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All In With Chris Hayes, Thursday, May 9th, 2013

Read the transcript from the Thursday show

May 9, 2013

Guests: Heather McGhee, Josh Barro, Janet Murguia, Sen. Elizabeth Warren, Ryan Grim, Shahien Nasiripour

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

I`ll be joined tonight by Senator Elizabeth Warren who introduced her
first piece of legislation, a pretty brilliant one, to help level the
playing field for people buried in debt.

And speaking of debt, a big report from "The Huffington Post" about a
system designed to make one company a fortune on the back of college
students. We`ll have the exclusive interview.

Plus, another senator takes a stand for science, reason and the divine
all in the name of our species.

All that and, of course, #click3.

But we begin tonight on the road with President Obama in Texas today
for the second time in as many weeks. And, of course, how and where the
president spends his time is probably the single most important tool the
White House has at its disposal.

So, the decision to send the president to Texas again is a fascinating
choice for a number of reasons. For starters, Texas is not exactly the
home of the Obama political base. He lost big there in 2008 to John McCain
and even bigger to Mitt Romney in 2012.

But even so, Texas is being seen more and more and potentially
winnable by Democrats, speculation over whether and when Democrats could
leverage changing demographics in the state and turn it from red to blue
has been simmering for months now.

It`s also a state that has seen some not considerable economic success
at a time when the nation as a whole is floundering economically, and the
president in traveling there today, is trying once again, to his credit, to
drag the nation`s attention back to the arena to jobs and economy despite
the best effort of our collective attention to wander on grandstanding and
conspiracy theorizing on the Benghazi attacks or the culmination of
salacious murder trials.


Austin talking with folks about what we can do to reignite the true engine
of America`s economic growth -- a thriving, rising middle class and a
dynamic cutting edge economy. That`s our priority. That should be
Washington`s top priority.

When you`re talking to your members of Congress or you`re talking to
elected officials. You`ve got to remind them -- we don`t want government
to do everything for us, but it`s got a role to play on infrastructure,
basic research, making sure that we`ve got a tax system that`s fair, making
sure that we`ve got some basic stability in our budget so people aren`t
always guessing what`s going to happen around the corner.


HAYES: The president was met at the airport today by Texas Governor
Rick Perry. The two former Mitt Romney opponents, one vanquished, one
victorious, seemed to have an affable enough greeting, especially that time
when he met Jan Brewer met the president on the tarmac when he was visiting
Arizona last year.

But public cordiality aside, both Rick Perry and America`s newest
right wing "It" boy, Texas Senator Ted Cruz took the opportunity of the
president`s visit to their home state, to thump their chest about the fact
that the Texas, by and large, is in better shape than the nation`s and to
argue that, of course, the lesson we should all be taking away today is the
president should run the country`s economy just like the Republicans are
running the Texas economy, or better yet just let Texas Republicans
actually take over for him.

For his part, Rick Perry wrote an op-ed on "Austin American
Statesman", saying, quote, "To highlight job creation, there`s no more
natural place to visit than Texas. After all, in the past five years,
while the nation as a whole lost 2.5 million jobs, Texas employer created
more than half a million yet new jobs. If President Obama is serious about
getting our nation back to work and he has certainly come to the right
place to learn how it`s done."

Ted Cruz released a statement, sarcastically welcoming the president
to Texas, saying, quote, "Texas is leading the nation in economic growth
and job creation because of principled conservative leaders who understand
the keys to economic success are lower, flatter taxes, limited government
and restrained spending. Texas has shown the country how it`s done and we
hope the president will take some of those lessons back to Washington to
bring true economic recovery to our nation."

Actually, the Texas story is a whole lot more complicated. And what
lessons might the president be taking away from the Texas economic model,
what would that model really look like if we applied it to the entire

Joining me at the table tonight, Heather McGhee, vice president at the
policy organization Demos, Josh Barro, lead writer and columnist for
"Bloomberg View".

Great to have you guys here.

HEATHER MCGHEE, DEMOS: Great to be here.

HAYES: So, I thought the choice of Texas was interesting. Here`s
opening like -- this is my jujitsu on the Texas issue.

The good -- the thing about Texas, I`ve been there recently, a woman
named Erica Greeter (ph), who`s a Texas writer just wrote this book. It`s
very good, sort of persuasive defense of the Texas model, which as a
liberal I don`t like in many ways. But there are things happening there.

To me, it`s a reminder how important growth is. Just growth -- that
is like -- that`s the take away from Texas. When you go to a place that`s
growing and I was recently in Austin and it`s growing, a lot of things come
out of that that are good and there`s a lot of things that challenges
growth presents.

But that`s what we need and that weirdly enough is precisely enough
what Washington doesn`t seem that interested in bizarrely.

MCGHEE: Right. In the short term, there is -- there has been a lot
of growth. If you look at what we need to do on the federal budget
picture, in the long term, what is missing is this basic idea we can have
not just government investment but actually the kind of immigration that
brings people in and allows people to spend money in their community.

