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'Up w/Chris Hayes' for Sunday, November 11th, 2012

November 11, 2012

Guests: Hakeem Jeffries, Neil Barofsky, Zephyr Teachout, Sen. Sherrod Brown, Molly Ball, Edward Conard, Teresa Ghilarducci, Robert Wolf

CHRIS HAYES, MSNBC ANCHOR: Good morning from New York. I`m Chris Hayes.
A powerful 6.6 magnitude earthquake struck in Myanmar last night and up to
12 people may have died according to the Associated Press.

And President Obama will visit Arlington National Cemetery today to mark
Veterans Day by laying a wreath at the Tomb of the Unknowns. Welcome to
all the veterans out there who are watching the show this morning on this
Veterans Day.

Right now, joining me today, we have congressman-elect and New York State
Assemblyman Hakeem Jeffries, a Democrat from Brooklyn, Teresa Ghilarducci,
professor of Economics at the New School for Social Research.

Edward Conard, author of "Unintended Consequences, Why Everything You`ve
Been Told About the Economy is Wrong," a former partner at Bain Capital and
Molly Ball, a national political reporter for the "Atlantic" magazine who
did some phenomenal work during this election cycle. You should definitely
be reading here.

Tuesday`s election brought us not just a second term for President Obama,
but a new Congress as well. There are two ways to look at the makeup of
that Congress.

One way is to see it essentially as an endorsement of the status quo with
the electorate returning both the Democratic Senate and the Republican
House and asking the two to work together as House Speaker John Boehner put
it the day after the election.


REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: The American people have spoken.
They have re-elected President Obama. They have again re-elected a
Republican majority in the House of Representatives.

If there`s a mandate in yesterday`s results, it`s a mandate for us to find
a way to work together on the solutions to the challenges that we all face
as a nation.


HAYES: The other way to interpret Tuesday`s results is to see them as a
resounding endorsement of liberal governance with more people voting for
Democratic House candidates than Republicans and a larger and apparently
more progressive Democratic majority in the Senate. That`s how Senate
Majority Leader Harry Reid framed the results on Wednesday.


SEN. HARRY REID (D-NV), MAJORITY LEADER: We had an overwhelming re-
election of the president. We`ve picked up seats in the Senate. We`ve
picked up seats in the House. That`s not the status quo.


HAYES: One thing though is certainly clear about the new Congress.
Demographically, it will look nothing like any Congress we have ever had.
Perhaps the most stunning example of this demographic -- demographic shift
is the diminishing number of white men in the House of Representatives.

In the current House, white men comprised 86 percent in the Republican
caucus compared to 53 percent in the Democratic caucus. In the new House,
even more of the Republican caucus will be white men, 88 percent.

But for the first time ever in history, white men will make up just a
minority, 46 percent of the Democratic caucus. Women meanwhile will make
up nearly 30 percent of the Democratic caucus compared to just 8.6 percent
for Republicans.

Latinos will make up 12 percent on the Democratic caucus compared to just 2
percent for Republicans. Hakeem, if I can still call you Hakeem?


HAYES: I want to congratulate you on your victory. You will be heading to
Congress as freshman congressman in the new Congress. I guess I want to
get your thoughts on having watched Congress work.

You are going to be in the minority in this House. Is there part of you,
you know, at that moment on election night, not that you had a close race,
when your race is called when you think, what have I gotten myself into?

JEFFRIES: Well, certainly, the challenges that we are going face down in
Congress and that we face in America are going to be enormous. You know, I
was largely, pleasantly pleased with how things went overall.

The president won a resounding victory, more than 50 percent of the popular
vote, landslide Electoral College, Democrats in the Senate increased their
majority and we gained seats in the House.

I think, from an overall perspective, the way I look at it, there is a
clear mandate from the American people. One, to work together to get
things resolved, get the economy back on track. But, I think it`s
undeniable based on the results in the House, in the Senate as well as the
presidency that people are supporting the idea of a more progressive
version of the government designed to stand-up for the middle class.

And that we are all in this together and that people aren`t on their own
and they shouldn`t be on their own. I`m hopeful the Republicans in the
House of Representatives will come to the conclusion they can`t continue to
stand by a hard line position of no compromise.

When the one thing that I think is clear from these results is that the
American people want government to work and that necessarily is going to
require compromise.

HAYES: The American people want government to work and wanting it doesn`t
make it so. Ed, I`m curious. You know, you are very an outspoken
supporter of Mitt Romney. You are a donor to one of the associated super


HAYES: So I`m curious how you`re -- obviously, I can understand how you
feel about the presidential election because the person you were backing
didn`t win. But when you look at the Senate and Congress and how this
Congress is going to work with the president, how you interpret or
understand the election results?

CONARD: Well, the one thing I think seeing the election results is there
were 7 million white voters who voted for President Obama the last time who
didn`t show up and vote. So they weren`t persuaded for Mitt, but they did
not vote for President Obama this time.

So I think we do have to take that into consideration. I also think we
need to recognize that the president did a great job in energizing his base
in not just get out the vote, but Obamacare for poor people, suspending
deportation of Hispanics for the Hispanic voters and student loan promises
for students.

Those are powerful incentives to bring out the vote that I think make a
difference in an election.

HAYES: This sounds suspiciously like the makers-takers analysis of the

CONARD: I hope not.

HAYES: These are all -- I just want you to zero in on what you mean by

CONARD: My problem with the makers-takers, which is if the government is
going to offer benefits and things like that, of course, people are going
to want more. Everybody wants more. I don`t view that as like makers
versus takers at all.

But there`s certainly a trade off between how we pay for it, whether it is
cost reduction or tax increases. I think in the next Congress we are going
to see a big debate between the trade off between those.

And of course, compromise that is going to need to be reached, but where
the line is drawn on the two I think is -- there`s $1.1 trillion deficit.

You can run maybe a $200 billion a year deficit and hold debt as a percent
GDP. You need to come up with $900 billion a year of either tax increases
or cost reduction. We only raised $1.1 trillion of income taxes.

HAYES: There are a lot of other taxes we can come up with.

CONARD: We need to bring it back into balance.

HAYES: Molly, you covered Washington. I want to show this chart because
to me this is the fundamental issue that we keep talking about with
Congress, right, partisan polarization.

It`s an asymmetric polarization if you look at the DW nominate scores,
which is the kind of standard political science, empirical way of trying to
track where people are and where the caucuses are.

The originator of this scoring system ran the numbers for the new Senate.
The 112th Senate is on top there and the 113th Senate is on the bottom.
What you see is not that much difference.

But that if there`s any difference is that both peaks have narrowed, which
means more polarization basically. It`s clustered more around their
caucuses. Can the Senate function under its current conditions of
polarization on one hand and super majority requirement on the other?

MOLLY BALL, THEATLANTIC.COM: Not so far, right. I mean, it didn`t -- in
the last couple years, they haven`t gotten a lot done. I mean, I think
this argument about, you know, status quo versus a mandate for if not
change something is really interesting.

Because it`s almost like the Republicans are making this argument that
there was a mandate to do nothing because they do not want to see liberals
sort of take the ball and run with it. And accomplish a lot of their
policy proposals or ideas.

So -- but I think you do already see some wiggle room. You know, you do --
I mean, everybody in congress realizes this reflects badly on all of them
when they can`t do anything.

HAYES: Do they realize it? It`s a remarkable thing about the conduct of
the House of Representatives, which is that the normal system of incentives
seems to have broken down.

The normal system of incentives is that you have to go back to your
district with something. You know, we did this. That tends to forge some
kind of pressure for compromise. But I think the House Republicans
discovered and I don`t think they are wrong that, A, through control of the
redistricting process.

And B, because of the more partisan nature of American politics more
broadly, they can present themselves as a parliamentary body that was
dedicated in mass to obstructing the president`s agenda.

And not pay a political price for it back home in the district if they
didn`t get some, you know, I don`t know, thing -- some little goody passed
for the local car dealer or whatever.

CONARD: They were elected to do that in a sense. I mean, the investors
are always going to be in the minority. People are paying the majority of
the taxes are always going to the minority of the vote. They have a line
with religious right to get close to majority, at least be competitive,

HAYES: That`s a crasser analysis of the right`s coalition than any liberal
I have heard.

CONARD: It is what it is. I`m not good at spinning the ball.

HAYES: No, I like the honesty.

CONARD: But I think that 35 percent is always going to be elected to
defend the taxpayers and investors and the guys paying the majority taxes.
If they stop doing that, they are not going to get re-elected.

majority of people who voted for Obama are taxpayers, lots of taxes besides
income taxes and payroll taxes. I saw a lot of agreement with this

I think the people rejected what economic model, which is that tax cuts for
the rich actually creates jobs and I see it in Republicans worried about
the so-called fiscal cliff, worrying about the taxes going up and spending
cuts happening the same time. It will cause a massive recession.

I mean, we were all to quote President Nixon, we are all -- I actually
people united behind an economic model that says that government has to
help us get this economy growing and maintain the growth.

