All In With Chris Hayes, Wednesday, Aprl 24, 2013

ALL IN with CHRIS HAYES
April 24, 2013

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

Guests: Farea al-Muslimi, Joshua Foust, Madiha Tahir, Ali Gharib

CHRIS HAYES, HOST: Good evening from New York. I`m Chris Hayes, and
thank you for joining us tonight.

I want to begin tonight telling you a story. It`s an incredible
story. And when I heard the details, I thought it was too incredible to be
real, but it is real. It`s a true story.

And it`s a story about a young Muslim man from another part of the
world who came to the United States before he was grown, who came to
assimilate quickly and rather seamlessly into American life. He made
American friends and came to celebrate American holidays and love American
high school sports and American culture.

He went back to his home country, and then something horrible
happened. Something horrible that threw him into a state of moral and
political tumult. His home country was not Dagestan. It was not Chechnya.
It was not in the Caucasus. It was Yemen.

And this is not a story about either of the Tsarnaev brothers. On
their account, I think the vice president told their at this point alleged
story today with very apt phrasing.

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: Two twisted,
perverted, cowardly, knock-off jihadis.

(END VIDEO CLIP)

HAYES: Knock-off jihadis seems like a perfect way to describe the
perfect that`s emerging of the Tsarnaev brothers. Based on what we`ve
learned so far, they do not appear to have been part of a vast network,
training for months, employing expert trade craft and meticulous planning.
Instead, the narrative that`s taking shape around the Tsarnaev brothers is
one of a couple of guys who sort of alienated from their local mosque, who
more or less self-radicalized and look stuff up on the Internet.

And that is a problem obviously. The alleged actions of the Tsarnaev
brothers are abhorrent and young Dzhokhar, if he is guilty, should be held
to account and we should do what we can to grant others who might follow
the same path from accessing means to cause violence, death, and
destruction.

And we can and should ask all sorts of questions in the aftermath of
an attack like theirs about where they got their guns and how they were
able to buy and build explosives as cheaply as they seem to have done. But
if we want to have a conversation about what kind of threat we are living
under right now, Republicans seem to want to have that conversation, then
the Tsarnaev brothers and their ilk would not be priority number one,
because while the self radicalizing loner, Web-trolling violent extremist
model of terrorism does represent a threat, it is not, it is not, the
number one terrorist threat to America right now.

The number one terrorist threat to America right now is not when
individuals are drawn to support political violence, but when an entire
geographical area, entire segments of societies rally to the cause of a
more experienced network of people who risk harm and violence and ill upon
the United States and its people. That process of radicalization, which is
structural and systemic, is very different from the psychological one we`ve
been focusing on with the Tsarnaev brothers. But it`s by far a much bigger
worry.

And that`s why the story I`m telling tonight is not about the Tsarnaev
brothers. The story of the Muslim who came to America and embraced the
country and culture here before returning home to his home country before
something terrible happen, that is the story of a young man who came to
Capitol Hill this week to explain in stark and moving terms what`s
happening with that bigger, scarier, more dangerous process of
radicalization.

His name is Farea al-Muslimi. He`s from Yemen, and here is what he
told a Senate subcommittee yesterday afternoon.

(BEGIN VIDEO CLIP)

FAREA AL-MUSLIMI, YEMENI NATIONAL: Six days ago, my village was
struck by an American drone in an attack that terrified the region`s poor
farmers. I spent there living with an American family and attended an
American high school. That was one of the best years of my life.

I learned about the American culture, managed the school basketball
team, and participated in trick or treat and Halloween. I went to the U.S.
as an ambassador for Yemen and I came back to Yemen as ambassador of the
U.S.

My understanding is that a man named Hamid al Radmi was the target of
the drone strike. Many people in Wessab know al Radmi and the government
could easily have found and arrested him. And the vast Wessab`s villagers
knew of the U.S. was based on my stories about my wonderful experiences
here. The friendships and values I experienced and described to the
villagers helped them understand the America that I know and that I love.

Now, however, when they think of America, they think of the terror
they feel from the drones that hovered over their heads, ready to fire
missiles at any time. What the violent militants previously failed to
achieve, one drone strike accomplished in an instant. There`s now an
intense anger against America in Wessab.

(END VIDEO CLIP)

HAYES: A violent militant previously failed to achieve, one drone
strike accomplished in an instant.

Farea al-Muslimi has said he`s not even sure it`s safe for him to
return to his village anymore, because the instant radicalization caused by
the U.S. drone strike was so complete that he thinks simply being
associated with America and American values will make him a target in the
village he grew up.

Farea al-Muslimi is not alone in his review. The United States`
government actions are radicalizing populations of Muslims in ways
militants have failed to do.

None other than retired General Stanley McChrystal had this to say
about American drone strikes in an interview for the latest edition of
"Foreign Affairs".

Quote, "Although to the United States, a drone strike seems to have
very little risk and very little pain, at the receiving end, it feels like
war. Americans have got to understand that. If we were to use our
technological capabilities carelessly, I don`t think we do, but there`s
always the danger you will, and we should not be upset when someone
responds with their equivalent, which is a suicide bomb in Central Park,
because that`s what they can respond with."

