'Up w/Chris Hayes' for Saturday, May 26, 2012

Guests: Ezra Klein, Melissa Harris-Perry, Karen Hunter, Pedro Noguera, Dana Goldstein, Amy Goodman, Joe Weisenthal, Marcellus Andrews, Marcellus Andrews, Joe Weisenthal, Amy Goodman, Dan Dicker

CHRIS HAYES, MSNBC ANCHOR: Good morning from New York. I`m Chris
Hayes. Tropical storm warnings are in effect for much of the southeast
U.S. from Florida to South Carolina with tropical storm expected Beryl to
form over the Memorial Day weekend.

And the first round of Egypt`s presidential elections is over leaving
Mohammed Morsi of the Muslim Brotherhood facing a run off against Mubarak
Prime Minister, Ahmed Shafiq.

Right now, I am joined by Dana Goldstein, my colleague at "The Nation"
magazine where she`s a contributor and the fellow at the New American
Foundation, Pedro Noguera, professor of education at New York University
and author of "City Schools and the American Dream: Re-Claiming the Promise
of Public Education."

Author and columnist Amy Goodman, host of "Democracy Now" rejoining
the program, and back at the upper stable, MSNBC contributor, Karen Hunter,
a Pulitzer-Prize winner for her work on the "New York Daily News" editorial
board. Great to have you guys all here

This week, Mitt Romney called the U.S. education system a failure,
unveiled a 35-page education white paper called "a chance for every child"
and attacks the president`s record on education.


likes to tell us we can`t wait. If only he`d say that and mean that about
education reform, because millions of kids are waiting for change, and so
many are missing their chance.


HAYES: Last September, Romney felt differently about President
Obama`s signature race to the top education plan which provides federal
money to states and school districts based on competition and not on need.


ROMNEY: I think Secretary Duncan has done some good things. He`s the
current secretary of education. I hope that`s not heresy in the room, but
he, for instance, has a program called "race to the top" which encourages
schools to have more choice, more testing of kids, more evaluation of
teachers. Those are things that make some sense.


HAYES: This week, Romney touted his free market vision of educational
reform in the inner city at a predominantly black charter school in West
Philadelphia. After touring the classrooms, Romney sat down for questions
and found himself trying to defend his previous claim that class size
doesn`t improve student performance.


ROMNEY: I said let`s compare the average classroom size from each
school district with the performance of our students, because we test our
kids, and we`ll see if there`s a relationship. And there was not.

UNIDENTIFIED MALE: I can`t think of any teacher in the whole time
I`ve been teaching, over 10 years -- 13 years, who would say that they
would love -- more students would benefit them.

ROMNEY: Right. Of course.

UNIDENTIFIED MALE: And I can`t think of a parent that would say I
would like my teacher to be in a room with a lot of kids and only one


HAYES: That is my favorite, so far. We call the shot in this show
the two shot, right when the camera is hitting the two of you. And that
shot of Mitt Romney in that school is my favorite two shot of the whole
campaign, so far.

Before we get into the weeds of it and the policy, because I think
it`s important, and I think education policy is so interesting and
important politically for a number of reasons. Both because it`s important
substantively, because it`s how we create citizens and form citizens and
form workers, but also interesting, politically, because it has a lot to do
with the way that we think about in equality and mobility and the American
dream and achieving all of that.

I want to talk first about the politics of this. Why is Mitt Romney
in West Philadelphia? Why is he in West Philadelphia? He`s not going to
get any votes in West Philadelphia. I mean, there`s no chance. He knows

Michelle Cottle, when she was covering George W. Bush in 2001,
referred to his emphasis on education, particularly education and the
achievement gap between Black and Latino children and White children, she
referred to it, I think, as a ricochet pander.

That it was not a pander -- it was not a political perspective that
was aimed at the actual parents of students in public schools and under-
performing inner city schools, but at vaguely liberal-minded, people who
consider themselves enlightened, you know, White suburban women, for whom
this was a kind of signifier of not being some monstrous on feeling on --

KAREN HUNTER, MSNBC CONTRIBUTOR: Well, you jut answered our --


HUNTER: -- sitting next to the man with a cool fee (ph) and Billy is
not --


HUNTER: Black folks in Philly is about, you know, that ricochet
factor. You know, but I read through the 35 pages which, by the way, has a
forward by Jeb Bush. And I`m saying this is so political. It really
doesn`t get to the cord. It`s nothing really -- or shadowing here or new
here or anything that`s really going to change the system or fix what`s

It`s just a lot of political pandering and a lot of things rehashed
that we`ve already heard before. Yes, we know that these things will work
if we implement them, but obviously, we`re not doing it for a reason. So,
maybe we should get of that.

PEDRO NOGUERA, PROF. OF SOCIOLOGY, NYU: I would say that Romney, like
many politicians know, the public care is about education. It shows up in
all the polls. It`s been a very important issue.

So, he wants to position himself as a reformer, and therefore, he
thinks that the kind of conservative approach of choice and vouchers is
what will do it and Philly is kind of ground zero for that kind of
experimentation right now, so hence, Philadelphia. But I think it`s mostly
the pander to the public`s general concern that something needs to be done
other than throwing money at the problem which is, kind of, again, one of
the mantras we hear.

But there`s nothing -- as you just pointed out, very clear at all,
about how we solve some of the real problems. But I think what`s even more
troubling is this idea that the whole system is failing, because the fact
is that there`s no evidence at all to support that.

HAYES: Explain that.

NOGUERA: If you look at the data, affluent people are getting pretty
good education in this country. Middle class people, in fact, like their
schools. It`s poor people that have bad schools. The real problem in
American education is inequality. The fact that if you look at wherever
poor children are concentrated, that`s where bad schools are located.

To have a generalized swipe against public education actually
contributes to the dismantling of public education which is one of the few
entitlements that all children is going to be have access to.

DANA GOLDSTEIN, THENATION.COM: And I think it`s really important to
also say about that, that neither Romney nor Obama wants to do anything
about reducing the concentration of poor children. That they`re so tied
often to small geographic areas where poverty is very concentrated. And
this isn`t something that`s really on the agenda in terms of what`s being

HUNTER: But the crazy thing is those poor students bring in the
money. Those poor students are the ones that are pushing the, you know,
special ed where kids are getting more money per kid in the school.

HAYES: And there`s a special Title I federal funding --

HUNTER: Right. There`s more money attached to those poor kids. And
I disagree with you. I think we are -- the education system as a whole is
a failed system. And I think it speaks to that where we sit among other
industrialized nations. We`re number 19 or 18 in the world. How is that
possible when the system is working for --

NOGUERA: If you control the poverty, we`re actually in the top five,
in case, the first in the world. That is the look at the districts with
the lowest poverty rates, our kids, American kids, outperform of the

HAYES: This is an interesting debate, because one of the things that
comes up in this debate is this question (ph), do we have a problem with
just poor schools? Do we have a broader education problem? When you look
at certain things, it seems like we do have a broader education in terms of
the amount we graduated in certain fields, the science and technology,
engineering, and math.

We`re not producing enough people that are going through those
channels to end up as engineers for instance, right? But then if you look
at -- I mean, I`ve read crazy stats to just break things out racially. And
if you just look at the education White kids get in America, it`s not so
terrible comparatively in terms of where their schools rank.

NOGUERA: Look at Massachusetts. If Massachusetts were a country, it
would be in the top five among countries.

HAYES: Right. Of course, Mitt Romney has boasted about his record


HAYES: Massachusetts, which I learned from you, Dana Goldstein, is
the birthplace in America of public education.

GOLDSTEIN: It is true. Our public education system started with the
coming school reform movement around 1830 in Massachusetts. And I think
what`s really interesting to think about -- and I`m writing a book about
this -- is when you go back to the birth of our public school system,
there`s always been a strong rhetoric in America that schools are where
we`re going to fix poverty.


GOLDSTEIN: And I think this is why our education system and our
education debate is so contentious and so controversial. If you expect
schools and teachers to do so much of the anti-poverty work in United
States, there`s just an incredible pressure on this system.

And if you go to other nations, you see that teachers don`t spend as
much time stressing out about whether their kids have eaten breakfast and
things like that because there`s other structures in the society that take
care of that. When they get into the classroom, it`s more about learning.

And if you interview teachers as I do in our city schools (ph), they
have a lot of pressures on them that people don`t experience in other

AMY GOODMAN, DEMOCRACYNOW.ORG: I also think that Mitt Romney strict
(ph) to Philadelphia just showed, actually, in some ways, how similar
Romney and Obama.

HAYES: Yes. This is the big question --

GOODMAN: So, similar the Democratic and Republican parties are in
dealing with issues, for example, of poverty, the "P" word, the word that
neither of them will really talk about, and even their educational plans.
While Mitt Romney was trying to position himself as opposed to what Obama
represents, in fact, they`re very similar in what they support.

HAYES: Yes. Let`s get to that issue, because I`ve heard two
different things about this white paper, a chance for every child which I,
too, read. Ooh, is it riveting?

And, you know, one is this represents something radical, right-wing
vouchers is sort of coming out explicitly for vouchers and choice which is
-- which sort of in the fault lines of education policy reform debates
takes you over a certain threshold, right?

You can walk up to that line and be a good democrat, and if you walk
over it, you`re no longer a good Democrat. I think that`s sort of fair to
say. At the same time, I`ve also heard the opposite, but this is
essentially nothing that new. That it`s more or less in line with the
direction of policy that we`ve seen under the Obama administration.

And in fact, let me show former education secretary, Bill Bennett, on
Tavis Smiley in April talking about the signature race to the top program,
which has been one of the main ways that this White House and this
administration has implemented some of the reform ideas that have been
moving through the nation`s policy shops.


American education is really not what it should be. And, race to the top
is encouraging the states to have systems of excellence and accountability.
And that`s where I`ll tip my hat to Arne Duncan and the president to have
that accountability.

