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All In With Chris Hayes, Tuesday, October 8th, 2013

Read the transcript from the Tuesday show

October 8, 2013
Guest: Robert Costa, Debbie Stabenow, Charles Pierce, Alexis Ohanian, Joe
Weisenthal, Stephanie Kelton, Scott Lilly

CHRIS HAYES, MSNBC HOST: Good evening from New York. I`m Chris Hayes.

And today, amidst continuing crisis, President Obama took command of the
news in the way only a president can do. Speaking for more than an hour
from the White House today, he laid out his position -- Congress must do
its duty by reopening the government and raising the debt ceiling before
the administration goes into any budget negotiation. He`s willing to talk
he said, just not under the threat of catastrophe.


get to demand a ransom for doing their jobs. You don`t get a chance to
call your bank and say, I`m not going to pay my mortgage this month unless
you throw in a new car and an Xbox. In the same way, members of Congress -
- and the House Republicans, in particular -- don`t get to demand ransom in
exchange for doing their jobs.


HAYES: When asked about a possible debt default, which could happen nine
days from now, the president said he was, quote, "nervous."


OBAMA: This is not something we should even come close to fooling around
with. And so when I read people saying, now this wouldn`t be a big deal,
we should test it out. Let`s take default out for a spin and see how it
rides. That`s not something that we should even be in a conversation


HAYES: And at around the 45-minute mark of his press conference and
sounding clearly exasperated, the president apologized, not for his own
actions but the government`s as a whole.


OBAMA: I know the American people are tired of it. And to all the
American people, I apologize that you have to go through this stuff every
three months, it seems like. And Lord knows, I`m tired of it.


HAYES: And a short time later, Speaker John Boehner stepped before the
cameras and in front of the flags.


REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The president`s position
that, listen, we`re not going to sit down and talk to you until you
surrender is just not sustainable. It`s time to have that conversation.
Not next week, not next month, the conversation ought to start today.


HAYES: Just so we`re clear, when Speaker John Boehner says the word
"surrender", he means vote on a bill that pegs spending at Republican
levels and avoids default. The speaker appears to feel zero pressure to
reopen the government, because on day 8 of the shutdown, how do Republicans
think they`re doing? Just fine.


SEN. RAND PAUL (R), KENTUCKY: Does anybody remember Charlie Sheen when he
was kind of going crazy last year, and he was going around jumping around
saying, winning, winning, winning?


PAUL: I kind of feel like that.

RUSH LIMBAUGH, RADIO HOST: And in this one, the Democrats are the ones who
appear mean.

SEAN HANNITY, FOX NEWS: Democrats miscalculated.

SEN. TED CRUZ (R), TEXAS: Winning this fight right now is the most
important thing we can do.

UNIDENTIFIED MALE: I think the path that we have laid out is a good one.

PAUL: I know we don`t want to be here. We`re going to win this fight.

LIMBAUGH: Whether it`s been the result of strategy or just grand good
luck, the Republicans are winning.

HAYES (voice-over): The Republicans are flushed with confidence that they
have the support of the American people. They are showing no signs of
slowing down, in fact, quite the opposite. Yesterday, 22 House moderates
were on record supporting a so-called clean C.R. to fund the government.
Just 24 hours later, the same House moderates are backtracking.

And now, Republicans are demanding a full delay or defund of Obamacare as
the price of raising the debt ceiling.

UNIDENTIFIED FEMALE: You think that some facet of the present`s health
care plan should be attached to an increase in the debt ceiling?

CRUZ: Yes.

REP. PAUL BROUN (R), GEORGIA: We have just got to put Obamacare on hold.

SEN. MIKE LEE (R), UTAH: I`ll do anything I can to protect the American
people from Obamacare.

HAYES: Republican Congressman Scott Garrett said, "If a debt ceiling deal
doesn`t have a full delay or defund of Obamacare, I know I and many others
will not be able to support whenever the leadership proposes."

The president has repeatedly assured Republicans this will never happen.

OBAMA: I`m going to repeat it: there will be no negotiations over this.

The United States government pays its bills. That`s nonnegotiable.

We`re not going to negotiate around the debt ceiling.

HAYES: But the GOP seems to think they have the support of the American
people in their efforts. They are wrong.

The latest polling finds that 70 percent of Americans disapprove of
Congressional Republicans handling of the budget. That`s up from 63
percent from just last week.

And the internals on the latest "National Journal" poll are even worse than
the GOP. Eighty percent of nonwhites oppose tying government funding to
Obamacare, along with 71 percent of men and women with a college education
and 70 percent of people 18 to 29.

Republicans are getting killed in the polls among precisely the groups they
pledged to woo. And they still think they are speaking for the nation as a

But the Republican Party has a history of this sort of self-delusion.

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


I think this is premature. I don`t know what the outcome is going to be.
But you should -- we got to be careful of calling things when we have like
991 votes separating the two candidates and a quarter of the vote yet to


HAYES: Joining me now is Robert Costa, Washington, D.C. editor for the
conservative "National Review" and CNBC contributor.

It was Robert`s article yesterday in which Scott Garrett actually said that
quote that we used in the clip there.

