'The Rachel Maddow Show' for Tuesday, June 12, 2012

Guests: Bernie Sanders, Ylan Mui, Josh Rogin

EZRA KLEIN, GUEST HOST: Good evening, Michael. Thank you for that.
It`s very kind.

And thank you to you at home for staying around for the next hour.
Rachel has the night off but we have a ton of news in the show tonight,
including of all things a crucial development regarding Spiderman.

So, here`s one of the biggest oddities in all professional sports.
You ready? The great state of New York has three -- count them -- three
different professional football teams. There`s the Buffalo Bills, the New
York Jets and the New York Giants. One state, three football teams.

Now, there are 22 states that don`t even have one NFL team. I come
from an hour south of L.A., which is not in itself a state but it also does
not have a football team, quite to our annoyance.

But the state of New York, the great state of New York, is blessed
with three of them. The odd part, though, is that of the three New York
NFL teams, only one of them actually plays in New York. The Buffalo Bills
play all their home game in a place called Orchard Park, New York. It`s
right outside of Buffalo.

The Jets and Giants, they both play not in New York but rather in New
Jersey. That`s right. The New York Jets and the New York Giants are both
based out of New Jersey. They in fact share a stadium in New Jersey called
the MetLife Stadium.

When the Jets are playing there, the stadium is lit up in green, very
fancy. When the Giants are playing there, the stadium is lit up in blue.
I think I like the blue.

If you happened to be driving by MetLife Stadium in New Jersey
yesterday morning, your face was probably a nice bright shade of red -- you
see how we did that? Because this is what it looked like, bumper to bumper
traffic, gridlock, nobody moving much more than a few feet for hours.

Now, was there some big sporting event at MetLife Stadium or some big
concert causing all of that traffic? No, it was not. It was Monday
morning. There was instead a giant water main break, a 12-inch water main
buried beneath the ground near MetLife Stadium erupted yesterday morning
around 3 a.m., turning one of the busiest roads into New York City to what
looked more like a parking lot. Traffic was backed up for miles all
because of a water main break.

And it wasn`t just New Jersey actually. Let`s say you were due in
court this morning at around 9:00 a.m. at the John R. Hargrove Sr. district
courthouse in Baltimore, Maryland. What you would have found when you
showed up for court this morning was the entire courthouse was shut down.
Baltimore courthouse was shut down today after -- you guessed it -- a giant
water main broke right nearby.

In St. Louis, Missouri, this morning, police had to close off several
lanes of Hampton Avenue to any vehicle traffic at all after a 36-in water
main broke right underneath that street. Hampton Avenue is one of the most
heavily trafficked streets in all of St. Louis.

In downtown Atlanta, again this morning, three of the four lanes of
Central Avenue had to be shut down after a giant water main broke there as

Now, this was the scene yesterday afternoon in Pearl City, Hawaii,
right outside of Honolulu.


REPORTER: They`ve seen water main breaks along Komo Mai Drive before,
but this one made an even bigger splash Monday afternoon.

UNIDENTIFIED MALE: I heard the noise, started hearing rocks flying,
some kind of glass noise and I heard water whipping out from the ground.
It was like old faithful.

UNIDENTIFIED FEMALE: It was just water falling, like gushing through
and can`t do anything by then.

UNIDENTIFIED FEMALE: They`re going to get flooded down there though,

UNIDENTIFIED FEMALE: It was a street like a river down to the
(INAUDIBLE) just going down, collecting with all the other water that was
shooting up this way. I was calling my mom crying. All you could hear was
the roar of the water flying past me.


KLEIN: Every day across the United States, an estimated 700 water
mains break -- 700. These water main breaks cause traffic delays, they
cause damage to lives and property. They cause disruptions in the drinking
water supply, which they carry to our homes.

Maybe you`d say it`s supposed to be like this. Maybe this is the cost
of having water.

No. Every few years, the American Society of Civil Engineers issues a
national report card on America`s infrastructure. You probably heard, the
latest report gave us the grade of D, sad.

But when it comes to water infrastructure, things like water mains, it
was even worse than that. We got a grade of D minus. And part of the
reason for that is our water mains in this country are really, really old.

Right now, the city of Evanston, Illinois, is in emergency repair mode
after eight separate breaks occurred along one water main in the span of 48
hours. Quote, "It`s being caused by the age of the system, and the ground
the water main is buried in," said Utilities Director David Stoneback,
adding the pipe`s contact with the ground for more than 86 years has been a
factor in the problem. You think?

In all, 30 percent of the pipes that are now serving major population
centers are between 40 and 80 years old. We are now in crisis mode when it
comes to the water infrastructure in this country.

And the cost to fix it: about $335 billion over the next 20 years.
That`s a lot of money. That`s the bad news.

The good news, there has never been a better time to fix it than right
now. Things like aging and broken water main -- that is exactly what we`re
talking about when we talk about infrastructure. And infrastructure just
happens to be the best deal in the economy right now.