In a week when the government seems trained on the threat posed by the
Tsarnaev brothers of the world, here is a stark and vital reminder there is
a bigger, more ominous threat out there that is largely being left
unaddressed by the demagogues who want to attack the FBI and the Obama
administration and it`s for the screw-ups in the investigation. It`s the
one that we, the people, can have some effect on.

There are people around the world who want desperately to love us and
we should be looking for every possibility to take them up on that offer.

Joining me now from Washington, Farea al-Muslimi, the Yemeni writer
and youth activist who testified yesterday before the Senate Judiciary
Committee hearing on drones.

Farea, thank you for joining me.

And the first question I want to ask about, how you came to go to high
school in California in the first place, which is kind of the most amazing
part of this story, because you are from a relatively remote farming
village nine hours away from the capital of Yemen?

AL-MUSLIMI: Thank you, Chris. Thank you. Thank you for the very
warm introduction. It`s a pleasure to be here.

It was one of the very great things the United States is doing in
Yemen. Unfortunately, it`s now this, which is scholarships for exchange
students and to teach students English and especially poor students with
good ranking grades in school. I was one of those lucky people who heard
one day in a random visit about the scholarship, and now, I am with you on
TV, because of that thing that changed my life. It`s an unbelievable thing
that not just changed my life, but made a duty on my life forever to be an
ambassador of this great country and these great people.

And I had a great experience that I cannot ever get out of, and I
cannot ever be less talkative about it, actually.

HAYES: You talked in your testimony about sort of coming to have a
surrogate father who`s in the Air Force and he went to mosque with you and
you went to church with him, and that bond, when you went back to Yemen,
you say you were an ambassador for America there.

What does that look like? What did you tell people about America when
you were back in your farming village of Wessab?

AL-MUSLIMI: I just told them about my great time with my American
high school friends, I showed them photos, I said everything about my
basketball team, everything about my great host family, everything that I
had, just my daily schedule and the warm and deep love that I had and I
received and the great feelings I had in this country.

All you have to do is just speak intensely and infinitely about your
daily life and that is enough in an area that does not even -- it`s like
equal of the size of Bahrain, about three times. It does not have a meter
of electricity, not a hospital, not a single college. That was the only
way people would know about this place and about this great country from
what I told them about my stories.

I was like their, you know, unpaid, non-official ambassador of the
U.S. to that village, which was a great honor and passion. I`ll keep it
for the rest of my life.

HAYES: And then what happened six days ago in your village? Describe
-- when we say drone strike, it sounds like something abstract to us or
something removed. What does that actually look and feel like when you are
there?

AL-MUSLIMI: Yes, I don`t know what happened in D.C. or anywhere else
in the world, but what happened in Yemen is exactly a lot of members (ph)
while I was having a good time with my American friend in the capital, I
received tons phone calls and messages from people about a weird bombing,
something was thrown from the air into their heads and targeting someone.

It ended up being American striker drones that terrified thousands of
poor farmers, and more importantly, I think in one shot it raised the whole
great public duplicity I have done or I have achieved with the United
States in my village.

It has been great sorrow. I was devastated, as I was already sad,
about the Boston news. I was, again, sad about the village thing,
especially that this is not just terrified poor people. But it also -- it
kills any chance of a public -- of a great relationship of why the village
should know about America and America should know about the village. It`s
killed every chance, I think.

But now, there`s probably there will be chance to fix this out, but it
killed every story I have told about great America in the last few years.
Whatever the radicals could not have achieved in many years was achieved in
one shot when someone pressed the button thousands of years -- thousand of
miles away from that place. And someone didn`t even know probably how to
pronounce Wessab.

Thousands of farmers were being terrified. In the past, they knew
America through my eye, they knew it about the striker drones. And Wessab
was not a place that was always by any way hostile with America.

It is a place -- there isn`t war there. There isn`t any -- it`s one
of the most peaceful places you can ever see in your life. And what
happened after that, it became one of the places right now I think one of
the places where America -- there`s a lot there that I don`t know how to
fix. And that will take a lot of time.

But the striker drones are not just in the village. The strike drones
are also in other areas of Yemen have been the face o America to thousands
of Yemenis.

I was away also in Aden, the south of Yemen, where I met with some
families who lost their innocent civilians for just simply by one shot.
One of the -- it became a daily fear, not just my village, it was a daily
fear for a lot of people in these other areas.

Like in Al Badya in the middle of Yemen, where a man said in the past
we used to tell women used to tell their children, go to bed or I will call
your father. Right now, they tell their children, go to bed or I will call
the drones. It has been horrifying fear at nights for thousands of people
who have nothing to do with AQAP and who have never had any sort of
sympathy for AQAP and rather than that, it was -- yes?

HAYES: Farea, thank you so much for telling your story and for coming
to Capitol Hill and for your public diplomacy in both directions. They are
greatly appreciated. Thank you very much.

AL-MUSLIMI: Thank you, Chris. Thank you very much. Thank you.

HAYES: The part of the world that most hates America is the part of
the world where America has been droning the most. Someone who`s actually
been there joins us next.

(COMMERCIAL BREAK)

HAYES: A month ago it was in style to stand with Rand on the issue of
drone strikes. But guess who`s not so sure of standing with Rand now?
Rand.