All right. Robert, where are we today? John Boehner came out and gave a
somewhat strange staged address in front of those flags. Are we any closer
today to a resolution? What is the thinking -- the latest thinking among
the House caucus and the leadership about the way out here?

ROBERT COSTA, CNBC CONTRIBUTOR: I think we have to get beyond the rhetoric
from both the White House and Speaker Boehner today, and I think we`re
actually inches closer to some kind of compromise. It seems like both
sides want to get through next week, continue to ratchet up the rhetoric,
but ultimately they may have a short-term debt limit extension. And this
will be enable future budget talks.

HAYES: Do you think the debt limit extension would come hand in hand with
the short term C.R. so we get essentially a month or so of time bought in
which the government could be up and operating, we aren`t defaulting and
some kind of conversation can happen in that month?

COSTA: When you talk to Democratic sources, Chris, you do hear that if the
Republicans are going to move toward a short-term C.R. they would also like
to see the government reopen. So, I think that`s going to be a bargaining
point over the next week.

But, for now, if you have the White House and House Republicans signaling
they`re somewhat open to a short-term limit extension, that`s interesting.

HAYES: When you`re talking to members of the House Tea Party caucus, the
folks that signed that letter back in the summer demanding a defund of
Obamacare and a continue situation of the resolution, they`re saying we
need to see defunding of Obamacare or delaying of Obamacare to vote for a
debt ceiling increase -- do they understand that can`t and will not happen?
Or do they really think that`s going to happen?

COSTA: No, it`s a genuine belief. And someone who`s in the corridors and
marvels halls of the Capitol almost every day, talking with these House
conservatives, you sense that they are so frustrated because they started
this defund repeal effort in the summer. They followed through now with a
standoff and stalemate, and they`re not yet ready to concede any ground.
And that`s really John Boehner`s dilemma. How does he deal with people who
are not yet ready to yield anything?

HAYES: That gets me to what`s been a strange evolution in the eight days
of the shutdown. In the beginning, the demand seemed to be a one-year
delay on the individual mandate, this provision about how members of
Congress and their staffs would pay for health care. Now, the demand
itself seems to be negotiations. It`s almost unclear what substantively
they want, what the out is, what would count as victory.

COSTA: It`s great question. I sat down with Senate Minority Leader Mitch
McConnell a few months ago and he talked about this fiscal impasse that was
coming up. And he always wanted entitlement reform and you look at Paul
Ryan`s op-ed in "The Wall Street Journal" tomorrow morning that just posted
online, he`s also talking about sequester trades for small entitlement
reform, at least for Republicans they look at it as small entitlement
reform, with chained CPI. So, I think that`s what Republican leadership
has always been moving toward, entitlement reform and budget talks whereas
the Tea Party reform has been focused on Obamacare.

HAYES: Robert Costa for "The National Review" -- thank you so much for

And joining me now is Senator Debbie Stabenow, Democrat from Michigan, a
member of Senate Budget Committee.

And, Senator, I want to go right with this question. I am seeing the
conversation turn from the discretionary budget, funding levels at
sequester levels, et cetera, already -- somehow the conversation is moving
towards, quote, "entitlement reform", Social Security benefit cuts.

What do you think about that?

SEN. DEBBIE STABENOW (D), MICHIGAN: Look, Chris, first of all, let me say
that Democrats are totally united in making it very clear we want the
government open up, we want to pay our bills, and then we are happy to
negotiate or continue negotiating on a wide variety of things. Today on
the floor of the Senate, Senator Murray, chair of the Budget Committee, for
the 20th time, moved to go to Conference Committee on the long term budget
so that we can actually address a wide variety of issues, and Republicans

So this makes absolutely no sense. When you look at it, Republicans always
say we should run government like a business. Well, if a business was run
like this, they would be in total mess.

And it makes -- it`s really embarrassing to me. We`re talking about the
full faith and credit of the United States government. We`re talking about
what`s happening to families.

HAYES: Let me -- let me ask that question though, because I am seeing this
conversation in elite circles, among Republicans. Paul Ryan`s op-ed that`s
coming out in the "Wall Street Journal." All of a sudden, the words
entitlement reform suddenly dropped into the conversation out of nowhere,
when we`re talking about a continuing resolution on discretionary funds for
the budget.

What is your reaction to hearing that word bandied about as a possible out
for the impasse we find ourselves in?

STABENOW: Chris, I`ll support things that strengthen Medicare and Social
Security for the future. We have a fundamental difference with
Republicans, frankly, the same kind of scare tactics being used now on
health care reform, were the same kind of words used when Medicare was
passed or when Social Security was passed.

We have a fundamental difference. When we come together, we as Democrats
will support those changes like negotiating prescription drugs to bring
down the cost of Medicare or doing things that strengthen Social Security
for the future.

But again we`re not going to allow Social Security for tens of millions of
Americans to be held hostage when they won`t open up the government, they
won`t pay our bills. If they want to talk long-term within the guidelines
of strengthening Medicare and social, we have already been doing that.

HAYES: So, in terms of opening up the government, chief economic advisor
Gene Sperling yesterday seem to leave open the possibility of some kind of
short term C.R. or debt ceiling increasing, something on the order of a few
weeks or month, what is your reaction to that idea?