HAYES: That`s part of the story in Texas, too. Big population growth
and lots of immigration and people, and this sot of virtuous cycle where
people are moving there, economy is booming and more people move there.

JOSH BARRO, BLOOMBERG VIEW: Right. But I think part of the question
is why is it Texas growing? If someone is immigrating to the U.S., they
can sort of go anywhere.

And I think one of the key parts of the story because it doesn`t fit
the right`s narrative or the left`s narrative has to do with housing
policy, where Texas has done a couple of really smart things. One is it`s
possible to build homes.

The most productive areas of California and New York where the highest
paying jobs are, it`s really hard to add housing units. It`s very
expensive to live there. It discourages job creation. In Texas, people
can afford to move there because --

HAYES: Housing is cheap there.

BARRO: Right. But at the same time, they had some sensible mortgage
regulation the rest of the country didn`t have.

HAYES: Coming out of the savings and loan crisis actually. And they
actually did not get the worst of it in the housing explosion bubble.

BARRO: Right. So, you can build a home, you can afford a home, but
you were discouraged from having the sort of crazy speculation you have in
certain other parts of the country. And I think that served Texas very

HAYES: And the president today -- I mean, so while the president is
there, he`s talking about trying to get growth back. He is kind of
constrained right now. I mean, this is the story right now. I mean, this
is the story, right? He`s constrained by Congress. The fact they don`t
seem that interested in growth to me.

It`s bizarre --


HAYES: It`s Republicans who are supposed to be all about pro growth.
Like how many times have you heard the term pro growth. I`m the liberal
saying, let`s do it, let`s get the 3 percent, 4 percent growth a year and
people -- the Republicans in Congress don`t see that issue.

But the other side of this is this kind of -- the fact that the
recovery has been a low wage recovery in many ways and Texas is part of
that story, right? If you look at Texas in terms of national average,
workers earning minimum wage or less, you got 4.7 percent, in Texas, it`s
7.5 percent. There`s a lot of low wage jobs being created.

Right now, also today, you had workers in St. Louis who were part of
this fast food worker strike. You were here before. We talked about other
cities. We talked about it in New York, there`s other one planned. These
are folks who are making low wages who are trying to get higher wages.

And in some ways, Texas does look like the future. At least it`s
growing but the jobs it`s producing, and this is a problem the president is
facing when he`s talking about building the middle class, right? That`s
the conundrum that`s on the table?

MCGHEE: You cannot build a middle class from low-paid workers. The
problem is, as the president, we released a report today at Demos
recognizing that nearly 2 million workers, that`s a really low estimate,
are being underwritten, 2 million jobs are being underwritten by the
federal government from contracts, from leases, from service contracts,
that pay low wage, that pay less than $24,000 a year.

And so, when you look at that, you see that the federal government has
actually walked into the economy that`s been made by Walmart and McDonald`s
and that kind of low wage economy and actually really moved in and become a
massive low wage employer, you and I --

HAYES: Are there things the government -- we`re talking the president
was touting a few different initiatives, one of them is a kind of, are
these manufacturing hubs, seems like good policy to the extent, you know,
$200 million which ain`t nothing but is very small in the context --

MCGHEE: Right. Very small amount of money, quite indirect. And we
think it`s great to do research and development.

The president could do an executive order like President Johnson did
on equal opportunity and affirmative action and basically --

HAYES: On this kind of thing.

MCGHEE: On this kind of issue and basically make a living wage law
for contractors and Josh`s head is about to explode. It would create jobs
because it would put more money in the hands of people who actually spend
money in this economy.

BARRO: I think these sorts of ideas really undermine efforts to
provide high quality government services and serve the needs of taxpayers,
because we`re mostly talking about state and local governments. The
federal government is supporting these activities but they -- many of them
are like home health aides through Medicaid and such are being run by state
and local government, which spend about half their money on employee

MCGHEE: You`re saying a janitor in Union Station making $8.75 an hour
after working there for 19 years with no benefits, if she makes a little
bit more money, it`s going to bankrupt any kind of government?

BARRO: It`s not that it will bankrupt the government, but the amount
of money state and local governments can spend is relatively fixed. They
collected between 10 percent and 11 percent of GDP in taxes --


MCGHEE: One if you have actually a better -- first of all, there`s
some extent there are state payers here but a lot of there`s a lot this
employment that is happening still with federal payers. And the most
important thing is that when you raise wages, create more stability, the
government actually can save money in terms of lower employee turnover and
higher productivity and we all benefit from the multiplier effect of having
a stronger middle class.

BARRO: To a large extent, the question that`s being faced by
government, should we employ more people or should we pay people more? And
then we had the reverse of that question over the last couple of years --


BARRO: -- with the budget cuts that have been unable to control per
employee expenditure. And so, they`ve been cutting head counts.