Senator Paul`s flip-flop-flip, and the most important conversation no
one is having. That`s up next.

(COMMERCIAL BREAK)

HAYES: You guys remember "Stand with Rand," the movement that popped
up to support Rand Paul`s nearly 13-hour drone filibuster of the
confirmation of John Brennan as the head of the CIA. The filibuster joined
by Ted Cruz and Minority Leader Mitch McConnell that took a very principled
stand against the use of drones, against American citizens of the United
States.

Well, this week provides us with yet another lesson in what happens to
those principles in the aftermath of the attack on U.S. soil.

This is Rand Paul on Monday night answering the question about the use
of drones during the search of a suspected Boston bomber.

(BEGIN VIDEO CLIP)

SEN. RAND PAUL (R), KENTUCKY: I`ve never argued against any
technology being used when you have an imminent threat, an active crime
going on. If someone comes out of a liquor store with a weapon and $50 in
cash, I don`t care if a drone kills him or a policeman kills him. But it`s
different if they want to come fly over your hot tub or your yard just
because they want to do surveillance on everyone and they want to watch
your activities.

(END VIDEO CLIP)

HAYES: So, just so people are being clear here, the hero of civil
liberties is saying that if you have 50 bucks from a liquor store robbery,
you can be iced by the death robot in the sky, which is a far, far cry from
the note he was trying to the floor of the Senate just recently.

Joining me now from Washington, Joshua Foust, national security
columnist for "Need to Know" on PBS, and former contracted defense analyst
for Defense Intelligence Agency.

Here at the table, independent analyst Madiha Tahir, and Ali Gharib,
senior editor at "The Daily Beast" Middle East open blog, "Open Zion."

Ali, I found that quote amazing, and I should say that there`s now a
walk back of that, which is a full statement released by Rand Paul.

"To be clear, my comments last night left the mistaken impression that
my position on drones had changed. Let me be clear: it has not. Armed
drones should not be used in normal crime situations. They may only be
considered in extraordinary lethal situations where there`s an ongoing
threat. I described that scenario previously during my Senate filibuster."

What do you make of the 180, now 360?

ALI GHARIB, SR. EDITOR, "OPEN ZION": Well, yes, the knocking off a
liquor store is, I guess, an extraordinary situation. I`m sure the
Founding Fathers are all glad we`re safe in our hot tubs now.

You know, it`s the sort of opportunism you can expect on Capitol Hill.
When Farea was speaking to the subcommittee in the Senate, it`s the same
thing. There`s this sort of really self referential vapid thing.

I mean, to watch Lindsey Graham lecture Farea al-Muslimi on what`s
going on in Yemen and to kind of badger him whether there`s a conflict
there, and what`s possible in terms of picking stuff up, like -- you know,
even if I was a U.S. senator, I`d like to think I`d differ to a man who
grew up in this village, who, you know, as he so eloquently stated himself,
has nothing but love for this country, that some of our security objectives
could hopefully be achieved there.

HAYES: Well, and the grandstanding at the Senate committee -- I mean,
I think this has been my issue from the beginning and was part of my
reluctance about the "Stand with Rand" stuff, even though I was that the
grandstanding here and the sort of opportunism of this has been really hard
to take.

I want to just play a little sample of what the questions at the
subcommittee looked like yesterday, because it was not a really impressive
display.

Take a look.

(BEGIN VIDEO CLIPS)

SEN. TED CRUZ (R), TEXAS: I`d like to begin by posing to each of you
the hypothetical that I pose to Attorney General Holder.

SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: Should the rules be any
different for remotely piloted aircraft?

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: Would you have advised
President Obama to call the Pakistani government up to go arrest bin Laden?

CRUZ: If that U.S. citizen is sitting on U.S. soil at a cafe in
northern Virginia?

GRAHAM: I`ve been to Yemen. It`s a country in great turmoil, do you
agree with that?

CRUZ: Does the Constitution allow the United States government to use
a drone to kill that U.S. citizen on U.S. soil?

GRAHAM: You walk up on a bunch of Taliban guys that are asleep, do
you have to wake them up before you shoot them?

(END VIDEO CLIPS)

HAYES: Josh, this is what the oversight of this program looks like,
and I have to say, I was massively disappointed, because here you have this
tremendous testimony and yet it seemed that the senators had a bigger stake
in kind of this hypothetical rather than the thing that is actually
happening.

JOSH FOUST, PBS, "NEED TO KNOW": Right. I think they actually missed
a tremendous opportunity to be talking to Farea about what actually happens
on the ground. I`ve been studying drones for a couple of years, and one
thing that I think Madiha can even talk about.

It`s really hard to get information from strike sites and from strike
zones about what`s happening and about the effects these weapons have, the
effects that the policy has, that the broad counterterrorism policy our
government has adopted, we don`t have a lot of very solid information about
this.

Farea was in front of a Senate subcommittee. He was telling them
exactly what was happening, his experiences, and exactly what the
consequences were, and they didn`t jump on that. They missed an enormous
opportunity to learn about what their own policies are doing.

HAYES: Madiha, you have been to Waziristan, in the tribal areas of
Pakistan, reporting on people, an area that`s been intensely droned. This
process of anger and radicalization, what does it look like on the ground?

