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'The Rachel Maddow Show' for Thursday, December 6th, 2012

Read the transcript to the Thursday show


December 6, 2012

Guests: Rick Pluta, Chrystia Freeland

EZRA KLEIN, GUEST HOST: Good evening. I`m Ezra Klein. Rachel Maddow
has the night off. Well deserved.

We appreciate you sticking around for the next hour on a very, very
big night in the news.

There is an enormous story about the rights of workers tonight in the
state of Michigan. It is seriously astonishing stuff. And we will get
very deep into it.

But there is another equally if not more seismic political story
tonight out of Washington. And that is where we begin.

Today will be seen, remembered, as a huge day in the Republican
Party`s continuance of war. Something really big happened. South Carolina
Senator Jim DeMint announced today he`ll be leaving the Senate. He`ll not
be there anymore.

He`s leaving to head a think tank called the Heritage Foundation where
he stands to make something like 10 times his current salary. So, yay for
Jim DeMint, good money. Kind of.

Yes, it`s good for him, but it`s really good for his colleague,
Republican Senate Leader Mitch McConnell.

You see, Jim DeMint is not your ordinary senator. He`s like the
Grover Norquist of the Senate. He`s the guy the other Republican senators
are really afraid of. And that is because more so than anyone else and
definitely more than any other Republican politician, DeMint is behind the
Tea Party strategy of purifying the Republican Party in the cleansing fire
of party primaries.

DeMint created this pact called the Senate Conservatives Fund. It is
a PAC, in fact, that he recently made into a super PAC which makes it more
super, and it exists to help conservative Republicans beat other
Republicans. Quote, "Since 2009 DeMint has raised more than $17 million to
promote promising candidates in an effort to remake the Senate not just in
a Republican image but in a diehard conservative one." The image of Jim
DeMint, even -- and he has often done it by going to electoral war with his
own party leadership.

In the 2012 midterm elections DeMint threw his weight behind Marco
Rubio in the Republican primary for Florida`s Senate race. Despite the
fact that the National Republican Senatorial Committee and Republican
Leader Mitch McConnell endorsed Charlie Crist in that race.

Marco Rubio went on to win that primary and that Senate seat. DeMint
also backed Rand Paul in his primary. That was a fight, by the way, that
took place in McConnell`s home state of Kentucky and McConnell endorsed the
other guy, the not Rand Paul.

But Paul won. He won his Senate race in Kentucky which was deeply
humiliating for Mitch McConnell.

But DeMint has also backed a lot of candidates who won their primaries
but did not go on to win their general elections. Like Christine "I am not
a witch" O`Donnell if you remember her. DeMint went against Mitch
McConnell`s wishes and backed the "not a witch" candidate and she lost big
time. He also backed Todd Akin of the "legitimate rape" comments and
Richard Mourdock of the other rape comments.

You can really argue the reason Jim DeMint isn`t in the majority today
is because of Jim DeMint. But Jim DeMint says he`s OK with that.


SEN. JIM DEMINT (R), SOUTH CAROLINA: I`d rather have 30 Republicans
in the Senate who believe in the principles of freedom than 60 who don`t
believe in anything.


DEMINT: Well, let -- let me make myself even clearer. I would rather
have 30 Marco Rubios in the Senate than 60 Arlen Specters.



KLEIN: Arlen Specter you might remember got driven out of the Senate
in part by folks like DeMint. He went to the Democratic Party and became
the 60th vote on Obamacare. So that worked out well for DeMint.

But DeMint does rather this being in the minority thing so much that
he wants to serve out the rest of his term in the minority. When you`re a
senator and you even begin talking to another employer about leaving the
Senate, you have to file this paper with the Senate Office of Public

They do that so before a big vote on, say, an energy bill that will
make oil companies really rich, you can`t go to a big oil company and say,
hey, don`t you think I`d make a good executive vice president who doesn`t
do anything but makes a ton of money for not doing it? But makes way less
money than you`ll make if this bill I`m going to be voting on passes? We
want to know that kind of thing if it`s happening.

So you have to file this paper and DeMint filed his paper only
yesterday. According to him, these negotiations began and ended in 24
hours. That is very decisive for leaving the U.S. Senate.

And if it is true then it`s really looking like the Heritage
Foundation and Jim DeMint saw an opportunity in the continuing Republican

Earlier this week, we learned that Dick Armey is breaking up with his
Tea Party group freedom works and then we learned freedom works is kind of
crumbling from within due to internal disputes over its strategy.

That leaves a mantle of leadership for the Tea Party wing of the
Republican Party wide open. That is a lot of power and a lot of fund-
raising opportunity. And if you believe the timeline of the records,
DeMint and the Heritage Foundation saw that opportunity whereby they could
join forces and seize it and perhaps even become leaders of that wing of
the party.