That`s the thing that`s been missing. I`ve argued for years, Tavis,
the worst thing about our education system is its run for the sake of the
producers, not for the sake of the consumers to --


HAYES: Now, that single line is -- that is the line, right? That is
the "rhetorical encapsulation of the entirety of the school reform." And
I`m putting it in quotation mark, because obviously, being able to claim
the mental (ph) reform is, itself, the contested political terrain upon
which this debate takes.

I want to ask the question of just how much of a difference in vision
former Governor Romney is presenting to what the president has presented,
and we`ll get to that right after this.


HAYES: As a soft to all that set your line to wake up this morning.
Don`t worry, we`re about to dive into the chance for every child
(INAUDIBLE) issued by the Romney campaign this week. I know you`ve set
your iPhone reminders for a conversation of that. I do want to find out
how much do the ideas that are represented here signal a divergence from
current policy and how closer today are what we see?

GOLDSTEIN: Well, on vouchers, definitely Mitt Romney supports the
private school vouchers and Obama doesn`t. But, on things like charter
school expansion and teacher merit pay and testing for students, the two
candidates are actually quite in line with each other.

What I would say about the big difference between them is Mitt Romney
really wants to get the federal government out of this business of school
turn around, which has been a big priority of the Obama administration.
Obama says the bottom 10 percent of schools nationwide need to be turned
around, and he`s provided a couple different models for doing this.

Some of which are more holistic. It`s called a transformation in
which the teachers mostly stay the same. They work with the community to
turn around the school, but some of which are more radical, school
closings, reorganizational charters, things like that.

Mitt Romney just -- he doesn`t want to spend money on this, and he
doesn`t believe the federal government should be involved. That level was
detailed with local school. So, what you see in this proposal is that`s
really, to me, a major difference between the two.

HAYES: And fascinatingly, the elephant in the room in all this is
that we have this huge -- the last time a Republican was using education as
a central platform to signal his compassion was, of course, George W. Bush,
and it was the big landmark piece of legislation. I would say that he
proposed on the campaign and it was signed into law, famously bipartisan.
Ted Kennedy was -- helped write it in the Senate.

We`re now ten years into this experiment. It`s one of these laws that
it`s very hard to find anyone who`s like a huge partisan for no child left
behind. It seemed orphaned. I mean remember going around as a reporter in
2008 to campaign events and the biggest applause lines would be getting rid
of no child left behind.

Both Hillary Clinton would say it. Barack Obama would say it. No
child left behind, if I`m not mistaken, doesn`t show up -- mentioned it
once in the entire --

GOLDSTEIN: Chris, I started on the education beat in 2007, and that
was the first time no child left behind was supposed to be reauthorized by
Congress. And it`s 2012, and it still hasn`t been. And it`s just because
nobody really wants to touch it. I mean, Obama and Duncan would like to
play around with it. But, in Congress, it`s just the count of football.

HAYES: OK. Why is -- in a parsible, accessible way, what has no
child left behind -- does it get a bad rap? Has it worked?

NOGUERA: OK. Let me get to the argument in favor. What it did was
it brought accountability to public education in an important way. It
required districts to disaggregate the data by race and by what they call
subgroups so we can see how different types of children are doing. The
problem was the evidence we looked for was simply how well they did on a
standardized test.

And what that did was it drove all instruction towards test
preparation. And anything that wasn`t on the test literally got eliminated
from the curriculum. So, you have schools where there`s no science in the
curriculum, because science was not on the fourth grade tests.

HAYES: Right.

NOGUERA: You see states that lower their standards in order to get
higher results. So, a lot of gaming, obviously, a lot of cheating going
on. All, I think, is a result of this inappropriate use of testing. The
problem with the Obama administration is they don`t understand what`s wrong
with no child behind.

They think it`s simply a branding problem. So, they come up with a
new slogan, "race for the top."

HAYES: Right. It`s same policy framework, more or less.

NOGUERA: That`s right. And so, I would say if you look at the
history of this, there`s a great deal of bipartisan support for these
policies. Ted Kennedy and George Miller, good Democrats, brought us no
child left behind with George Bush. And so, what they don`t get is that --
this speaks to the point early about the failure.

We do have high drop out rates. In almost every major city, drop out
rates are 50 percent and higher. So, we have clear reference that this
strategy is not working. What the Obama administration doesn`t get nor the
Romney`s is what it will take to address that problem.

I don`t think Romney fully cares that much, at least, from looking at
this document. I think the Obama administration is pretty -- it`s been
disappointing because I don`t think they`ve even begun to grapple with it.

HAYES: Karen.

HUNTER: Because no one really got to the core about this. It`s not
really about -- and I totally agree. I was going to talk about the test
taking. You can`t educate a person by teaching them how to regurgitate
stats on a test.

HAYES: Right.

HUNTER: This is why, I think, the system is broken. That`s why I
disagree with you. Yes, those kids may perform well on tests, but it
doesn`t mean they think well. It doesn`t mean we have critical thinkers.
This country, this nation was number one because we had people who
innovated, who thought, who created things, things were made in America
because we had that ability to do that.

We don`t have it anymore. And now, we can`t redesign a system to
compete with China, Japan, and Korea who are all taking tests, you know,
which you`re talking about the sciences and things like that when that`s
not really what we`re about here in America. So, we need to establish what
it is that we really want to do and look at the system as a broken system,
and it took to fix it from the core.

HAYES: And there`s a deep, philosophical question which fascinates
me, which is what is -- what`s the goal of public education.

NOGUERA: That`s right.

HAYES: Is it to produce workers or is it to produce citizens? And --
no, I mean, that`s -- those can be very different things. I mean, what do
we want out of it.

I mean, when you listen to the rhetoric that comes out of, say, Mayor
Bloomberg, or the business groups that are always issuing a report every
six months about how battered education system is, it`s a threat for
competitiveness, they`re worried about just the raw economic human capital
that is being produced by the schooling system, but there`s also the
question of how do you create -- you know, I mean, the original vision of
education in the country had a lot to do with both of these two roles,

GOLDSTEIN: Yes, and also creating moral people of high character.


GOLDSTEIN: That was the original goal. And then from there, there
was a long debate between that goal and also citizenship and also business.
But I would also add a forcing into that that I think we should think about
which is just knowledge. You know, what do our students know?

HAYES: Right.

GOLDSTEIN: And on this, I actually do want to get the Obama
administration some credit, because they have really asked states to
embrace this thing called the common core. And 46 states have agreed to do

That`s going to be much higher standards in Math and English, more
writing, deeper reading, and it`s going to keep states from doing the thing
Pedro referenced earlier, which is that they lower standards.

HAYES: So that they get better test scores. Right.

GOLDSTEIN: So that they get better scores. And they have done some
good stuff in this. And I also think that Obama realizes that the cutting
of science and the arts from the curriculum is a problem. So, he said,
let`s assess all teachers including the music teacher, the art teacher, the
gym teacher. And I`ve actually visited some schools that are now giving
kids tests in all these subjects.

So, it`s kind of like a perverse thing that the Obama administration
realizes we should have music and art, so let`s create test that will make
the school --

NOGUERA: That`s good.

HAYES: This is a classic if all you have is a hamburger --


GOODMAN: But I want to also ask about how the privatization of
education where they were talking about charter schools and the past that
was vouchers, but also around high stakes testing where privatization fits
into this. I mean, kids are being --

NOGUERA: Make lots of money with --

GOODMAN: It appears that you have these kids that are being forced to
take even more tests, and they`re just guinea pigs for this private
company. They`re just doing testing and that adds to the list of test.

HAYE: And one of the places right now that is, as you mentioned in
the opening one of the ground zero for this, is Philadelphia where Mitt
Romney was this week. Let`s talk about what`s going on in Philadelphia
after we take a quick break.



suddenly somehow found West Philadelphia, somehow, now wants to talk about
education. Romney has always opposed investing in our children`s
education. Again, I don`t understand why he`s here today.

What he supports are policy that hurts our ability to educate our
children and prepare them for good jobs and a good future.


HAYES: That`s Philadelphia mayor, Michael Nutter, rolling up a
welcome back for Mitt Romney`s --

GOODMAN: And beat him with a --

HAYES: And beating him with it. Exactly. Now, the irony here, of
course, is that the city mayor Michael Nutter -- and that`s why the
politics of all this get so complicated. I mean, every time -- as both
camps are trying to create distinctions between each other, they keep
stumbling over the fact that there`s a whole lot of bipartisan defense, as
you said, in the direction of policy.

So, Mitt Romney questioned class size -- you know, the efficacy of
reducing class size, and then, people dug up quotes from Arne Duncan
saying, "Well, class size is a sacred cow that we have to take another look
at, and I don`t know what the data says about class size." And the data is
a little inconclusive on class size I`ll say having dipped into it

Then, you have Michael Nutter going after Romney for, you know, his
education vision, while in Philadelphia is the site of this very ambitious
massive project in essentially breaking up the central school district.

They hired Boston Consulting Group to come up with the plan, and
they`re going to try to create competition among different entities that
would manage these different groups of schools, including private and poor-
profit companies, if I`m not mistaken.

And so, it doesn`t look like that different from the basic outlines of
the vision that Mitt Romney is employing. How much is privatization as Amy
asked before we went to break? How much is that driving -- is that where
it all this is headed?

NOGUERA: I think a lot of it is headed there, because many people
look at public education in this country and see a lot of money being spent
and some would argue being wasted and would like to have access to it. And
you have private companies that are positioning themselves to take
advantage of the system.

And while I would agree that we need to be willing to experiment with
different ways of delivering education, I think the questions you`ve raised
before about the quality of what our children receive and whether or not
we`re encouraging critical thinking, all of those are very important
question that we should be focused on.

But what we also need to realize is that public education in this
country is one of the only institutions that all children have access to.

And that commitment from our state governments, even more so than the
federal government because it`s not mentioned in our constitution, is
fundamental to ensuring that our children have at least the opportunity to
participate in our society. And I think that`s what`s really at stake

HUNTER: Let`s take the money out. Let`s take the politics out and
let`s really, all of us, focus on making sure these kids get educated as
opposed to all of this political pandering what we see in this 35-page
white paper.