JEFFRIES: And I think there were some consequences in the election. One
way to interpret sort of what happened in the House of Representatives is
that they were sent to do nothing because they retained their majority.

But the reality is the redistricting process did lead to artificial
results. As you pointed out earlier, Chris, the overwhelming -- well at
least the majority of the American people --

HAYES: A very slim and narrow majority but a majority.

JEFFRIES: Pennsylvania is one example. The president won Pennsylvania by
five points. The 18 members of Congress in Pennsylvania, 13 will be
Republicans. That`s because the Pennsylvania Republican Party coming out
of the 2010 election controlled the redistricting process.

HAYES: This is the key point. The wave of in the House in 2010 was at the
state house level. The state houses were dominated by Republicans. You
said something I think is important. Was this a referendum on tax hikes
for the wealthiest?

Because I think if there`s one thing that was argued in this campaign, it
was that. I want to talk about how that relates to it`s not a fiscal
cliff, fiscal curve, austerity faze and whatever you want to call it after


HAYES: All right, so, the big conversation happening in Washington right
now is about something, which I think is misleadingly been labeled the
fiscal cliff. Now the irony here is the fiscal cliff is a term coined by
Ben Bernanke. And when he was talking to Congress and the reason he coined
it is this.

I think we`ll have a misunderstanding about what is going on. So I just
want to take a second to set the context. The context of this goes all the
way back to 2010. Here is why I find the discussion of this so maddening.

In 2010, Tea Party revolt, OK, what happened? People on the right
mobilized. There was a lot of backlash against Obamacare and there was
this obsession with the debt and deficit. We are spending too much money,
not taking in enough, it`s going to hurt this country.

We are going to get inflation, high interest rates, we will end up Greece.
Republicans were elected to Congress and then there was a lame duck
session. A huge conversation about how horrible and monstrous the deficit
and debt was.

And what happened? Republicans and the president got together to add $800
billion to the deficit the next year right after this election, which was
apparently this ratification on the notion of large deficits.

The deal they struck, which is extension of all the Bush tax cuts for two
years was $800 billion, I guess, over two years, right? OK, first of all,
I want people to know, when people in Washington talk about the debt and
deficit, nine times out of ten, they do not mean the debt or deficit. They
mean what their favorite policy is, whether that`s tax cut extension or tax
raises or cutting spending, right?

That`s what they are talking about. They are not talking about the debt
and deficit. Every time you hear debt and deficit, as you, as a news
consumer, have to say, what do they really mean by that word?

Because they almost never mean it because if they did mean it, the deal
that was struck after the 2010 elections would not have been the deal
struck after the 2010 elections. OK, that brings us now to the situation
we are in now, the so-called fiscal cliff.

And what it means is that at the end of this year, all the Bush tax cuts
expire, which raises taxes on everyone and spending cuts kick in, which are
automatic as part of the debt ceiling deal of sequester, OK.

That is not -- I think people hear fiscal and they think what`s going to
happen in January 1st is the deficit is going to explode. It`s the
opposite. The deficit is going to dramatically reduce.

There will be this intense austerity squeeze. So think about his also.
Washington is so obsessed with the debt and deficit. Right now, they are
freaking out and markets are freaking about the spectra of an automatic
massive reduction in the deficit.


HAYES: OK, no one actually cares about the deficit. This is very
important for everyone to understand. People say they care about the
deficit. But no one in their actual political behavior conducts themselves
as if they actually do.

OK, sorry for the rant. It`s been driving me bananas to watch this
conversation happen. So now the question is, what are we going do to
reduce -- the framing of the conversation is we need to reduce in the out
years the long term debt to GDP ratio.

And strike a deal to do that to avoid the austerity that is going to be
disastrous with the economy. I think everyone agrees with that. Would you
agree the immediate austerity?

CONARD: Yes. Coming from the school of rational expectations, I think
it`s built in more than the Congressional Budget Office.

HAYES: Rational expectations, do you want to explain?

CONARD: People look forward in the future. They see the coming storm.

HAYES: That people are pricing in the problem about it right now. One
more thing about the reason I think it`s a mistake to call it a fiscal
cliff and we should call it the fiscal curve instead. It will start
happening on day one.

But not all, whatever it is, I don`t know the total amount of it, $800
billion. It`s not the $800 billion isn`t going to be on January 1. That`s
the size of the check. For instance, the payroll tax holiday, which is
two-percentage points for your employee, right?

The first day you are going to pay that much. The second day you are going
to pay that much. If they cut a deal in January, they can go back and
legislate you get the taxes back.

GHILARDUCCI: Spending that you get from the tax cut.

HAYES: Exactly, so the point is that, it`s unlike a cliff. Once you fall
off, you are dead. It`s more like a curve. Table is set. I`m sorry that
I have --

GHILARDUCCI: No, it`s very good.

HAYES: What`s that?

GHILARDUCCI: Everybody is on board with that. It`s on a cliff, a natural
occurrence that causes a disaster. It`s manufactured and we can steer it
away. I like it.

HAYES: You can reset. Let me play where we are right now. The big
question is how are the two sides going to come together to deal with this,
in the lame duck or are they just kick it over to the next session. Here
is President Obama giving his thoughts on this.


wedded to every detail of my plan. I`m open to compromise. I`m open to
new ideas. I`m committed to solving our fiscal challenges.

But, I refuse to accept any approach that isn`t balanced. I am not going
to ask students and seniors and middle class families to pay down the
entire deficit while people like me, making over $250,000 aren`t asked to
pay a dime more in taxes.

I`m not going to do that. I just want to point out. This was a central
question during the election. It was debated over and over again. On
Tuesday night, we found out that the majority of Americans agree with my


HAYES: All right, the big question on the table right now is, if there`s
going to be a deal, what is the ratio essentially going to be of raised
taxes to cut spending? Will Republicans raise any taxes? Here is John
Boehner talking to Diane Sawyer with his thoughts.


DIANE SAWYER, ABC ANCHOR: Is it on the table to talk about it?

BOEHNER: I made clear yesterday that raising tax rates is unacceptable.
And frankly, it couldn`t even pass the House putting increase revenues on
the table, but through reforming our tax code.

I would do that, if the president were serious about solving our spending
problem and trying to secure our entitlement program. I`m the most
reasonable, responsible person in Washington. The president knows this.
He knows he and I can work together.


HAYES: I admitted this to my staff yesterday and I`m surprised I`m saying
it on national television, but I really like John Boehner in spite of
myself. I sort of like his, kind of like good old boy sort of, you know,
kind of doesn`t take himself too seriously when he says it. You can see the
smile he cracks.

Mitch McConnell released this statement. I`ll read this. "I know some
people out there think Tuesday`s results mean Republicans Washington are
now going to roll over and agree to Democratic demands that we hike tax
rates before the end of the year. I`m here to tell them there`s no truth
to that notion whatsoever."

So this is the standoff we have. I`m sorry that I filibustered this entire
block of television. I`m going to let you reset the table and all of you
guys weigh in right after this break.


HAYES: All right, Ed Conard, please respond to my little rant about the
deficit and debt. If you want to reset the table how you see it, go ahead.

CONARD: I think when you talk about the deficit you are wagging the dog by
the tail. We have a 30 percent increase in spending, at least $1.1
trillion a year deficit. The real issue is whether you are going to solve
it by reducing cost or increasing taxes.

I think they are down to 17 percent and the payroll tax holiday, if it went
away, 18 which is the historical level. So, I think that -- well, I forgot
what I was going to say.

HAYES: You are basically saying look, the real issue here is spending.

CONARD: The negotiation has to be between taxes and spending. It doesn`t
really matter whether you tax or borrow the money and lower the taxes
either way that a tax increase. When you talk of the $800 billion stimulus
that`s a one-time --

HAYES: You really are a rational expectation --

CONARD: I am. Let`s just say I think there`s a goalpost. I`m half way in
between. I think some of it is built in.

HAYES: What is your idea of ratio here?

CONARD: I would love to see 2 to 1, or 3 to 1. But keep in mind, the
fiscal cliff is $5. A tax increases a dollar of spending cuts about $500
billion a year of tax increases and a billion dollar of spending cuts.

You know, because you get an increase in unemployment benefits that offsets
some of the spending cuts are lower because you get according to the CBO
4.5 percent reduction in growth. Right now, they are predicting a big
bounce back there. Every year they predict a bounce back that never comes.

HAYES: Would you be willing -- I notice there`s a one in the ratio, which
is kind of the key part of this negotiation, right? I`m serious. If
there`s no one, if there`s not a single dollar revenue -- if there`s not a
single dollar revenue, there is no basis for negotiation.

CONARD: This is why I think that the benefit, both Republicans and
Democrats have pushed this issue past the election. Eventually, the math
catches up with you. You cannot close a $1.1 trillion deficit. Maybe you
can run $200 billion a year and hold it as a GDP.

HAYES: Which is what`s projected right now?

CONARD: So you need $900 billion of spending cuts or tax increases. You
can`t get there with one or the other. It`s not possible. What we have
pretended and it`s worked very well, all we have to do is let the Bush tax
cuts expire and people earning over $250,000 a year.