Here are the reasons: we have construction workers who aren`t
productively employed. The unemployment rate in that sector is about 14
percent, it`s a depression. The global slowdown has meant a slowdown in
construction costs because raw materials are cheap because countries like
China and India aren`t using as many of them, much as Europe.

We have factories that are lying dormant that could be making those
materials and employing people to produce those materials that aren`t
currently being productively used for other things, and we have money that
is on the table to borrow for essentially less than nothing.

Let`s be clear -- putting this stuff off is not fiscally responsible.
A dollar of delayed of infrastructure maintenance is like a dollar of
borrowing, a dollar to pay later. But when you delay the infrastructure
maintenance, that $1 today can become $50 tomorrow -- as a bridge you were
going to fix has now collapsed.

So we need to do it. It`s cheap to do it. And it gives people jobs.
It is an unbelievable deal. In any world we should be doing it and yet
we`re not.

There be are some things in American politics and policy that we
should be having real arguments about. When Mitt Romney says, for
instance, we don`t need more public sector workers, he thinks we as a
country of too many firemen. It`s an argument we should have. It`s a fair
argument, an argument on the size of the public sector.

But if he thinks we shouldn`t be spending as much money on teachers?
Fine, that`s also an argument we should have.

But nobody thinks we don`t need to fix water mains. I mean,
literally, nobody thinks that -- not Mitt Romney, not Barack Obama, not
even archconservative members of the U.S. Senate like James Inhofe who
thinks that we should be spending more in infrastructure than we currently
are. Earlier this year, Congress extended the payroll tax cut. Reasonable
people can disagree about whether we needed more payroll tax cuts. Giving
people more money that isn`t in their paychecks isn`t necessarily buying
anything for us as a country. It`s supporting the economy, but it`s a
temporary boost, we don`t get anything tangible and permanent out of it in
the long run.

It`s the sort of thing Republican Congressman Paul Ryan called sugar
high economics in fact, again, a temporary boost, not much else.

I don`t really agree, but reasonable people can have that discussion.
We can have a discussion whether or not it`s sugar high economics.

But you can`t say that doing things like fixing water mains is sugar
high economics. You get something tangible in the end. You get a new
water main.

Not all infrastructure is what you can see with your eyes -- roads and
bridges. Sometimes it`s the stuff under your feet. It`s bringing water to
your family.

Even if tomorrow the economy recovered completely, we still as a
country need to fix our water mains. It`s one of the things we need to do
no matter what. And now is not only as good a time to do it, it`s a better
time than almost ever to do it.

But instead, we have traffic pileups for hours and hours, in city
after city, while we sit and do nothing. If this is the time to do it, the
question is: why aren`t we?

Joining us now is independent senator from Vermont, Bernie Sanders.
Senator Sanders is on the Senate Committee for environment and public works
and the budget committee.

Senator Sanders, thank you for being with us tonight.

SEN. BERNIE SANDERS (I), VERMONT: Great to be with you.

KLEIN: So, why aren`t we?

SANDERS: Well, the answer is pretty simple -- everything you said is
true. Everybody knows you have to invest in infrastructure. We can create
millions of decent paying jobs in the long term and I speak as a former
mayor, you obviously save money because you don`t have to do constant
repairs as we`ve just seen.

The simple reason is I`m afraid that you have a Republican mindset
that says, hmm, let`s see, we can repair the infrastructure, save money
long time, create millions of jobs, bad idea. Barack Obama will look good.
And we`ve got to do everything that we can to make Barack Obama look bad.

So, despite the fact that we had a modest bipartisan transportation
bill, roads, bridges, public transit pass the Senate with over 70 votes,
Inhofe, the most conservative guy in the Senate, working with Barbara
Boxer, one of the most progressives, we can`t get that bill moving in the
House of Representatives.

So if you`re asking me why, I would say 100 percent political. If
it`s good for America, if it creates jobs, if it`s good for Barack Obama,
we can`t do it.

KLEIN: Now, some Republicans say and some people say didn`t we do
infrastructure a couple years ago? You heard a lot in the stimulus we had
done infrastructure. So, how come we have all of this outstanding --

SANDERS: Because we ignored the needs for a long, long, time. Yes,
we did put infrastructure. We put it into the state of Vermont, put more
money into roads and bridges. But we need a lot more and that`s true for
the other 49 states as well.

We have -- it`s not only roads, it`s not only bridges, it`s not only
water systems. It`s mass transportation. It is rail. China is building
high-speed rail all over the place. We are not. Our rail system is in
many ways deteriorating.

We have schools that are aging. We have culverts that need work. We
have tunnels that need work.

We have an enormous amount of work that is ready to go right now and
it is beyond comprehension that our Republican friends will not support
infrastructure legislation.

KLEIN: Now, one of the things I think people sometimes miss in the
infrastructure conversation is for the last couple of years, we used to do
infrastructure bills for many years at a time, five years, six years,
something like that. In the last couple of years, we`ve passed nine short
term bills in Congress, instead of one.

The Inhofe-Boxer bill is only two years, but that`s longer than a
couple of months. And that`s meant states and localities can`t plan future
projects because they don`t know what the federal government will be doing
in a couple months, making essentially every dollar of spending in
infrastructure now less effective because people can`t plan for the future
around it.