HAYES: What would that look like? I think you have expressed -- and
correct me if I`m wrong -- you`ve expressed sympathy for the idea of choice

HUNTER: I express sympathy for the idea of educating kids any kind of
way we can. If charter schools work and some of them do, do charter
schools. If vouchers work, do that. If there are public education --
public schools at work, let`s model that.

I mean, I just think it`s too crucial right now. We are, to me, in a
crisis situation, so not look at everything and say what`s working? And
let`s duplicate what`s working and --

GOODMAN: Well, that is a question, for example, in Philadelphia, are
18 charter schools under investigation right now, but we don`t hear this
very much.

HUNTER: Right. Because it`s political.

HAYES: Well, but the other thing is -- I don`t think -- I mean, one
of the things that`s interesting about this 10-year sort of grand
experiment we`ve been running as a country is -- and, again, this is not --
I`m not going to pretend that education policy is my area of expertise, so
please correct me if I`m wrong.

But my sense is it`s hard to see -- it`s not that there`s a ton of
obvious consensus, big, silver bullet answers that have come out of it. Do
this one thing. And we`ve seen the Gates Foundation thought smaller high
schools. Silver bullet.


HAYES: And they made -- they`ve spent hundreds of millions of
dollars, if I`m not mistaken, making smaller high schools across the
country, and to their great credit, look to the data afterwards and said
actually no. So, I mean, the question you will hear this often in the
debate over education reform, we know what works. We just have to do it.

Now, there`s a political (INAUDIBLE) to doing what work. And the
question is, is that true? Do we know what works?

NOGUERA: We have examples of what works. We have examples of
schools, pubic schools, private schools, charter schools in poor
neighborhoods as well that are working, that are serving children well.
What we`re not good at is replicating what works.

And the reason why is because the complexity. The complexity is, it`s
the teachers, it`s the kids, it`s the investments in that commitment.

HUNTER: No. I think it`s very simple. I look at (INAUDIBLE) she`s
one of my chiros (ph) from Chicago, right? It takes one person with a

HAYES: I like you dropping chiro like it ain`t no thing. Like chiro.

HUNTER: Chiro, you know? And it takes a person with vision, right?
Schools that work, you could probably tie back to a principle that has a
mandate and a vision that trickles down to the teachers. All of us can
probably think about a teacher in our lives that had an impact.

I know Ms. Johnson, Sister Joan who taught Latin at (INAUDIBLE). I
was impacted by these teachers who sparked something in me that allowed me
to go forward. So, that is --

HAYES: But the question is, how replicatable is that?

GOLDSTEIN: That is exactly the problem, because, for example,
Geoffrey Canada`s Harlem Children`s Zone here in New York City as one of
President Obama`s favorite models for how to reform school. You cannot
clone Geoffrey Canada. He`s a charismatic, amazing leader that you can
create to of (ph) and what`s more.

His position here in New York City, the finance capital of the world,
allows him to do a level of philanthropy that is completely inaccessible to
someone, say, in a small, Midwestern city like Cincinnati or something like
that. So, what you see as President Obama said let`s replicate the Harlem
Children`s Zone.

He created a federal program called "The Promise Neighborhood," and it
has like a few million dollars in it.

HAYES: Right.

Well, there`s like a hundred million dollar budget at the Harlem
Children Zone. How are you supposed to create something like that in
Cincinnati with this trickle of money? I mean, Pedro has some experience
on the ground in New York, trying to look at this neighborhood zone idea.
And I`ve been in some of his schools.

And it`s true, you can go to a place like New York that has a terrible
reputation. You can see an amazing teacher, an amazing principle, but you
can`t photo copy these people.

And what we need to do is raise the whole level of education system,
and I think what it would take to do that is to care about poverty as a
whole, because as long as the schools are the only institution in society
that are expected to take any responsibility for this problem, they`re
going to be struggling, and it`s going to look like they`re failing.

It`s going to look like they`re failing because we`ve asked them to do
maybe a little bit more than they can do, and that doesn`t mean that we
don`t hold them to high standards, but schools are for learning.

HAYES: Right. Well, and I think -- I agree, entirely, about the
macro context this was in, which is that we don`t talk about mobility and
equality. We talk about, you know, equality of opportunity. We don`t talk
about equality of outcomes. And the two aren`t so neatly acceptable.

If you`re going to create a society which has increasing accelerating
inequality of outcomes, those inequality of outcomes will bleed in and
corrupt the attempts to create some sort of level playing folds (ph) or
equality of opportunity.

And that`s what we see continually happening. And we ask the schools
to undo everything that`s happening on the outcome side (ph), everything
that`s happening with finance capital, everything that `s happening with
taxes, everything that`s happening with deunization and
deindustrialization, everything that`s happening with the high levels of

We say to the schools, it`s your job to mitigate all of that that`s
happening on this part of the scale. And no matter how much weight we put
on this part of the sea saw, it doesn`t balance.

HUNTER: Are we going to talk about the elephant in the room that,
perhaps, maybe society really doesn`t care about, Black, poor, Hispanic
poor children? Maybe they have just been toss the side, and we don`t
really care about them. We pay lip service to them. We may put out a
document and we`ll mention them in a couple of lines, but we really don`t
care about what happens to them as a society.

HAYES: Also, I think, one thing I`d like to get to is work that
you`ve done which is not only whether we care about them or not, what we
have given up on in this country and which is not part of the discussion is
desegregation. I mean, "The New York Times" did a blockbuster piece on

That is not part of this whole conversation. We`re going to have some
schools that are a hundred percent black. We`re going to figure out how to
make them high achieving in our school system. Let`s talk about that right
after this break.


HAYES: All right. We`ve talked about the elephant in the room before
we went to break, which is school segregation and the fact that we have a
very segregated school system. In fact, "The New York Times" did a bloc
buster piece about this, I think about a week ago, which they just looked
at the numbers.

Running the numbers in New York, and the trends are also not very
promising. I mean, we have essentially given up as a nation on
desegregation achieving integrated schools as a policy objective. I think
it`s fair to say that we essentially just threw in the towel on that. Why
is that not in the conversation, Pedro? This is something that you write
about a lot, and what are the -- are there concrete benefits education to
actually desegregating schools?

NOGUERA: I think because of court orders that have made it more
difficult and because of a history that showed a great deal of resistance
on the part of White middle class people to putting their kids in schools,
which on the color. We basically say OK, we`re going to leave it alone.
We`re not going to force it anymore, and we`ll accept segregated schools.

So, the way we are now, if you think about it as a country, not only
aren`t we living up to the brown division, we`re not even living up to the
plussie division. Plussie said separate but equal. We are separate and
profoundly unequal. Now, the good news is, and this is the story that
doesn`t get heard, is there are a small number of experiments around the
country of magnet schools.

Connecticut has several of them that are integrated, deliberately
integrated by law and are doing extremely well. And the research has shown
that our kids do, in fact, do better, particularly poor children, in
integrated schools. A lot of that is about access to resources, but it`s
also about the effect of having access to other children who are getting
support at home.

So, you`re not in a school that has concentrated poverty and where
kids are coming from very similar circumstances.

GOLDSTEIN: And if I could just jump in here, I was lucky enough to
attend integrated schools all through my education. So, I`ve been
interested in this as a journalist and I was at the research. And a common
misconception is while it may be great for poor kids to be an integrated
school, it`s not good for middle class kids. Their achievement is going to
go down.

HAYES: It`s like a zero some game. It`s like a transfer --

GOLDSTEIN: And that`s why I think parents resisted. They think, oh,
the teacher is really focusing on the more disadvantage students. My child
is going to suffer. And actually, that`s not true. The research does not
show that middle class kids do really want integrated schools, and they`re
bringing a set of values with them out into the world that I think value
diversity are more sort of in tuned with what other people`s lives are

HUNTER: That`s why you`re so successful and cool --


HUNTER: Yes, because you have that flavor. You know, and I think it
is important. So, how do we -- how do we get people to stop being
inherently racist, because it`s really definitely what we`re talking about,
right? Because I don`t want to send my kids to school with those people
because they`re going to infect them with their bad education.

HAYES: And because that -- I mean, let`s not forget, there was a
brutal war waged over exactly this issue. I mean, almost physical war.

NOGUERA: In Boston, it was a literal war.

HAYES: In Boston, it was a literal war.

GOODMAN: I mean, I come from Bay Shore High School in Long Island,
public high school. And my dad led the task force to integrate the schools
of our community. I mean, that`s where I grew up in that fight. I would
go to the cafeterias in the high schools, a thousand screaming parents.

My father had death threats against him, the whole task force. But
ultimately, they integrated our community, and I think it was way better
for that, for everyone, for all colors, for all classes.

HAYES: Well, one of -- I mean, in terms of what it would take, I
mean, it would take us re-putting this on the agenda. And it`s very hard
to any political incentives for anyone to start talking about --

GOODMAN: Mitt Romney should out that in his --

HAYES: Yes. Maybe, it`s a mix in the China moment.

NOGUERA: Here`s the thing that what we know. The only think that
will lead to more integrated schools is a focus on equality. Middle class
people will not put their children in bad schools.

HAYES: Right.

NOGUERA: You can only force poor people to put their kids in bad

HUNTER: So, why do we tolerate that and --

NOGUERA: We shouldn`t tolerate it. We shouldn`t tolerate it. So,
that`s why I say New York City. Here we have Mike Bloomberg had control of
the schools for almost 12 years now. And what has he done to address this
issue? It`s not even part of the agenda.

HAYES: Right.

NOGUERA: Even as they -- Mike Bloomberg, Joe Cline, now Mitt Romney
say education is the civil rights issue of the 21st century, this is the
civil rights issue they never touched.

HAYES: I want to -- we`ve talked -- I`m glad that we brought into
this conversation things that are so often excise from a poverty, in
concentrated poverty, the segregated nature of American education.