Now, they`re not alone. You know who`s leading the other wing of the
Republican Party right now? And also getting a bunch of money? The "don`t
primary all of your incumbents and choose all of your unelectable
candidates" wing of the party. That is Karl Rove.

Here`s how Rove explained his election experience.


KARL ROVE, REPUBLICAN STRATEGIST: I was involved in a group called
American Crossroads. It`s the worst volunteer job I`ve had in my life. I
was in charge of raising money. We raised $324 million, and I got sick and
tired of spending money in races where the moderates and the conservatives
had gone at each other and made victory impossible.


KLEIN: Rove has said he wants to reorient Crossroads and some
reporting says he`s going to do that by beginning to intervene in primaries
where Jim DeMint-like strategies are being carried out. In fact, already
even though it has been less than a month since the election, Crossroads is
coming to the defense of Shelley Moore Capito, thinking of challenging
Democrat Jay Rockefeller in 2014. Some conservatives have been attacking
her as not conservative enough for the seat.

Crossroads President Steven Law told "Politico", quote, "It is
distasteful to see Washington politicos clubbing Republican candidates
right out of the gate, especially ones with the guts to challenge an
entrenched incumbent and who enjoy the broad base of support that Shelley
Moore Capito appears to have."

Or as friend of the show, Dave Weigel, put it, Jim DeMint said he`d
rather have 30 really conservative Republicans in the Senate than 60 who
don`t believe in anything. Karl Rove would probably rather have 60
Republicans in the Senate no matter what they believe.

That is going to be the fight. That is the battle line in the
Republican Party right now -- the guys who want purity, more Tea Party,
versus the guys who want a supermajority. No more Obama cares. Heritage
versus Crossroads, Karl Rove versus Jim DeMint. Pass me the popcorn.

Joining us now is Dave Weigel, author of that quote, reporter for
"Slate" and an MSNBC contributor.

Dave, it is good to see you here tonight.

DAVE WEIGEL, SLATE: Good to see you, Ezra.

KLEIN: So is this what it kind of looks like? Do you see DeMint and
Heritage as consolidating power here and making, and vying for leadership
of the Tea Party wing of the party?

WEIGEL: No, I like the way that you put that. I mean, FreedomWorks
is going through an awkward patch right now. Heritage has actually been
expanding into that terrain long before any problems that occurred at

Heritage in 2010, point out, launched Heritage action, 501(c)3 which
is actually renting the floor space in the rest of the Heritage building
and it has been aggressively campaigning during the congressional voting
season against Republicans, getting them to vote their way on various
bills, irritating a lot of people, a lot of libertarians, a lot of
moderates. This signals they`re going to step that up.

And it`s really perfect for DeMint who has always done this. I mean,
you didn`t mention any of his legislation in your intro because he wasn`t
much of a legislator. He passed I think in the last few years that one
bill that renamed a courthouse. Yes, he had stuff added to other bills.
But his strategy was to really slowly replace senators over the course of
many years. That`s what he`ll do from the outside.

KLEIN: Right. He didn`t so much create legislation as he created

WEIGEL: Right.

KLEIN: One thing here, his term if I`m not wrong, goes until 2016.
It`s somewhat atypical for senators to leave in the middle. Being in the
minority in the modern Senate is not super fun and so, it`s hard to escape
the impression here that a minority status that Jim DeMint helped create
led him to leave early. It`s like he`s fleeing a situation that he brought
into being.

WEIGEL: That`s astute. If you look at the seats that he had the
influence on, people he actually brought into the Senate, he did create
people in his mold to a degree that I don`t think has been -- anyone has
done before. But he did it in seats already held by Republicans.

The one semi-exception as you point out is Pennsylvania where -- I
mean, Jim DeMint in a way, inadvertently, enabled the passage of Affordable
Care Act, had Specter stayed within the party specter`s pattern was to run
toward Republicans in the primary, run toward the general. It was

The clip you played before when he talks about 60 senators who don`t
believe in anything, that`s a little bit unfair to Republicans like Arlen
Specter. I mean, they existed and their vision for the Republican Party
was to compromise on a couple things, build the party on immigration
reform, build the party on a Medicare Part D, on No Child Left Behind --
all things DeMint opposed.

He succeeded in making Republicans elected from places that safely
vote Republican more conservative. He didn`t broaden the party at all.

I mean, Mitch McConnell is not just craven. He believes to win the
party, can`t vote the way Jim DeMint does. Jim DeMint said, well, fine,
here`s seven people like me. I`ll see you.

KLEIN: One thing I think we sometimes forget when we talk about
abstract party principles is something a guy like Specter believed is you
represent your constituents. And his constituents were not as conservative
as Jim DeMint`s in South Carolina, as Mitch McConnell`s in Kentucky and, of
course, Pennsylvania has been going very blue.