STABENOW: Well, again, we`re in lock step as Democrats together. And if
the government is reopened, public services from food safety to the
intelligence services to helping moms and babies on the WIC program, if we
make sure that we are not defaulting on the full faith and credit of the
United States of America, if those two things are happening, obviously the
longer the extension --

HAYES: But you`re not proposing the possibility of some sort of short-term
solution in the intermediary?

STABENOW: Correct. What I would say is the longer the better for purposes
of the economy.

HAYES: I think everyone agrees.

Senator Debbie Stabenow, thank you so much for your time tonight.

STABENOW: You`re welcome.

HAYES: OK, coming up on ALL IN:


REP. TED YOHO (R), FLORIDA: Hello, America, how are you all doing? I`m a
guy, I`m a large animal veterinarian, never been in politics before.


HAYES: That was Republican Congressman Ted Yoho, not yogo, from Florida,
introducing himself to America -- a guy who added his photo to his campaign
bumper sticker to make sure voters didn`t think he was Japanese. He`s now
hard at work in Washington, running your government.

We`ll continue the introduction, ahead.


HAYES: Coming up next, the man who wrote this, "We have elected an
ungovernable collection of snake handlers, bible-bangers, ignorami, bag men
and outright frauds, a collection so ungovernable that it insists the
nation be ungovernable. We have elected people to governors who do not
believe in government."

I can`t add to that but I bet you can. Tonight`s question, how do we get
out of this mess? Tweet your answers @allinwithchris, or post at I share a couple at the end of the show.

So, stay tuned. We`ll be right back.


HAYES: If you would like to know why the United States government is shut
down right now, much of it lies in this letter on August 21, Congressman
Mark Meadows to Speaker John Boehner and House Majority Leader Eric Cantor.
It`s a leader signed by 80 Republican Congressmen, demanding the House
defund Obamacare as a condition of passing the continuing resolution.

Now, at the time, this was nothing more than a ceremonial fringe comment.
Red State comment thread printed and put on paper.

But this is now the governing blueprint for one of our nation`s two major
parties. And as we look through the signatories on this, it occurred to us
that while some of these people are well known to you, for instance,
Congresswoman Michele Bachmann, many are not but they should be, because
they run the Republican Party and they own this crisis.

So, tonight, we introduce our new segment, these are the people who are
running the country, featuring the small click of rabid extremists who had
taken control, even though they represent only 1/30th of the power of the
three branches of government.

Our inaugural member, Congressman Ted Yoho of Florida who I confessed I had
not really heard much of, until yesterday when it was reported that he said
this about the country defaulting, "I think we need to have that moment
where we realize we are going broke. I think personally it would be
stability to the world markets." That`s an idea so daft that I asked his
Republican colleague, Reid Ribble, about it last night.


HAYES: Your colleague, Congressman Yoho, said that actually breaching the
debt ceiling would, quote, "bring stability to financial markets". Do you
agree with him?

REP. REID RIBBLE (R), WISCONSIN: No, not at all. I think that`s just
crazy talk.


HAYES: So, who is Ted Yoho? He`s a veterinarian of 28 years and now a
freshman Republican Congressman who pulled off an incredible victory in
2012, vanquishing a 12-term incumbent, Congressman Cliff Stearns in the
Republican primary. Yoho won that primary by 829 votes with the backing of
Congresswoman Michele Bachmann and now former Congressman Allen West, in a
district redrawn by a heavily Republican State legislature.

Yoho is a member of the Florida Veterinary Medical Association and the
Florida Association of Equine Practitioners. And his familiarity with
animals showed in this campaign ads.


YOHO: Career politics are like pigs feeding at the trough. The career
politicians have given us $16 trillion in debt. It`s time for new
leadership. I`ll repeal Obamacare and balance the budget.


HAYES: Yoho, an NRA member, of course, has also distinguished himself by
carefully riding the birther wave.


CHRIS MATTHEWS, MSNBC HOST: So you accept the fact that he was a born

YOHO: Ah, I`m not -- no comment.

MATTHEWS: Are you a birther then?

YOHO: I`m not going to comment on it, Chris.


HAYES: Yoho had previously said in a town hall meeting that he would
consider co-sponsoring Congressman Steve Stockman`s birther bill. In that
same town hall meeting last August, Yoho said this about the tanning bed
tax in Obamacare.


YOHO: I had an Indian doctor in the office the other day, very dark skin
and two non-dark skinned people, and I asked -- they started laughing, and
I said, "Have you ever been to a tanning booth?" And he goes, "No, no
need. "

So, therefore it`s a racist tax and I thought I might need to get to a sun
tanning booth twice so that I can come out and say I got taxed because of
the color of my skin.


HAYES: Like many in the Tea Party, Yoho views himself as engaged in an
epic struggle for justice that`s right up there with some of the great
struggles in all of history. It only takes one with passion, he said,
"Look at Rosa Park, Lech Walesa, Martin Luther King, people with passion
that speak up. They`ll have people follow them because they believe the
same way. Smart leadership listens to that."