SANDERS: Absolutely. And I`ll tell you something -- every day that
we delay right now getting this modest transportation bill done is a
serious problem because -- in the state of Vermont, you know, you don`t do
roads in January and February. We do them in the summertime. The
construction companies need to know they`re ready to go and they need to
know it now.

KLEIN: One of the things we used to do in infrastructure and that I
know is holding up the transportation bill in some ways is we had a gas tax
for it. It was a tax on gasoline. Ronald Reagan raised it by a nickel
when he invested in infrastructure.

One thing that`s been remarkable to me in this conversation last
couple of years, just showing how far both parties have moved right on the
tax issue is that even Democrats refuse to broach the idea of a gas tax.
And with that not even on the table anymore, you know, I do wonder where
we`re going to be funding it in a sustained way going forward.

SANDERS: Well, that`s a good question. I`m not a great fan of the
gas tax because I come from a rural state, a lot of people traveling long
distances to work, and they`re making 10 bucks an hour. We`re living in a
country right now with the most unequal distribution of income and wealth -
- the wealthiest people paying the lowest effective tax rates in decades.
There are ways to raise money to create jobs and rebuilding our
infrastructure without doing it in a regressive way in my view.

KLEIN: Senator Bernie Sanders, thank you so much for being around

SANDERS: My pleasure.

KLEIN: And one of the brainiest, best-equipped policy people among
Republican leaders is saying stuff that he cannot seriously believe. That
is next.


HAYES: Do you wish you could do this?


HAYES: Yes, me, too.

Stick around for a gravity defying moment of geek. Spidey costume not
included, unfortunately.



GOV. BOBBY JINDAL (R), LOUISIANA: I`m Bobby Jindal, governor of
Louisiana. Tonight, we witnessed a great moment in the history of our
republic, in the very chamber where Congress once voted to abolish slavery,
our first African-American president stepped forward to address the State
of our Union.


KLEIN: That was Louisiana Governor Bobby Jindal`s big entree into
national politics. His big moment to step forward as a leader in the post-
George W. Bush Republican Party.

And thanks to his delivery in that speech, the Republican response to
President Obama`s first joint address to Congress, Bobby Jindal is probably
the most well-known as the Republican who got made fun of by Kenneth the
page from "30 Rock."


JINDAL: I`m Bobby Jindal, governor of Louisiana.

KENNETH THE PAGE: This Jindal guy sounds like a real goober --
natorial representative.


KLEIN: I always felt actually terrible for Governor Jindal after
that. I really did, because he`s a serious guy, and talking on TV is
difficult, I have to do it occasionally and it doesn`t always goes well as
I would like it to.

Bobby Jindal was in a very, very tough time slot, following the
president after his first address to a joint session of Congress. It is
hard to make that look good.

As for me, I like Bobby Jindal. Jindal is a politician after my own
heart. He`s a wonk. Most politicians get into politics and as sort of a
nasty side effect, have to learn about policy, too. Jindal did policy
first. He`s a Rhodes Scholar who focused on health policy at Oxford. He
worked in the Health and Human Services Department in the George Bush
administration. He does real policy work. I don`t always agree with his
work but he takes it seriously.

But here`s the thing, there are things that people do to you that sort
of undermine you as a serious political player. Like say teasing you for
your folksy delivery during a high pressure primetime speech.

And then there are things you do to yourself, like say undermining
your own credibility by tossing around nonsense like this.


JINDAL: I suspect that many in the Obama administration really don`t
believe in private enterprise. At best, they see business as something to
be endured, so they can provide tax money for government programs.


KLEIN: That was Bobby Jindal speaking at CPAC regional conference on
Friday where he took it upon himself to destroy his reputation as serious
policy guy or at least harm it, because that was Bobby Jindal launching
into the kinds of ridiculous, on its face, hyperbole that he is more than
smart enough to recognize for what it is.

And it`s clear why he`s doing it. In Republican Party circles,
everybody is doing it. This is now a GOP litmus test.

There are things you must loudly proclaim if you want to be a national
Republican to today`s party. One is taxes should never, ever, ever, ever,
ever, never go up, ever, never. And the other is that Barack Obama is
super crazy anti-business.


SEN. JIM DEMINT (R), SOUTH CAROLINA: I can`t imagine a more anti-
business president than the one we`ve got now.

business, anti-investment, anti-jobs agenda.

understand this basic reality. You can`t be pro-jobs and anti-business.

ROMNEY: What we have in Washington today is a president and
administration that doesn`t like business.

KARL ROVE, REPUBLICAN STRATEGIST: The anti-business, anti-market,
anti-capitalism rhetoric.

ROMNEY: It was the most anti-small business administration I`ve seen
probably since Carter.

most anti-business administration since the Carter years.

ROMNEY: America is on the cusp of having a government-run economy.
That`s where he`s taking us. President Obama is transforming America into
something very different than the land of the free and the land of


KLEIN: You know, I could be wrong but I think Republicans might
believe Barack Obama is anti-business, anti-business, I think.