That`s $50 billion a year, get rid of capital gains, bring back ordinary
income and estate taxes are $150 billion. We`re talking $800 billion. Get
rid of the payroll tax holiday. You get $700 billion to go.

This is where the tire is going to hit the road. People are going to
realize how tough it is to really bring the fiscal balance back together

GHILARDUCCI: You know, some of the spending actually pays for itself. If
we spend money on unemployment insurance compensation, spend money on
infrastructure, spend money on things state and local governments pay for
like education, it puts people back to work.

The only number I really care about here, today, this morning is 7.9. It`s
the unemployment rate, 7.9 percent is better than we have had the last four
years and the beginning of the recession.

It`s still recessionary levels of unemployment. If we get people back to
work through spending, targeted spending that increases the multiplier.
That spending translates into jobs and people start paying taxes. That`s
the way --

CONRAD: We have a 30 percent increase in spending. We are running a $1.1
trillion --

GHILARDUCCI: That spending --

CONARD: We have 8 percent unemployment.


HAYES: You know that`s not a legitimate argument, right?

GHILARDUCCI: If that spending had not been there -- Ed, if that spending
had not been there, the unemployment rate would be 10 percent and 11

CONARD: You have to pay back and then you see what the CBO predicts the
ultimate unemployment --

HAYES: That`s the thing I want to question. The thing we are bounding
this in is the premise about we have to close the deficit or debt to GDP
has to be something. I`m not convinced it`s the case.

CONARD: Go tap forever?

HAYES: Yes, basically, I do. I think we have the world`s reserve currency.
I think at some point, right, there`s two problem that is come with running
too much of a deficit, right? You get interest rates going up, right?
Because people don`t think you can pay it back. You get inflation if you
expand the monetary base -- yes exactly.

CONARD: Engineered inflation.

HAYES: Yes, engineered that`s right. But the point is, we don`t have
either of those things. Someone who believes in the market gets the price,
right. Net present value is calculated, explain to me why the bond
markets, which you say are rational and make these long-term projections
why they have not priced them in today.

CONARD: The rest of the world is going down the toilet. There`s enormous
excess capacity.

GHILARDUCCI: OK, that`s the -- what the International Monetary Fund --

CONRAD: I think we are debating this, the timing of when the market price
hits. I`m not 100 percent on one side or the other. I`m half way in
between. The market is why you can spend $1.1 trillion and still be in a
recession. A lot of it ends. The private sector dials up and down. If
you want to dial down it --

HAYES: Private sectors dial down?

CONRAD: Private -- regardless, spending is up 30 percent, OK, from where
we were in 2007. The public sector is up. Private sector is down as a
result the two compensate. Not 100 percent. Not perfectly in time.

HAYES: Right.

CONRAD: I don`t think there are many people in economics that are going to
disagree with where we have to be in the long run. I don`t think they
think we can run this deficit forever and continue on.

HAYES: Hakeem, I want you to tell me what would you be saying in these
caucus meetings if you were in the lame duck session after we take a break.


HAYES: Hakeem Jeffries, you are not yet a United States congressman. You
will be beginning next year. But if you were in the Democratic caucus
meetings and they were having these meetings about how to approach these
negotiations that we were just litigating some of the wonkier aspects on,
thank you for staying with us America.

What would your position be? What do people in your district care about
politically and substantively what do you want to see come out of this that
you would be able to -- if you were representing your district, come back
and be proud of.

JEFFRIES: I think the debt and the deficit are legitimate issues and that
people do care about those things?

HAYES: Do they care in Brooklyn? I`m serious.

JEFFRIES: Absolutely. I mean, I think that people are concerned when they
hear the number $15 trillion, what does that mean for their children and
grandchildren? It`s hard to understand and process it beyond that.

HAYES: It`s not hard, impossible.

JEFFRIES: Absolutely. I do think that when you saw the debt ceiling
debate in 2011, there were many people in the Eighth Congressional District
that the president was being treated unfairly and that the Republicans were
being hypocritical.

You know, the president needed to raise the debt ceiling for the good of
the economy. There was debt that was accumulated during his presidency,
but he inherited two wars as well as the Bush tax cuts that added to that

Ronald Reagan raised the debt ceiling 18 times during his presidency. He
was never accused of being fiscally irresponsible by some on the right. So
there`s hypocrisy in debate, but moving forward, I think given the
recession that we are still working our way through, pulling out of,
certainly it`s been tremendous progress.

The reality is we have to stimulate the economy in this short term. We
have to create jobs and put Americans back to work. That is what the
people in the Eighth Congressional District and I think all across this
country want to see.

HAYES: Yes, and it strikes me, Molly, you were on the campaign trail a
lot. You did great reporting and talking to a lot of folks. I just
wonder, like, the politics of this issue. I`m bias everyone can see
because of how I feel.

My sense is that it becomes the words dead and deficit are ways of naming
economic anxiety opposed to an actual specific commitment to what some
balance ledger looks like.

BALL: Yes. I think that`s right. I think like you were saying before
everybody cares about the deficit until it comes to the money they want to
spend. Whether it`s through the tax breaks that they want to give people
or the government spending they want to put in the budget.

And so what I`m really interested here given the caucus meetings that
you`re talking about haven`t started yet is, I think it really rests on
what the Republicans are going to do, how they are going to position

You have, you know, the president coming out there very firm pointing out
what the leverage is that he has and all the Democrats really united saying
we are willing to go off this cliff or curve.

HAYES: Thank you. Thank you.

BALL: But, you know, that`s the negotiating position. There`s a
negotiating position set on the other side by Boehner and McConnell. Also
some very tough talk, but you hear the language they are using saying tax
rates instead of saying taxes and admitting revenue needs to be brought in.

Those are sort of the smoke and signals saying we want to deal. We want to
come together somehow, but then the question is when you get into the
loopholes, who is --

HAYES: That`s a great -- great point here that the smoke signals are
coming and there`s a "New York Times" article actually just this morning
about a conference call Boehner had with his caucus in which Boehner -- it
sounds like, from the reporting.

And again, all this reporting is being done for specific reasons because
certain people want to send certain messages. It sounds like Boehner said
look, we are going to have to deal. They are more OK with that than they
have been in the past.

What is weird to me is that the jobs aspect of this, which you are talking
about in terms of what your constituents want and the thing you hear on the
campaign trail. It`s so absent from this conversation. It seems to me
like the most important thing is growth.

I`m with Bob Lucas that said that, right? Once you think about growth, you
can`t think of anything else. Exactly, growth is important. The point is,
how do we get growth and full employment? That, to me, is a part of this
conversation that`s not here.

GHILARDUCCI: Yes, absolutely so some of the spending is actually
investment. When government spends money on unemployment, which is part of
this fiscal curve, it`s manufactured. We could steer away from that curve
by extending the emergency unemployment compensation.

We put money in those pockets of people out of work. They spend it
immediately. It goes into the economy. Corporations have $1 trillion of
cash waiting for a smoke signal that there`s going to be aggregate demand.

They know the government will provide people out of work with money that
there`s going to be a commitment to growth and job growth. Those
corporations are going to release those resources and create more jobs.

HAYES: It can`t be said enough. The market is worried about uncertainty
now. Austerity is spooking the people I talk to as a reporter, we have
hedge funds and Wall Street. It`s the thing that worries them. There will
be near term austerity.

GHILARDUCCI: The world cares about this election and what the lame duck
Congress does. The world manifested through the International Monetary
Fund said right now all countries, especially the United States should not
engage in austerity. Basically, they are saying please steer away from
that fiscal curve.

JEFFRIES: It seems to me, the fiscal cliff, the fiscal curve, is set up --

HAYES: Just go with curve for the next hour and a half.


JEFFRIES: It`s designed to force compromise between two competing
philosophies of how do you stimulate the economy. Because on the Romney
side you stimulate the economy by reducing taxes on the super wealthy who
they claim to be job creators.

It`s a failed philosophy that is wrong. That is the philosophy as it
relates to how to stimulate the economy. There are others on the more
progressive side who make the argument that you have to invest in the

You have to protect entitlements as it relates to the most vulnerable in
society. You have to invest in transportation and infrastructure that may
require some targeted but increased spending.

HAYES: Ed, I want to come back to you because one of the prime issues
litigated in this election was tax rates on the wealthiest. It`s something
you wrote about in your book. I want to get your thoughts on that after we
take a break.


HAYES: During the campaign that preceded our current fiscal curve debate,
there was a lot of debate about taxes, particularly taxes in the highest
tax bracket. The positions of the two candidates, Barack Obama said I want
to extend all the Bush tax cuts except for those in the highest tax

It`s moved around a bit whether it`s above 250,000 or above a million.
There`s a little uncertainty in the Democratic caucus about where that cut
off is.

Whereas Mitt Romney and the Republican Party said we are not raising tax
rates for anybody. I want to get your thoughts on this because it seems
like that argument, you can say a lot of things weren`t litigated in the
election, but that definitely was litigated in that election, it seems to

CONARD: Absurdly so.

HAYES: How so?