But now, I want to turn because while I have you here, I want to talk
about something that is always at the center of it which is the teacher`s
unions, which not, Lord knows, you can`t go a day without hearing about the
horrible specter that is hunting America and education of the teacher`s

Mitt Romney had some strong words direct to the teacher`s unions. I
want to play that, and then, one of the spokes people for the Obama
campaign seemed to throw the teacher`s union under the bus. We`re going to
talk about that right after this break.


ROMNEY: The teacher`s unions are the clearest example of a group that
has lost its way. Whenever anyone dares to offer new idea, the unions
protest allows. The teacher`s unions don`t fight for our children. That`s
our job. And our job keeps getting harder because the unions wield
outsized influence in elections and campaigns.


HAYES: That`s Mitt Romney going after the teacher`s unions at a
speech he gave to a Latino coalition lunch on Wednesday. Fascinatingly,
it`s not surprising that he was attacking teachers` unions.

Democrats and Republicans both attacked these teacher`s unions,
although, Republicans weigh more so than Democrats, because obviously,
teacher`s unions are within the Democratic coalition, and they are not
within the Republican coalition, so it`s much easier to just go at them
full bore.

Stephanie Cutter, who`s a spokesperson for the president`s re re-
election campaign tweeted in response to this. "Fact check, Romney off on
Obama`s relationship with teacher`s unions. It`s anything but cozy." And
then she pasted a fact check piece from "Washington Post" which said
actually, yes, actually, something to believe that is the case.

But it has about a huge number of policy issues. So, she was right.
But it`s a strange thing to advertise that people dislike you. Just
generally, as a political thing, you don`t go around talking about all the
groups that hate you. FDR, of course, famously said that of the bankers.
I welcome their hatred.

The second after Stephanie Cutter did this, it got some attention on
the internet, because teacher`s unions are an important part of the
Democratic coalition. And, someone said blame -- explain yourself, and
Stephanie Cutter tweeted back, "Pres fights for union`s teachers because he
believes in them. Mitt dishonest about being beholden to them." What do
you make of this stuff, Dana, covering the politics of all of this?

GOLDSTEIN: Yes. I actually think Stephanie`s statement is pretty
true. If you go back to 2007 when Obama was facing Hillary in a Democratic
primary, Hillary had the teacher`s unions endorsements. Obama was booed in
front of a teacher`s union convention in 2007 for advocating teacher pay
tied to student test scores.

So, he doesn`t have a cozy relationship. He ran for the Democratic
nomination knowing that he wanted to change the parties relationship with
the teacher`s unions. That said, I think he and Randi Weingarten and the
president of the American Federation of Teachers have a relationship.

They are careful, each one, not to step out too far ahead of the
other. They have cooperated on certain issues, the stimulus, for example,
which saved a lot of teacher`s jobs on the ground. They disagree about
other stuff. They agree on the common core, the sort of shared English and
math standards that I discussed earlier.

The teacher`s union haves moved a lot over the past four years, and I
often think that the facts in the ground have changed. Tenure productions
have weakened in most states in response to the Obama administration`s race
to the top program. It`s a really different-looking relationship than it
used to be.

HUNTER: And a lot of that should be credited to Randi Weingarten.
(INAUDIBLE) a lot when she was in New York.

HAYES: We knew it at the daily news.

HUNTER: Yes, over this issue. I mean, you know, merit pay should be
on the table. And a lot of these other protections of bad teachers should
be off the table. We should have these discussions in a society where we
claim to care about kids, right?

If that`s really your goal to educate kids, you have to be able to
talk about these things, and I applaud her for moving that needle because
it was an important thing to do. And you`re absolutely right. The
president doesn`t have a close relation with the unions, but the unions
have been an impediment until quite recently to change, to reform.

HAYES: Do you agree with that, Pedro?

NOGUERA: Well, I would say we have to be very specific in what areas
our union is an impediment. I mean, the fact is, again, what the evidence
shows, the states that are the most unionized outperform the states that
are not. Mississippi, Louisiana, these are not states that --

HUNTER: They have other issues --

NOGUERA: Exactly. But my point is if it was simply the union --

HAYES: Right.

NOGUERA: Then, it -- it`s more complex than that. We need to be very
clear. The unions, I think, play a very important role in ensuring that
teaching, as a profession, does not go downhill and teachers are not
abused. And that, I think, is a legitimate role.

At the same time, I think your point about addressing the teachers
that should be removed, because they`re not effective in the classroom, not
committed to children, unions should play a role in facilitating their
exit, right?


NOGUERA: They should be defending the profession, not the individual.

HUNTER: And they haven`t.

HAYES: And here`s my feeling as a kind of broad theme to all this is
you know, what happens is the discussion gets narrowed, and it gets
narrowed to benefit some specific political constituency. And to me, what
I find frustrating about the education reform discussion is that it gets so

Look, if we`re going to talk about desegregation and inequality and
childhood poverty and teacher tenure and merit pay, and class size, and all
these things, then let`s have a comprehensive discussion. What happens is
the discussion gets narrowed into specific things and goes after those
political constituencies deemed the weakest or their -- most expeditious to
go after them.

And I think that sort of broadening out like we`ve done here is a good
step. I want to bring you guys back to continue talking about this in the
future because it`s going to play out at the election. Dana Goldstein of
"The Nation," great to have you. Pedro, ma, fantastic from NYU. Thank you
so much for joining us.

President Obama`s sharpest jab yet. They get to stay at Mitt Romney
over Bain Capital when we come back.


HAYES: This week, President Obama launched his most direct attempt
yet on Mitt Romney`s record at Bain Capital. The remarks came at a
campaign stop in Iowa on Thursday.


financial firm like Governor Romney`s is not to create jobs. And, by the
way, the people who work at these firms will tell you. That`s not their
goal. Their main goal is to create wealth for themselves and their
investors. There may be value for that kind of experience, but it`s not in
the White House.


HAYES: Obama`s willingness to engage Romney head on this early in the
campaign is unusual for a sitting president, but his remarks follow a week
of internal dissention within the Democratic Party over the legitimacy of
attacking Romney`s past as a corporate biospecialist. The back and forth
began with this appearance by Newark mayor, Cory Booker, on NBC`s own "Meet
the Press" last Sunday.


MAYOR CORY BOOKER, (D) NEWARK, NEW JERSEY: I`m not about to sit here
and indict private equity. To me, it`s just -- we`re getting to a
ridiculous point in America, especially that I know I live in a state where
pension funds, unions, and other people investing in companies like Bain

If you look at the totality of Bain Capital`s record, they`ve done a
lot to support businesses who grow businesses, and this, to me, I`m very


HAYES: Under pressure from Democrats, Booker backtracked a few hours


BOOKER: Let me be clear, Mitt Romney has made his business record a
center piece of his campaign. He`s talk about himself as a job creator.
And, therefore, it is reasonable. And in fact, I encourage it for the
Obama campaign to examine that record and to discuss it. I have no problem
with that.


HAYES: The president was then forced to defend his attacks on Romney
for the first time at the NATO summit in Chicago the next day.


OBAMA: He`s not going out there touting his experience in
Massachusetts. He`s saying I`m a business guy, and I know how to fix it,
and this is his business. And when you`re president, as opposed to the
head of a private equity firm, then your job is not simply to maximize
profits. And so to repeat, this is not a distraction. This is what this
campaign is going to be about.


HAYES: Romney, meanwhile, continued to in artfully (ph) dodge the
issue in an interview with "Time" magazine`s Mark Halperin two days after


UNIDENTIFIED MALE: So, when the president says he wants to focus a
lot of the election debate on your career at Bain Capital, do you welcome

ROMNEY: Of course. I`d also like to focus on his record. What is it
that he`s done as the president of the United States over the last four


HAYES: Joining us now at the table are Marcellus Andrews, professor
of economics at Barnard College, and Joe Weisenthal, deputy editor of
BusinessInsider.com. Gentlemen, it`s great to have you here.


HAYES: Joe, what did you make of this back and forth politically this
week in the fall out? It started when we were basically on air last Sunday
with Cory Booker on "Meet the Press." It`s interesting to watch Democrats,
specifically, try to walk what is a very, very narrow line on this attack.

WEISENTHAL: Well, I think the interesting thing is there is an
attack, but it`s hard to say what the attack is, because -- so with Obama`s
criticism of Romney and private equity, he certainly doesn`t offer any
solutions or propose any regulations that would change anything. I think
there probably is some legitimacy of the idea that not having had
experience as a private equity chief.

It does not necessarily mean you know anything about creating jobs or
is qualify to be president. Though, on the other hand, I can`t think of
any jobs that do qualify to be president.

HAYES: Well, possibly governor of a large state. I mean, the irony,
of course, is the fact that he was governor of the state, and he has
completely erased that line off as (ph) president.

MARCELLUS ANDREWS, BARNARD COLLEGE: But his performance is fairly New
Yorker (ph).

HAYES: What`s that?

ANDREWS: his performance is fairly (ph) New Yorker.

HAYES: As governor of Massachusetts.

ANDREWS: Right. Furthermore, one of the things that I find peculiar
about this entire debate is that we have the opportunity to ask ourselves
the following question. What are capital markets for?

HAYES: Right.

ANDREWS: What do we suppose to do? Do we really want to take the
private equity a hue of capital markets? What I find interesting about the
Democrats and kind of peculiar is that they won`t raise this debate for the
capital markets unpopular.

HAYES: Right.


HAYES: Yes. You are not going to see a 60-second ad paid for by the
Obama re-election campaign called, what are capital markets for?



HAYES: Because that actually, I mean, that is the question. And what
we were talking about this last weekend, when we were in the first round of
this conversation precipitated by the ad the president`s re-election
campaign run, and someone at the table an economist said you know no one`s
debating whether we should have private equity.

I said, no, no, that`s the debate I want to have. I mean, should we
have a private equity industry? Should we look askew? Should there be
moral (ph) program and sanction attached to private equity. That`s the
question I want to get into right after we take this break.


CHRIS HAYES, HOST: Good morning from New York.