Joining me now is Charles Pierce, writer-at-large for "Esquire" magazine,
political blogger for, where he just written a piece about the
113th Congress called the reign of morons this year.

All right. Charlie, you have been covering politics for longer than I
have, and I think there`s a temptation when someone covers politics to say
this moment, this is the worst. This is the worst that`s ever been. These
craven crooks and maniacs who are running Capitol Hill, they`re the worst.

Give us some historical perspective. Is it really as bad as it appears to

CHARLES PIERCE, ESQUIRE: Well, I don`t go back to the Congress of the
1850s, regardless of what I like lie to you on the TV screen. I can`t
speak for the pre-civil war era. But I`m old enough to remember what went
on in the `60s and what went on when the first Reagan class came in with
Larry Pressler from South Dakota and Bob Kasten in Wisconsin and that
bunch. And they were pretty wild, but nothing compared to this.

I mean, you are talking some of the great live theater of all-time now.

HAYES: It is --

PIERCE: I`m sorry. And now what are we going to do? Now what do we get?
Another supercommittee.

HAYES: Yes. What`s remarkable to me is that there are characters in
politics who are kind of become kind of cable news fodder, Michele Bachmann
is a perfect example, but in most cases, they don`t have a lot of power.
They don`t wield a lot of influence.

What is so incredible about this, is that all the folks that we kind of
delight in showing you crazy clips of who are in better times, I assume, I
guess side shows, are genuinely running the strategy and calling the shots
now in the House Republican Caucus right now.

PIERCE: Yes, that`s because there is no longer a Republican establishment.
I mean, there is not gray eminence. There`s no Jim Baker who`s going to
get everybody in a room and knock their heads together and tell them to
knock it off. There is just a galaxy of the independent power bases.
There`s a galaxy of independent billionaires who will do with their money
what they will do with their money and won`t care what Reince Priebus or
John Boehner thinks about it.

So, I think one of the problems you have is you have people who are not
only insulated in safe districts but are empowered independently by these
other centers of power that answer essentially to no one.

HAYES: That`s -- I`m glad you made that point because Eric Bollard (ph)
had a piece today in which he -- from Media Matters, he basically said,
look, people keep talking about gerrymandering and we say it on the show
and it gets said all day on cable news about how these are safe districts,
safe districts, safe districts. But, of course, gerrymandered how seats
aren`t necessarily new, and they even exist on the Democratic side. I`ve
grown up in big cities my whole life, in Chicago and New York, and believe
me, no one voted for Congress who`s running in a competitive race in the
general election.

So gerrymandering can`t be the thing that explains all of what`s going on

PIERCE: Well, no, and I grew up all my life in Massachusetts, which is
home of the state which happens to be the commonwealth where was born the
guy who gave gerrymandering its name. So, I`m not in no position to argue
about this either. But also, (INAUDIBLE), I never interviewed either by
the way.

But there`s more to it than that. There is what I think both oddly enough
a fracturing and a strengthening of the Republican Party -- fracturing in
that there is no Republican establishment anymore, but strengthening in
their incredibly powerful centers of influence with a lot of money behind
them that operate independently.

HAYES: And what we`ve seen is the decentralization of that power has
empowered these kinds of people that are now rising to the front, and no
one can even stop them from becoming the face of the party?

PIERCE: No. And that`s why I think all of these -- and I`m sure that, you
know, members of Congress said what they said when the MSNBC researchers
batted their eyes at the members of Congress. But the fact is, I don`t
think there are 20 people who will vote for a continuing resolution among
the Republicans.


PIERCE: I mean, you are talking about people who will instantly become the
RINO, the tote (ph) RINOs of all time.

HAYES: Go talk to Cliff Sterns who is in Congress for 22 years and got his
butt handed to him.

PIERCE: The un-shirted hell that will be released upon these people once
that do that, and I`m looking at the House Republican Caucus. And I`m not
seeing 20 of those profiles in courage. I`m lucky if I see three.

HAYES: Charles Pierce from "Esquire" -- thank you so much.

ESQUIRE: Thanks, Chris.

HAYES: Gerry through a district that looked like a salamander, hence,
gerrymander. True story.

We`ll be right back with #click3.


HAYES: There is some breaking news this evening, as the White House says
President Obama is set to name Janet Yellen as his next nominee to be the
next chair of the U.S. Federal Reserve to succeed outgoing Fed Chair Ben
Bernanke. She would be, if confirmed, the first woman to hold that

The announcement is scheduled for 3:00 p.m. tomorrow afternoon, and Yellin
is likely to step right into the middle of a hot financial mess, if
Congress continues to threaten to not raise the debt ceiling on October

And if you thought the government shutdown was bad, wait until you see what
a debt ceiling breach looks like. We`re going to explain why it might make
the 2008 financial crisis look quaint.

But first I want to share the three awesomest things on the Internet today.

We begin with the country exasperated by the government shutdown. Today`s
chapter involved the baseball playoff game between the Atlanta Braves and
the Los Angeles Dodgers. I bet you didn`t know the game could be linked to
the shutdown. Neither did Republican Congressman Jack Kingston of Georgia,
taking the logic of the shutdown and applying it to professional baseball.