The city of Los Angeles has 10 percent fewer employees than it had
three years ago. And so, to the extent we put more upward pressure on
wages paid to workers working for the government, we`ll have fewer --


HAYES: Here`s the issue. Right now, we have the worst of both
worlds. This is what I think the Texas thing highlights.

An economy that`s creating a lot of low jobs but has cheap housing and
is growing gives you something you can hold on to, right?

An economy that`s not really growing and creating a lot of low wage
jobs and actually has pretty expensive housing as it does in many metro
areas in the country, that`s not giving people any a foothold, right?

And that`s exactly the situation the president faces and the thing
that he is trying to highlight when he goes on these job tours. And I read
in "The New York Times" story about this story, well, there`s a concern
this looks like he`s doing something symbolically. And it`s Like, what the
heck do you want him to do symbolically, right? Like that is the issue
right now.

You can have a growing economy that fits a conservative model much
more. You can have a growing economy that looks much more liberal. But
you need people -- you need a tight labor market. You need people getting
back to work, and you need the economy growing.

That`s -- and right now, there is no appetite for that in Washington
and remains amazing to me that that is the case.

MCGHEE: I think it`s very simple. You have to remember that
corporate profits are at a record high. We keep pretending the economy is
doing poorly for everyone and it`s not.

HAYES: Josh actually had a smart piece why Wall Street should
actually care about the fact unemployment is high.

I want to talk a little bit more about unemployment. I also want to
talk about the big background context the president in Texas, the
demographic changes there and immigration, and what that means for the
Obama coalition and what happened on the Hill today which is actually quite
fascinating, after this break.


HAYES: Coming up, the banks are getting historically low rates on
loans. Students on the other hand will see their interest rates double in
July at a time when they`re already facing record debt. One senator wants
to change that. Elizabeth Warren joins me tonight, plus a blockbuster
report from "The Huffington Post" that you`ll hear for the first time in
this hour.

So, stay with us.


HAYES: I stopped myself from dropping an "F" bomb before, which is

Josh, it is frustrating. You have this great piece today where we
were just talking about, the seeming lack of motivation or care for anyone
to do something about job growth. The president was talking about in Texas


HAYES: Heather, you said corporate profits are record high. You
wrote a great piece today saying Wall Street should care.

BARRO: Right. I mean, the last time I was on your show, Keith
Ellison, the congressman from Minnesota, was the theorizing wealthy people
and owners of stocks want this slack labor market so that wages will stay
low. But when you look at stock prices, the S&P 500 is at an all time
high, but price to earnings ratios are actually pretty low.

Corporate profits have gone up a lot in the last but those low P/E
ratios reflect they won`t grow that strongly in years to come. And that
makes sense. You need people to buy your products if you want to make

HAYES: And the point here I think supposed to decode this a little
bit, the point is, as high as the Dow, is it`s actually under-performing
where it should be based on profits if people were confident that there was
going to be markets in the future and consumer demand?

BARRO: Exactly.

HAYES: And today, we have this great report on "The New York Times",
economist estimating that the budget cuts we`ve already seen put in place
since the Republicans won over the House, right, which are not as much as
they`ve wanted but they`ve gotten a fair amount, those budgets have
already, if they were not there, we would probably have a percentage lower
unemployment. That`s a big, big deal.

So, the president`s in Texas today, one part of the Texas story is
wage growth, the other part of Texas is changing demographics. And, of
course, a lot of that has to do with immigration.

I think the immigration story in Washington is fascinating. And
here`s why: it`s the most important thing happening in Washington right
now, by far. It has the biggest ramifications what this country will look
like, millions of lives at stake. It will change the politics of this
country, the society -- huge, huge, big high stakes issue, no one is
talking about it because there is a conspiracy of silence on the part of
people who want to see a deal get done that if they talk about it at all,
they will blow the deal up.

So, everyone is out there trying to make this thing happen, walk on
egg shells. You interview someone about it, they walk on egg shells, like
you need talking points, because they don`t want to blow it up. I do not
want to blow up the deal. I want to see it will get done.

But I`ll also as a journalist think we should talk about it.

So, let`s bring in Janet Murguia, president and CEO of the National
Council of La Raza.

You`re smiling in recognition, the largest Hispanic advocacy
organization in the United States. And there was a mark up today in the
judiciary committee, a lot of Republican amendments aimed at trying to put
poisonous bills in this bill to do precisely the thing that you fear will
happen and I fear will happen, it will get blown up.

What happened today and is the bill still intact?

JANET MURGUIA, PRESIDENT, LA RAZA: Well, let me move my egg shells
aside and see if I can --

HAYES: Get frank.

MURGUIA: Look, I think we had a good day, our first day of the mark-
up. We saw a lot of extreme amendments that were able to be pushed back
and yet there was a lot of transparency, folks were able to offer
amendments and we`re seeing real progress. And that`s really what`s
important today, to keep this bill moving forward.