MADIHA TAHIR, INDEPENDENT JOURNALIST: I mean, first of all, Josh was
right, it is difficult to know in many ways, what is going on on the
ground, however, given that the drone wars have now been going on for about
a decade, we actually do have a certain amount of evidence. We do know
that hundreds of children have been killed.

I actually met a teenaged cousin of a 9-month-old baby girl. Her
named was Javaria (ph). She had been killed in a drone strike in March
2010. I met another teenager whose legs had been shattered and had to be
amputated in another drone strike in September 2009.

I met Sahin Karishi (ph), who`s also a teenager, and he has a glass
eye now. He was in the first drone attack that Obama authorized when he
first came into office in 2009.

HAYES: When people -- when we have this conversation and talk about
this, the way that people react to that news, that is horrible and
lamentable, but what would you rather have us do? Should we just let the
Taliban occupy the tribal provinces? And we`re talking about
counterterrorism, like we`re talking about the fact that in the wake of
9/11, the thing that was identified from the problem of a counterterrorism
perspective was that Afghanistan was able to give sanctuary to al Qaeda,
where they had training camps and many of the hijackers went to train.

And so, what should we do if this is the wrong policy, should we
invade? This is the question I myself get asked, it`s a question the
people right now are asking the television angrily.

TAHIR: Yes, I mean, look, this is -- first of all, this is not a
targeted killing program, it`s just a killing program. It`s a bombing
campaign that`s happening right now. It`s indiscriminate killing. Over
4,700 people by some counts have been killed.

And, you know, the latest reports, papers released show that actually
we`re not, the U.S., is not just killing al Qaeda and associated forces,
they actually don`t know who they are killing in many of these situations.

And the second thing I would say, that you cannot kill your way out of
a political situation. This is a political predicament, it demands
political solutions. And this is an absolutely shameful policy that`s
being, you know, set forth.

HAYES: Are there political solutions, Ali, that are actually in the
works?

I mean, when we`re talking about the aftermath of Boston, we`re
talking about radicalization, we`re talking about radicalization in Yemen,
in places like tribal areas -- what is reorienting away from that look
like?

TAHIR: Total shift in, you know, trying to block the probably
impossible task of blocking the inertia of U.S. foreign policy, you know,
pretty much from the Mediterranean Sea, all the way to India. Going to be
really difficult, but the answer to what we should do is, you know, this is
where you should apply the -- you know, the first principle of being a
medical doctor.

And what you should do first is do no harm. And so, I think that
that`s why, you know, that we need to take a critical look at these
policies is the important first step of what we should do.

HAYES: Josh, quickly, you have defended the targeted killing program
and drones, what is your response to Madiha?

FOUST: I mean, to a certain extent, Madiha is right. This is
ultimately a political program. I think at their greatest, drones can be a
stopgap measure, that kind of manage the problem and don`t ultimately solve
it.

But, you know, back to this charge of indiscriminate, I don`t think
that`s accurate at all. Even the most uncharitable statistics about drone
strikes give them a civilian causality ratio about on part with the air war
in Kosovo, which isn`t good. It`s not like civilians are happy and that
people are being protected and that there`s no killing going on. But it`s
not an indiscriminate program. Indiscriminate is really misrepresenting
what`s happening here.

Despite the violence and despite the difficulty of this, there haven`t
been that many people killed by drones compared to the Pakistani military
in Pakistan or even compared to the Taliban. So, when we look at these
drones, this goes for Yemen, as well. Drones are happening in an ecosystem
of violence.

(CROSSTALK)

TAHIR: Josh, it`s not a game of who`s going to kill more, whether
it`s the drones or military. We actually know. I mean, this is
misrepresentation.

We actually know the high value targets in Pakistan are no more than 2
percent. We actually don`t know beyond that who it is we are killing.

HAYES: What we do know is the statistics which we talk about in this
case, right, are attached to individuals and human beings, and I think one
of the things that we all can do in the aftermath of watching the horror in
Boston is to think about how people feel in the aftermath of watching death
of an innocent person, how we all feel about the people that we know who
died there and know that that feeling -- that human feeling that we all
feel, everyone around the world feels when they watch someone that they
love perish in an instant. And that, that is a very hard thing, I think,
for our policy makers to get through their heads.

Independent journalist Madiha Tahir, Ali Gharib of "The Daily Beast",
national security columnist Joshua Foust -- thank you. We`ll be right back
with quick three.

(COMMERCIAL BREAK)

HAYES: What if I told you the U.S. is suffering catastrophic economic
pain because of an error made by these two economists in a Microsoft Excel
spreadsheet? Well, it turns out that`s true. And what that story has to
do with striking fast food and retail workers in Chicago, coming up.

But, first, I want to share the three awesomest things on the Internet
today, beginning with a pitch from our Twitter fan Daniel Hatkis (ph) who
tells us this essay by a fourth grader on marriage equality is kind of
awesome. It was posted by a Reddit user who says, one of my fourth grade
students chose gay marriage as his topic for a persuasive essay. This is
the result, more sense that some adults.

Upon further examination, you can see how true that is. Why gay
people should be able to get married is you can`t stop two adults from
getting married because they are grown and it doesn`t matter if it creeps
you out, just get over it. And you should be happy for them because it`s a
big moment in their life.