A Braves fan named Paul Kaplan (ph), wrote this letter to Kingston, tongue
firm in cheek, detailing last night`s loss by the Braves, he writes, "We
must have sent batters to the plates at least 40 times. But just because
we couldn`t score enough runs, the Dodgers refused to relinquish the title.
And worse, they won`t even discuss it. If the Dodgers won`t listen to
cries of average Americans like you and me, then Congress should outlaw
Major League Baseball until the Dodgers cave. And if that means the
country will be deprived of its natural pastime, the Dodgers will have only
themselves to blame. Game on."

In another digital disobedience, a post on Reddit, directed us to a couple
who wouldn`t let the shutdown rain on their wedding day. A couple that was
supposed to get married in Yosemite, thanks to a government shutdown, they
had to reschedule in last minute, they just posted this pic. Look at that,
it`s the national bird.

Congratulations to the bride and groom.

The second awesomest thing on the Internet today. We all know that Amy
Poehler rocks. We know she`s hilarious. We also know she has the huge
heart. The proof was on displayed during a Hollywood event, when she was
speaking about a charity called Worldwide Orphans Foundation. Poehler was
overcome with emotion when talking about the children in need.


AMY POEHLER, ACTRESS: And so who are we to be in this room and to be
living this life without helping them? You know, that`s it. That`s the
simple truth. I`m sorry.


HAYES: But a comedian as good as Poehler is not going to let the touching
moment go without a laugh.


POEHLER: If you take one thing from this event, please remember that
giving to charity is good for your skin, and it makes your ass smaller.


HAYES: Great advice. It`s a diet that even Ron Swanson could love.

And the third awesomest thing on the Internet today, a promo goes down a
rabbit hole. A TV show "Once Upon a Time" tried to promote a spinoff
series called "Once Upon a Time from the Wonderland" with one of those
annoying animated pop-up from the screens on the bottom of the screen. The
Snow White character was trapped in an uncompromising position as captured
here by an Instagram user.

Yes. Looks like the white rabbit drew his magic portal in just the wrong
spot. The image of this innervated graffiti quickly went all over the
internet. "Entertainment Weekly" does Snow White magic crops and said the
mistakes arguably promotes the new series in a whole new viral way that
prompted a tweet from Snow White herself. Ginnifer Goodwin who wrote "Dear
E.W. It`s just a once plus under land crutch over and I`m not viral. And,
they lived happily ever after. You can find all the links for tonight`s
Click on our website, We will be right back.



HAYES: I want to show you the way people are getting their information
online these days. Here is the "New York Times," and that`s their traffic.
Here is "Huffington Post" and here is Reddit right up there at the top,
bigger than the "Times," bigger than the "Huffington Post."

And, I suspect a decent portion of you and just said, what is Reddit?
Reddit is not just a new source. It is a universe. A sprawling oiling
community filled with user generated content and links that both generates
massive traffic and drives internet means on pretty much everything. If
you saw an internet video or a gift this week, that people were passing
around and posting on Facebook, odds are very high that it started on

Yes, that one is awesome. In fact, nearly all of you wonderful and
terrible things that is collectably make up the internet can be found on
Reddit. It`s like -- which is more than 81 million unique visitors last
month, calls itself "The front page of the internet" and it was co-founded
by a man that forms a name "The Mayor" of the internet.

Alexis Ohanian, a 30-year-old entrepreneur and investor who is out with a
new book "Without Their Permission: How The 21st Century Will Be Made, Not
Managed." And, joining me now is Alexis Ohanian. It is great to have you

ALEXIS OHANIAN, CO-FOUNDER OF REDDIT: Thank you for having me.

HAYES: So, in the book sometimes there are moments where you flirt with
and in some ways just forth rightly assert a vision of kind of techno
optimism, which has a long lineage -- right? In the ideas that there are
the institutions and organizations and rules we have now and technology
renders meant much of that obsolete. It allows us to bypass obstacles in
our way. Defend that argument for me.

OHANIAN: Sure. Well, and I will be clear. Yes, there are plenty of
people that have come before me, and even very smart men have written the
entire book, "The Masters Switch" about plenty of other platforms that were
suppose to be just as Democratizing. That ended up not being --

HAYES: being co-opted becoming huge concentrated power --

OHANIAN: -- becoming corporations.

HAYES: Exactly. That is right.

OHANIAN: Precisely.

HAYES: And, so, this is not at all guaranteed. But, what is so
interesting is and we are seeing it happen every now is more people get
access and as more people get the skills to make the most out of that
access, more voices are being heard, more people are actually getting the
opportunity to bring their ideas to the world.

HAYES: OK. So, here is what I am think is interesting about this. We are
talking in the political context about the death of the institution of the
Republican party.


HAYES: The Republican establishment. And, if you said to me as someone --
you know, "OK, I am going to describe to you the death of the party
establishment." I will be like, "Right on. Groovy! I do not like
establishments. I want the power to be devolved outward. I want
individual members to speak for themselves." What it is doing is causing
absolute political and institutional havoc.