CONARD: You have to close $900 billion. You are debating whether or not
you are going to let the Bush tax extension for 250,000 or more go on or
not go on. You are debating $50 billion a year, not the main issue.

HAYES: Right, but you can`t get to 900 until you get to 50 first.

CONARD: Of course, but you ultimately, you have to get to 900. There has
to be a lot of tax increases and a lot of spending cuts and this has to
come home unless you can run the deficit.

HAYES: Would you be willing for those to start if we were building a jenga
tower of spending cuts and tax raises for one of the blocks to be $50
billion because we have to come up with 18 blocks like that.

CONARD: It has to be.

HAYES: It has to be.

CONARD: It has to be because --

HAYES: Thank you. That`s great. We got it.

CONARD: The problem is, we are debating the pre-election spin, not real
economics. They avoided debating real economics. We pushed that off until
after the election. Now we are going to debate real economics.

What is the real inside game here? It`s whether they get two bites of the
apple for people over 250. We are going to say we want an increase this
year. Next year, you are really going to negotiate the $900 billion with
50 in the bank.

They are going to come back for a second bite for people over 250 because
believe me 39 percent marginal tax rate doesn`t come close to solving this
problem. The fiscal cliff has $200 and some billion a year of tax
increases on the middle class. We are talking $300 billion on the middle
class that they kind of agree as their compromise.

HAYES: Here`s actually my feeling on this. Molly, I want to get your
thoughts on this. I actually think it`s really important for the -- it`s
like if you have been laid up in a hospital for awhile and you haven`t
moved your leg muscles and you have to go through physical therapy to build
up the strength.

We have not -- we have lost the ability to raise taxes as a political body
that muscle has totally atrophied. We just haven`t been able to do it. I
actually think it`s really important from the health of the body politic.

And symbolically, even if only those $50 billion doesn`t get to 900, just
to say we can do it. Look at this America. We are capable of raising
revenue because what happens in countries that is go the way of Greece is
that they are incapable of raising revenue.

CONARD: This is where I disagree with Hakeem. We ran this experiment, the
U.S. versus Europe over the last 25 years. We grew 63 percent. France
grew 35 percent since 1991. Germany grew 22 percent. Japan grew 16
percent. We have 35 percent to 40 percent more hours of work per working
age adult in the United States than Germany and France have. This idea
that -- lower taxes on investors, it pumps up growth in the economy.

It`s hard to look the data in the face and come to that conclusion. The
shocking difference between the U.S. and Europe, it`s stimulus spending and
government spending and investment. Europe would be kicking our butts and
Greece would be the poster child of success. It`s an unmitigated disaster.

HAYES: Europe is not just one thing, right. It`s Norway and Greece.


HAYES: Norway is doing pretty well. Amsterdam is doing pretty well.

CONRAD: You say Germany is doing well. It grew 22 percent. It`s barely
come out of the recession. We are way ahead.

JEFFRIES: The European example is a false example. It`s a red herring.
Not that you are using it because I believe that, you know, your views on
the economy are anchored in solid philosophy.

But I think politically it`s used to say we can`t return to socialistic
policies because Europe has failed. The real comparison, the actual
comparison should be the Clinton economy versus the Bush economy.

In the Clinton years, tax rates ran 39 percent for the super wealthy. We
are balanced. We have a surplus in terms of the budget and tremendous
economic growth. The Bush years, we drop the rate and we found ourselves,
because of --

HAYES: That`s zero job creation.

JEFFRIES: And the worst economy since the depression. Europe is a false
comparison. Let`s look at what`s happened in America.

CONRAD: We commercialize the Internet in 1993. It`s like commercializing
the telephone. If you want to look at the effect the telephone has versus
tax rates, you have to go -- everybody got the telephone in 1990, us,
Europe, Japan.

We killed everybody, OK, because we had lower marginal tax rates and more
innovation, because we had higher payoffs for risk taking. So you can`t
make the comparison today without taking the Internet into it.

HAYES: Darpo is a government funding entity that created the Internet. It
did. I want to bring in Democratic Senator Sherrod Brown of Ohio right
after this.


HAYES: I want to bring in Senator Sherrod Brown of Ohio who was just re-
elected on Tuesday in his race against Republican challenger Josh Mendell.

Senator Brown, first of all congratulations on your victory on Tuesday
night. I would like to hear your thoughts. You are right back at it. I`m
sure the next day, there are memos zinging around the Senate Democratic
caucus about the fiscal curve negotiations.

So what is your approach going into this. What is your, I guess you are
not going to tell me because you`re negotiating, but I`ll ask anyway what
are your red lines?

SEN. SHERROD BROWN (D), OHIO: Well, I think you started with a balance,
but let me -- I was listening to the last 10 minutes of the show and wanted
to comment on something that Congressman Jeffries said and Mr. Conard said.

Mr. Conard talked about comparing the United States and Europe over the
last 25 years and economic growth here was better. I think that was more
clearer the way that Congressman Jeffries did it. If you look at economic
growth in the U.S. in the last 10 years, it`s not been much to brag about
because of those economic policies that started more than a decade ago.

What Congressman Jeffries said is compare the Clinton eight years with the
Bush eight years. I don`t want to look back, but it`s instructive to look
back sometimes and look at least at recent economic history.

You can talk about the Internet, but look what happened with a bit higher
tax rates, but a real investment in the middle class the way we did the
Clinton years. Look at no job growth, no net job growth to speak of in the
private sector, 20 million versus virtually close to zero.

That gives instruction ahead. That means balance and we don`t cut
dramatically anywhere right now, but the cuts will take effect. We let the
tax cuts expire for over 250. Every person, including millionaires will
get a tax cut up to $250,000 income then pay higher taxes.

It`s not onerous tax burden, it`s a few percent higher. We can wait. We
can go. We can save tens of billions of dollars on farm subsidies. Spend
on generic drugs. We can close tax loopholes like hedge fund operators and
oil companies. All of those will bring significant, make significant
progress toward deficit reduction in the next five to 10 years.

HAYES: I want to get, quickly, your response. When you saw your
colleague, the gentleman from Kentucky, Senate minority leader, Mitch
McConnell, his statement he issued on Tuesday night in the wake of the
election was quite defiant.

Basically saying if anyone thinks we were sent to raise taxes, they are out
of their mind. I couldn`t help, but notice he was the only person watching
the fundraiser Wednesday. He`s up for re-election. What was your reaction
to that statement from Senator Mitch McConnell and what do you think that
bodes for how the Senate minority --

BROWN: It was disappointment. I thought that Senator McConnell would be
better than that. I think Speaker Boehner was better than that. Members
of his caucus will be better than that.

I hope he spoke without so much pulling his caucus when he did that. I
mean, he`s the same guy that after the 2010 elections talked about a
mandate with the whole country because of that election.

Mitch McConnell, three of the four elections have not been positive for him
and his caucus, in `06, 2008 and 2010. He felt like Karl Rove on election
night. He was pretty frustrated and unhappy.

HAYES: Senator, I want you to stick around. We are going to talk about
after the fiscal curve, there`s a whole new term of Congress, which there`s
other stuff that is going to happen. I want to talk about what you are
thinking about that after the break.


HAYES: Hello from New York. I`m Chris Hayes. With me this morning, I
have Democratic Congressman elect from the 8th District, Hakeem Jeffries,
Teresa Ghilarducci of the New School for Social Research, Ed Conard, former
partner at Bain Capital and author of a great book, and Molly Ball of "The
Atlantic" magazine.

Joining us on satellite is Senator Sherrod Brown, Democrat of Ohio.
Senator, I want to get your thoughts. And Molly, I would like you to chime
in here.

There`s going to be this budget discussion that happens in the next few
weeks, next few months, maybe even a longer if it gets pulled over. But
then there`s a new Congress with a new term.

I`m curious what you are going to Washington to do in January. What do you
want to see be on the agenda? The president has the unique ability, I
think in American politics -- the biggest power he has aside from his power
in the war making sphere is the power to set the agenda. What do you want
to see the agenda -- what agenda do you want to see set starting in the new
Congressional term?

BROWN: Well, I think we`ll look to -- obviously look to the president on
where, as he approaches the inauguration, where he wants to go. I have had
conversations with him in the White House, both before this campaign and
during this last campaign, about what we do with manufacturing.

And we have seen after 12 years -- 11 years of manufacturing job decline in
this country, every single year, we have seen almost every single month
manufacturing job increase, about 500,000 jobs. Nothing close to what we
need yet. That was part auto rescue. It was part enforcement of trade
rules with China.

It was part a focus on community colleges. Tomorrow, I`m going to be in
Aleri (ph), Ohio, 30 miles west of here in an opening of a lithium-ion
battery plant. That`s partly from federal investment and partnership.

I think we learned from the auto rescue that it`s got to be bipartisan when
it comes to a manufacturing strategy. And it needs to be a partnership,
whenever possible, between the federal government and local communities and

I think we`re -- I see the president looking that way and going that way,
partly enforcing trade rules, partly investing in clean energy in -- in
Ohio. We are a manufacturing state, of course. It also means medical
device and so many other kinds of more advanced manufacturing. I think we
are moving in that direction well.