This is the Republican line of attack this election year. President
Obama, anti-business president. He`s so anti-business in fact that
according to Romney`s dystopian vision, soon, we won`t have a private

But if President Obama is so anti-business, if he`s engineering a
hostile government takeover of the entire economy, he`s hiding it very,
very well, because President Obama`s policies have, in fact, been very pro-
business. Let`s look at what can`t lie, at what has happened in the
corporate private business world in the Obama presidency.

Here`s what corporate income taxes have looked like. See that part on
the right hand side of the chart where corporate tax receipts plunged?
That`s a recession. It`s also when Barack Obama is becoming president.

Now, check this out, the other piece of the puzzle. This is corporate
profit over time. Corporate bottom line seems to be in pretty good shape.

In fact, look at 2010. Corporate profits as a percentage of GDP, even
after taxes, were at their highest levels since 1966. These profit margins
do not look to be suffocating under some super duper anti-business
political regime.

But I -- maybe Republicans basing this is simply really resilient and
it`s just bravely resisting all President Obama`s anti-business policies by
chucking up record profits. So, fine. Let`s look at some of the actual
business policies.

Practically, the very first thing Obama did after winning the election
was to go to Congress and say, hey, I need to you pass the hideously
unpopular second round of TARP bailout money to save the private financial
industry. And he did that knowing it was going to be on his record, that
everyone would hate him for that because everyone hated TARP.

But he did it because if he hadn`t, the bailout hadn`t gone through,
we would have been in danger of losing our banking system, at which point
private businesses would have not been able to access capital anymore.
Obama could have gone in a different direction by listening to the many
economists who told him to temporarily nationalize the banks but he didn`t.
Left them under private management.

Then he had to usher through the auto bill, which at the time was also
not popular, which Mitt Romney, even though he now denies it, said we
shouldn`t do, said the government should stay out of the auto business,
leave it to the private bankruptcy market, which then didn`t have the
ability to finance them through bankruptcy at that point.

So, that was the auto business implosion that could have been but
Barack Obama saved it because he doesn`t hate business.

For a guy who is supposed to be the most anti-business president,
Obama`s taken actually quite a lot of risks to help private businesses and
to keep them running. In fact, if you account for a key corporate tax rate
passed under the Obama administration, the effective corporate tax rate,
the amount businesses actually pay in taxes was just 12 percent last year,
12 percent.

"The Wall Street Journal," that known bastion of communism, points out
that was the lowest corporate tax rate since 1972. And if Republicans had
helped him pass -- had helped Obama pass the payroll tax cut he proposed
for 2012 as part of the American Jobs Act, business taxes would be even
lower this year.

So, if we`re going to have a real serious discussion about Obama`s
policy, one criticism people can actually make of President Obama is
arguable he`s been too pro-business, he spent too much time trying to pass
corporate tax cuts and rescuing banks and too little time rescuing
homeowners, or trying to get corporations out of American health care

Maybe he`s been too quick to come to accommodations with big
corporations. That`s fine. We can have that debate. It would be a
rational thing to debate. We can have real discussions about whether or
not President Obama has had the right approach to business and economic
policies. He`s been too soft on corporations or too hard on them? People
have different visions of this kind of thing -- different ideas.

But the idea that he has some sort of standing bias against very
concept of private enterprise, that he somehow only tolerates private
enterprise because it provides tax revenues is out there beyond excessive
exaggeration, beyond political miners (ph), that`s crazy town.

The argument is that President Obama`s administration look at all the
electronics, at these Mac laptops and think, man, I wish that corporation
didn`t exist to make all these things but at least we get taxes from them.

That`s the argument Governor Jindal is trying to make about the
president and his policies. But Governor Jindal knows better that that,
partly because he`s a serious policy guy who can run a spreadsheet.
Probably because no one actually thinks like that, not even China thinks
like that today.

To find somebody who thinks like that, you need to fire up your hot
tub time machine and send it to the Soviet Union, circa 1972. And Governor
Jindal knows that, too. He knows that what he`s saying about President
Obama`s policy is frankly a little bit whackadoo. But Bobby Jindal is
Republican in 2012, and at this point rattling off wing-nut level hyperbole
about he commie, pinko Democratic president is a Republican Party
prerequisite this year, even unfortunately for the policy guys.


KLEIN: Mitt Romney likes to joke that, quote, "you might have heard I
was successful in business." And you might have. It`s kind of what we
call a humble brag. It`s also true, Romney has done very well in business.
And in April, he told students in Otterbein University in Ohio who I they
could do well, too.


ROMNEY: This kind of divisiveness, this attack of success is very
different than what we`ve seen in our country`s history. We`ve always
encouraged young people take a shot, go for it, take a risk, get the
education, borrow money if you have to from your parents, start a business.


KLEIN: Got that, kids? Borrow money if you have to from your
parents. Start a business.