And that seems to me to be kind of the core argument here. One thing
that`s happened is these political parties have nationalized in a very big
way, and DeMint`s strategy, it appears to me to largely be to nationalize
the elections. You have this big Washington groups like FreedomWorks or
now Heritage entering into these primaries that are in districts for House
members and states for senators and trying to get people acceptable to the
national Republican Party even if they`re not really in any serious way fit
for the district or state they`re representing. And that seems to me to be
what Karl Rove is attempting to fight. He`s saying, look, you got to have
these elections have some local character.

WEIGEL: Yes. Newt Gingrich used to say, when Newt Gingrich was more
of a wise man outside the party, said the same thing. Remember, Gingrich
endorsed the Republican who`s a moderate in a special election, and in
Upstate New York which a lot of people had forgotten, but was kind of the
kickoff to this purge of non-conservatives. And then, Gingrich apologized
when the third, you know, the third-party candidate lost with -- it was
complicated. Basically the conservative might have won had the Republican
pulled out completely. Said, I`m sorry, I`ll never do it again.

The DeMint vision for how to bring Republicans to bear what they have
to believe if they`re Republicans has spread far beyond places where it is
sellable. And, again, the people who disagree with him, they just don`t
see what he gained for all that opposition. They saw, you stopped a couple
of spending bills, but in the long run, or at least in the next couple
years, you just set up a bunch of crisis points where Republicans don`t
have lots of leverage because our message looks like your message and
voters reject it.

I mean, voters by about a 20-point margin blame Republicans now or
they will blame Republicans if there`s a fiscal cliff crisis.


KLEIN: Right. They perspectively --


KLEIN: They perspectively blame Republicans for it and in part from
folks like DeMint.

Dave Weigel, reporter for "Slate" and MSNBC contributor -- thank you
for being here tonight, my friend.

WEIGEL: Thank you.

KLEIN: Lame duck session means different things in different parts of
the country. In one hugely important industrial state, lame duck means
shockingly bold action by the government -- a lot of people calling it lame
and other people ducking. It`s big news and a serious conflict in the
state of Michigan.


KLEIN: Still ahead, red lobster, olive garden, and the Affordable
Care Act. The trifecta America has been waiting for and it includes



REPORTER: There was a group of protesters who we are told by the
state police rushed to police officers trying to get into this Senate
chamber. At that point, the police officers took out chemical spray,
pepper spray, sprayed them, and eight people ended up, eight protesters,
ended up being arrested. And so now, there`s a phalanx of state police
officers out in front of the Senate chambers, it`s similar in front of the
House chambers, as they begin to take up this bill.


HAYES: That was what democracy looked like today in Michigan where
the state`s Republican majority began voting on a bill that will
dramatically curb the power of units. Hundreds of people flooded into the
Michigan state capitol where the House was scheduled to debate the bill.
Police locked down the building until a local court ordered they open the
doors again.

The scene in Michigan today looked familiar. It looked like the
scenes in Indiana and in Ohio and in Wisconsin where those states voted to
take away the rights of unions. In fact, it was exactly that kind of scene
Michigan Governor Rick Snyder, a Republican, had said he wanted to avoid.

In February, Governor Snyder looked at those other Midwestern states
with Republican governors and workers protesting in the state capital and
decided he did not want that thing in Michigan, not in his historically
very strong union state. Governor Snyder said, quote, "You look at now
that they`ve had those things happen, do they have a productive environment
to solve problems? Not necessarily. They`re still overcoming the
divisiveness, the hard feelings from all of that."

At the time reporters wanted to know whether Rick Snyder would support
what is known as a right-to-work law.

The idea of right-to-work is simple. Under a right-to-work law,
employees of a union shop don`t have to pay union dues. The employees get
the benefit of the union, the higher wages and better health care, all of
that, but they do not have to pay for it. And why pay money if you can
have something for free?

For unions, the results of this are close to catastrophic which is why
Republicans and big business love right-to-work laws. They are a way of
frontally destroying unions.

The same Heritage Foundation that will be Jim DeMint`s new home says
union membership fell by 15 percent in states that passed right-to-work.
Union organizing fell by half, passing a right-to-work law stops unions and
it stops organizing.

On the labor left, the Economic Policy Institute reports that wages
fall by more than 3 percent after you institute right-to-work. And
pensions take a hit, too. That`s why unions call right-to-work the right-
to-work for less.

With Governor Snyder saying he wanted no part of a fight over right-
to-work just a few months ago, the move to pass a bill in Michigan was,
well, kind of surprising. It appears to have started this year with a
referendum campaign by union activists to protect union rights. Against
Governor Snyder`s wishes, they collected signatures and got a referendum on
the ballot that would have made it impossible for the state to pass a
right-to-work law that Governor Snyder said he opposed now, or ever.

That referendum failed. Failed by 16 points. That was November.