And I think a lot of credit goes to Chairman Leahy, of course, but
also to that bipartisan group senators that have stayed together so far to
be open, to a transparent process but also to keep the core of the bill

HAYES: There are some really funny amendments today. There`s one --
what was the one about the Boston report? This is Chuck Grassley.

Chuck Grassley was the leader today with amendments. You can tell
who`s trying to kill the bill by how many amendments they add. Chuck
Grassley was the leader today on the leader board with 77, Jeff Sessions
coming in second, getting the silver with 49.

Chuck Grassley, my favorite amendment, it would postpone asylum claims
and refugee status until a hearing on the Boston bombings is submitted.
There was also Ted Cruz who tried to blow up the cornerstone of the bill,
which is a path to citizenship. That I don`t think was voted on today.

And then we also have Senator Mike Lee. I`d love to get your reaction
to this. To exclude certain employment of domestic services to prohibition
is of unlawful employment on unauthorized aliens -- basically saying we
should have a black labor market in the following: domestic services,
services performed by cooks, waiters, butlers, housekeepers, governesses,
maids, valets, baby sitters, janitors, laundresses, furnacemen, caretakers,
handymen, gardeners, footmen, grooms and chauffeurs of automobiles for
family use.

This was an actual amendment that was actually proposed to the bill to
create a black market in labor for those named professions of services.
What does that say to you that this was actually considered by the

MURGUIA: Well, I think, look, there`s a lot of amendments, as you
pointed out. What`s happening, people are filtering through, certainly
Hispanic voters are seeing which ones are being taken more seriously and in
a good faith effort to improve the bill, and which ones to slow down the
process itself or to really make that path to citizenship an uneven one,
and certainly one that`s more convenient for one segment of society versus
the other.

So, those amendments, though, are by and large being turned away. And
I think that`s the right thing of course. And what is emerging is a
premise, more than anything else that, look, the border security title was
the one considered today. People realize that`s going to be an important
factor for immigration reform.

But even not just Democrats but some Republicans are acknowledging
that it`s a factor but it`s not all that we need to do on I immigration
reform. That goes against the old guard thinking of enforcement only type

And so, I think we are seeing some bipartisan consensus emerge and we
want this process to keep moving forward. Those amendments that are not to
be taken seriously I think are being voted down and that`s the way it
should be.

HAYES: America does need more governesses. I don`t even say the

So, here`s -- I want to say this bite of sound I think was pretty
revealing. There was a Heritage Foundation study, we talked about it. It
came up with this ridiculous number that was widely ridiculed because it
was a ridiculous number about the cost of this kind of comprehensive bill
being $6.3 trillion. There is an interesting genuine civil war among
conservatives over comprehensive immigration reform.

It was revealed by Dylan Matthews (ph) over at "Wonk Blog" that the
co-author of this report had written a Harvard dissertation that flirted
with some gnarly eugenic ideas about the different IQ achievements of
different racial groups, a line in there about Hispanics immigrating being
unlikely to achieve IQ parity with whites. This is now --

MCGHEE: Not just them, their grandchildren.

HAYES: Their grandchildren, right, in several generations, they`re
not going to get to parity. Really exclusive stuff.

And this is an interview with someone from Heritage Foundation who
went on Univision Radio today. Take a listen.


FERNANDO ESPUELAS, UNIVISION: Are you standing by his premise? Are
you standing by his premise that Hispanics have low IQ?

MIKE GONZALEZ: No. That`s not our position. That`s not my position

ESPUELAS: So, why is he an author in your study?

GONZALEZ: He did the number crunching, as I said --

ESPUELAS: So you have someone who is a racist obviously, right, who
is part of your study, you`re accepting his work, therefore you`re
accepting his intellectual framework, right?

GONZALEZ: We did not accept the work he did before arriving here.

ESPUELAS: Are you going to fire him or are you standing by him?

GONZALEZ: We really -- you know, I don`t want to comment on that.


HAYES: Janet, this has really blown up in a fascinating way. It`s
causing some real problems right now.

MURGUIA: Well, you know, it should. Look, we all want to make sure
when folks are using these types of -- this type of thinking, when you see
eugenics start to surface, as part of an author who was part of this report
and see that in his background, it does make you question why would the
Heritage Foundation not renounce that part of his work at the very least?


MURGUIA: I think it would be appropriate for the president of the
Heritage Foundation, former Senator DeMint, to reject that part of this
person`s background and renounce that. If they`re going to continue to
stand by that report, they should at least renounce that thinking. It`s
the right thing to do.

HAYES: You know these intra-right disputes better than I do.
Heritage is losing this. They`re getting their butt kicked.

BARRO: They are. And it`s -- you know, I thought it was a mistake
when they brought Jim DeMint in back in December because Jim DeMint is not
that well-liked by a lot of establishment --

MCGHEE: Right. But to be fair, this is the same person who did the
study last time around, is it not?