That is Mitt Romney`s advice to Americans. Forget go west, now it`s
call mom and dad and ask for a bit of help. Mr. Romney`s economic
strategy got a lot of attention, much of it sneering but that really was
his advice to the young entrepreneurs. It wasn`t the first time.

In a 1994 interview with Ann Romney, the candidate`s wife explained to
"Boston Globe" how she and her husband made ends meet in college. Quote,
"They were not easy years. You have to understand I was raised in a lovely
neighborhood as was Mitt and at BYU, we moved into a $62-a-month basement
apartment with a cement floor and lived there two years as students with no

It was tiny. And I didn`t have money to carpet the floor. But you
can get remnants, samples, so I glued them together, all different colors.
It looked awful, but it was carpeting.

We were happy, studying hard. Neither one of us had a job because
Mitt had enough of investment from stock that we could sell off a little at
a time.

The stock came from Mitt`s father."

Given Mitt Romney`s family background, that might seem like a natural
recourse, sell off a little of the family stock to get you through college,
help you squeak by while you`re taking a risk, getting an education.

Nobody is saying that Mitt Romney got two degrees from Harvard without
being smart or that he became a success in business without working hard.
When he says would-be business owners should borrow money from their
parents, he`s actually talking about something real, about a common way
that people in America, even non-rich people, do start a business.

Right around the time Mr. Romney gave that advice about leaning on the
family wealth, Nobel laureate economist Peter Diamond told me something
about how he sees job creation working in the economy. Peter Diamond said,
quote, "High earners tend to have high wealth. The rest of the population
has very little access to wealth outside of their housing."

So, if you want to encourage dynamism in the economy, it`s more
important to get money into their hands, than to get to those who already
have a lot of wealth. What he`s saying in simple terms is the rich tend to
get richer in part because they have wealth in the first place they can use
to invest. If you have wealth or your parents do, you can use it to open a
store, start a firm, build a factory.

With that wealth comes the ability to take a risk that Mitt Romney so
passionately wishes for Americans. You can try and you can fail and you
can bounce back and try again. You`re not living every moment on a

But if you`re not rich already, then to the extent you have wealth, it
probably in the value of your house. It`s part of why we set up tax
policy, to encourage homeownership in the country.

For average Americans, home sweet home has meant wealth sweet weather,
however modest.

During this campaign season, Republicans have made a point a point of
saying we don`t need to worry about income inequality nearly so much as the
equality of opportunity. That`s the distinction drawn by Congressman Paul
Ryan, the shaper and hero of Republican economic policy when he talks about
his vision for the country.


REP. PAUL RYAN (R) ,WISCONSIN: I think it`s not good for the country
and I think it does come from a difference in philosophy, which is the
American idea is to promote equality of opportunity so people can make the
most of their lives.


KLEIN: To a very real extent, Paul Ryan and his fellow Republicans
are exactly right on this. Equality of opportunity is one of the ways you
fix income inequality and one of the most important elements in a dynamic

Maybe you`re broke today. But if you have a fair chance, if you have
an equal opportunity, then you can still find a way to be better off
tomorrow. And you fall along that path, you can get a job and you can buy
a little house and maybe you can build up some wealth.

But that`s the key -- one of the key contributors to opportunity is
wealth. And inequality of wealth is even worse than inequality of income.
In 2007, before the recession, the top 1 percent had 21 percent of the
national income share but 35 percent of the national wealth.

And after the recession? It`s not good. According to new figures
from the Federal Reserve, the median net worth of families fell by almost
40 percent, 40 percent during the great recession. In 2010, Americans
found themselves at the economic level of 1992, two decades of economic
progress wiped out in one horrifying freefall.

Most of that lost came because the value of home owners home fell by
42 percent, draining their main pool of wealth. If you dive into the
report from the Federal Reserve, just the wealthiest family suffered least
because they had other kinds of wealth, not just houses.

At this point, in the recovery from the great recession, the type of
wealth that rich American have has come back. If you hold a lot of stocks,
if you invest in corporations or emerging markets, then bully for you.
Stock market has bounced back substantially from the dark days of `08. So
wealth inequality is actually up, which means inequality of opportunity is
up, too.

Joining us now is Ylan Mui, my colleague at the "Washington Post" and
a reporter who spent a lot of time swimming around the new data from the
Federal Reserve.

Ylan, thanks for being here.

YLAN MUI, THE WASHINGTON POST: Thanks for having me, Ezra.

KLEIN: So what happened here? How did -- 40 percent is very, very,
very quick. It`s a whole lost generation in wealth building if I`m not

MUI: Yes, I think that`s what`s really interesting about this data is
that the span of time that it has set us back, 20 years, that`s before the
Internet was even widespread. I`m not even going to ask you how old you
were, I`m not going to tell you how old I was at that time.

But 20 years of wealth has been lost in just a three-year time period.
That really puts perspective on both how deep the wounds of the financial
crisis were and how long it could possibly take us to recover. You know,
we lost it in a very short period of time before we`re not going to get it
back in that period of time. We`ve seen the recovery be slow.