Both very true. The essay comes on the heels of a lot on the marriage
equality front. France just legalized it. Rhode Island is one step closer
to legalizing it. And Nevada lawmakers voted not only to overturn the
state`s constitutional ban on same-sex marriage, but one state senator
actually came out to his colleagues on the Senate floor during the debate.
And as fast as things are moving now, just wait until today`s fourth
graders are voting.

The second awesomest thing on the Internet today is this video posted
online of a McDonald`s hamburger. It belongs to David Whipple of Utah.
Mr. Whipple says the burger has been in his possession since 1999. Yes, I
got that right, 1999. Now the crazy part here is not the fact that a man
has held on to a burger since the Clinton administration. The crazy part
here is that the burger looks like it has not aged a day. Whipple told his
story on daytime TV, adding it`s great for the grand kids to see what
happens with fast food. And by great, I`m sure Mr. Whipple means
completely terrifying.

And the third awesomest thing on the Internet today, this report from
Dave Weigel of "Slate," titled "Adam Savader, Part-Time Accused Online
Stalker, Full Time Photo bomber." First, the part time accused online
stalker part. Savader is a former campaign intern with the Romney and
Gingrich campaigns. He was arrested and charged in federal court Tuesday
with cyber stalking and Internet extortion. A criminal complaint alleges
that Savader obtained nude photos of women and used those photos to
blackmail his victims and get them to send even more nude photos, which is
gross.

Naturally, Savader calls himself an American patriot in his Twitter
bio. As Weigel discovered, Savader`s Facebook page is chalk full of
pictures of the guy posing with/photo bombing various right wing pundits
and politicos. Here he is with Paul Ryan, RNC Chair Reince Priebus. Even
Bill O`Reilly gets a shout out. But here`s where it really gets weird.
Yahoo!`s Chris Moody reports that while interning for Newt Gingrich,
Savader often bragged about dressing up as Ellis the Elephant, a character
in Callista Gingrich`s children`s books. Savader would volunteer for the
job and appear with Newt and Callista during various events. Moody neatly
surmises, "as it turns out, there may be junk in that trunk."

You can find all the links for tonight`s Click Three on our website,
AllInWithChris.com. We`ll be right back.

(COMMERCIAL BREAK)

HAYES: Ever since the Tea Party insurrection, conservatives have had
a favorite statistic. It is not the number of gun deaths in Chicago, which
has relatively strict gun laws, or how much money from Medicare is used to
fund Obamacare. It`s this.

(BEGIN VIDEO CLIP)

REP. DAVE CAMP (R), MICHIGAN: Independent economists have found that
debt loads greater than 90 percent of GDP could result in the loss of up to
a million jobs.

SEN. ROB PORTMAN (R), OHIO: Once a country`s debt burden reaches 90
percent of the economy, you have a significant downturn in economic growth.

REP. PAUL RYAN (R), WISCONSIN: Economists who have studied sovereign
debt tell us that letting total debt rise above 90 percent of GDP creates a
drag on economic growth and intensifies a risk of a debt-fueled economic
crisis.

(END VIDEO CLIP)

HAYES: That sounds scary. And the reason is it sounds scary is this:
look at our debt to GDP ratio. Here we stand, America, on the precipice of
disaster, because science says so. This favorite conservative stat came
from an impressive paper from economist Carmen Reinhart and Kenneth Rogoff.
The two achieved fame for writing an incredibly exhaustive research history
of the last eight centuries of financial crisis called "This Time It`s
Different."

I read it. And it`s really quite good in many places. But the one
number that policy makers have clung to was this 90 percent statistic.
It`s taken from a paper the two published in 2010 which suggests that
countries with public debt more than 90 percent of GDP will have negative
economic growth. Senator Tom Coburn, Republican from Oklahoma and member
of the Senate Finance Committee, emphasized why this finding was the
Rosetta Stone for understanding our economic peril.

"If you study Reinhart and Rogoff and what they said, they know what`s
coming. Every country that`s ever had a debt crisis and has printed money
has ended up with an inflation problem."

Well, an incredible thing happened last week, and it was drowned out
by lots of other news. But honestly, it`s one of the most astonishing
things in recent economic history. A grad student, Thomas Herndan, a 28
year old at University of Massachusetts Amherst, had an assignment, rerun
someone else`s data and see if you can get the same results. Herndan chose
the Reinhart/Rogoff study. He looks at an excel spreadsheet. We`ve all
seen them.

And the first thing he sees is the crucial column in their data, the
one that averages the growth rates of countries with debt to GDP ratios of
90 percent, is wrong. It`s got a mistake. The average should have
contained data from rows 30 to 49, but instead only averaged data from 30
to 44. Five missing rows, all because of a typo, apparently.

It meant that poor little Belgium, for instance, which had a pretty
decent growth even with high debt level, was left out. Not only that, the
author selectively omitted a number of countries in the post-World War II
era, Canada, Australia and New Zealand, that experienced good growth with
high levels of debt. So, here`s the punch line, if you correct the
spreadsheet error and put the intentionally omitted countries back into the
data set, the entire statistic falls apart.