BARRO: No. So, I think there are a lot of establishment
conservatives in Washington who would like Heritage to stop being a problem
on things like the debt ceiling and various other fights and immigration.
This is one of these issues where you have to talk about an elite consensus
that ignores mass opinion, this is one where that`s cutting in our favor.
Elites are much more favorable of immigration.

HAYES: Than the base of the Republican Party. That`s the battle
that`s playing out.

Heather McGhee of Demos, Josh Barro of Bloomberg View", and La Raza
president, Janet Murguia -- thank you very much.

MURGUIA: Thank you.

HAYES: All right. Rising sea levels, out of control carbon emissions
and a Congress determined to do nothing about climate, one lawmaker has his
"just can`t take it anymore" moment. It`s delightful. That`s coming up.


HAYES: Today, Senate Republicans blocked President Obama`s nominee to
head the EPA, Gina McCarthy. But as Republican obstructionism goes, this
was not your every day obstructionism.

Republicans actually, get this, boycotted a committee vote to deny a
quorum prompting committee chair, Senator Barbara Boxer, to proclaim that
Republicans should, quote, get of the fringe lane.

Republicans wouldn`t even let the nominee out of committee.

Here`s the other reason, though, blocking this nomination is so
extraordinary. Gina McCarthy is currently the assistant administrator for
the Office of Air and Radiation at the EPA. In other words, she is head of
the EPA`s air pollution regulation effort, and as head of the EPA would
have the authority, as its current head does, under the Clean Air Act, to
regulate the biggest pollution we face, which is carbon.

That`s an idea Republicans and their fossil fuel backers really,
really hate. That`s why the committee`s ranking Republican, Senator David
Vitter, and his brethren want McCarthy and the EPA to first answer more
than 1,000 questions -- not exaggerating -- about the, quote, "underlying
data used to justify the EPA`s job killing regulations."

You see, the EPA is our best shot right now at regulating carbon, and
regulating carbon is pretty damned important considering the milestone we
are approaching. We learned recently that we`re about to pass 400 parts
per million in the amount of carbon in the atmosphere wasn`t a century ago,
wasn`t 1,000 years ago, and it wasn`t 10,000 years ago. It was 800,000
years ago, according to ice core records of atmospheric carbon dioxide.
See that spike at the end of the graph? Notice how much higher it is than
any other period of time over the past 800,000 years.

And in fact, even that is an understatement, as detailed by
"Washington Post`s" Brad Plumer. What`s more likely is that the last time
we hit those levels of carbon in the atmosphere was about thee five million
years ago, otherwise known as the Pliocene Era.

Now I don`t know much about the Pliocene Era, but average temperatures
were three to four degree Celsius higher than today`s, with sea levels
between five and 40 meters higher than today. And yes, there were

So, pro-a lot of mammoths. Con, hot as balls. With, as a bonus,
really extraordinarily high sea levels, particularly if that kind of sea
level rise were to happen today. But, of course, that doesn`t matter to
Republicans because they`re either so in the pocket of big carbon, they
want to deny it, or they`ve decided, as some might have put it, that God
won`t allow us to ruin the Earth.


SEN. SHELDON WHITEHOUSE (D), RHODE ISLAND: I was recently at a Senate
meeting where I heard a member of our Senate community say, God won`t allow
us to ruin our planet. The statement that God won`t allow us to ruin our
planet sweeps aside ethics, responsibilities, consequences, duties, even


HAYES: That was Senator Sheldon Whitehouse, who offered a stunning 17
minute answer to that unnamed person`s statement, including the notion that
any God who gave us Earth also gave us its natural laws.


WHITEHOUSE: And we must in turn believe that God gave us its laws of
gravity, of chemistry, of physics. We must also believe that God gave us
our human powers of intellect and reason. Why would he allow a badly
engineered bridge or building to fall, killing innocent people, but protect
us from this mistake?


HAYES: Exactly. If no divine power stops gravity from operating, no
divine power will stop the heating of our planet. When we know that we are
putting an element in the atmosphere at outrageous levels, that will lead
to an untenably hot planet.


WHITEHOUSE: We`re to continue to pollute our Earth with literally
megatons each year of carbon, heating up our atmosphere, acidifying our
seas, knowing full well, by his natural laws, what the consequences are.
We need to face up to the fact that there is only one leg on which climate
denial stands: money.

The polluters give and spend money to keep polluting.


HAYES: Well said, senator. It`s time for Republicans to get out of
the fringe lane, out of the pocket of big carbon and into reality, divine
or secular, before we`re all riding woolly mammoths under water.


HAYES: Fed Chairman Ben Bernanke says low interest rates are helping
the global economy. Ask any bank CEO and they will tell you the same. But
Senator Elizabeth Warren wants to know why these cushy rates don`t apply to
people who really need them? Senator Warren is my guest coming up.