I`m Chris Hayes -- here with Barnard College economics professor
Marcellus Andrews; Joe Weisenthal of Businessinsider.com, recently profiled
in "New York Times" magazine; Amy Goodman of Democracy Now; and MSNBC
contributor Karen Hunter.

We are talking about private equity. We are the provocative question
that Marcellus Andrews raised before the break, what are capital markets
for? Why do we have capital markets? What do we want them to do?

One thing that is fascinating about watching the politics of all of
this is when you start looking, private equity people are everywhere. I
mean, one of the things they`ve had to do is to say, look, we`re not going
after private equity.

We are going after specifically either Bain Capital and what Bain
Capital did -- which I think doesn`t quite hold water because from all that
I`ve read, Bain Capital was no worse than other private equity firms. The
landscape is strewn with companies that took on too much debt and went
under, from KKR or Blackstone, or P.E. groups.

But when you start looking around among the American elite, you see a
lot of connections with private equity. Here`s just public officials who
are associated with private equity firms after a government service.

This is just a little -- just former Reagan Defense Secretary Frank
Carlucci, Reagan Budget Director David Stockman, George H.W. Bush, Vice
President Dan Quayle, President Bush`s secretary of state, James Baker,
President Bill Clinton, former Clinton Energy Secretary Federico Pena, it
goes on, White House chiefs of staff.

George Stephanopoulos was with private equity, House Speaker Newt
Gingrich, SEC Chairman Arthur Levitt, New York City Mayor Rudy Giuliani,
Colin Powell, John Snow, Rod Paige, Evan Bayh.

Here are public officials who work at private equity firms before
joining government. The Obama jobs council member Mark Gallogly, Richard
Parsons, Steve Rattner, of course, who`s been making the rounds, the budget
director Jack Lew, now I think chief of staff in the White House, Nancy-Ann
DeParle, who is deputy chief of staff, undersecretary Jeffrey Goldstein,
Erskine Bowles, Roger Altman.

So there is -- this is a -- there is a lot of movement between the
world of public life and politics and private equity. And that obviously
is going to make it very difficult for the president to make this argument
specifically about the enterprise of private equity.

And the question I wanted to ask you, though -- let`s forget about
Bain for a second because I don`t think it really is an outlier. I think
Bain acts like most private equity does.

Has private equity had a net positive or a net negative effect? Is it
something that you should be proud of working?

JOE WEISENTHAL, BUSINESSINSIDER.COM: I think -- a couple things. I
mean, I think what you point out with the connection between private equity
and government speaks to something very interesting about the private
equity business which is the extent to which having connections and
understanding the law and understanding regulations provide huge
opportunities, you can come in, bring in this, you know, expertise in
government and suddenly unlock a lot of value for a company.

That being said --

HAYES: Why is that the case? Because you can get tax subsidies from
the government --

WEISENTHAL: Regulatory arbitraries -- tax subsidies, understanding
what programs can bring your companies benefits, stuff like that.

I think going back to sort of the history of private equity, I do
think there was a time in sort of the heyday when there were a lot of big
American companies that have become old and bloated with executive C-suites
of people who took off at 2:00 on their private jets to visit their family
and do golfing, and they saw it as a huge opportunity. We`re going to come
in, really cut the fat cliche --

HAYES: Right.

WEISENTHAL: But they saw an opportunity there and they made a lot of
money. With all the investments what happens is, people see something
huge, and then more and more rush in and then the opportunities obviously
get smaller, you know, capitalism --

HAYES: Right.

WEISENTHAL: So, then later on in the development of private equity,
it gets much more to be about this thing, about tax arbitraries, and then
the illegitimacy of its profits become more questionable.

HAYES: Explain what tax arbitraries means.

WEISENTHAL: Well, one thing about private equity, it benefits
tremendously from the favorable legal stance towards debt.

So the great thing about Mitt Romney, were he to become president, his
whole career is a testament to the wonders of debt and the wonders of
borrowing cheaply. And I try to think is there some institution out there
that could borrow incredibly cheaply right now, that could afford to spend
a lot more.

The U.S. government could afford to spend a lot more money borrowing
cheaply right now. Hopefully, if he really wants to learn, you know, take
his lessons that he applied in private equity to the U.S. government, that
would be the big lesson that I hope he takes away.

KAREN HUNTER, MSNBC CONTRIBUTOR: What the president has done so
eloquently I think is to ask this question of us: is this how we want
America to be shaped and viewed who make money essentially off of bad debt
or good debt, or make money off of other people`s hard work? And I guess
that is how we kind of started, huh?

But, really, is all of this good? You know, is this -- all of this
money making, is it good? Is it how we want to make money? Is this --

HAYES: That`s the conversation he doesn`t want to have. I think he
wants to have a narrower conversation about practically is this good, is
this -- are you equip to be the president based on this experience. But
the question of, should there be some moral sanction that -- I mean, for
instance, here`s an analogy -- if someone who were running for president
who is a former tobacco executive, right, I think we all share the
intuition that they would get killed for it, right? And rightly, right?

We think -- now, that doesn`t mean we think you should -- I don`t
think you should make cigarettes illegal, right? I don`t necessarily think
they should be outlawed. But I think some moral sanction should attach to
it. I think it would be fair to say -- and the question I think here, the
only way I think to make this argument work in a campaign sense, is to have
some subtext that there`s something morally self optimal about engaging in
the enterprise.

MARCELLUS ANDREWS, BARNARD COLLEGE: Wait a minute, there`s two
questions. One is the question that you pose, the moral question. But
there`s another basic question. Does it work?

HAYES: Right.

ANDREWS: We want capital markets to put capital to the most
sufficient uses, right?

HAYES: Right.

ANDREWS: And we want to fix companies that don`t work, right?

Does private equity do that? Arguably, you might say in the `80s is
what we`re talking about during the break, it might have worked to some
degree in helping some companies get structured, right? It doesn`t work
now. There`s simply no evidence that having private equity creates jobs,
private equity makes companies leaner, private equity makes companies kind
of smarter. There`s no evidence of that, right?

At which point, it strikes me that the president could say, you know,
Mitt, you made a lot of money, that`s really good. You didn`t do much
good, dude.

HAYES: Right.


AMY GOODMAN, DEMOCRACYNOW.ORG: Whether someone makes money, whether
that is good or bad, is what cost? And when we`re talking about the number
of jobs that have been lost, they also think that this whole questioning of
where Romney comes from and the point you raised, Chris, you know, he
doesn`t tout being the governor of Massachusetts, you know, the precursor
to Obamacare, Romneycare, supporting Planned Parenthood and all of these

HAYES: Of course.

GOODMAN: He has reasons not to want to do this.

But it also goes to the power of Occupy, that this election is taking
place in the midst of the Occupy movement that has asked some very serious
questions about inequity and inequality in this country. That`s the flip
side of what Mitt Romney and his car elevators and his Cadillacs represent.

HUNTER: We`ve always had this, right? Since the robber barons --

HAYES: But it has gotten a lot worse.

HUNTER: Right. But that`s not just that, but I think there`s no
moral responsibility on -- you know, we had Rockefeller, Mellon, Carnegie
folks who are extremely wealthy off, you know, a lot of different
industries. But they also gave back.

You know, there was a nation that it was just -- when I think about
Mitt Romney`s donation to the Mormon Church or what-have-you, we`re talking
about a real understanding that there`s a responsibility attached to this
great wealth that I have to now make my country better, as a result.

GOODMAN: It`s private inequity.

ANDREWS: But that speaks to really important basic questions, right?
And I want to come back to the Occupy point. What is the social function
of inequality? We want a Rockefeller to make a lot of money, not only for
Rockefeller gives back, right? But we want Rockefeller to make a lot of
money, for Rockefeller to create a lot of jobs, then for Rockefeller to
empower a lot of people.

HUNTER: Right.

ANDREWS: Americans don`t mind all that much if you make a lot of
money if the rest of us do better, right?

HUNTER: It`s about checks and balances. Right now, we have a lot of
checks and no balance.

ANDREWS: With regard to the Occupy thing, I don`t want to bring in
Obama to do this. You`re right. This does take place in the context of
the Occupy debate, right?

One of the things the Democratic Party doesn`t want to do is have that
discussion, about inequality. The point that you raised.

Now, that speaks to a Democratic Party and I would say it`s a
presidency that I find a little disturbing. That it`s not willing to think
about the function, how do --


HAYES: I don`t think -- I don`t think -- let me just say. I don`t
think it`s quite the case the Democratic Party doesn`t want to talk about
inequality because they do. But they want to talk about it in these very
specific ways. And I think that`s the distinction.

GOODMAN: To talk about it. The question is what you want to do with

HAYES: Well, they want to do things about it in very specific places,
right? So something like the carried -- changing tax treatment of carried
interest gains, right, which are gains you get from these kinds of private
equity deals which are taxed at 15 percent. There`s the Buffett Rule, the
idea that you shouldn`t be taxing that lower than the Warren Buffett
secretary, middle class wage earning work. They talked a little bit about
doing some things in taxation, regulating financial markets. Obviously,
Dodd-Frank is passed.

But something like -- you know, getting back to Joe`s point, what are
they proposing we do to make it not a world in which private equity can
swoop into a company, load it up with debt, extract manager`s fees, take
none of the downside risk, and if it all goes kablooie, still walk away
with a profit, that`s very unclear to me.

WEISENTHAL: Well, you could have a radical retreatment -- a radical
retreatment of the tax code would actually be to take away the advantages
of debt. And this would -- and if you actually look at the causes of the
crisis. So, somehow, after the 2008 crisis, the national debt became a
really big issue.

HAYES: Right.

WEISENTHAL: The national debt had nothing to do with the crisis.
It`s not an issue at all slightest.

ANDREWS: It made it much worse.

HAYES: Right.

WEISENTHAL: Right. Absolutely. The expansion of the debt is what
saved the economy.

Private sector debt is a really big issue on the household side and on
the corporate side. And, you know, right now, the private sector continues
to deliver and that`s good. But in the broad scheme of things, this
question of: should we be prioritizing or should be favoring debt so much
in the tax code --


WEISENTHAL: It might be a really big problem if we tried to do
anything about it. But it would be a legitimate question that would really
be fundamental.