On Tuesday, all of a sudden, Governor Snyder said right-to-work was on
his agenda. How come? Quoting "The Detroit Free Press," "There is a view
unions must put something on the table if right-to-work is not to proceed
after having gone ahead with a collective bargaining ballot proposal
against his urging in last month`s election."

So this is payback? Bargaining? This morning, Governor Snyder held a
press conference with Republican lawmakers to announce new right-to-work
legislation for the current lame duck session. The governor said he was
doing it for the good of Michigan`s workers.

And then the lawmakers explained that they had crafted the bill in
such a way that Michigan voters could not put it up for appeal by
referendum the way they appealed Governor Snyder`s emergency manager law
last month. So good, you can`t actually get rid of it even if you want to,

Republicans then rushed the new language into a vote at the statehouse
where it passed by a largely party line vote of 58-52, just before 5:00
p.m. local time.

So depending on how you look at it, the entire legislative process
today took about an hour and a half.

This evening, the Republican-controlled Senate also voted yes. House
Democrats are now trying to slow down final passage of the bill and the
protesters will likely continue their protesting.

With Governor Rick Snyder saying he will sign a right-to-work bill if
Republicans want to take away strong unions in Michigan, there may not be
that much that can stop them.

Joining us now is Rick Pluta, capital bureau chief for Michigan Public
Radio Network.

Mr. Pluta, thank you for being here tonight.


KLEIN: What changed? What changed that Governor Snyder said he was
opposed to doing right-to-work in Michigan, moved it to on to the agenda
and passed it so quickly?

PLUTA: Well, certainly one of the things was what you outlined was
that the unions pushed a very expansive union rights bargaining rights
ballot proposal that also would have repealed or threatened a lot of laws
that he and other Republicans supported.

But, yes, and once it was over, you know, the governor said they`d
overreached and really said that right-to-work might be kind of a
comeuppance, regardless of what his wishes are. And he did hold it at
arm`s length for really a couple of years in order to focus on other
things. He said now a lot of those other things have been taken care of
and it was time.

But there was a lot of push behind the scenes. A lot of big money put
behind encouraging both state lawmakers and getting the public behind a
right-to-work legislation, a right-to-work movement in the state capital.

And also just unions and Democrats were too slow to come across with
some support on things that the governor wanted to do. You know, just to
name one, a rewrite of the state`s emergency manager law that was actually
repealed by voters in a referendum which this bill won`t be once it becomes

KLEIN: What is the response been from unions and Democrats in
Michigan? Is there anything they think they can do?

PLUTA: Well, I mean, it`s -- this has really taken on an area of
inevitability, that both the House and Senate approved bills today. The
governor said he would sign them. There`s no reason to believe that
anything will change between now and next week when both the House and the
Senate will have to take final action on that legislation to get it to the

That does not mean, though, that unions and progressive groups won`t
be organizing actions and protests to try at the very least call attention
to what`s going on at the state capital of Lansing. They`re already
planning for what`s going to happen after right-to-work legislation is
signed into law in Michigan.

You know, Democrats and unions are talking about things like trying to
recall lawmakers, maybe even some ballot questions that this right-to-work
law, if it does remain referendum-proof, still isn`t necessarily immune to
the ballot because the unions can go and try and initiate a voter-approved
law on their own -- a separate law that would basically supersede it. And
they could even go back and try and maybe do a cleaner constitutional
amendment that would just protect collective bargaining rights and not be
as expansive as this last ballot -- a lot of people really saw as an
overreach. Something that was so sweeping that it just made voters too

KLEIN: Rick Pluta, capital bureau chief for Michigan Public Radio
Network -- thank you for your underground reporting on this. We appreciate

PLUTA: Oh, my pleasure.

KLEIN: The thing about most doomsday plans is they have to do with
what happens after doomsday. Among the current Republicans in Congress, a
doomsday plan means something way different from that. It would be funny
if it were not, you know, about doomsday.

Stay tuned.


KLEIN: Meet Julia Gillard. She`s the prime minister of Australia.
If that falls through, a potential Tilda Swinton impersonator. But for
now, prime minister of Australia, top dog, head honcho, the boss of

And Julia Gillard, have I mentioned, she`s the prime freaking minister
of Australia, stood at a podium in front of an Australian flag and in a
somber tone delivered some incredibly bad news.


Australians, the end of the world is coming. It wasn`t Y2K. It wasn`t
even the carbon price.

It turns out that the Mayan calendar was true. The world is about to
end. Whether the final blow comes from flesh-eating zombies, demonic hell
beasts or from the total triumph of K-pop. If you know one thing about me,
it is this: I will always fight for you until the very end.

Good luck to you all.


KLEIN: Wait, wait. What? Control room, somebody needs -- we need
breaking news banners.

Matt Drudge, we need your biggest siren. A prominent world leader
just said the world is ending, maybe because we`re all going to be eaten by
zombies. I don`t think I`m generally prone to panic, but I`m not very
fast, so 28 days later kind of zombies, I find that worrying.