KLEIN: Now, the Federal Reserve data, you know, when you look at
economic data, house is wealth, the equity you have in your house is
wealth. It`s for most Americans ,the middle income Americans, the main
type of income they have. But does it feel that way to them? I mean, it`s
not liquid in the way can you sell a stock or sell a bond.

I mean, if you sell your house, you actually need somewhere else to
live, which is going to also cost you money. So, when we say we`ve lost 40
percent of our wealth, is that how it feels to people and does it have the
knocks on the economy from that kind of wealth drop?

MUI: Yes, I think it does. I think -- there are two things. One is
that you say it`s not liquid when you talk to (INAUDIBLE). But you also
have to remember that a lot of folks took out home equity loans and did tap
into sort of the rising paper value of their homes.

But more broadly, it speaks something what we call the wealth effect
that, right, even if you haven`t realized the gains on your home or
realized these increases in prices, that it makes you feel more wealthy and
that can affect the way that you spend money, it can affect the way that
maybe you go out to dinner more often, maybe you go shop at the mall more
often. And all those things help fuel the economy. Consumer spending, as
you know, is two thirds of GDP.

So, you know, you have the sense of people feel like I`m secure, that
I have a safety net. That can affect people`s spending. Now, we`re seeing
the reverse happen, even if I didn`t take out a Helock, now, I feel less
wealthy because my home value is less, at least on paper, and so, I`m going
to alter my spending and alter my behavior because of that.

KLEIN: Right. And one of things a lot of people did when they take
out a new line on a home, because you can get a fair amount of money off a
mortgage like that, is they would start a small business. We`ve seen in
the last couple of years the lowest rate of new business creation we`ve
seen for a very, very long time.

And so, to go to the sort of underlying question here -- is this kind
of a loss in wealth going to lead to a different set of economic winters
going forward? Would we expect to see different folks at the top of the
income ladder in 20 years because different folks will have the opportunity
to invest those gains starting now?

MUI: What the Federal Reserve found is that there was mobility in the
middle but not really so much on the outside. So, you had the folks who
were bad off to begin with, they stayed bad off. The folks who were at the
top of the spectrum stayed at the top of the spectrum.

But what you found that only half of the people who were in that
middle class only stayed where they were in 2007, by the end of 2010.
There was a lot of movement there. Some folks went from being upper middle
class to lower middle class. Some folks actually went from being lower
middle class to middle class. There was movement in both directions but
there was a lot of mobility in that area because of the volatile price of

So I think that you may see some, again, movement in the middle but to
jump from the middle class to that top 10 percent requires an exponential
leap in wealth. I mean, the net worth of the top 10 percent is something
like over $1 million. So, you know, it`s increasingly hard to get to the
top 1 percent, even though there`s a lot of fluctuation at the center.

KLEIN: Ylan Mui, colleague at the "Washington Post," thank you for
getting through all this data for us. You made it look easy.

MUI: Thanks so much, Ezra.

KLEIN: It is Tuesday, so you know what that means. Somebody
somewhere must be voting on something. And they are, all over the country.
If you favored the Blunt Amendment in Congress this year, has North Dakota
got a ballot measure for you. All the data on tonight`s voting is coming


KLEIN: In the seven states across the country today it is election
day. This is my first experience sitting here while that election music

I got to say, I see what Rachel likes about it. It`s inspiring.

There are House or Senate races in South Carolina, Virginia, Maine,
Nevada, and North Dakota, two Democratic runoffs in Arkansas, a special
election in Arizona where voters in the eighth district are choosing
between Democrat Ron Barber and Republican Jesse Kelly to fill out the rest
of former Democratic Congresswoman Gabriel Gifford`s terms, which is until
November. Polls closed right before we went on the air tonight and we`re
still waiting for results.

Mr. Barber is a former aide to Ms. Giffords. He was there when she
was shot last year and they were together this afternoon as they cast their

In Virginia, 65 percent of Republican voters selected former Governor
George Allen to run for a state Senate seat vacated by retiring Democratic
Senator Jim Webb. Allen will face another former governor of the
commonwealth, Tim Kaine, in November.

And in the great state of North Dakota, voters are deciding on four
ballot initiatives, including one that would eliminate the property tax,
another that would force a University of North Dakota to keep the fighting
nickname and logo, and one that would give churches the ability to opt out
of the laws of general public is required to follow. That one measure
three would add a clause to the state constitution saying, quote,
"Government may not burden a person or religious organization`s religious
liberty unless the government proves it has a compelling governmental
interest in doing so."

The measure says a burden includes, quote, `indirect burdens such as
with holding benefits, assessing penalties or an exclusion from programs or
access to facilities."

Opponents of the measure say the language is too vague and could have
broad implications, meaning a pharmacist might be able to refuse to fill a
birth control prescription or an employer can fire someone from being gay
if it were viewed as objectionable to his or her religion. The implication
of that, of course, could be quite radical. The measure isn`t expected to
pass but on election night, anything can happen -- so keep watching.