ANDREWS: Let me piggy back off of that. At one point, we used to
give favorable tax treatment to consumer debt and now, we don`t.

HAYES: Right.

ANDREWS: Right? And we stop doing that for a variety of reasons. We
can revisit this --

HAYES: We have a blockbuster chart that would blow your mind about
the preferential treatment -- that`s the kind of Joe Weisenthal tease, a
headline at "Business Insider".

We have a blockbuster chart that will blow your mind on the
preferential treatment of debt in the tax code right after this break.


HAYES: Joe Weisenthal of "Business Insider" said the entirety of Mitt
-- the lesson of Mitt Romney`s career is a testament to how awesome it is
to take on debt when debt is cheap and how good it can be and how much it
can increase the value of the enterprise that takes on that debt.

Here, effective tax rate for corporate investments financed with debt,
versus investments financed with equity. That`s the equity financing. You
have an effective tax rate around 37 percent. And debt financing, you get
a tax subsidy of about 4 percent.


HAYES: So, there -- this is one of the big ways that private equity
works when we talk about tax arbitrage is you`re moving -- literally,
you`re moving things from one column of the accounting ledger to the other
from a place where they get taxed heavily, to a place where you got a tax
subsidy. I mean, in that respect, in terms of thinking about it as,
something making markets more efficient, it`s constructed -- it is an
artifact of a set of policies about tax stream.

It would be like you went to Indiana, bought a truck full of
cigarettes, drove them to New York and sold them. You can make a neat
profit because cigarettes are taxed in New York much more. You can
undersell and reap the profit, but it`s not like you`re doing some amazing
thing in the Adam Smith sense of the market of innovation. You`re just
taking advantage --

WEISENTHAL: If people selling cigarettes and buying cigarettes in low
tax states and selling them in high tax states is not the essence of what
the financial crisis was about.

HAYES: Right.

WEISENTHAL: This was exactly, like, square on, a big part of why the
economy collapsed in 2008.

HAYES: Because of the preferences to take on debt.

WEISENTHAL: Because every entity that could be (INAUDIBLE).

ANDREWS: But the interesting thing that -- if you look at the diagram
if we can, one of the interesting things about it is that when we usually
think about capitalists, what capitalists do is take on risks, right?


ANDREWS: So you put your equity at risk and you get a return. If you
look at that, what you see is the circumstances where we subsidize people
not to take on risk, but to transfer a risk. And to the transfer it to the

HAYES: Right.

ANDREWS: Which is the banks are insured. They`re transferred.

WEISENTHAL: That equity component it`s as small as possible. The
equity is some representation --

HAYES: Explain what that means. What does that mean equity -- what
you`re saying is that in the same way that -- in the analog of the whole --

WEISENTHAL: Right. Exactly.

HAYES: Five percent down.

WEISENTHAL: Five percent down, well, why not make it 1 percent --
which is what we did on the inside. But also, here, you know, buying a
company, the principle is not that different. The structure -- the
incentive, if the equity represents your risk, the structure of the tax
code encourages you to put as little risk in as possible and to transfer
that out to whoever else.

HAYES: And I should say when we have the tax reform discussion,
interestingly enough, people will identify on the right and the left. I
mean, the -- in its framework for tax reform, the Obama administration has
identified tax code preferences for debt over equity as problematic. It`s
something to address in tax reform. It`s actually something conservatives
a lot about in terms of how it distorts the incentive.

But I love this idea of Mitt Romney as someone who his whole life is
about the virtues of debt and how you can explore debt, and now he`s
running for the nomination at the time when he`s running with the debt
clock behind him and debt has become the signifier in the minds of the
populous. It`s a very simple, concrete symbol and token of how we lost our
way, right?

And then the private debt has been moved on to the public debt balance
sheet, as a way dealing with the crisis. And now, everyone wants to turn
around saying government got too much debt.

HUNTER: But we`ve created this culture, right? We`ve created this
culture where we expect to do very little and get a higher return, right?
We`ve created a culture where we now invest in companies that I`m not even
sure what they do, right?

We`re going to talk about Facebook later. How do they make money is
the larger question. As somebody who`s been intimately involved in going
out and getting venture capital, I`m amazed that what people put their
money into and you`re like $50 million for a urban box, really? How does
that work, you know?

HAYES: Right.

HUNTER: And then when it implodes, we all sit around and, you know,
oh well, we`ll just write it off and go on to the next thing. That`s our
culture. We do have to address what is it we want to stand for moving in
the future. Is this how we want to be defined?

HAYES: This gets us back to our question, which is what do we want
capital markets, a well-functioning capital markets, what should we be

ANDREWS: What I used to tell my students, to have a well-functioning
capitalist economy, what the capital market does is price future income,
right? You put money in to venture. If it works, it`s going to be some

So, you buy a share of stock because you want a piece of that future
profit, right?

HAYES: It`s a claim on future earnings.

ANDREWS: It`s a claim on future earnings, right.

You lend people some money because they`re going to be guaranteed to
pay you back in the future. That`s what the capital markets supposed to
do. The prices are supposed to reflect what guesses about what that future
is and that future is kind of murky, so you get everybody together and they
compete and you come up with an average consensus price.

What we -- the system we`ve constructed, to come up with your point
and your point as well, the system we constructed makes asset prices
meaningless because what we`ve just done is we said, borrow as much money
as we can, take as little risk as we can, right? And make sure that you
put the risk on the stockholders who can`t afford to avoid it -- that would
be us, the taxpayers and the people who therefore know the least about
these things.

So Mitt Romney ends up making an enormous amount of money putting the
risk on people who don`t know anything about it.


WEISENTHAL: I`ll respond to that. Far be it for me to question the

ANDREWS: Oh, people question us all the time.

WEISENTHAL: Doing pricing assents. But in defense of Mitt Romney --

HAYES: Please, that`s why you`re here.

WEISENTHAL: Everything is voluntary. Now, grant it, not people
getting laid off. But he has to go out and borrow the money from someone,
the private equity firm has to go out and borrow the money from. There`s
not a machine out there that he presses a button and says oh, I`m going to
put half a billion dollars into this and now you can be $9.5 billion in

Someone has -- he has to make the case to someone. Now, there was a
bubble before, you know, in the 2000s in which it became extremely easy to
borrow money. Money was cheap.

HAYES: And we saw the private equity.

WEISENTHAL: People believed in this thing called the great moderation
which we`re never going to having another crash again.

But people did put up risk, people did lend to these entities
voluntarily. It wasn`t just like, we`re just going to throw it off.

Most of the companies that Bain Capital invested in weren`t the type
that got big bail outs during the collapse and so on. Bain is kind of the
different story because they have --


WEISENTHAL: Yes, back stop. But for the most part, the people who
took the looses on things were people who entered into them voluntarily.

ANDREWS: I absolutely agree. But the voluntary nature of taking that
losses, not the issue, isn`t the issue that somebody like Mitt Romney comes
along and he puts his own money at risk and he borrows enough money and he
makes it work, right?

The question about the nature -- what the capital market is for, do we
want the banks to lend money to these guys to do this? Or do we want the
big banks to lend money to other people to do other things.

HAYES: Right. And is it channeling -- and is it channeling capital
in the most --

ANDREWS: Channeling scare capital to the most efficient use.

HAYES: And that brings us to our next question about the Facebook IPO
and whether it was rigged to screw retail investors. We`ll talk about that
when we come back.


HAYES: Last week, the pending Facebook initial public offering
dominated the news cycle. But all the really interesting news came out
after the company actually went public. At the close of the market
yesterday, the stock was trading at $31.90, down almost 18 percent since
the IPO.

What was supposed to be kind of a corporate celebration for the
company has turned into a debacle. The first screw up was the technical
glitch in the processing orders for stock purchases. The news got worse
when reports surfaced, largely of "Business Insider" where Joe works, that
analysts for Facebook`s underwriter banks lowered their future revenue
estimates and told some investors but not all.

This week, three people filed a class action lawsuit against Mark
Zuckerberg and the underwriters, alleging that Morgan Stanley was told that
Facebook`s revenue this year could be lower than estimated. The bank kept
that information on the inside and did not share with ordinary investors.

Now, Massachusetts secretary of state is subpoenaing Morgan Stanley,
Security and Exchange Commission Chairwoman Mary Schapiro is promising to
review issues related to the IPO and the Senate Banking Committee wants to
know more. There was a time when stocks used to be the most benign and
vanilla instrument on Wall Street.

What happened?

Joining us now at the table is CNBC contributor Dan Dicker, a licensed
commodity trade adviser and president of MercBloc LLC, a wealth management

Dan, it`s great to have you back.


HAYES: All right. So what do we make of this? I mean, screw-ups can
happen anywhere, right? I guess the first thing I want to ask is, is this
a screw-up that`s just contingent accidental? Or does it say something
about what is going on in our financial markets?

DICKER: Well, let`s do a little reconnaissance here for a second. I
mean, we have a group, a generation of investors that have been lost over
the last 10 years. We call the years between 2000, 2010 the lost decade of
stocks because the indexes have, in fact, gone nowhere for 10 years.

HAYES: Right.

DICKER: And that makes people --

HAYES: If you put in your money in 2000, right now, you have no

DICKER: Correct. That means people of a certain generation, my
generation, maybe a little bit younger, to have lost confidence in the
stock market. We can see over the course of the last four or five years
that the gains made in the stock market have been made entirely without
what we call the retail investor, those guys like me who were trying to
play by the rules. You put your money in, you wait for the dividends to
compound and, in fact, it hasn`t worked out in the last 10 years.

So, here`s the sub text of what`s running through. We`ve lost all of
these retail customers. This was an IPO that was decidedly to try to get
them back, not only for the Occupy Wall Street crowd. Remember, this is
the application of the Occupy Wall Street crowd, of the 99 percenters, of
the one that inspired the Arab Spring, the Chinese dissidents.