OHANIAN: Yes. Yes. It is -- It is indeed. I don`t think it`s directly a
causal relationship with the internet. But, one of the areas where I hope
the internet can make government better is in bringing more accountability
and transparency. We have a certain expectation that we can see some
strangers` breakfast -- you know, on our phones --

HAYES: Yes, exactly.

OHANIAN: Why can`t we get that insight into our public officials? Why
can`t we get that same insight into exactly what they are doing or what
they aren`t doing?

HAYES: Well, and there are some who are argue that we actually know more
about what our public officials are doing because of the disclosure because
of the internet than we have before. And, it is actually making deal -- It
is actually making things harder to operate. And, I think this goes to
your thesis, which is that the technology does have a way of disrupting the
old way of doing things.

I want to talk to you about Silk Road, which I think is like the most --
one of the most fascinating stories happening right now. Silk Road was --
And, if people are not familiar with this, basically, Silk Road was a
hidden internet black market where you could buy anything and a lot of
people bought a lot of drugs. That was the main thing it was used for.

It was hidden on the internet using this product called Tor, which is
people in repressive regimes will use Tor to hide their interactivity from
the authority in the internet. Silk Road just got busted by the
government. And, to me, it shows everything that is kind of amassing and
also dangerous about carving out these universes where no state institution
can touch them.

OHANIAN: Yes. And, it is -- it is a gift and a curse of technology,
right? We praise that exact same technology like you were saying, because
it lets dissidents in China share whatever news they want and see whatever
they want about, Tiananmen Square Massacre, for instance.

The reality is humans are resourceful. And, you know, I can -- You know,
prohibition, whether it`s in space or cyberspace is not guaranteed to work.
What is interesting to me, though, is you know all of those transactions
happened with Bitcoin. And, some of the biggest Bitcoin provider is that
it is going to go coin base, which is like the PayPal --

HAYES: Stop there, right there and explain what Bitcoin is?

OHANIAN: OK. So, it is a digital crypto-currency that does not have any
kind of connection to a particular nation. It is basically just through
very clever math a way for people to transfer goods and services.

HAYES: It is an independent internet traded and used currency that is not
attached to any nation?

OHANIAN: Nothing. And, this sort of PayPal for Bitcoin noticed actually a
really small drop after the shutdown of Silk Road. And, so it led a lot of
us to believe, "All right" -- you know, there was a sector of this internet
that was using it for illegal purposes. But, actually, it was not big and
just in the same way people use cash money to buy drugs and illegal
services --

HAYES: Right.

OHANIAN: Most of that cash money is actually used for pretty benign
reasonable things.

HAYES: The commerce uses have been having -- we have been having about
privacy reasonably in the wake of the -- and about the NSA. There is a
certain argument that says we are just in a post privacy world and we have
to just accept that, because we have already accepted it. We sign terms of
service. We post everything on Facebook. There is no privacy left. What
do you think about that?

OHANIAN: The difference is, you know, whether if I`m taking a photo of my
cat, I am doing that with the expectation that I am sharing it with the
world. There are areas, whether it`s online or off where we expect to have
privacy and I think what the NSA revelations have shown us is that most
Americans really want to draw a boundary. You know if you want to get
access to my mail or my home. You have to get a warrant. There is due
process. If you want to get access to my digital mail, my email or my
digital store key, you should get a warrant.

HAYES: I am curious to see as I pleased now whether that most -- in that
sentence you just uttered, that seems to me the operative, because I don`t
think that there has been a kind of normalization of this sort of invasion
that has happened, partly because of how we share. Alexis Ohanian, author
of "Without Their Permission." Thanks so much for coming by.

OHANIAN: Thank you for having me.

HAYES: All right, when you hear the phrase `raising the debt ceiling,` it
is pretty easy to think that means adding more debt. The president said
today, that is not what it means at all. But, Republicans everywhere are
rejoicing that the debt ceiling is such a complicated, confusing thing to
understand. So, we are going to make it crystal clear. Coming up.



what is called the debt ceiling, America would not be able to meet all of
our financial obligations for the first time in 225 years. And, because
it`s called raising the debt ceiling, I think a lot of Americans think it`s
raising our debt. It is not raising our debt. This does not add a dime to
our debt.


HAYES: That was President Obama at a news conference today trying to help
Americans understand the debt ceiling is not necessarily what they think it
is. The problem for the president is the concept is complicated enough
that it is really easy to mislead people about what the debt ceiling
actually is, which is extremely frightening considering what`s at stake.


HAYES (voice-over): The debt ceiling. It is complicated. It is abstract
and easy to misrepresent, which is perfect for conservatives.


SEN. JOHN CORNYN (R-TX), MINORITY WHIP: We are not going to give the
president a clean debt ceiling increase. That is like maxing out your
credit card.

SEN. JOHN RANDOLPH THUNE, (R) SOUTH DAKOTA: It`s like increasing the
amount that you can charge on your credit card.

MARTHA MACCALLUM, FOX NEWS ANCHOR: Your daughter runs up the credit card,
and has access to it and just goes crazy on it. You are going to say, "We
are going to pay the bill, but we are going to change things in the

REP. JOHN BOEHNER, (R-OH), SPEAKER OF THE HOUSE: No family in America can
spend more than what it brings in for 55 in the last 60 years.