Oh, wait. OK. I`m told this is a joke. It is delivered with so
little vermouth (ph) that it is a little hard to tell. But this appears to
be a promotion for a morning drive radio show in Australian, more a
promotion for their end of the world party, prime minister doing your
promotional work. That is a good get, Australian Radio Network.

So, the world isn`t actually ending, at least no more than it was a
few minutes ago, so far as we know. That is the good news.

The bad news is that that was only the second scariest news about
doomsday we have for you tonight. The scariest doomsday news is something
I will tell you about in a minute.


KLEIN: Typically a doomsday plan, it is meant to help you survive the
thing that happens after doomsday. During the cold war, the U.S. had a
doomsday plan meant to protect the president and ensure the continued
functions of the U.S. government in the event of a nuclear attack. So
nuclear attack, your doomsday happens then you`ve got your doomsday plan to
try to survive it.

In 2005, Congress passed another doomsday plan. It was meant to
ensure the House could function in the aftermath of a terrorist attack that
killed or incapacitated most of its members.

The rule they passed in the House states that under, quote,
"catastrophic circumstances" a quorum would not require 218 congressmen as
it does now. Rather the House could operate with whoever happened to be

So, again, you have a terrorist attack, your doomsday scenario, then
there`s this plan to help you survive it. That is what a doomsday plan
usually is.

This week, Washington is really into another so-called doomsday plan.
But it`s a weird kind of doomsday plan. It`s not a plan meant to save the
country in the event of doomsday. It is a plan meant to create a doomsday
scenario in the event that Republicans have to compromise on tax rates.

On Monday, ABC`s Jonathan Karl explained how it worked. He said,
"Republicans are seriously considering a doomsday plan if fiscal cliff
talks collapse entirely. It would be quite simple: House Republicans would
allow a vote on extending the Bush middle class tax cuts. That bill
already passed in August in the Senate and offer the president nothing
more. No extension to the debt ceiling, nothing on unemployment, nothing
on loopholes. Congress would recess for the holidays and the president
would face a big battle early in the year over the debt ceiling."

Two Republican officials tell me this doomsday plan is becoming the
most likely scenario.

"The New York Times", a few days later, added more detail including
this amazing quote from Rep. Michael C. Burgess of Texas. "There`s always
better ground, but we have to get there."

In this case, the better ground is exchanging the threat of a
congressionally induced recession for the threat of a congressionally
induced global financial crisis combined with recession. That -- that is
your better ground? That`s a big plan?

It`s not -- it`s not better ground for the economy. And, frankly, I
find it difficult to see how it`s better political ground even for the GOP.
I figured I didn`t get it -- so I figured this was beyond my small
political brain to understand. So I asked some of my smarter Hill
Republican friends what the theory was here.

They told me the idea is that while the president can permit the
economy to fall over the fiscal cliff, or curb, or whatever you want to
call it, he can`t allow us to default on our debt. That would, like,
destroy the economy. That gives Republicans a stronger hand or so they
think. But really, think about that.

Here`s how it would go. Later this month, Republicans would, by
voting present, which everyone would think was a bit weird, permit the bush
tax cuts to expire for income over $250,000. That would let President
Obama pocket $1 trillion in tax revenue and secure a win on his key
priority in the talks. But they would do nothing else.

At the end of the year, we would still go over the fiscal cliff.
Remember, the Bush tax cuts are one of the at least stimulative policies in
the negotiations. According to the Economic Policy Institute, extending
the middle class tax cuts would wipe out only about 11 percent of the
austerity`s economic impact -- 11 percent.

But all that other stuff, the payroll tax cut, the unemployment
insurance, the sequester, all that, that would still be expiring. So, come
early next year, the economy would likely be entering an austerity-induced
recession. Markets would be convulsing as they realize our austerity
crisis is about to become also a default crisis.

And so, the economy, as a whole, is going to be going nuts. Poll
after poll already shows Republicans are receiving more blame for the
potential failure of the debt talks. And after telling the press that
they`re going to make a strategic decision to use a debt ceiling as more
and more dangerous leverage, they`re likely going to get blamed for that,
too, and that will be much worse in the polls.

Republicans may believe the White House can be so afraid of default
that it would simply capitulate. But my reporting actually suggests the
opposite. The White House is completely inalterably committed to the idea
that they need to break the GOP`s habit of using the debt ceiling as a
bargaining chip.


suggests that they`re going to tie negotiations to debt ceiling votes and
take us to the brink of default once again, as part of a budget
negotiation, which by the way we have never done in our history until we
did it last year -- I will not play that game, because we`ve got -- we`ve
got to break that habit before it starts.


KLEIN: Did you see that background behind President Obama? It kept
saying, Business Roundtable.