But first, I want to share the three awesomest things on the Internet
today. We begin in Brazil with this video, awesome in its insanity, taken
from a police chopper, showing Brazilian authorities pursuing and wildly
firing on from the helicopter one of the country`s most notorious drug
traffickers, in an unbelievably, dramatic shootout and car chase. Like is
this how they normally do it in Brazil?

The chase took place last May, but the footage just aired Brazilian
television over the weekend, going viral online. The man they were
chasing, Marcio "Mathematician" Perrera (ph), managed to escape on foot,
was found dead the next day. Now, an investigation has been launched as to
whether police used excessive force. You think? >

The second awesomest thing on the Internet today comes from Twitter
fan Tracy Lee, who says there`s a lot of music underneath New York City and
one writer is taking the time to really hear it. This blog from Brooklyn
based writer Michael Alexander Chin, documents the underground music scene
that thrives in the New York City Subway System. Through Chin`s accounts,
you can meet all kinds of musicians, sample their music and read their
stories, from the ukulele guy at Union Station to the guitarist at Grand
Central. Chin provides a really beautiful and fascinating portrait of
subterranean culture in America`s biggest city. You should definitely
check it out.

And the third awesomest thing on the Internet today, a really
tremendous solution to one of the big issues of our time: TV spoilers.


UNIDENTIFIED FEMALE: So you guys watching game "Game of Thrones"?
Who`s king? Is it Joffrey?

UNIDENTIFIED MALE: It just started. It`s so good.

UNIDENTIFIED FEMALE: Are you guys watches "Madmen?"




UNIDENTIFIED MALE: Don`t spoil it.


HAYES: We have all been there. You missed your favorite TV show.
You get on Twitter and your feed is full of spoilers giving away every plot
twist and turn. Well, now there`s an app to block these Tweets. As Geecho
System reports, a 17-year-old coder named Jenny Lamir (ph) has created
software that filters your Twitter feed for discussions of shows you don`t
want spoiled. It`s called Twivo. It`s an extension of Google Chrome.

And here`s how it works. Let`s say you miss an episode of "Madmen."
You can still use Twitter on a Sunday night. You just tell Twivo you would
like to block any Tweets containing the show name. You can also block any
mentions of Don, Joan, Roger and Peggy. As you can see, illustrated here,
with the show "Dance Moms," once you watch the episode, you can lift the

And here`s the best spoiler alert of them all, Jenny Lamir won the
grand prize for her genius invention at a national coding competition. In
fact, she was the only female who presented a project. The high school
senior is not only saving America from spoilers, she`s kicking some serious
butt in the tech world. Bravo.

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


HAYES: We put this graphic up on our Facebook page. It got more
likes than anything we have ever posted, and for good reason. It comes
from Senator Elizabeth Warren, and it compares two simple things: how much
banks have to pay when they borrow money from the federal government and
how much students have to pay.

Well, for the last seven years, banks have gotten a sweet deal on
interest rates and students have gotten a raw one. Bank rates have been
slashed again and again to almost nothing, while student rates have been
lowered only slightly and are scheduled to double from 3.4 percent to 6.8
percent in just over a month. Banks are now paying less than one percent.

While they`ve been able to borrow at near zero interest rates, student
debt has absolutely exploded. There is now over a trillion dollars in
student debt outstanding in the United States, second only to mortgage
debt. In 2011, the average student graduated with over 26,000 dollars in
loan debt.

Enter Senator Elizabeth Warren, who says what`s good for banks is good
for students. This week, she introduced her first bill as a senator. The
concept is very simple, that students should be able to borrow money from
the federal government at the same rate that banks do. The senator joined
me earlier today from the Capitol.


HAYES: All right, senator, so I`m really curious where the idea for
this piece of legislation, which is impressive in its simplicity, where it
came from? How did this originate?

what happens with the big banks all the time. That`s out there, and the
number of ways in which this country is subsidizing those big banks. I
also work on middle class economic issues. One of the things that`s really
slamming the middle class is student loan debt, making it hard, hard, hard
for young people to get an education and start their lives.

You look down, you see the intersection of those two and say, look, as
a country, if we`re going to make this kind of investment in our big banks,
that is lend them money at a little tiny interest rate, can`t we do the
same thing for our young people who are trying to get an education? That`s
all I`m looking for.

HAYES: So here`s the Devil`s Advocate response that I thought of,
right; are you beginning a slippery slope -- are you setting a precedent,
if you open up the Fed discount window to students, right -- I mean, we
just did a story last night about a municipality in Michigan, Saginaw, that
is shutting down its school because their credit line from the state has
been cut off. And I thought to myself, they should be getting from the fed
discount window, too.

If you start thinking about all the people that should be borrowing
from the Fed discount window, is there something scary about opening up
that Pandora`s Box?