HAYES (voice-over): You will be hearing a lot of this; so, it cannot be
stressed enough. Your household budget and the budget of the United States
federal government are nothing alike.


JOE BARTON, (R) TEXAS REPRESENTATIVE: We have in my household budget, some
bills that have to be paid and some bills that we can defer or only pay


HAYES (voice-over): A couple of crucial differences. Unlike, say, your
next door neighbor for example. The U.S. government has the world`s
largest army. And, it likes to keep that army busy with multiple
simultaneous foreign entanglements. The government also operates a social
insurance program for 300 million people. You may have heard of that.

These things are expensive and the United States routinely borrowed money
in order to operate. That is not some terrifying crisis. That is the
norm. Get this, this country has run a deficit in 45 of the last 50 years.
No household get away with that, but then again, no household has the
ability to print its own money either.

The national debt has grown to nearly $17 trillion as a result of these
deficits piling on top of each other. If Congress wanted to change that,
well, they are the ones that authorize an appropriate literally every
single cent the government spends. So, go to town.

But, the debt limit, to quote President Kennedy does not and cannot control
expenditures. No. All blocking the debt ceiling increase does is send an
incredibly dangerous signal to the world that the U.S. might not deserve to
be the single most trusted borrower on earth.

Here is what you are messing with if you mess with the debt ceiling. The
U.S. issues debt by selling treasury bonds. And, the reason that people
buy treasury bonds is that they are supposed to be literally the safest
investment in the entire world. They are the golden promise on which the
entire global financial system is built. If the U.S. owes you, it`s going
to pay you back. The IOU is iron.


UNIDENTIFIED FEMALE: The boy or girl, man or woman who gets one of these
new bonds for Christmas has something that grows in value with the years.


HAYES (voice-over): If you threaten that notion, you pull the corner stone
out from the global financial system. Suddenly, no one knows, which other
promises might not be kept. Confidence is destroyed and with no safe asset
to depend on, markets will very likely panic. And, we could all remember
what that looks like.


meltdown. The American financial system is rocked to its foundation as top
Wall Street institutions topple under a mountain of debt.


HAYES (voice-over): No matter what some irresponsible tea partiers claim,
there is a very real possibility that breaching the debt ceiling will mean
default, which means the U.S. rips up an IOU. It doesn`t pay someone back
that we borrowed money from. And, that likely means higher interest rates,
a devalued dollar and a crash in the stock market.

All because a small group of Republicans who didn`t know the difference
between a household bulling and that of the largest and most powerful
economy on the planet managed to convince the world that America is no
longer to be trusted.


HAYES: Joining me now is Joe Weisenthal, Executive Editor of "Business
Insider." Stephanie Kelton, Associate Professor and Chair of the
Department of Economics at the University of Missouri-Kansas City and Scott
Lilly, Senior Fellow at the Center for American Progress and Progressive
Think Tank. He worked in Congress for 31 years as a staffer largely in the
appropriation committee. And, my big question for all three of you is,
just how screwed are we? And, I want you to answer that right after we
take this break.


HAYES: Earlier in the show we asked you how do we get out of this mess?
We got a lot of answers posted to our Facebook and Twitter pages like Jean
Morkin from Facebook, who says to Congress, "Take away all the perks in the
job." David Carrillo, "Redistrict the entire nation in every state using a
longitude and latitude system that does not allow gerrymandering for either
party." And, Kelly Jean on Twitter says, "Institute wise spot concept in
the members of Congress. Pelosi and Boehner switch districts for a few
months." Thanks, I like that idea. We will be right back.


HAYES: We are back with Joe Weisenthal and Stephanie Kelton and Scott
Lilly. And, Joe, you are an executive editor of "Business Insider," were
you follow with more care and attention to granular detail the minute
fluctuations of the market. What -- as someone who spends all your time
thinking about this, what happens if we go over the debt ceiling?

think -- I don`t think we would see a debt default -- the true default on
day one. We probably do have some more cash that we can run. There
probably would some attempt to reprioritize payment, but it would be
technically very difficult. The treasury pays out millions of automated
computerized payments every month --

HAYES: $2 million a day, I thought --


HAYES: -- I mean there is some crazy amount of --

WEISENTHAL: -- and, there is no -- like -- there is no reprogramming that
in the next few days. I am sure we are going to see very severe stock
market reaction. It would be very fascinating to watch the equity of the
treasury markets react to this because the inferiority -- the risk becomes
the U.S. is going to default on its debt. But, in a period of panic, the
traditional thing for all market participants is to raise for treasuries.

HAYES: I want to say this because this is fascinating. At one level, you
say, "OK, treasuries aren`t going to paid back." You just took that alone
and you are not going to be -- you know, you just lent someone money and
they`re not going to pay you back. At the same time, what markets do when
they panic is they rush to buy treasury bonds.

WEISENTHAL: It would be the strangest thing and I don`t think anyone
really knows how it would resolve, because the instinct for everyone is
anytime, anything nervous happens is buy treasuries. But, if that is the
instrument that is about default --

HAYES: Right.