Instead of countries with the dangerous level of 90 percent debt to
GDP having a negative growth rate of 0.1 percent, they have a modestly
positive growth rate of 2.2 percent. That is a big freaking difference.
That`s the difference between recession and recovery, which means the
intellectual cornerstone for the arguments about austerity coming from the
Republican party was based in part upon a screw up on an Excel spreadsheet
from two of the most widely lauded economists in the world.

Think about that for a moment. The bigger issue, though, is that the
entire project, the one used by conservatives to throw a lasso around the
world and rope in a magic number that pointed toward austerity, was
intellectually bankrupt. The basic idea that the Paul Ryans and Tom
Coburns of the world were pushing was that high levels of debt led to slow
growth. We have slow growth now and it`s because we have debt that` too
high.

Of course, it`s hardly the case that Republican politicians and even
Tim Geithner reviewed the Rogoff/Reinhart paper and were persuaded to
advocate for cuts. No. The reason they loved the stat is because it was
marshaled in favor of an argument that powerful people wanted to make
anyway, which is why the debunking of the statistic isn`t going to stop
Paul Ryan or Tom Coburn or John Cornyn or anyone else from taking the floor
to talk about all the reasons we need to cut government spending.

They want to cut government spending not because they happen to read
some economist`s paper. They want to cut government spending because that
is what they want ideologically. It`s what they are committed to, largely
because a lot of powerful interests with a lot of money are committed to it
as well. And the grinding misery it is producing is simply on some other
part of the spreadsheet they haven`t bothered to click on.

We`ll be right back, and I`m going to show you what that looks like.

(COMMERCIAL BREAK)

HAYES: Here`s the most maddening thing about the debate over the
sequester. A, the sequester exists because Republicans won an election and
pushed for spending cuts, the midterms. At least that`s the reason broadly
it exists. Republicans, B, want discretionary spending cuts. That`s part
of the government they want to see shrink. And C, Republicans want to get
spending cuts, then they want to simultaneously attack the president for
not cutting enough spending and for cutting spending.

Case in point, the blame game over sequestration cuts to the Federal
Aviation Association. The FAA started furloughing air traffic controller
operators a few days ago, insisting that budget cuts mandated by the
sequester leave no other choice. Republicans wasted little time in blaming
the Obama administration. Republican National Committee urged passengers
with delayed flights to contact the White House, while House Majority
Leader Eric Cantor took to Twitter with "Why is President Obama
Unnecessarily Delaying Your Flight? FAA Could Cut Other Spending,
#ObamaFlightDelays."

And today, at a Congressional hearing, Republicans lawmakers -- mind
you, these are some of the same Republican lawmakers who voted for the
sequester -- criticized FAA Administrator Michael Huerta.

(BEGIN VIDEO CLIP)

REP. HAL ROGERS (R), KENTUCKY: This imperial attitude on the part of
the administration, and you`re the most recent example of that imperialism,
is disgusting. So, I hope you have some answers for us today. But the
first question I want answered is, why didn`t you tell us about it
beforehand?

MICHAEL HUERTA, FAA ADMINISTRATOR: We have been talking about
reduction in available controller hours of 10 percent for months.

ROGERS: But you didn`t tell them which airports, which airlines.

HUERTA: We told them they should expect significant impacts at major
hub facilities.

ROGERS: Well, la tee da, everyone knew that. That`s what sequester
is all about.

(END VIDEO CLIP)

HAYES: La tee da, game, set, match there, congressman. So while
everyone there is obsessing over the spending cuts to the FAA that, by the
way, effect members of Congress who have to fly to D.C. directly, and which
is why you don`t hear them making a stink about cuts to education or
Medicare, here`s the image of another hearing that took place on Capital
Hill today. This hearing on long term unemployment held before the 19-
member Joint Economic Committee began with just a single lawmaker this
morning, Senator Amy Klobuchar, Democrat from Minnesota. The committee`s
vice chair was the only lawmaker to show up for the beginning of the
hearing.

Not too long after the picture was posted on Twitter by "National
Journal" reporter Narij Shilkshi (ph), a few other Democratic members of
congress, Senator Chris Murphy from Connecticut, Congressman John Delaney
from Maryland, and Congressman Elijah Cummings, also from Maryland, began
to trickle in. Not a single Republican ever even bothered to show up.

And this image tells you what you need to know about how Congress is
setting its priorities. Long-term unemployment, or people who have been
out of work for more than six months, is the most direct affect of
austerity and the slow recovery. Before the recession, 2007, just 0.8
percent of Americans were out of work for more than six months. In 2010,
that number rose to 4.2 percent. And today that number is around three
percent, or close to five million Americans.

We are right now in the midst of creating a permanent class of people
whose skills are deteriorating, who are going to be more likely to use
social services, tax expenditures, and who have things to offer that we are
just setting on fire every day. And Congress, particularly Congressional
Republicans, seem perfectly content to just let this human tragedy continue
to grind on.

But they shouldn`t be allowed to get away with it by simply staying
out of the hearing rooms. Their absence is the story. Joining me tonight
from Washington is Congressman Keith Ellison of Minnesota, member of the
Congressional Progressive Caucus. And I don`t -- I do not -- I don`t want
to sound like a cliche here, but what the heck is wrong with members of
Congress on Capitol Hill? It is unfathomable to me that we have five
million people who are employable adults, who have skills, who have things
to offer, and we have just essentially all decided that`s not a problem for
them just to sit out in the labor market and sit around not doing
productive things.