WARREN: You know, I`d just reverse the question, if you would let me.
That is, why is it that we`ve been supporting the big financial
institutions with these very low interest rates for years and years now?
So they can borrow money at very low interest and then they can go out and
lend it to American families, or they can go out and buy things with it.
And they do all that and make a big profit on the spread.

So the way I see this is this is really about our examining a
fundamental policy. As a country, whenever we do something like this Fed
rate, where you can come in and borrow at a very low rate, in effect, the
American taxpayer has now said we`re going to make an investment in that
group. I just want to know why it should only be big financial

The group I`m looking at, students, they`re trying to get a loan. And
let me be clear, student loan debt, the Fed itself said, in March, is a
real drain on the economy and our economic recovery. So the reason we use
for subsidizing the banks in this way, it seems to me we ought to make that
same kind of investment in our students.

HAYES: You mentioned the Fed. And they have been issuing -- both the
local Feds and the main Fed have been issuing lots of very alarming reports
about the levels of student debt, how much that overhang is hurting
recovery. Have you had a conversation with Ben Bernanke about this piece
of legislation? Because my sense is that, the Fed being what it is, they
are not going to be happy with this piece of legislation?

WARREN: So I have not yet spoken with Chairman Bernanke about it. I
would be delighted to talk with him about it. It`s the Fed`s own reports,
as you rightly point out, that show the risks that student loan debt poses
to us. Remember, it poses a risk not only to the family that`s trying to
manage the debt, the student that`s trying to manage the debt, but it poses
a risk to the entire economy.

This is a way just to back the pressure off a little. Let`s remember,
if Congress does nothing, come July 1st, the interest rate on new student
loans is going to double. And that means it will be nine times higher than
the amount charged to the big financial institutions. That`s bad
economically. And, frankly, I think it`s bad morally.

I don`t think it`s the right place for us to be. This bill says, hey,
same deal for our students and for the banks.

HAYES: Let me ask you one more question about the gap between funding
that increasingly -- what you`re talking about are the direct student
loans. These are loans the government makes directly to students. That is
covering a smaller and smaller percentage of students` tuition, as tuition
costs go up. And the gap in between increasingly is being made by a
company called Sallie Mae, which itself is a beneficiary of all kinds of
essentially financial subsidies from the U.S. government.

Is that something we should be looking at as well? There`s a HuffPo
report out today showing just how much universities themselves who have
stock in their endowments are benefiting off the back that Sallie Mae is
making record profits.

WARREN: I don`t want to kid anybody. What I`ve got here is a one
year fix on keeping the student interest rates from doubling. I want to
bring them down to the rate that the big banks pay. But I want to use that
year to get permanent solutions in place. The question about how our young
people are going to pay for college, it`s a big question. It`s a hard
question. It`s a complicated question. It`s got a lot of moving parts,
but it`s a question we have got to work on.

It is critical to our country that we make investments in our young
people, so they get a good education, so they go out there and grow this
economy and strengthen America`s middle class. That`s what this is all
about. What I`ve got today is just a first step trying to do that.

HAYES: Final quick question, any Republicans interested in signing on
board so far?

WARREN: So I started this as grassroots. I didn`t ask. I started it
by talking to lots of people. That`s why I`m here today. I want lots of
students, lots of people, the families of students, just people who think
it`s smart, a good idea. E-mail your senator, please, over it.

We are going to gather a lot of people and see what we can get going
here. This is grassroots legislation. It`s legislation -- keep in mind,
the banks, they`ve got an army of lobbyists. They`ve got an army of
lawyers. What this is about is our students. They don`t have those same
kind of lobbyists. We`re going to build this one from the grassroots up.

HAYES: Senator Elizabeth Warren of Massachusetts, thank you so much
for your time tonight.

WARREN: Thank you.


HAYES: Lowering the federal student loan rates is a first step. The
education loan system is designed to funnel money away from the students
and over to the biggest private lender in the business. The game is
rigged. And we`ll learn more about this jaw dropping report from the
"Huffington Post" coming up next.


HAYES: We just spoke to Senator Elizabeth Warren about her new bill
to reign in the incredible costs of federal student loans by giving
students the same interest rates to borrow money for school the government
gives to banks. Well today, a blockbuster new report out from the
"Huffington Post" details how the company Sallie Mae is making a fortune
off of private student loans, while colleges that are charging a fortune in
tuition are making money off of Sallie Mae.

Quite, "university endowments and teachers` pension funds are among
big investors in Sallie Mae, a private lender that has been generating
enormous profits thanks to soaring student debt and the climbing cost of
education. The previously unreported investments means that educational
professionals are able to profit twice off the same student, first by
hiking the cost of tuition, then through dividends and higher valuations on
their holdings in Sallie Mae, the largest student lender and loan servicer
in the country."