HAYES: Actually, we need to make a quick correction on something we
literally just reported. Polls in Arizona are still open for another 15
minutes or so. They close it 6:00 p.m. Arizona time. But Arizona does not
observe Daylight Savings Time and it`s 3:00 behind us here in Washington.
I`m sorry, an error which we regret.

If you`re in Arizona and if you have not voted, go out and vote. Go
do it very quickly.

We`ll be right back.


KLEIN: I did not know this, but Russia apparently has its own Paris
Hilton. Lucky them. Russia`s Paris Hilton goes to fancy society parties
and movie premieres, much like our own Paris Hilton. She`s photographed
all over the place by the Russian paparazzi. She`s in the tabloids all the
time. She`s Russia`s "it" girl, at least that`s what Wikipedia tells me,
and Wikipedia wouldn`t lie to me, would it?

Her fame is derived from her father`s political career. So far, so
Paris Hilton-y. But Russia`s Papa Hilton doesn`t run hotels. He was the
first democratically elected mayor of St. Petersburg and friends with
Vladimir Putin back in the day. It`s ever rumored that Putin is the
godfather to the Russian Paris Hilton, which is going to be creating the
invite list to her next birthday party a little awkward.

Russia`s Paris Hilton, you see, has recently become Russia`s Jane
Fonda. She aligned herself this year with the anti-Putin opposition
movement. She had opposition figures on her MTV show, which was then
promptly cancelled. She starred in a satirical video mocking Putin`s
control over the country.

Russian authorities responded to her new found activist streak by
raiding her apartment yesterday. She says they confiscated her passport
and a lot of cash. I guess they wanted to keep it safe for her.

It`s part of a concerted effort, she says, to prevent the opposition
movement from successfully organizing another anti-Putin protest today. It
didn`t work.

Between 10,000 and 50,000 people showed up in the freezing rain to
protest the Russian president. They marched through the bad weather and
the cold. They mocked the government`s efforts to stop them.

They did this even though the Russian parliament passed a law fining
anyone who damages property in the course of a protest. The fine is
$9,000, more than the average Russian makes in a year.

Also yesterday, before the planned march, a bunch of opposition
leaders were brought into the police station for questioning for something
totally unrelated to today`s protest, just happened to fall at the exact
moment when they need to prepare for the protest. It`s very convenient
that way in Russia.

Opposition groups also promoted this video, highlighting Vladimir
Putin`s wrist watch collection. "Foreign Policy`s" "Passport" blog wrote
about it. The watches are high end to say the least according to the
"Moscow Times" just one of them cost as much as half a million dollars,
five times what the president officially makes in a year. I guess he`s
been saving up.

Last year, the president was accused of letting Russian businessmen
build this billion-dollar mansion for him, you can land not just one
helicopter there but three, presumably one for the president and two for
his watch collections.

Right now, the U.S. Congress is considering whether or not to
normalize trade reelections with Russia. Doing so would make it cheaper
for American companies to do business with Russian companies.

If Congress doesn`t normalize trade relations, Russia`s crackdown on
protesters and human rights abuses and general corruption would be a reason

Its too close for comfort relationship with Syria will be another
reason. Russia is of the last friends that the brutal Syrian regime has
got. Human rights groups estimate Syria`s Assad regime has killed at least
10,000 civilians in a 16-month long violent assault on its own people.
Today, the guy in charge of peacekeeping missions at the United Nations
said definitively the conflict had turned into an actual civil war, not
just an uprising or protest or crackdown but an actual civil war.

The U.N.`s annual report on kid in armed conflict was released today.
It found the Syrian regime has killed and tortured kids, also using them as
human shields. Yesterday, the Syrian opposition said they took control
temporarily of an important army base where they held up 22 sympathetic

Their claim cannot be independently verified by news organizations.
But if true, that`s what you would call a mutiny.

Syria isn`t just attacking its own people with artillery and mortar
rounds and snipers. They`re apparently also using attack helicopters.
Who`s helicopters?

Earlier today, Secretary of State Hillary Clinton accused Russia of
sending a new round of gunships to Syria. It`s unclear when they will
arrive or if there`s anything the United States can do to stop them.

Joining us now is Josh Rogin, senior writer for "Foreign Policy"
magazine and its must-read blog, "The Cable."

Josh, thank you for being here.

JOSH ROGIN, FOREIGN POLICY: Thanks for having me.

KLEIN: Josh, Hillary Clinton`s comments today came at a think tank.
It wasn`t a huge speech. It wasn`t a big conflagration. Is this business
as normal in our approach to Syria? Is this an escalation? Have we
changed policy?

ROGIN: What Hillary Clinton denotes is a change in U.S. policy of one
from trying to persuade Russia of being a better actor in Syria of one of
trying to persuade Russia to be a better actor in Syria for months now,
behind the scene. The Obama administration has been pleading with Russia,
trying to find areas of common agreement, common interest, trying to find a
way that we can work on this together.

A senior state department official named Fred Hoff came back from
Moscow yesterday. Apparently, the administration didn`t like what they
heard, so they decided to ratchet up the pressure one more notch.

KLEIN: The State Department also warned today that Syria, that the
U.S. is paying attention, the international community is paying attention,
and that war crimes, in theory, could be prosecuted in the future.