HAYES: Molly, having covered the campaign and the politics of it and
covering Washington, what are you expecting to see start be put in the
pipeline in terms of a legislative agenda when we enter the new Congress,
once the fiscal budget conversation has ended?

BALL: It`s really interesting to me to hear someone like Senator Brown
talking about this. But I think you really do have among Democrats a sense
that they did win the policy argument in this election and they really are
emboldened to pursue it.

I mean, I`m listening to this economic policy debate. And I think you can
go around and around and around in that basically eternally. But what`s
new is that Democrats feel like they won the argument on raising taxes. In
the past, you have had -- this drives the left crazy, but Democrats feel
like if you get called a tax raiser, you can`t win.

And you had a lot of Democrats have millions and millions and millions of
dollars spent against them in their campaigns, calling them tax hikers, and
they still won. And I know this is something that -- that Senator Brown
believes, but even the Democrats who are not considered as liberal as
Senator Brown, are also starting to edge toward this perspective.

The question is sort of whether the Republicans -- I think the Republicans
are in a little bit of disarray right now, not sure whether they can
continue to sort of beat that drum, or if they will have to sort of peel
off and go along with some of these compromises. So that`s going to be the

JEFFRIES: I think we did win the argument. And Senator Brown won the
argument in a tough battleground state in Ohio. I congratulate him.
President Obama won the argument.

You had Mitt Romney articulating a view of a five trillion dollar tax cut,
largely benefiting the super wealthy, and President Obama saying there`s
got to be tax fairness. And that means raising the rates on high income
earners above 250,000 dollars, the clearest argument that could have been

And the American people supported the tax fairness argument.

For me, on what I hope to see in the next Congress, beyond the big picture
issues that are worked out to the benefit of the district and the American
people, I`m inheriting a district that was hit hard by Hurricane Sandy.

For me, everything changed really on October 29th. This is where
government compassion and efficiency matters. FEMA matters now to the
people of the Eighth Congressional District. Rebuilding, creating
infrastructure, providing immediate humanitarian relief, partly in
partnership with not for profits like the Red Cross, but largely driven by
government at all levels. And certainly the federal government`s
involvement has been important and will continue to be important.

HAYES: One of the other big issues that I think we have seen before -- and
this is a process issue, but I`m obsessed with it, so if you will indulge
me, senator. The filibuster and way that the filibuster has mutated over
the years.

And there was a little bit of a push at the beginning of the last Congress
for filibuster reform. Basically, you get a one day window to do anything
with the filibuster, in which you can -- in which the rules are passed for
the new term of Congress on the first day that Congress is convened.

And there`s been more rumblings about filibuster reform. And I`m curious
where you are on this issue. Is that something that you want to see
prioritized and pushed for? Is it something that you can kind take or

BROWN: No, it`s something -- I`m not one of the leaders, like Senator
Merkley is probably and Senator Udall of New Mexico, the one who has been
the most outspoken and shown the strongest leadership. Senator Reid is on
board now. Senatorss that weren`t so certain have watched what`s happened
and they see a dysfunctional Senate, where there`ve been -- what, was there
one filibuster when Lyndon Johnson was majority leader in the `50s and
leading into 1960.

Today, there have been, in the last six years, something upwards of 300,
where the Senate simply can`t operate it. And we need to move more towards
a majority -- majority control in the Senate. There will still be many
protections, as there should be, for the minority. But there are things we
need to do, the 41 vote rule, the motion to proceed. I won`t go into all
the kind -- in the weeds.

But clearly we have got to do something so the Senate can operate, so Mitch
McConnell just can`t wave his hand and block anything that he and his major
big money contributors want to stop, because the Senate will not respond to
what the American people want if that`s the case.

So I think there will be real sentiment to do it. I think we have more
than 50 votes in the Senate to do it on the first day. There will be
success there, I think.

HAYES: I`m curious your thoughts on filibuster reform, Ed, because it`s --
it`s one of these issues that has kind of broken down slightly on
ideological lines. There`s a small R republican conservative argument
about these kind of anti-majoritarian checks. And I`m curious what your
thoughts are?

CONARD: I think the Congress was set up so that the president really has
to negotiate a bipartisan agreement, except in extreme circumstances like
we had in 2008. I think it served our country extremely well for 200
years. We have out performed the rest of the world.

I`m very fearful of taking the governor off, because I think there`s
important compromises that need to be made between consumer who would
consume every dollar that is out there, and investors who are trying to
save and invest in the private sector. And reaching some compromise
between the two of them I think is more valuable than just majority vote
and the minority.

HAYES: I think that`s a very interesting analysis. You`re saying that
consumers outnumber investors. And one of the ways -- one of the things
that gets mediated in the legislative sphere is this sort of battle between
consumers and investors, and that this minoritarian protection can be a
minoritarian protection for the investor class against the majority.


CONARD: -- value the investment. They just don`t realize how valuable it
really is.

BROWN: Chris, I would call those consumers citizens. I don`t look at
elective office quite the way in our government. It`s not a corporation.
It`s very different. We need some corporate efficiencies, to be sure.
Although I can`t imagine corporations have a filibuster kind of situation.
But that`s beside the point.

But clearly -- clearly, you can argue for 200 years it`s work. But Mitch
McConnell was never the leader in the Senate in the 1850s or the 1950s.
And when you have a Senate leader who is willing to say, one, I will do
everything I can to stop the president of the United States from being
reelected two years before the election; then you have that same leader
filibuster hundreds of times; and then you have the same leader, after
losing big in an election -- they expected to take the majority -- actually
losing seats and see the president reelected with more than 100 electoral
vote margin, saying that he`s going to continue to do this -- something is
dysfunctional. And the dysfunction is pretty one sided on this.

I want to weigh both sides. But I think on this one, the minority party in
the Senate has really kept it from doing the people`s business. I don`t
think there`s any question about that.

HAYES: Teresa?

GHILARDUCCI: Don`t concede very quickly that there`s something called an
investor class and a consumer class. I agree with Senator Brown.
Consumers are citizens and they also invest. The middle class and working
class do a lot of investment. The rich folks to a hell of a lot of

So that`s not the way we frame the economic system.

HAYES: I want to thank Senator Sherrod Brown, Democrat of Ohio, for
joining us. I would like to have you back because I think it`s going to be
a much more interesting legislative session than people are realizing at
this point.

Teresa Ghilarducci from the New School for Social Research, Edward Conard,
a former partner at Bain Capital, Molly Ball from "The Atlantic" magazine,
great to have you all. And Ed, thank you for being a good sport. I want
to have you back, I really do. I really enjoyed arguing with you.

The myth that big money lost on Tuesday, right after this.


HAYES: One of the top headlines out of this election, the first election
following the Citizens United ruling, has been that a very few -- a few
very wealthy people spent a lot of money without a whole lot of results.
The man who is perhaps most responsible for convincing extremely wealthy
people to part with their cash is Karl Rove, the GOP`s go to big money guy,
and the mastermind behind the network of Crossroads organization.

On Tuesday night, he sat on Fox News in a state of disbelief as the network
called Ohio for the president.


CHRIS WALLACE, FOX NEWS ANCHOR: I`m going to ask you a straight-out
question. You went through this in 2000. You almost went through it in
2004. Do you believe that Ohio has been settled?

KARL ROVE, FOX NEWS CONTRIBUTOR: No, I don`t. I don`t know what the
outcome is going to be. But you should -- we have to be careful about
calling things when we have like 991 votes separating the two candidates
and a quarter of the vote yet to count. Even if they have made it on the
basis of select precincts, I`d be very cautious about intruding into this


HAYES: Rove was in denial. But you can understand why. His American
Crossroads alone spent over 100 million dollars in this election cycle.
That`s just one part of their spending.

According to the Sunlight Foundation -- This might be my favorite
statistic. And shout out to Alison Koch (ph). Our segment producer found
this. According to Sunlight Foundation, just 1.29 percent of that money
went to candidates who actually won -- 1.29 percent.

Rove has reportedly spent the past week fielding a lot of questions from
his likely enraged anonymous billionaire backers. But the perceived lack
of influence super PACs had on the presidential campaign obscured the fact
that not all is lost for big money. The further down ballot the money
went, the more successful the money was.

In many ways, this has been lost over the past week in favor of the well
deserved skewering of Karl Rove, a man whose political acumen has at long
last been called into question.


DAVID LETTERMAN, HOST, "THE LATE SHOW": The people who gave him the money
-- I think it was the Koch Brothers. They gave him 400 million dollars.
They said here, hey, tubby, go get us a president. We got stuff we want to
ramrod through. We are going to turn this America -- we want America back.

Here, what is it going to take to get America back, Karl? Here, come on.
Come on, 400 billion. Bring back a real America, will ya?


LETTERMAN: So, a lot of that money is left over and -- I tell you, the
Koch Brothers -- don`t be surprised if you read that Karl Rove was beaten
up by the Koch Brothers.