The business community agrees with him. My colleague at "The
Washington Post," Greg Sargent, reports, "The Business Roundtable, the
biggest and most powerful business trade groups, is preparing to come out
for the White House`s proposal to give the president essentially unilateral
authority to raise the debt ceiling forevermore, ending these crises

And so, Republicans will have to compromise with the president who
will have already pocketed $1 trillion in tax increases. Business will be
screaming. The economy will be convulsing. They`ll be getting blamed.
That is supposed to put him in the weaker bargaining position?

It`s frankly hard for me to see how this strategy gets the GOP any of
what it wants either in terms of policy or politics. This doomsday they
are courting, it might be their own.

Joining us now is Chrystia Freeland, editor for "Thomson Reuters
Digital" and author of "The Plutocrats: How the Rich are Getting Ahead and
the Economy is Failing Everyone Else." I think I just messed up your
subtitle. I apologize.

cover of the book there. I love it.

KLEIN: It`s a great book. I read it. People should read it. I
highly recommend it.

But, I want to talk to you about tonight, because you`ve been talking
to a lot of business folks and reporting for your book and your everyday
reporting -- is the business community radicalizing on the debt ceiling?
They didn`t take the debt seriously in 2011. But from what I`m hearing,
they`re taking it a lot more seriously in 2012.

FREELAND: I think that`s exactly right. I think that it`s because of
the experience of what happened, you know, and two parts of the experience.

First of all, I don`t think that people believed America would get so
close to the brink. You know, and I heard, remember at the time they kept
saying, they`ll do a deal, they`ll do a deal, and the way they behaved was
frankly astonishing.

The other thing that was a surprise not just for American business but
for global business was how powerful the reaction was. And I think
actually the greatest reaction was outside the United States. This was the
first time that the rest of the world really actually paid attention to the
finer points of politics inside the Beltway, which actually are profoundly
boring for the rest of the world in general. But this was really the
moment in which, you know, if places like Beijing and Berlin, people
started to say, you know what, maybe American political dysfunction is so
extreme as to imperil the macro stability of the country.

KLEIN: So does this now actually lead to pressure? I mean, one
complaint that the White House certainly had in 2011 was they talk to these
business guys and business guys all said, yes, this would be a disaster.
But they didn`t do anything about it, in part because they didn`t really
believe in it.

So the Business Roundtable coming out for the White House`s proposal
here seems like a very big deal to me. I mean, are you seeing the
beginnings of an actual campaign to pressure Republicans to take this
threat off to the table, not get to the point where we begin seeing
consumer confidence drop, begin seeing businesses cut back, begin feeling
those economic effects we got in 2011?

FREELAND: Well, I agree with you this is an important moment, but I
think we also have to remember that that hostility that we felt during the
election campaign towards Obama, that wasn`t fake.

KLEIN: Right.

FREELAND: That was really real, and in a way, you know, the fact that
the president won in the teeth of opposition from the super rich and the
fact that he is now more insistent than ever on raising the taxes on the
very top, does not exactly endure him to the entire business community.

So I wouldn`t say that battle is won, but I do think that what you`re
starting to hear from business is a sense that maybe Republicans actually
are not better stewards of the economy as a whole. And that`s scary.

KLEIN: Is there any evident effect being felt from the president`s
ongoing CEO tour? Since the election, despite the hostility, the feeling
of betrayal on the part of the White House, he`s been going to business
group after business group, having business leaders over to the White

Is that paying dividends? Are people sort of -- is there any calming
of those passions because of the diplomacy tour?

FREELAND: Sure. I think it really matters. And, you know,
businesspeople, believe it or not, are human beings, too, and like to be
paid attention to. They especially like to be paid attention to by the
president. So, yes, I think it makes a big difference.

I do actually think the president is partly to blame for that extreme
hostility in his first term because he didn`t do some of the basic, you
know, meet-and-greet stuff that actually is the job of a political leader.
He`s making up a little bit for that now.

KLEIN: Do you think the White House can stand its ground on this? If
we get past the fiscal cliff and Republicans are attempting to take this to
the brink, do you think despite what President Obama says, they have the
capacity to say, listen, if you want to pull the pin on the grenade, you do
it, but we`re not going to do this anymore?

FREELAND: On the fiscal cliff or the debt ceiling?

KLEIN: On the debt ceiling.

FREELAND: You know, I was very interested by your reporting, that you
took a really strong position there. I do think the White House has been
transformed, both by the experience with the debt ceiling and with the

I think if they want to stand their ground, I think they can actually
do it. I think that that is, in fact, possible.

Can they? You know, we`ll see. They seem a lot tougher now than they
were last time around. Don`t you think?

KLEIN: They sound very tough now.

Chrystia Freeland, editor of "Thomson Reuters Digital", and author of
"The Plutocrats" -- thank you very much for being here tonight.

FREELAND: Pleasure, Ezra.

KLEIN: I promised, red lobster, olive garden, and a timely political
context for both, and I will deliver. That is ahead.