WEISENTHAL: -- we will truly never know it --

HAYES: No one knows. Stephanie, I think this gets to something I think is
really crucial for folks to understand. We think of debt is bad. Debt is
bad, U.S. government debt is bad. We want to reduce the amount of debt.
And, yet, U.S. government debt, that`s stuff, the treasuries we put out
there, it is like the fuel for the entire global economy. Everyone needs
this thing that we in a domestic political context talked about as a bad

absolutely right. The national debt is the equity that supports the entire
global credit structure. So, when you talk about messing with the national
debt in that way, you are talking about potentially under mining the
support for the entire global credit structure.

HAYES: And, that`s because treasury bonds, these simple things, basically
a promise, the U.S. government will pay you back. That is the entire world
has agreed to look at that thing as the most ironclad thing that exists in
all of the world of all of finance, right?

KELTON: Yes. Exactly! The entire world has agreed that when we want to
park our dollars in a very safe place that allows us to save those dollars
and earn a bit of interest while doing that, that treasuries are the gain.

This is one of the most important assets in the entire financial system in
the world, right? These are the safest, the most liquid, the most relied
upon. They are used to diversify portfolios to allow people to take more
risk in other areas because they know they have got these safe treasuries
in their portfolios.

HAYES: And, so, when you hear the analogy made from several Republicans
about the debt limit is like increasing your credit card limit. What`s
your reaction to that?

KELTON: Well, you know, you started off the segment talking about how the
government is not like a household. And, so, my reaction to that is the
government is not like a household. The federal government doesn`t have a
credit card that it needs to rely upon in order to finance its spending in
the same way that you and I do.

What really distinguishes the federal government from you, from me, from
ordinary businesses and quite frankly from state and local governments is
the fact that all of us are just merely users of the U.S. dollar. We are
users of the currency. The federal government is the issuer of the
currency --

HAYES: Right. It makes them --

KELTON: -- And, this is something -- Yes. It makes them and it`s not a
secret and it`s not some crazy -- you know, ideas. This is something that
the federal reserve writes regularly in their reports when they say the
United States Government is the sole manufacturer of the dollar. Well, if
you are the sole manufacturer of the dollar, that says you have a monopoly
over the issuance of the currency.

HAYES: Right.

KELTON: It can`t come from anywhere else and you can`t literally ever run
out or be unable to make a payment or be forced into insolvency or any of
those things that can happen to you and I and private businesses --

HAYES: To normal households.

KELTON: -- Sure!

HAYES: Scott, you worked on the Hill for years and we have had in the last
30 years or so, there`s been a number of essentially debt ceiling
negotiations. And, there has been this recurring line and I want to play a
little clip from an interview I did with Congressman Reid Ribble last
night, in which you hear Republicans say, "Look, this thing we are doing,
we`re trying to negotiate on the debt ceiling. This isn`t some anomalous -
-you know, crazy thing we`re doing. This is normal." Take a listen to


REP. REID RIBBLE, (R) WISCONSIN: However, if you go back to 1978, it was
house Democrats who took the debt limit right to within eight hours of when
it was going to go up. This has happened a fair number of times.


HAYES: So, are we seeing something normal now with these demands on
concessions and exchange for raising the debt ceiling or is he wrong?

think you are exactly right when you say that we misnamed this. This is
not about paying off the debt in time. It is about whether we are going to
pay our bills once we have incurred them.

The house Republicans including Mr. Ribble voted for last spring for a
budget resolution that has an increase in the public debt of this fiscal
year of $824 billion dollars from where it is now. So, there is no reason
that we couldn`t add that to the debt limit. He has voted for the policy
that he thinks is appropriate. But, now he wants to play games with the
debt limit and see if he can get a deal out of it.

HAYES: Let me reiterate that just so folks understand what you just said.
When the house Republican caucus voted unanimously for the latest iteration
of the Ryan budget, they were voting for a budget that would increase the
amount of debt by almost a trillion dollars.

LILLY: That is correct. That is correct. So, if we would just say, "All
right, you already voted for that, so let`s raise the debt limit from $16.7
trillion to $17.7 trillion in line with your budget resolution. What`s
wrong with that?"

HAYES: Right.

LILLY: And, the answer to that is, well, we want to use this. We want to
threaten the economy and see how much we can get in terms of other
concessions --

HAYES: Joe, a quickly --

LILLY: -- and I think the president is very correct in saying he doesn`t
want to play that game.

HAYES: -- Quickly, markets are not panicking right now?

WEISENTHAL: Yes. I think it is probably just a belief that they always do
it in the end. That is when if you ask people in that budget, in the end,
11th hour it always happens.

HAYES: But, they are not panicking because they don`t think default
wouldn`t be a big deal.

WEISENTHAL: Yes. There is nobody in Wall Street, nobody in serious.
There none a Democrat or a liberal idea that a debt ceiling breach would
not be a big deal.

HAYES: Joe Weisenthal from "Business Insider," Stephani Kelton from
University of Missouri-Kansas City and Scott Lilly from the Center for
American Progress. Thank you all. That is "All In" for this evening. The
"Rachel Maddow" Show starts right now. Good evening, Rachel.

Chris. Thank you very much, my friend.


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