REP. KEITH ELLISON (D), MINNESOTA: Well, Chris, I mean, I, obviously,
agree with everything you just said. But I think you ought to ask yourself
a question. Are the people who are neglecting the long-term unemployed
stupid? No, they are not. Actually, unemployed -- the unemployment
numbers actually help some people. And for example, they make it a little
more dangerous to try to get out there and start a union. They keep wage
rates down because the employment market is very slack.

I mean, you know, the bottom line is, the American people need jobs.
The American people need to get back to work. What`s good for the American
people is to really invest to make sure the economy works. But there are
some special interests who actually benefit from high unemployment. And I
think that`s a reality we need to face, too.

HAYES: OK, that -- what you just said is incredibly important and no
one in Washington ever comes out and says it, which is that there are
political -- because what happens during, for instance, the campaign is it
is useful for the person who`s running against the incumbent to talk about
how terrible it is that there are all these people out of work. Obviously,
we all want full employment. We want everyone to get back to work.

But having a quasi permanent excess labor supply of people who you can
offer a job to if the person that is in your shop looks at you sideways is
useful for a lot of business interests in this country.

ELLISON: Well, you got to call it out, Chris, and I do appreciate you
doing it. I mean, but you know what, here`s the truth. I mean, low-wage
workers are getting a lot of courage. I was so proud of you when you had
those low-wage workers who were striking in New York a few weeks ago. They
are doing it again today in Chicago. These people are demanding a better
America, a better job, a better pay on their job than a right to join a
union.

So what Congress is not doing, the American people are leading the way
on. And so there are some bright lights out there.

HAYES: Is that the answer here? I think I`ve been banging my head
against the wall on long term unemployment.

ELLISON: To a certain extent, it is. To a certain extent, the answer
is we`ve got to get our feet in the street, turn up the heat, and
politicians see the light when they feel the heat. That`s a fact. And we
need to do that. I mean, in the Progressive Caucus, you know, we threw
away the metric of debt. And even though that is -- we consider it to be
important. But the true metric is how much is your budget going to lower
unemployment. Ours would lower unemployment by seven million jobs in the
first year and get us to full employment in three years. That`s the metric
we thought was important to put in the Back to Work Budget.

So there are at least 81 members of this Congress who have a different
set of priorities.

HAYES: Those are some of my favorite members of this Congress.
Congressman Keith Ellison, also one of my favorite members of Congress,
thank you.

ELLISON: Thank you, sir.

HAYES: People fighting for their economic lives in the recession do
something remarkable you just heard about. They go out on strike. That`s
next.

(COMMERCIAL BREAK)

HAYES: Let`s bring in Josh Barro, economic policy writer for
"Bloomberg View," and Tracy Gihlarducci, director of the Schwartz Center
for Economic Policy Analysis at the New School. It`s great to have you
here.

Josh, you are -- you consider yourself a Republican, I think, and
write from the center right, but have been really on this full employment
issue. And I want you to respond to Keith Ellison, the congressman`s
point, which I agree with, which is that there is some interests keeping
unemployment high.

JOSH BARRO, "BLOOMBERG VIEW": Yeah, I don`t think that`s quite right.
The idea is basically, you know, you keep unemployment high to keep labor
costs down. But the problem is the strategies to keep unemployment high
also keep economic growth weak. And so it`s a hugely negative sum game,
where basically you`re saying we`re going to keep a weak economy so that we
can depress wages and take a larger share of the economy as corporate
profits.

And that just makes no sense as a long term strategy to enrich
yourself if you own a business or you are a rich guy.

HAYES: People do nonsensical things sometimes.

BARRO: People do. But I think it makes much more sense to look at
this as an error, because we`re in -- we`ve been in a situation for years
where we have aggregate demand that`s too weak. And that`s been --

HAYES: People aren`t buying enough. There`s not enough consumption.
There`s not enough desire for consumption.

BARRO: Exactly. But if you run a business that`s trying to sell
things to people, that`s not good for you either.

TERESA GIHLARDUCCI, THE NEW SCHOOL: That`s the problem with employers
and capitalists. They actually get conflicted. On one hand, they really
want the business coming through, but they don`t want to pay their workers
a lot to provide consumption for their places. So they are conflicted,
which means that they are not on the streets telling Congress forget about
the balanced budget, give us growth. That`s what`s happening. Employers
won`t do it.

HAYES: This is where I think there is -- this is why both these
accounts sync up, because there`s the part of the business brain that`s
like I want customers, I want demand. But then it`s like, well, you go and
write your checks to your favorite candidate and you read the "Wall Street
Journal" editorial page and you`re like austerity, austerity, austerity.
And I think those two things are happening in the same people.

GIHLARDUCCI: That`s why they don`t fight for their own interests. So
they are -- they don`t know what their interests are. That`s been the
story of especially small and medium-sized businesses.