HAYES: Joining us now is Neil Barofsky, author of "Bailout, An Inside
Account of How Washington Abandoned Main Street While Rescuing Wall
Street," and former special inspector general in charge of oversight of
the Troubled Assets Relief Program, or TARP, Robert Wolf returning to the
table, former president of UBS Investment Bank, outside adviser to
President Obama, and host of the weekly webcast "Impact Players" on the
Reuters Channel on YouTube TV. And Zephyr Teachout also returning to the
table, associate professor at Fordham University School of Law, visiting
assistant professor of public policy at the Kennedy School of Government at
Harvard University.

And also, Senator Sherrod Brown, you are still there in Ohio. I said good-
bye to you, which is premature because I`m very happy you are sticking
around for this conversation, because you just had a very up close look at
big money in your last campaign.

Let`s start out with this super PAC big money story, because that`s the
kind of headline story. Then we can kind of dive in deeper. I`m going to
take a second for like a little Shaudenfraud here, and particularly with
Sheldon Adleson. And here is the thing that I think is amazing.

Sheldon Adleson, of course, multi-billionaire casino magnate, very
conservative guy, spent a lot of money in this election, hundred million
dollars, north of a hundred million dollars in this election. And the
thing that`s so funny about this whole thing is here is a guy who has made
his money running casinos.

And the way casinos make money is they identify marks, right? They
identify people that is very easy to separate from their money. And they
give them suites and free drinks and meal tickets. And then they just
bleed them dry.

And it turns out, at the end of this election, the biggest mark in American
politics is Sheldon Adleson himself. He is the mother of all whales. He
walks into a casino and they part the ways for him. The consultants lined
up. They gorged themselves on Sheldon Adleson`s money.

And I think there`s a certain kind of poetic beauty to that story. Am I
wrong to feel some Shaudenfraud about that?

ZEPHYR TEACHOUT, FORDHAM UNIVERSITY: I don`t want to take away from your
relish, because I think we all felt that. You know, one of the things we
have to look at is what is the return on investment? There`s a temptation
to say the return on investment is who got elected, when, in fact, the
return on investment is what are the policies.

You know, there was not discussion of climate change. Why not? The
serious -- I think Sheldon Adleson, sadly, may have got a pretty good
return on his investment if you look at where the tax discussion was.

HAYES: Interesting.

Senator Brown, you saw a lot of money come in from the outside on the other
side. You also had money from the outside on your side. What is your take
away from this race? I think you can say hey, look, you know, basically,
we found an equilibrium. And the voters decided. And it didn`t hurt me.

BROWN: My take away is a couple things. First, I think that, in my race -
- and I won`t speak for others. But in my race, it wouldn`t have been much
of a race without the 40 million dollars in attack ads that came pretty
much every week for about a year.

So it puts somebody in the game to begin with. That`s not great concern to
people, but I think that`s a factor. I think when you have this kind of
money, the first thing you do is you think -- the first response is you
have to be yourself. You can`t let the money spook you, which it easily
can do.

It concerns you, but you fight back in a way that you stand for what you
stood for in the past. At the same time, you make sure that people
understand increasingly why they are spending this money. We knew, in our
case, it was Wall Street, because of my legislation to break up the six
largest trillion dollar banks. We knew it was oil companies because we
want to close their tax loopholes.

We know it was companies that outsource jobs to China because of our
currency legislation. So you know that. You remind voters of that.

But I think what was just said is a concern, too, because some issues are
probably talked about less in campaigns because of the money and the way
that we govern in the future. I`ve got to think that some of my colleagues
who may not always be willing to stand-up to big money are going to think
in the back of their heads, if I support this amendment, is the wrath of a
super PAC going to come down on me.

So I think we won this year, clearly, against Rove and Adleson and all
that. But I think the insidiousness of this money still stands. They will
be back. The return on investment, as you say -- Adleson`s looking at a
nine billion dollars savings, he says -- said to a friend of me. That`s a
nine billion dollars savings if we eliminate the estate tax.


BROWN: Yes. So these guys aren`t going away. Rove was a bit pathetic on
election night and has been since. And his political acumen has never been
what people thought it was, in my state or elsewhere. But he`s still a
major player. He still has access to tens if not hundreds of millions of
dollars. They will be back.

That`s why we need to deal with the Citizens United case as straight
forwardly and in as focused a way as we can.

HAYES: Neil Barofsky, you have written a whole book about how money
operates in Washington. Robert, you`ve been a donor. You`ve been a fund
raiser. I want to hear what you guys think about what the lessons of this
new super PAC era were right after we take a break.


HAYES: Watching this election unfold and having just come from Washington
and writing a book that was really about the way in which big money
operates on a day-to-day institutional level in Washington, as distinct
from how it operates on the campaign trail, what do you take away from the
race? And do you think the kind of joy that people feel about, oh, big
money was defeated is premature? Is it warranted?

First of all, as you said in the opening, in a big race like Senator
Brown`s race, you are going to attract a lot of money from both sides. And
that advantage -- the super PAC advantage, all that Wall Street money,
there`s going to be some counter weight. Ultimately, all that noise
cancels out. And when you have a strong candidate, I believe, with a
strong message like Senator Brown, who I congratulate on his victory of
standing up to Wall Street and being victorious, it`s going to have less of
an impact than, as you said, on a smaller race.

But the second thing is before the Shaudenfraud gets too much for Karl
Rove, remember big elections are now a big business. My guess is that Karl
Rove`s bank account is a lot bigger today than it was beforehand.

One of the problems is it`s a real conflict of interest for a lot of these
consultants. They get paid on volume. How many ads they place, they take
a piece of that in their various consulting and spin offs.

So for them, it`s a win either way. Now maybe there`s a bit of debt --
degrading of their influence. But they have a little time to recover. And
I wouldn`t cry too many tears for Karl Rove.

HAYES: This is a great red state headline, which is this is now the
recrimination period. And people are saying exactly this, on the right,
not on the left, but in the recrimination that`s happening on the right, in
the Republican party, among conservatives. This here`s a Red State
headline, "Campaign Sources, the Romney Campaign Was a Consultant Con Job."

Basically, people thought oh man, this was going to be the most expensive
race in history. There`s tens and hundreds of millions of dollars flying
around. And I can get in on that. As a donor, is that a concern of yours?

Street guy who is close to the president, I`m feeling OK today. Listen,
let me talk about the whole super PAC situation. I think what we learned
was this was not an election about pro-Obama versus anti-Obama. It was
about who was pro-Obama and who was pro-Romney.

And the truth is less people were pro-Romney. And so he got a lot less
votes than McCain got. And more people came and said, you know,
irrespective of all these negative ads, I like the vision of President
Obama. That`s why he won eight of nine swing states. That`s why the
middle went for him.

I think that this whole idea of money influence, yeah, it`s important. But
at the end of the day, we all have just one vote. That one vote was very
loud for the president.

HAYES: But here is my question to you -- and this is something I think
about a lot. Let`s imagine two -- let`s imagine Mitt Romney and Barack
Obama both run and they each run -- they have 10 million dollars, just 10
million dollars.

Are they running the same race, each of them, 10 million dollars versus 10
million dollars as they each run with 100 million dollars or a they run
each with a billion dollars. Which is to say, as the money goes up, are we
just finding the exact same equilibrium with just more expense to people
like yourself and other folks? Or is there something that is changing the
dynamics of the politics as we climb up this equilibrium?

WOLF: Listen, I think as you have more money, you are allowed to be more
dynamic on the issues you want to follow. At one point, it was about Wall
Street and this and that. Then, at the end of the day, it became about
women`s issues. It became about immigration reform. It became about
infrastructure with FEMA.

And let`s be blunt, at the end, most people thought OK, it was important
for the hurricane that we have government involvement. It was important in
Sherrod Brown`s state that we had government involvement in the car auto
bailout. So I think the money allows you to be much more dynamic.

HAYES: You are actually making the argument that it`s beneficial, because
it actually -- you can talk about more things with this larger pool of

WOLF: You can talk about more things.

JEFFRIES: There`s another important point here, too. Big money clearly
lost across the board. There were three objectives coming into play.
Defeat the president, strike one. Retake the Senate majority for the
Republicans, strike two. Increase the GOP House majority, strike three.

They lost across the board. But I do think moving forward, what you may
see is the investors, the Sheldon Adlesons of the world, recalibrating and
saying should this money have been spent in larger degree on a ground game,
as opposed to spending it on all these ads that over saturate the market.

TEACHOUT: I may have even said this a couple months ago on this show.
This is amateur hour for super PACs. And we shouldn`t over learn from this
year. Nobody knows how to use this money. Yes, they are just making it up
as they go along.

But I don`t think big money lost across the board. The two things I talked
about before, climate change, where was it? Where was, from my point of
view, much more discussion about Wall Street?

JEFFRIES: I think there`s a question about whether big money lost on the
issues in terms of what we see out of the next Congress.

HAYES: Senator, I want to get your thoughts on this, because there are two
sides to this, right? Big money, the president all in, his fund raising
and the associated groups, basically was one for one with the other side,
when you take the campaign and the associated groups.