This is the app that`s going to bring not just the 20-somethings, but
the parents who still have their 20-somethings in the basement living
there, with the whole bunch of educational loans and can`t get them out of
the house but they still have to work for another six or seven years
because they`ve got to put off their retirement.

Here it is, here`s the IPO of the century. This is the one. this is
the one that`s going to make everybody, going to make the bring the retail
customer back, and with this massive opportunity brought to Wall Street, to
bring an entire generation back to the stock market that`s been lost for
the last 10 years --

HAYES: Very interesting.

DICKER: -- it was bollixed entirely on every level, by the
underwriters, by Facebook, by the exchanges, by the media. Everyone had a
piece of destroying what could have been a grand reintroduction of an
entire generation back into the equity markets.

HAYES: You`re talking about Facebook and what Facebook does in terms
of connecting people as having this fundamentally small-d democratic ethos.
We have, you know, it`s empowering people with platforms they wouldn`t have
had before. I mean, this is the remarkable thing, about Facebook, I have a
friend who is a grad student doing really fascinating research I`ve
mentioned before on the program on basically the life of teens and the
digital stream, particularly teenagers in Harlem and their online life.

And what`s remarkable and the power of Facebook in this respect is
that, you know, someone who`s a 16-year-old who lives on 130th Street has
more instant access of a platform to talk to people than a tenured
professor did 40 years ago, right? If you wanted to tell 500 people
something 40 years ago, what did you do? Start a phone tree? You start,
you know, putting up things, you know?

So in that way, it is distributive and empowering. And then,
everything about the way the IPO has happened seems the opposite. It seems
like the rigged game that we`re all familiar with, where there`s a
distinction between people on the inside and those who are on the outside.

WEISENTHAL: I mean, I was -- it should have been the easiest IPO in
the world. The demand was just remarkable. It shouldn`t even matter that
it was overvalued by an traditional metrics. Everyone wanted in. Everyone

Everyone expects that you pay too much. So, just the level of screw-
ups from all down the line from perhaps Facebook not understanding and what
you need to put in the S-1 to be clear, to the NASDAQ --

HAYES: The S-1 is the disclosure form you have to file with the SEC.

WEISENTHAL: Before a company goes public, they have to file all of
the relevant information in this filing called an S-1. And basically, it
spells out every last detail of the business.

And there`s this question of were they clear enough in the final S-1
just days before it went public, that business had actually started to slow
down, that they were seeing weakness in recent months and people knew the
analysts who covered the stock for the banks, clearly, they got word from
the company because they all lowered their forecast at exactly the same
time, to the exact same number. It was not obvious from the S-1 that that
had happened. So -- and then, you know, that was one screw up.

And then, you know, that was screw-up. And then you have this NASDAQ
technical glitch, the trading didn`t start for half an hour, and for the
full day, people didn`t know if they had gotten shared that they had
ordered. So, it was just a remarkable chain of events.

HAYES: Amy, Dan just mentioned the media coverage of this. I wonder
what you make of the media frenzy that we had over this IPO.

GOODMAN: Well, I think overall, now, talking about the level of
corruption -- I mean, especially you`re talking about what Facebook
represented to so many people in the world, the sense people always looked
for a hero, it was Steve Jobs, it`s Facebook, everyone will now glory in
the profit, and yet the same old thing happened.

And what about the banks? And what about the financial institutions
like Morgan Stanley?

DICKER: Even the banks didn`t benefit that much. I mean, they were
forced to use their entire green shoe to support the stock on the first day
so it wouldn`t be a total disaster.

HAYES: What is a green shoe?

DICKER: We`ll go through this, but we won`t go too far. But
basically, they are fake shares that are generated through the IPO process
so that the investment bank --

HAYES: Wait, what?

DICKER: I kid you not. Joe will confirm this on me. They are fake
shares that are created so that there is a short interest generated into
the investment banks so that they can provide to a certain degree --

HAYES: Oh, it`s like a margin for them.

DICKER: And it allows them to press the stock upward or in other
ways, support the stock so that the institutional players, those inside the
syndicate and everybody else who`s involved in this IPO has a good
opportunity to get out for at least a scratch, if not a profit. I mean,
it`s an incredibly stilted process.

HAYES: They come along -- basically, they lift the car up, the
investors go in, grab their case or whatever, and they left car crashing
down (ph).


DICKER: The investment bank can go to the original issuers and say we
want these shares back at the original IPO prices.

HAYES: I want to hear the blow-by-blow of this. Wait a second, we`ll
take a very quick break.

More of the blow-by-blow on how the green shoe works right after this.



UNIDENTIFIED MALE: I think that after the latest debacle that the
Facebook IPO.

How about the Facebook IPO? It was a total disaster. Just a total
fiasco. I told you it was going to be bad.

UNIDENTIFIED MALE: A lot of people turning negative on the future of

UNIDENTIFIED MALE: Is the honeymoon over for Facebook?

UNIDENTIFIED MALE: The fallout from Facebook -- yes, it rages on. My
guess is he`s going to be spending more time with his family. Let`s give
it a couple of months after this settles.

UNIDENTIFIED MALE: I don`t know what to say about this. I`m afraid
to say anything.


HAYES: That`s just a little taste of the coverage of the Facebook IPO
in the wake of it in this past week, it debuted a week ago from Friday.
But this week was a first week of it in the markets.

Joe, what is your understanding of why this was such a debacle?

WEISENTHAL: I mean, there were a few things that really harmed the
chances of it. First of all, it`s been a very bad few weeks in the market.
I think that stepping back to the real big picture -- timing matters.

HAYES: Right.

WEISENTHAL: People have been getting skittish about all kinds of

Facebook sold an insane amount of stock. So one of the reasons that
IPOs tend to pop on the first day is because there`s a shortage. People
are excited like, I want to buy into LinkedIn, or I want to buy into
Groupon, or whatever it. Well, there just aren`t that many shares

Facebook issued way more shares that most. So, that also. Now,
theoretically, that shouldn`t have -- and this gets to the failure of asset
markets to pricing. The number of shares that exist shouldn`t technically
change the evaluation.

ANDREWS: Exactly.

WEISENTHAL: But it does. It seems to be the thing to happen in the

And there`s this issue that as the road show is going on, the road
show is when the company sold the stocks to institutional investors before
it goes public, that words started getting out that the company was not
doing so well.

Then, also, in the days before the IPO, there was that news item that
G.M. had decided to stop advertising on Facebook. So, there was -- it
seemed like the IPO that should have been amazing suddenly had several
things that on is own wouldn`t have been a problem. But a series of things
that went wrong.

DICKER: Don`t forget the greed factor. Don`t forget the greed

HAYES: Right.

DICKER: They increased the number of shares, floated by 25 percent.

HAYES: Because they want more money?

DICKER: Yes. I mean, the investors, the venture capital firms wanted
more money. Facebook itself, Zuckerberg, they all wanted more money.

GOODMAN: I think Democratic Underground put it very well.

First, corrupt bankers picked to sell the stock. Second, corrupt
bankers filled media with sales corporate propaganda. Third, corrupt
bankers make IPO unavailable to anyone but the rich.

Fourth, corrupted market claims technical difficulties for first two
hours stock is traded. Fifth, corrupt banks dump stock leaving costumers
and investors with huge losses. Sixth, corrupt banks spread propaganda
supposedly explaining what happened.

Seventh, corrupt financials professional, economist, writers all
invent more lives fitting their corrupt paradigm. Eighth, corrupt
politicians being concerned collect more campaign money.

HAYES: As someone who works at the market, does that sound like --

DICKER: That`s a bit over. Just a bit over. But it`s true. This
one was bollixed in eight ways.

The retail broker was the one that got hurt the most. I mean, the
ones that are suing are Knight and Citadel. I mean, there`s the ones who
are really stuck with huge retail claims against them from people who
wanted a fair price on this.

HAYES: Wait, you said not just bollixed.

GOODMAN: Yes, not just bollixed. It`s corrupt.

HAYES: That`s the question -- and that`s the big thing here, I think,
in terms of we look at the IPO. When we think about this, this distinction
between people on the inside and people on the outside, right, the regime
of securities regulation that begins in the New Deal, that still extends
forward, right, is about getting rid of to the extent possible, right,
leveling the playing field and throws them information, right?

Everybody`s got to have access to the same information. It explicitly
bans insider information. And what it seems like from the reporting that`s
been done by your boss at "Business Insider," Henry Blodget, is that there
were two tiers of information around this stock, and that fundamentally
that`s not a mistake.


DICKER: That`s the way the IPO process in general works. So, to be
involved in the IPO process is to understand that these are biased
mechanisms. They advantaged certain parties compared to other certain

HAYES: I want to find out which parties they advantage, right after
we take a quick break.


HAYES: Joe Weisenthal of the "Business Insider," you wanted to
respond. This question here I think is an important one about this is
incompetence, this is bollixed stuff, or this is corrupt, there`s
fundamentally different tiers of information.

WEISENTHAL: Well, so one of the things -- you know, people talk about
level playing field. What does that mean in practice? Who actually was on
the lower tier?

What`s interesting is the underwriting firms themselves are in
multiple tires.

HAYES: When we say underwriting --


HAYES: Right. Morgan Stanley was the lead bank that took Facebook
public. So, there is -- their institutional clients like the hedge funds
and mutual funds, who bought a lot stocks, they were the ones who knew that
business had gotten weaker. They were the ones that were given access to
these newly revised analyst forecasts.

And it`s worth noting there`s analyst forecast and then there`s
guidance. So, guidance is when a company gives a forecast and -- but then
analysts can make their own estimates. In this case, what they`re calling
analyst forecast was just guidance, because they got it from the company
and then they passed it on. And we know this because all of the analysts
at the different banks had the exact the same numbers.

HAYES: Had the same number, right.

WEISENTHAL: So what the retail -- so the wealth managers, so they
have Morgan Stanley has its institutional clients. But then they also
have, you know, your Morgan Stanley wealth management that might have
helped someone with their retirement.