Is this the type of threat that a regime like this, particularly a
regime that is now seeing some mutiny, potentially, among its soldiers,
would take seriously, or is it the type of threat that causes them to try
to double down and hold on to power all the more?

ROGIN: Well, half of them will take it seriously and half of them
will double down.

KLEIN: Which half?

ROGIN: Well, we don`t know. That`s what we`re trying to figure out
by making these threats. I mean, a big part of the administration`s
strategy is peel off those members of the regime who don`t want to be
associated with this brutal massacre and get them to turn on Assad, so
threatening them with war crimes and after actions is one way to help to
encourage people to defect from Assad and the people closest to him.

KLEIN: This is somewhat reminiscent, this kind of escalation and
circumstance of what happened in Libya, in which we shortly thereafter
created a no-fly zone. Given Syria`s attack helicopters, is a no-fly zone
a possibility here? Is that something people think could be a move

ROGIN: Right. So, the first thing Obama administration officials
will tell you, Syria is not Libya. It`s more complicated. It`s more
diverse. But in a lot of ways, it certainly looks like Libya, and much
like with Libya, we`re seeing a steady pace of an administration increasing
actions towards intervention. And that pace keeps going, even towards this

Now, the main reason that Syria is not Libya is that there no
international consensus on intervention that would be represented by a U.N.
Security Council resolution. Of course, the reason there`s no consensus is
because Russia is vetoing that resolution.

So that`s not going to change. So what we`re looking towards is a
mid-July deadline. Where the Annan plan will be up for a review. We`re
going to declare it dead probably because it seems to be ineffective. At
that point, the U.S. will have to decide whether to abandon the Security
Council and pursue international intervention in Syria without Russia.

KLEIN: Josh Rogin of "Foreign Policy`s" "The Cable", a wonderful blog
-- thank you very much.

Moment of geek is next. Two words: Spiderman.


KLEIN: As a former comic book geek, tonight`s "moment of geek" is
very close to my heart. It is about the brave inventors who are getting
closer and closer to achieving the longtime dream of nerds everywhere --
becoming Spiderman.

Recall the story of Spiderman, if you will. Peter Parker, a young
geek extraordinaire, gets bitten by a radioactive spider and gets
superpowers. He becomes stronger, he becomes faster, he can sense danger.

But less well-known is what comes next. He`s not all superpowers.
He`s sort of a geek hero. He uses his geek acumen to prevent a substance
that mimics spider webs and allows him to climb walls. Then he uses his
machinist acumen to create web shooter things that go on his wrist that
allow him to shoot it out in order to climb the walls.

It is a story of a radioactive spider bite, but also science
triumphing. Now, we are trying to replicate it in laboratories across the
country and there is a history of this sort of thing being tried.


KLEIN: That is a so-called Ascending Aggie, a member of Utah State
University`s engineering the department, scaling a brick wall on campus
with the help of a device called a vertical ascender.

If you`re thinking, but, Ezra, that is nothing new, I`ve saw Tom
Cruise climb the Burg Khalifa with suction gloves, yes, that`s true.
Suction has been used in wall climbing before. And not just in movies.

But this is different. This isn`t suction can cups on a smooth glass
surface, it`s a vacuum suction capable of lifting 300 pounds up a pitted
surface, like a brick wall. Just like spider-man. Which is apparently of
some interest to the U.S. military, specifically the Air Force research

They are the people who helped develop the X-37 space plane, the
unmanned orbiter that is about to land after spending more than a year in
space on a super secret mission. Back here on the ground, the Air Force
research laboratory sponsors a contest every year for college students to
come up with innovative solutions to warfare challenges. This year, the
contestants had nine months to design a system that would let four special
ops personnel scale buildings or mounted faces. Seems like something there
might be a need for, what with walled compounds that might need getting
into, if you know what I mean or remember it hearing anything about that
earlier this year.

The entries were judged on weight, size, velocity, usability,
innovation, elegance, and stealth. I`m guessing the Ascending Aggies the
didn`t win on stealth, but maybe their next version will be quieter.

But if you`re thinking, but, wait, I`ve seen videos on the Internet of
people climbing walls with vacuums strapped to their backs before, you are
also very right. And you also are very into videos of this kind of thing
on the Internet.

This is 13-year-old -- this is a 13-year-old British boy climbing a
brick wall with a homemade device made out of two vacuum cleaners a couple
of years ago. And he wasn`t even the first to do that, but the Aggies
improved on the previous designs enough to win the contest, beating out
this entry from the University of Minnesota-Duluth, a robot vacuum-powered
wall climber, which, guys, it is a vertical Roomba that can clean your
walls, which is amazing.

But the Aggies, they`re like Spiderman, and you don`t get more
awesomely geeking than that. So that is the best new geek thing.

That does it for us tonight. We will see you again tomorrow night.
Until then, you can check out my work at wonkblog.com at "The Washington

Now, it is time for "THE LAST WORD" with Lawrence O`Donnell. Have a
great evening.


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