So I don`t think you can say the race has big money on one side and not on
the other side. There`s a lot of money floating around. Senator, I want
your thoughts on that right after we take this break.

BROWN: Sure.


HAYES: Senator Brown, we were just talking about big money and money in
this election. And I want to -- and this is a slightly uncomfortable
question, but I`ll ask it to you. There`s a lot of big money on the other
side. I think that prompts the natural question, the people that are
giving money to your campaign, what are they expecting? What do they want?
Don`t those dynamics play out on both sides of any given campaign?

BROWN: Well, it`s a bit of a false equivalence, because the amount of
money on their side was 40 million outside dollars. On my side, it was
slightly I believe under 10. Our 10 million was mostly disclosed, unlike
their 40 million.

So I -- you know, the people know my politics, know what I stand for. I
think people that gave me money knew that going in.

Robert Wolf said something that was interesting I thought, that it expanded
the debate. I think it did. But I think into more issues with more money.
But I think it also contributed -- I think that`s tempered by a more
cynical electorate because of the number of TV ads. You live in a state
like Ohio, it was ad after ad after ad from about July on.

And people get more and more cynical about politics there. I also worry
about what might be next for this crowd, because they -- what Zephyr said
earlier, they have more influence in state legislative elections. Sort of
the further down the chain you go -- in Ohio, the legislature is after --
after Republicans winning big, the far right in 2010, they went after
women`s rights, voter rights, collective bargaining rights. We are seeing
that all over the country.

That`s one of the major impacts of outside money that we have to be very
aware of looking forward. Not just a Senate candidate where I can fight
back. I may be outspent overall two or three to one, but I can fight back
because I have some resources and skills developed or whatever. It`s
harder for state legislators where people aren`t paying the same attention
to it.

HAYES: It`s a very good point. People shouldn`t lose sight of the fact
that because Citizens United is a constitutional ruling that finds a
constitutional right to unlimited spending, it knocked down state laws that
had limited it for state elections. So in places like Montana and North
Carolina, all of a sudden you have this huge amount of outside money.

I was reading some reports on this in State Supreme Court judge races,
where someone writes a check for 300,000 dollars with a week to go. You
think about people making the decision who they`re going to vote for State
Supreme Court. No one knows who these people are or what their records
are. So you see a bunch of ads. That`s going to have a pretty intense

BAROFSKY: I think Zephyr`s point before is a very good one and worth
talking about. They are going to get a lot better at this. This was a
really blunt instrument. I think in many ways, the super PAC money
probably hurt Romney in his campaign as much as it probably helped.
Initially in the primary, all that outside money helped define him as this
plutocrat, Bain Capital. Came from -- the Republicans did all that damage.

Then I think it was a straight jacket, notwithstanding your point, during
the general election. Some issues that you were discussing earlier on
Twitter. What could have been a game changer for was breaking to the left
of Obama on the banks, going after Wall Street and breaking up the banks,,
which we saw a glimpse of during one of the debates. That could have been
a game changer that delivered the election and completely destroyed a lot
of the attempts to define him otherwise. But he couldn`t do it. .

HAYES: It`s also something -- you know, breaking up the banks is something
that there`s intellectual support for among conservative writers and
thinkers. But -- so it would have some rooting in a kind of ideological
pool of people. But there`s an interest problem.

TEACHOUT: Listen, I`m part of that one percent. I`m on Wall Street. Most
of my peers gave to super PACs. I did not. I`m close with Priorities head
Bill Burton. My view was I don`t want to contribute to a campaign part
that is about the negative side. I remember having conversations with
Valerie Jarrett, where we were saying what a great ad that came out where
the president was talking about his vision. Those were the best

The president won because people liked him. They liked the direction he
was going. His favorability was the highest it`s been since the Osama bin
Laden part. That`s because they are seeing a different light of the vision
he`s going, which I think is much more important. And I think, you know,
we can hit Wall Street, but Wall Street didn`t drive super PACs. Most of
the people who were driving these super PACs were not part of Wall Street.
I mean, we should just be clear.

HAYES: I think that`s actually --

TEACHOUT: They gave to Romney in a disproportionate fashion to the
president, but it was not about the super PAC thing.

HAYES: Right, but I think that`s one of the interesting things, is that
what you basically had was this was the era of super PACs as vanity
projects of eccentric billionaires, as opposed super PAC projects of
vehicles for institutional industrial interest.

TEACHOUT: Correct.

HAYES: Right. I think we`re -- the next time we run this experiment we
are probably going to get the second version.

I want to thank Senator Sherrod Brown, Democrat of Ohio, recently reelected
on Tuesday to the United States Senate to serve his second term. And it`s
a great pleasure, Senator Brown. Thanks so much.

BROWN: Good to be back. We`ll do it again. Thank you, Chris. To the
panel, thank you.

HAYES: We`ll be right back.


HAYES: We are talking about super PACs and big money and the wild and
woolly new era of post-Citizens United campaign financing and what it all
says now after the first election -- first presidential election which it`s

And Hakeem Jeffries, congressman-elect from the great eighth district in
New York, in the Borough of Brooklyn, there was a story about a group
called Students First in the summer. They were a self-described education
reform group, which the term itself I hate, because that`s a very broad
term that`s been appropriated by one side in a very heated policy dispute
about the best way to improve education.


HAYES: But the side on the other side from the Teachers Union, let`s say.
And they announced -- you were in a very contested primary race. You
didn`t have a very big Republican opposition in the general. But they
announced in the primaries they are going to come in and spend some money
on your behalf against your opponents. Tell -- walk me through what
happened next.

JEFFRIES: Well, there was a moment in time where it appeared that my
opponent in the primary was surging, at least as it related to the
mainstream media and the manner in which the campaign was being covered.
So, he had secured the support of the outgoing incumbent, which was
unexpected. Then he secured the support of one of the largest municipal

The reason that was articulated as to why they didn`t endorse me -- the
overwhelming majority of progressive labor went with me, with the exception
of this one union -- was because I had been supportive of charter schools
as a vehicle for educational opportunity for poor, inner city students.
And so Students First announced, in the context of what appeared to be a
very competitive primary, that they were going to come in with outside
money to support my candidacy because they agree with my openness to
charter schools as an educational alternative.

We decided that that wasn`t the right approach. I support charter school.
I support the public school system. I don`t support unregulated outside

HAYES: So you basically told them to back off, essentially.

JEFFRIES: We can`t coordinate, but we were able to --

HAYES: Go to the press.

JEFFRIES: -- a public statement and say we don`t want the involvement of
this particular group. We can win this race without outside money. We
want to win this race without outside money. That`s the right thing to do.
That`s what the people deserve. To their credit, they backed off and
didn`t engage.

TEACHOUT: And as a progressive New Yorker, I was getting lots of messages
saying let`s influence the Jeffries campaign on this and ask him to push
back. You do see this sort of across the board grassroots effort to push
back against the super PACs. I don`t know that it`s going to last forever,
but we have a small window in which we can do constitutional amendments.
And it was a really exciting I think grassroots push back.

HAYES: What`s also interesting about this is that one of the fascinating
things about outside money is that the person giving the money or spending
the money can create an associational cost to the candidate that the
candidate doesn`t necessarily have veto power over.

In your case, you took a lot of heat for it, because this is an incredibly
fraught area of policy, particularly in a Democratic primary. I don`t know
what the thinking was or the calculation, whether it was on principle of
outside money or that you were just getting a lot of flak for it.

JEFFRIES: There certainly was a view among some of my consultants, like
with friends like this, who needs enemies.

HAYES: Right. No, I remember you were getting creamed. I remember all my
lefty friends were attacking Jeffries as a sellout.

JEFFRIES: Fortunately, I have worked closely with the Teachers Union over
time and continue to work closely with them. So we were able to put
together an alternative narrative. But it certainly complicated things
beyond the principle.

HAYES: Having written a book, having seen up close the way that big money
can skew policy in Washington, I want to turn maybe to this conversation
about how much of it is the campaign system and how much of it is something
else. Because I think that`s where the kind of rubber hits the road here.
We end up looking at the six billion dollars spent in the campaign and we
look at the checks.

And there`s this kind of assumption that there`s some kind of quid pro quo
happening, some kind of debt being incurred. That debt is then paid off
with favors. And my reporting in Washington -- and your book is a great
account of this -- it`s just so much more complicated and diffuse than
that. I want to kind of try and get our hands around what it is.

I mean, how much do you think the campaign finance system produced the kind
of capture that you chronicle in your book?

BAROFSKY: It`s ideological, right? And what it is, is it put pressures
and narrows the focus on what candidates are going to do and what type of
candidates can rise to the top and enter into these primaries and get the
right money behind them. They start self-selecting their own positions on
policies that conform.

You know, we have this sort of strange system where they can`t communicate
with the candidate or coordinate. But there`s all different types of ways
to coordinate other than through direct communications. I think that you
have that shaping of an ideology that is going to inevitably flow.