BARRO: I think that`s what it is. I think these business owners are
convinced that austerity will be good for their businesses, even when it
won`t. I think it`s -- if you look back to the 1990s, which were a time of
full employment and fast wage growth, businesses certainly don`t look back
on that as a bad time. They made a ton of money in the 1990s. But the
1990s were also a time of tight budgets, where we ended up running budget
surpluses. And I think people look back at that --

HAYES: That was the thing that sprung the growth.

(CROSS TALK)

GIHLARDUCCI: Government didn`t run deficits, but boy was there
policies to make sure that households ran deficits. There was easy money.

HAYES: The other way to square the circle here, right, is that if
you`re talking about that, why is there not more political mobilization for
full employment, right? Well, Pew has a study about where the gains from
this recovery are coming. And this is part of the story, is that a huge
percentage of the gains are going to the people at the top. And the
distributional story here, right, that the top seven percent are up 30
percent in what they are getting, and all the other bottom 93 percent are
down four percent -- the distributional story is part of this, right,
because the top seven percent are the folks that have disproportionate
effect on what Congress cares about. Don`t you think?

BARRO: I think there`s less to this study than meets the eye. This
is looking at wealth, not income.

HAYES: Right. It`s wealth growth, right.

BARRO: What it`s basically telling us is that the stock market did
better than home prices over this period. And I think that doesn`t tell us
that much about the circumstances of the 93 percent of Americans who are in
the minus four percent bar, because those people aren`t living off their
wealth. They are living off income from labor.

HAYES: We look at income and we look at a lot of things, right. We
look at corporate profits versus wages, when we look at all sorts of
things, what we`re seeing is the distributional effect of the recovery,
such as it has been, has been very good at the top and not very good at the
bottom.

GIHLARDUCCI: So when people aren`t uncomfortable, like the very top,
they are not going to actually ask Congress to do something different, like
full employment. It is not uncomfortable.

HAYES: This brings us around to the amazing, very I thought
courageous fast food workers in Chicago and retail workers today who walked
out on strike. We heard from organizers, 2,000 people in the streets
protesting outside of one of the big McDonald`s downtown. Chicago Whole
Foods workers were going to be on strike at 8:00 p.m. There was a number
of stores that had to close. Again, this is, in the grand scheme of
things, relatively few workers. But what`s remarkable about it is it`s --
this kind of labor action in the sector of the economy that is growing the
fastest in the recovery and where people do have the least amount of labor
power, because if your boss doesn`t like you or doesn`t like you catching
an attitude, there is someone out there they can hire.

BARRO: I don`t think this is likely to be a path right now that`s
going to be effective for getting workers higher wages or more jobs, just
because I think there isn`t that much demand among employers to hire. So
what really are needed are public policies that will improve the overall
employment situation. That will give workers more power in the workplace
and more ability to demand higher wages like in the `90s. I don`t think it
can be done just through labor.

HAYES: I think it`s both and.

GIHLARDUCCI: No. We do need policies. You need minimum wage
policies. You need other kinds of protections. However, how does that
happen? It happens when people are on the street. That`s always happened.
The at`s how we`ve gotten minimum wage and labor --

HAYES: You also need -- you need growth and employment. You made
this point in a column I thought was really interesting, bringing us back
to the FAA. You basically said, good, hold the FAA hostage if that`s what
it takes to get people to care about austerity. If the thing that`s going
to make Republican congressmen care about austerity is the fact their
flights get delayed, then hold it hostage.

BARRO: Yes. Now it actually looks like this evening the White House
is indicating they are going to cave on the FAA issue. So now what we`ve
learned from this is that when something gets screwed up in the government
that`s really negative for affluent people in New York and Washington
areas, we can see how long it takes for Congress to agree on a fix. It`s
about 60 hours.

HAYES: Right.

BARRO: Then you have all these other problems created by the
sequester that will be around for months and years. And it`s not that the
FAA shouldn`t be fixed. There should be a fix. It`s stupid that we have
all these flight delays. But the government is just so much more
responsive to the needs of people who are within the elites on the coasts
than it is to people who are much more challenged by the recovery.

HAYES: Like those five million long-term unemployed.

GIHLARDUCCI: They are pretty docile. They are really wiped. But
these workers on the streets are not. So to make any customers
uncomfortable, the owners of stores uncomfortable, that will make change.

HAYES: But I think the other issue here is there has to be some kind
of mobilization that makes members of Congress uncomfortable, that makes
the political system get uncomfortable. Because as long as we -- we are
cutting the budget. If you look at the graph, the deficit`s coming down in
almost European levels, right?

GIHLARDUCCI: Yeah, yeah.

HAYES: So we`re going to look at this excess labor supply for a long
time unless people get religion on Capitol Hill. Josh Barro of "Bloomberg
View," economist Theresa Gihlarducci from the Washington -- and from
Washington, Congressman Keith Ellison, who I already good byed.

That is ALL IN for this evening. "THE RACHEL MADDOW SHOW" starts now.
Good evening, Rachel. I think I got through that prompter, not very
gracefully.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

Copyright 2013 CQ-Roll Call, Inc. All materials herein are protected by
United States copyright law and may not be reproduced, distributed,
transmitted, displayed, published or broadcast without the prior written
permission of CQ-Roll Call. You may not alter or remove any trademark,
copyright or other notice from copies of the content.>