiating leverage in the last several months as we‘ve gone through these continuing resolutions.  Isn‘t that right? 

ALTER:  Yeah.  I think that is right.  You know, so he has, you know, used them to help him to this point.  But now he has a very tough decision to make.  He needs to, you know, it‘s really—the ball is really in Boehner‘s court. 

As you just indicated, the cuts that were made, the 30 billion—or call it 70 billion if you want to score it that way—are what they requested at an earlier point, what they requested.  In other words, the Democrats have come all the way to where they wanted—where Boehner wanted the government to be. 

And yet he can‘t take yes for an answer because he‘s afraid of the Tea Party.  So this is a real test of Boehner.  And a strong leader would say, we‘re doing—we‘re cutting a deal and I‘ll take my lumps. 

HAYES:  Jonathon Alter and Heather Boushey, thank you so much both for your time.  Thank you for staying with us.  That‘s THE ED SHOW.  I‘m Chris Hayes in for Ed Schultz.  For more information on THE ED SHOW, check out our new blog at 

You can read more of my work at, or follow me on Twitter, username ChrisLHayes.  “THE LAST WORD” with Lawrence O‘Donnell will continue our live coverage of the budget discussions in Washington right now. 



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