Joining me tonight are the reporters who broke this story, Ryan Grim,
Washington bureau chief for the "Huffington Post," and Shahien Nasiripour,
"Huffington Post" chief financial and regulatory correspondent. Gentlemen,
excellent reporting. Great work.

What led you to dig into this?

RYAN GRIM, "HUFFINGTON POST": Well, we actually first got a tip from
a tax guy who was going through SEC filings. What bothered him the most is
that these endowments don`t actually pay taxes on the profits that come
from this. So for a tax person, that really chafes them, when they see
someone making extraordinary profits and not paying taxes.

When I saw it, I thought, well, that`s -- OK, that sucks. But, wow,
this is also a pretty interesting -- so universities and teachers` pension
funds are the people making some of the most profit off of soaring tuition
and soaring student debt. It adds up to this conflict of interest, where
the higher that they can raise student debt levels, the more their
investments become worth.

HAYES: Shahien, one of the things that emerges in the piece that`s so
interesting is just the role that Sallie Mae is playing right now, and the
fact I didn`t quite understand the degree to which it has this now
monopoly. It`s basically there`s government loans, but those government
loans are capped at a certain amount. Anything over and above that, Sallie
Mae is basically the only game in town for folks looking to get student

students who basically need -- they need more funding than the government
will provide, there are only a few players left. And Sallie Mae is by far
the largest lender of private loans. They charge rates anywhere from a few
percentage points to 14, 15 percent interest.

And it`s perfectly legal. That`s how they make their money, for the
most part. Thanks to that and thanks to Uncle Sam, basically.

HAYES: Right, so here`s the weird part, right, Sallie Mae, when you
hear that name -- because it sounds like Fannie Mae or Freddie Mac. You
think, like, oh, is that one of those -- is that part of the government or
not? It`s occupying some weird space. What is Sallie Mae`s status?
They`re private, but they have a government guarantee?

NASIRIPOUR: Sallie Mae started off as a government sponsored
enterprise, just like Fannie Mae and Freddie Mac. They were spun off and
privatized in 2004. And so now they`re a publicly traded company. So most
of their assets, though, are federally guaranteed loans. That`s the vast
majority of their balance sheet.

The thing is, even though they`re a public company, most students,
most borrowers, most families, when they take out Sallie Mae loans, they
assume it`s somehow guaranteed or blessed by the government, when, in fact,
it`s not. And that source of confusion is leading a lot of families down
the wrong path.

HAYES: We`ve got this -- people talk about the student loan bubble
all the time. What is driving the fact that Sallie Mae is recording record
profits? And Sallie Mae said in your article -- and they`ll say, look,
we`ve cut rates down, we`re providing this valuable service. It`s actually
a good investment for people to take out -- to take out loans at the
interest rates we`re offering, because the returns on education are so

Why is Sallie Mae so profitable right now during this period? What is
going on in that market?


GRIM: It`s basically a lack of competition. It`s kind of as simple
as that. If you need the money and you want to go to school, you have a
choice. You can basically go to Sallie Mae and take whatever rate that
they`ll give you and go to school, or you can not go to school. And we
place such a premium, such an emphasis on college, as we should, in this
country, that people are going to take the offer. It`s an offer that you
can`t refuse, more-or-less.

So when that`s the case, then the lender is going to get as much as
they can conceivably get out of it.

HAYES: And Shahien the tuition, there`s an interesting relationship
that`s happening right now. You guys hit on this in the article, which is
that there is a relationship between tuition going up and the availability
of student credit and student debt, which is that it`s the availability of
lines of credit and the expansion of student debt that makes it possible
for places to raise their tuition in the first place.

Those two things have a strange symbiotic relationship. And it seems
like we`re caught right now in American higher education in a kind of
vicious cycle of higher tuition, more debt.

NASIRIPOUR: Right. That`s exactly it. If there wasn`t financing
available, colleges wouldn`t be able to raise the cost of tuition,
particularly private colleges. But because there is financing available
and because there`s such an emphasis placed an attending school, colleges
can raise tuition as much as they want. It out-paces inflation. And
there`s always going to be a lender who is willing to charge them an
exorbitant rate.

And once these kids graduate and get good paying jobs, they are unable
to refinance that high rate debt into something that`s much more affordable
and much more sustainable. And you just have this negative feedback loop
that just permeates throughout the rest of the economy.

HAYES: We should say here, we just saw that chart, there are two
stories that are happening here. I want to be really clear to people,
because sometimes in the New York/Washington access, where people just
think about private education, right, public education is going up a lot.
A lot of that is being driven by cuts at the state level. State austerity
has taken an absolute hammer to the budgets of these institutions and they
are raising tuition.

Ryan Grim and Shahien Nasiripour of "Huffington Post," great
reporting. Thank you so much.

GRIM: Thanks, Chris.

NASIRIPOUR: Thanks for having me.

HAYES: That is ALL IN for this evening. "THE RACHEL MADDOW SHOW"
starts now. Good evening, Rachel.


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