And I think frankly, this is going to be too big of a business and too
profitable for those within the system for there to be much push for
meaningful reform, because a candidate or a member or a staffer, when they
have the opportunity now not just to go to a lobbying organization, but to
go and profit richly off one of those consultant or super PACs, that`s
going to mean more money that is going to self-propagates the system, just
like we have seen in other areas of Washington.

HAYES: I want to hear your thoughts on the self-selection, because I
suspect you don`t quite see eye to eye with me on that. So let`s take a
break and I want to hear from you.


HAYES: In just a moment, what you should know for the news week ahead.
But first, a quick personal update, tomorrow, Monday November 12th at 8:00
p.m., I`ll be appearing at the Miami Book Fair International at Miami Dade
College of Miami, Florida to talk about my book, "Twilight of the Elites."
And on Tuesday, November 13th, at 7:00 p.m., I`ll be appearing at MIT in
Cambridge where I`ll be talking about my book and the election with Ta-
Nehisi Coates of "The Atlantic" magazine.

For more information on these events, go to our Web site,

We also want to update you on some of the Congressional candidates we had
on the show this year. You know that Hakeem Jeffries was elected to serve
in the Congress. Democrat Tulsi Gabbard was elected to Congress in Hawaii,
becoming the first Hindu member of the House. Democrat Tammy Baldwin
defeated Republican Tommy Thompson in the Wisconsin Senate race, becoming
the first openly gay woman to serve in the U.S. Senate.

Shelly Berkeley, Democrat of Nevada, lost her bid for Senate to Republican
Dean Heller. Democrat Nate Shinegawa lost his challenge to Republican New
York Congressman Tom Reid. Democrat Rob Zerban lost his challenge to
Congressman Paul Ryan in Wisconsin.

Congresswoman Chellie Pingree was reelected to a third term in Maine, while
Democrat Cynthia Dill lost her Senate bid there to former Governor Angus
King, an independent. And Kyrsten Sinema, a Democrat, is narrowly leading
her race for an open seat in Arizona, where provisional ballots are still
being counted.

Finally, an updated on CEOs bullying their employees to support Mitt
Romney. Some of them are punishing their employees for President Obama`s
victory. Robert Murray, the CEO of Murray Energy, the Ohio based coal
company who once ordered employees to miss a day of work without pay in
order to attend a Romney rally announced on Wednesday that he will lay off
160 workers. Murray told employees he said going into, quote, survival
mode as a result of President Obama`s reelection, according to WTOB TV in

And Papa Johns CEO John Schnatter -- sorry -- Schnatter says that he will
cut employees` hours as a result of President Obama`s reelection, according

On a more positive note, Westgate Resort David Siegal who threatened to
fire his employees, said after the election he is going to give them raises

So what should you know for the week coming up? You should know that on
Monday morning, Michael Morell will start his first day as the new acting
director of the Central Intelligence Agency, after the abrupt resignation
of former CIA Director and retired four star General David Petraeus.
Petraeus cited an extra-marital affair as a reason for his resignation.
Subsequent reporting indicates that the woman involved in the affair was
Paula Broadwell, who wrote an extremely complimentary biography of the

You should know that since Andrea Mitchell broke the story on Petraeus`
resignation Friday on MSNBC, additional details have come to light about
Petraeus` affair with Broadwell. You should know that we had a long,
spirited editorial meeting yesterday about whether to discuss the Petraeus
story on our air today.

Because important details are still to be resolved about this story, we
decided not to. But we agreed that as basic facts become clear, we intend
to dive into a lot of the important issues involving David Petraeus, his
role as a public figure, relations between the general and civilians, the
rise of counter-insurgency as a dominant strategic theory during our long
wars, and the increasing role of the CIA as a paramilitary organization.

Speaking of David Petraeus, one of our nation`s best known and most
celebrated veterans, you should know today is Veterans` Day. You should
know that Veterans Day began in 1919 as Armistice Day, observed on November
11th, because it was the day in 1918 when the horror of World War I was
officially brought to a close.

You should know, in an official proclamation in 1926, Congress said the
holiday, quote, "marked the cessation of the most destructive, sanguinary
and far-reaching war in human annals, and the resumption by the people of
the United States of peaceful relations with other nations which we hope
may never again be severed," and that it was, quote, "fitting that the
recurring anniversary of this date should be commemorated with thanksgiving
and prayer and exercises designed to perpetuate peace through good will and
mutual understanding between nations."

After World War II and the largest mobilization of arms in the country`s
history, President Dwight Eisenhower began a tradition of using the date to
honor the millions who served, and officially declared it Veterans Day.

I think, particularly at this moment in our history, it is fitting for ust
to reflect on both peace and our veterans on the same day. We`ve been
through a decade of ceaseless war. One of those wars is over. One will
end soon. And as we move from war hopefully to peace, we will be a society
that must still live up to the contract that we all have with the millions
of men and women who we, as democratic citizens, have directed to wage war
with all of the boundless danger and deathless sacrifice and lasting
consequences that entails.

You should know that during the upcoming fiscal cliff negotiations and
discussion of sequester and balancing the budget there are those,
particularly on the right, who want to cut the benefits of both current
service members and veterans. And it must be a priority of the political
left to see that that does not happen.

I want to find out what my guests think we should know for the week coming
up. Let`s begin with you, Hakeem Jeffries.

JEFFRIES: I think that many people were encouraged by the somewhat
moderated tone of Speaker Boehner coming out of this most recent election,
particularly when you compare it to the tone of Mitch McConnell on the
Senate side. What will be interesting and what we should all follow is
next week, probably on Wednesday, Speaker Boehner will have the first
opportunity to conduct an in-person conference with the entirety of his
Republican membership.

Coming out of that conference, it will be interesting to see whether he
remains with a moderated tone of common ground or whether he comes out of
that conference with a more extreme line in the sand.

HAYES: Totally agree. That`s what to watch for.

Neil Barofsky.

BAROFSKY: You should know that Senate committee assignments matter. And
almost within hours of Senator Elizabeth Warren`s victory up in
Massachusetts, we already heard the floating of the trial balloons in
"Politico" and other media outlets that maybe she won`t be on the Senate
Banking Committee. Maybe she`ll be on some other committee. Pushing back,
I believe, from the party establishment that wants to not have Elizabeth
Warren in a place where she needs to be, where she could be a leading voice
for regulatory reform, protecting the good parts of Dodd-Frank, and taking
it to the large financial institutions that helped cause this last
financial crisis, and may do so again.

Really important that that gets pushed back and she`s on the committee that
she needs to be on, which is Senate Banking.

HAYES: And she`s on the committee where she has a tremendous amount of
expertise. I mean, that`s the thing that`s so bizarre. This is the issue
she`s devoted herself to. It would seem quite strange not to put her on
that committee. Robert Wolf.

WOLF: Being Veterans Day and entering the week of the lame duck session
about the fiscal cliff, I felt like I should give a history lesson. So
post- the revolutionary war, individual state taxes began. Post the war of
1812, we had a increase in consumer good taxes. Post the Civil War, we had
the national income tax.

The Spanish-American war, the telecom tax. World War I, rates went to 77
percent. World War II, to 94 percent. The Korean War, we had an excess
profit tax. And the Vietnam, we had a tax liability surcharge.

We all remember the Gulf War, when President Bush said, "read my lips, no
new taxes." Yes, taxes. So when President Obama speaks about going back
to the Clinton era rates, up three percent for the top two percent earners,
this is not about class warfare. It`s about helping pay for a 10 year war.

And those in Congress that pledged to the Grover Norquist pledge, you are
on the wrong side of history. And this is what you should know.

HAYES: That`s a very, very great point, that there has always been a link
between waging war and higher taxes for the obvious reason that wars are
expensive. And link has -- that historical link endures throughout the
republic has been detached in this era.

Zephyr Teachout.

TEACHOUT: That`s a great poem. OK, You should know on Tuesday, the
canvassing -- recanvassing of a key New York State assembly vote is
happening. This is huge for New York, but also for money and politics,
because Cuomo might -- should support citizen-led elections matching funds.
And if this is a democratically led Senate, we could go there. We could
change money in politics.

HAYES: It all rests on this race, if the Democrats get the Senate. And
then Andrew Cuomo will have no excuse not to support public money and
public elections here in New York. I want to thank my guests today,
Democratic Congressman Elect Hakeem Jeffries, Neil Barofsky, former special
inspector general for TARP, former president of UBS Investment Bank Robert
Wolf, and Zephyr Teachout, Fordham University School of Law.

Thank you, all.

And thank you for joining us. We`ll be back next weekend, Saturday and
Sunday at 8:00. Our guests include will include Bill McKibben, founder of, stopping by as part of his group`s 21-city bus tour, Do the Math,
highlighting links between our extreme weather and climate change.

Coming up next is "MELISSA HARRIS-PERRY." On today`s "MHP," the second
term agenda and the mandate debate. What will President Obama try to get
done next.

Also, the incredible victory of women on election night. If you haven`t
seen just what happened in New Hampshire on election day, this is one you
want to watch. Really incredible.

That`s "MELISSA HARRIS-PERRY" coming up next. We`ll see you next week here
on UP.




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