HAYES: Right.

WEISENTHAL: They weren`t given this --

HAYES: Even internal to the --

WEISENTHAL: Right. So there`s two different tiers within Morgan
Stanley. And then that creates a problem. That`s where people are really
angry at the bank for that.

HAYES: Marcellus?

ANDREWS: I`m listening to you guys explain something very important.
And one of the things you`re explaining is why I don`t own all that many

DICKER: And perhaps why so many people have lost interest in owning

ANDREWS: Exactly, because you just described the situation where I
don`t have the information to make judgments. This is amazing. Is this a
regulatory problem? Or is this simply the way the market`s got to work?
Does it have to work this way?

DICKER: That`s an excellent question and difficult. This is -- all I
can say is this is the way the market has always worked.

Now, part of the problem it seems to me has been in the mechanization
of the market and the lack of human contact that has gone on particularly
in the last five years, part of the problem that happened with the Facebook
IPO was particularly related to NASDAQ and the insane amounts of volume
that are being driven through there through high frequency trains and guys
who are shorting stock that they don`t really own that`s really doing some
guesses on whether these guys really have the right to short things, and
they`re making adjustments and they`re going back and forth.

I would say that the IPO process worked like this a whole lot better
when you got sort of analysts into a room. You had mutual fund managers.
You had the institutional investor and everybody sort of collectively
created a price that kind of worked, at least to start of stock of.

Now it`s become this kind of whirlwind mechanized, high frequency
trade monster. Particularly in a stock this large, it became just this
behemoth, this Frankenstein, this mess.

GOODMAN: What did Morgan Stanley know and when did they know it?

WEISENTHAN: Well, they do -- I mean, they have an intimate knowledge
of the business. And they will say, we did everything --

HAYES: To the letter of the law.

WEISENTHAL: To the letter of the law and also how we`ve done every
single other IPO, which is that we know what`s going on. We talk to the
company. We`re not allowed to produce official research report estimates,
but we do get -- we do know the numbers and we can do, can tell certain
clients that.

GOODMAN: So, we give information to 1 percent, and we leave the 99
percent --


WEISENTHAL: And for the most part, people who have their money with
Morgan Stanley wealth managers are probably pretty close to that 1 percent,
as well.

I think, you know, one of the things -- so the IPO does come off as
seeming incredibly corrupt, you have the road shows, not everyone is in.
For most companies aren`t Facebook, they actually do need selling.

HAYES: Right.

WEISENTHAL: Most people don`t know who they are, are smaller
companies. So, it made sense for a lot of things that you had to go on
this road show and advertise this.

HAYES: CNBC contributor Dan Dicker, thanks for coming back. We
really appreciate it.

DICKER: Thanks.

HAYES: What do we know now that we didn`t know last week? My answers
after this.


HAYES: What do we know now that we didn`t know last week?

After a full week on NASDAQ, we know now the most heralded initial
public offering in the last decade was also the worst performing IPO of the
decade. We know that the stock lost 18 percent of its original share price
and $38 at its IPO to $31.91 Friday.

We also know there are reports that midway through its road show for
IPO, big Wall Street banks managing the offering, cut the revenue
projections for Facebook, and only communicated this to the big
institutional investors, not retail investors.

We know that stock transactions are the one of the most rigorously
regulated areas of our financial landscape that even with a long tradition
of relative transparency and oversight, they remain ample opportunity for
insiders to game the system.

We know that Senate Banking Committee has invited JPMorgan Chase CEO
Jamie Dimon to testify on June 7th, about his firm`s massive quarterly loss
on a bad bet on credit derivates. We also know the staff director for the
committee is, lo and behold, a former JPMorgan Chase lobbyist. We know
that Dwight Fettig was a registered lobbyist for the bank, according to
2009 disclosure filings and we know he was hired to work on financial
services regulatory reform on behalf of the investment bank.

We know he is staffing the committee tasked with overseeing the
industry, and while we don`t know just where his allegiances lie, we can

Thanks to NBC News national investigative correspondent Michael
Isikoff, we now know what the next frontier of billionaire super PAC donor
access looks like. We know Harold Hamm, CEO of the company that calls
itself "America`s Oil Champion," was named to be Romney`s top energy
adviser in March, and thanks to recent FEC disclosure filings, we know that
a month later, he contributed nearly a million dollars to the pro-Romney
super PAC Restore Our Future. We`re fairly certain that we`re going to be
seeing a lot more billionaire benefactors with financial stakes in the
major policy debates populating the ranks of Mitt Romney`s policy advisers
in the months to come.

We already knew that Alan Simpson is performing an elaborately self-
referential caricature of a cranky old man after taking to the airwaves and
saying things like this.


ALAN SIMPSON, FORMER U.S. SENATOR: Grandchildren now don`t write a
thank you for the Christmas presents. They are walking on their pants with
their cap on backward, listening to the Enema Man and Snoopy, Snoopy Poop
Dog, and they don`t like them.


HAYES: I love that bite so much I`m just going to play it again.


SIMPSON: Grandchildren now don`t write a thank you for the Christmas
presents. They are walking on their pants with their cap on backward,
listening to the Enema Man and Snoopy, Snoopy Poop Dog, and they don`t like


HAYES: But we now know that this animus isn`t limited to the use of
America, but extends to his fellow fogies. In a letter to a California
senior groups that was critical of the Simpson/Bowles budget proposal,
Simpson attacked the group for using pictures of young people on its
fliers, writing in a letter recently made public, "What a wretched group of
seniors you must be to use the faces of the very people that we are trying
to save while the greedy geezers like you use them as a tool and a front
for your nefarious bunch of crap." And telling the group that if they can`t
understand the basics of the Simpson/Bowles approach, they, quote, "need a
pane of glass up your navel so you can see out during the day," exclamation

I don`t really know what that means.

I want to find out what my guests know now they didn`t know when the
week began. Let`s start with you, Marcellus, what do you know now?

ANDREWS: Oh, many things. Principally, that plutocracy doesn`t work,
that`s what I know. I know that in watching the JPMorgan disaster and in
watching the Facebook disaster, I know that not only do financial markets
have the difficulties that we as college professors talk about all of time,
but I know for certain now that unless we fix this, this nation is in
unbelievable trouble. That I really do know.

HAYES: What a risk of the system.

Joe, what do you know?

WEISENTHAL: I learned something that I saw on Twitter, which was a
great quote from Mitt Romney about how, of course, he`s not going to cut
the spending like crazy, if he wins, because that would harm the economy.
So, he knows that spending cuts harm the economy.

HAYES: Yes. This is really interesting. This is an interview with
Mark Halperin and I had picked up on it and talked about it with Rachel
Maddow and it got around yesterday that he basically, when Mark Halperin
said, are you going to frontload those cuts, why not just get them off? He
said that would be crazy if we took $1 trillion out of the economy, we
would -- that by definition would put us into the recession and depression.

It gets to this whole question that we`ve been talking about on the
show, which is how much do the Republicans believe their own talking

WEISENTHAL: I thought for a while when -- that austerity is strictly
what the out of party advocates, and now --

HAYES: When they get in power.

WEISENTHAL: Now they are in power and already revealing it.

HAYES: Amy Goodman, what do you now know?

GOODMAN: I know the media likes to cover soldiers and veterans and
they should, but not when they are questioning the military. I just came
back from the major NATO summit protests where thousands gathered -- a very
solemn ceremony of 40 veterans of the Iraq and the Afghanistan wars who
hurled their medals back at the NATO generals toward the NATO gates.

I am thinking of Aaron Hughes one of the organizers of Iraq Veterans
Against the War as he hurled each medal, he said this is for the 18
suicides a day of veterans. This is for the sexual harassment of the women
and men in the military. And this one, he throw the final one and said,
and this just to say I`m sorry.

This is a ceremony as we move into Memorial Day what we should know
about, and particularly about Mary Kirkland who is a mother who lost her
son, Derrick, to suicide. He tried to commit suicide in Iraq, was brought
back and sent to a German hospital. She was part of this ceremony --
ultimately was sent back to Fort Lewis and there they deemed he was low
risk for suicide and released him and the next day, he killed himself.

HAYES: We`re going to have Mary Kirkland on the program tomorrow
actually as a matter of fact, and talking about Memorial Day.

Karen Hunter, what do you know?

HUNTER: Well, what I learned this week is that individual racism was
tied to ignorance and a limited I.Q. I now know that is not the case --
thanks to the UCLA`s medical school which has singled out Christian Head
who is the first and only African-American tenured professor there for
racist attacks and ridiculed, among other things that they did to him. And
you can go on YouTube and watch it. Christian Head is his name.

They put his head on the face of a gorilla and had it sodomized, it
was some horrific things. But it discovers, you know, but these are
doctors who taken an oath to first to do no harm and have completely
assassinated this man`s character just simply because of the man`s color of
the skin, and we really need to do something in this country about that.

HAYES: My thanks to Professor Marcellus Andrew from Barnard, Joe
Weisenthal of BusinessInsider.com, Amy Goodman, of course, of Democracy
Now, MSNBC contributor Karen Hunter thanks for getting UP today.

Thank you for joining us today for UP. Join us tomorrow, Sunday
morning at 8:00 a.m. You can go online to Up.MSNBC.com for information
about upcoming shows and guests.

Coming up next is, of course, "MELISSA HARRIS-PERRY".

Melissa, what have you got for us?


We are going to dig further into this education question and
particularly Romney`s education plan and, you know, actually want to take
this opportunity to jump back a little bit and ask, wait a minute, are we
even asking the right questions?

We`ve got a great panel of education reformers. Also, going to ask
whether or not President Obama is actually a big spender or a frugal fanny.
And I also want to ask about the issue of the new black politician and all
of what was made of the Cory Booker thing, and also, I`m going to have a
cigar. But you got to watch to find why.

HAYES: Wow. I don`t know if they allow that in Studio 3A.

That`s Melissa Harris-Perry coming up next.

We`ll see you right here tomorrow at 8:00. Thanks for getting UP.


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