KLEIN: You might remember a couple of times I`ve been here when I
want to do something too boring even for the geeky nerd geeks on THE RACHEL
MADDOW SHOW and I love you geeky nerd geeks, they made me do it in under
two minutes in a short segment called "The Ezra Klein Challenge". I have
got one tonight.

Tomorrow, the monthly job numbers are going to come out. And everyone
will freak out because they will be horrible. Economists surveyed by
Bloomberg News say as low as 86,000. Deutsche Bank says could be as low as

But don`t freak out. In fact, you should probably ignore this report
entirely, at least for now. And I`m going to tell you why in a bit less
than 90 seconds. Ready, clock? Go.

All right. First remember what the jobs report it. It is a survey.
And the first numbers we get, the ones we`re getting tomorrow, they`re
preliminary. They get changed over the next few months as better data
comes in. The initial numbers are usually off the first time by about
100,000 jobs.

What`s special about this jobs report is the survey was being taken at
the same time hurricane Sandy hit. Transportation was blocked. Power was
out for a big swath of the country. Factories had to stop producing.

The economy particularly in the Northeast was a mess. There was no
way to survey it well. That, the economists say is why their expectations
are so low for tomorrow.

The good news is the hurricane`s affects are reversing and quickly.
The number of people filing new claims for unemployment benefits rocketed
in the week of the hurricane, the week of the hurricane, but then last week
fell just as rapidly.

We will eventually know what happened to the labor market in November.
But as my "Washington Post" colleague Neil Irwin writes, probably not until
December 21st or so, that is when the state by state jobs numbers come out,
that we can filter out the states hit by the hurricane and see what`s going
on in states where the economy was relatively normal.


So, whatever the number is -- I don`t have time to spare. Whatever
the number is tomorrow, don`t freak out, don`t worry about it -- at least
not yet.


KLEIN: Do you remember what Republicans called their bill to repeal
Obamacare? I do. It was an act to repeal the job-killing health care law.

Now, the whole job-killing thing has always been a bit of a talking
point myth. A nonpartisan study of the very similar health insurance
mandate enacted six years in Massachusetts showed, quote, "no evidence of
reduced employment as a result of health reform there."

But still, that argument, the whole job killing Obamacare thing, sent
the owner of red lobster and a bunch of other very carb-friendly restaurant
chains on a hapless misadventure in corporate protest that culminated today
in a really public and embarrassing and informative way.

Back in October, company called Darden Restaurants announced they were
putting more workers on part-time status instead of full-time to see if
they would be able to limit the cost of complying with the new health
reform law. Under the new law, big companies like Darden have to either
offer health insurance or pay a $2,000 fine for each full-time employee.
Over 30 employees who ends up using public subsidies to buy health care.

You catch those words there, though? Full-time employees or their

So, the thinking went, if you have fewer full-time employees, that
equals less money spent on health coverage would equal profit. And thus
began Darden Restaurants ill-fated experiment in dodging Obamacare. It
turns elaborates schemes ended up making life worse for blue collar
employees are kind of unpopular in America.

This week, the company had to lower its earning estimate for next year
in part because of all the bad press they got for health reform
shenanigans. Also, people aren`t going for dinner special. Apparently, 2
for $25 olive garden dinners are not a good enough deal in post recession

But today was the end of the line for Darden`s experiment in health
reform dodging. The company announced that their test in using fewer full
time employees to avoid having to provide them with health insurance, it
was a fail.

According to the "A.P.`s" reporting, the company says it, quote,
"received a flood of feedback from customers through its Web site, on
Facebook and in restaurants."

All that feedback, plus, quote, "internal surveys showed both employee
and customer satisfaction declined at restaurants" where they experiment
with fewer full time employees.

It turns out everyone is happier when you have healthy full time
workers who are not sneezing on your food, even the customers.

The story of the Darden Restaurants is kind a funny, hapless story.
But illuminates a very, very serious point -- there is a reason that
employers give them health insurance. It is because they are swell, it is
because they need their employees to be happy and they need their employees
to be healthy and they need talented people to want to work there.

One of the big policy arguments against health reform was that once it
is fully implemented, employers will just drop their insurance coverage and
pay the $2,000 fine. Won`t it be cheaper?

But do you know what big employers pay now if they don`t give their
health care? Nothing. No $2,000 fine, no penalty at all. And yet, most
of them provide health care anyway and they do it because they need to do
it. It`s good business.

We have seen how it goes. If you are a Massachusetts business and you
do not want to provide health insurance to employees under the state`s
mandate, the fine is a measly $295 per employee per employee per year --
way less than the 2 grand you`d pay under Obamacare.

But the same arguments were made in Massachusetts. Oh, no, employers
are just going to drop their health insurance coverage and pay the fine.
It didn`t happen. In fact, since statewide health reform there, a bigger
percentage of employers in Massachusetts offer health insurance in the
country as a whole.

Do you know what kills businesses and thus kill jobs? It`s not the
health care, though. It is losing your talented workers and getting a
reputation as a terrible employer with terrible service and breadsticks
handled by sick people.


KLEIN: Unless you kind of like sitting back and watching the
Republican Party tear itself to shreds, you might wonder why you need to
care about the fact that some Washington politicians named Jim DeMint is
leaving the Senate to go to some Washington think tank. It`s a definition
of a Beltway story.

But you should care. You should care because you care about the
quality of the Republican Party`s thinking. A lot of the thinking for both
parties in modern Washington is done by think tanks -- think tanks like the
Heritage Foundation.

And DeMint`s move shows something really important and upsetting about
the direction that those tanks are taking.

But before we get to that, let me tell you the story of the individual
mandate. The individual mandate, the requirement that all Americans who
can`t afford to buy health insurance do so or pay a penalty is the heart of
Romneycare and Obamacare, and it made it`s major Washington debut in at
1989 paper by the Heritage Foundation.

The thesis titled, "Assuring Affordable Health Care for All
Americans," and Stewart Butler, the foundation`s health care expert argued
four years later, the mandate, he argued that it was like a seatbelt, that
you needed to have it just like we have auto insurance.

Four years later, the mandate appeared in a Health Equity and Access
Reform Today Act. That was the Senate Republican`s big alternative to Bill
Clinton`s health care plan.

Twelve years after that, the mandate appeared in Mitt Romney`s health
care plan. And that caught the eye of a young and very influential
politician named Jim DeMint. In `08, he endorsed Mitt Romney for
president, saying, quote, "He has demonstrated when he stepped into
government in a very difficult state that he could work in a difficult
partisan environment, take some good conservative ideas like private health
insurance and apply them to the need to have everyone insured."

So, Heritage won. They came up with the idea, a conservative way to
do health care reform, an alternative to big government, single payer
socialism, and they made it the law in Massachusetts and they even got
Democrats to embrace it, to give up their big government ways -- for a
think tank, that is the dream. And they could not possibly regret having
done it more.

Today, both the Heritage Foundation and its new president, Jim DeMint,
agree that the individual mandate is not just about policy, it is terrible,
no good, horrible, unconstitutional, the primary threat to liberty policy.
Their idea now horrible and only judged only really after Democrats began
endorsing it.

Look, Jim DeMint is a politician, very Republican, very conservative,
very partisan politician. Flip-flopping to try and make health care
reform, in DeMint`s words, quote, "the Waterloo" for a Democratic

Well, I don`t want to call it his job, but it`s not shocking. It`s
kind of what you do.

But it`s not what you do if you are a think tank. You`re supposed to
hold the line on good ideas. You`re supposed to be where policy trumps

DeMint`s ascension to the head of the Heritage Foundation is both a
perfect match and a disturbing one.

Think tanks are really important in Washington. They are where the
politicians get their ideas, where staffers get their policy analysis where
the media figures look to get an informed take on whether something make
sense or not.

Their leaders have often had one foot in the political world and one
in the policy world.

Strobe Talbott, head of the Brookings Institution, worked at the State
Department and then headed the Yale Center for the Study of globalization.

Arthur Brooks, president of the American Enterprise Institute, which
recruited from Syracuse University, where he was a Louis A. Bantle
professor of business and government policy.

The Center for American Progress, probably the most activist think
tank on the left, is lead by Neera Tanden, Hillary Clinton`s former policy

Heritage has always been an unusually politicized think tank. It was
founded by conservatives who thought the American Enterprise Institute,
which was been big conservatives think tank was too reluctant to involve
itself in partisan politics. But even Heritage is headed by a former
policy guy. Edwin John Feulner Jr. began his career at the Center of
Strategic and International Studies, before moving to the Hill and becoming
director of the Republican Study Committee, the policy arm of House

But DeMint doesn`t have even one foot really in the policy world.
He`s a politician who made his mark practicing a hard edge reform of
electoral politics, launching primary challenges against insufficiently
conservative Republicans.

You don`t name Jim DeMint head of your think tank because you are
trying to improve the quality of your scholarship. You name DeMint head of
your think tank because you`re trying to make your think tank a more
powerful force in conservative politics. That is not necessarily a
criticism of DeMint. He`s probably the right guy for that job.

But that is the shame that is the job Heritage seems to want done.
The right really could use more intellectually honest think tanks. It
needs very scholarship. The problem for the last few years has been they
had too few, good, appealing conservative policy ideas and way too many
really, really conservative politicians.

A place like Heritage could under the right leadership help reverse
that trend. Instead, it is poised to accelerate it.

That does it for us tonight and we`ll see you again tomorrow. Don`t
forget, you can check out my work at or follow me at Twitter,
at And on Facebook, at


Have a great night.


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