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All In With Chris Hayes, Wednesday, January 29, 2014

Read the transcript from the Wednesday show

January 29, 2014

Guest: Matt Friedman, Frank Pallone, Shaun Donovan, Joseph Stiglitz

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

Two new reports give us two new pieces of the puzzle that is day by day
being fit together by reporters, lawyers and New Jersey state legislators
forming a clear picture of the kind of operation Government Chris Christie
has been running in the state of New Jersey over the last five years.

So far, allegations and documentation have centered around alleged
political retribution. Today, we have a story of an apparent reward.


GOV. CHRIS CHRISTIE (R), NEW JERSEY: This is an historic day. I can tell
you, I`ve watched politics in this state for most of my life. And I never
thought I`d see a day like this.

HAYES (voice-over): For the Christie re-election campaign the mission was
clear, win a second term by a blowout margin and then set sights on the
White House in 2016. And central to that mission was painting Christie as
a bipartisan kind of guy, capable of winning over Republicans and Democrats

The key to that is racking up endorsements. Today, "The New York Times"
reports on what length the Christie re-election campaign went to, to get
Democratic endorsements. And central to the political money ball approach
was the town of Belleville.

UNIDENTIFIED MALE: Belleville, I need a number for a Katherine Romano.

OPERATOR: Thank you. For what city?


HAYES: A town of almost 40,000, Essex County, New Jersey. Belleville`s
mayor is Raymond Kimble, a Democrat. Essex County executive is Joseph
DiVincenzo. Getting the support of the Bellevilles of New Jersey or as the
Christie campaign called them, the mini-Ohios was a priority.

In April, Christie met personally with Belleville mayor and county
executive. In May, Mayor Kimble said he planned on endorsing Christie,
saying, "I think the governor is going to help the town of Belleville with
certain projects we need." Shortly thereafter, "The Star Ledger" reports
the town received $6 million to build Franklin Manor, 137-unit senior
citizen housing complex, a project that had been in the works long before
Superstorm Sandy hit.

The money came from the federally funded community development block grant
program, just part of the billions given to New Jersey to rebuild after the
destruction of Sandy. The Christie administration said the project would,
quote, "help those displaced from the storm from other towns." And the
money was pushed for personally by the Republican governor.

But when Christie attended the unveiling of the project himself, he barely
mentioned Sandy.

GINGRICH: What we need is to set an example in our state for how people
can work together. How people work across party lines.

HAYES: Less than two weeks later, both Kimble and DiVincenzo endorsed

So, according to "The Star Ledger", Belleville received $6 million in Sandy
reconstruction money for a single housing project despite emerging from
Sandy, relatively unscathed, particularly compared to other parts of the

For a comparison, this was Hoboken before and after Sandy.

According to the Fair Share Housing Center, residents and businesses inside
all of Hoboken received $4.76 million from that same pool of money total.
That is less than one senior housing center in a politically coveted town.
So, was Sandy money about helping victims of the storm or helping
Christie`s political aspirations?

CHRISTIE: I`ll be happy to admit I was trying to run up the score.
Absolutely, and that`s what you do in a political campaign.


HAYES: Joining me now is Matt Friedman, a reporter from the "New Jersey
Star Ledger", who has been covering the story and author of the piece that
we were quoting there.

Excellent piece of reporting. What do you have against this senior
citizens of Belleville, man? Why -- what`s the problem? Six million
dollars of state money, you get a senior housing center, what`s the issue?

MATT FRIEDMAN, REPORTER, THE STAR LEDGER: Actually, most people I talk to
consider that a totally worthy project, and something Belleville`s been
trying to get off the ground for at least five years. The thing, though,
is that has nothing to do with everything we could tell with Sandy.

If you -- you know, I watched 20 minutes of videos at this event where they
unveiled the project, and Sandy was only mentioned in passing and not even
in the context of resettling seniors. This was really about a project that
people in Belleville desperately wanted but had nothing to do with the

HAYES: Right, there`s a project, it long predates Sandy, the people that
want it, the governor says, oh, I think I can make this happen. How does
the governor make this happen?

FRIEDMAN: Well, if you look in some press releases that Essex County put
out, very deep in the press release, I believe it was the second to last
paragraph, there was one quote, basically, to sum it up, it said, oh, yes,
people affected by Sandy will be eligible to live here, too. That`s kind
of the way you can make it eligible for the money by saying them too.

In fact, Joe DiVincenzo who you introduced in that segment, he personally
said, he told a reporter from a local publication, that day it`s like,
well, people in Belleville will have priority, but you can`t keep people
who were affected by Sandy out because --

HAYES: So, if it were to happen that we had some extra spaces and maybe
someone from Sandy needed to relocate, we could look into that possibly.

FRIEDMAN: The only promise they have gotten from the developer is that it
was marketed to Sandy victims. I was wondering how that will happen --

HAYES: We`re talking about $6 million. It`s not a small amount of money.
In the broad amount of $50 billion emergency appropriation coming from
federal government, it is. But in terms of the amount of money that`s
actually spent in New Jersey and particularly for the folks in Belleville,
that is a lot of money on the ground for a project that the local mayors
really wanted.

The issue that I think a lot of people start to have is, is this Sandy
money just a slush fund sitting in the governor`s bank account, right? I
mean, what is the process whereby this money is getting from the federal
government that authorized and appropriated it, to people who need the
money because they were hit by Sandy?

FRIEDMAN: Right, and there`s -- there have been calls for more stricter
oversight. In fact, the legislator passed a bill to have federal monitors,
and I believe they would have monitored this community black grant money.
Because this is what people are concerned about, this is the most -- have
you the most flexibility with this money out of any Sandy recovery aid.
So, this is what people thought -- this is one thing can you use for
political chips.

They did pass a bill and sent it to the governor to create monitors,
independent monitors. And the governor vetoed that legislation. He did,
however, and this was be wildering to us watching and I think it was weeks
later, he said, OK, we`re going to install our own monitors and he did.

Now, how that relates to whether those monitors took a look at this --

HAYES: Well, let me tell you, we`ve been reporting on this, you`ve been
reporting on this, we find ourselves in a situation where we have to fact
check things or figure out a figure, how much money was spent. How easy is
it to trace down, even just for the story, to figure out the flow of money?
How easy is it?

FRIEDMAN: Well, there is a website, I believe it`s where I
looked at where I initially, you know, confirmed the Belleville figure that
I had been told before.

It`s very clunky. It`s hard to navigate, it takes a lot of patience. But
there is some information on there, I`m also not sure if it`s updated too

HAYES: I found it incredibly difficult even to get the apples to apples
comparison where we cited Fair Share Housing Center, who`s been doing
amazing work on getting this data together. The big question is -- so,
then the next question is, are there other towns like this? Are there
other places like this? Is this a pattern of behavior where there`s
punishment for some, reward for other, and the carrot and/or the stick is
this Sandy money? That seems like a fruitful line of reporting inquiry?

FRIEDMAN: I definitely think so, and while I`m not prepared to say one way
or the other, there have been enough questions raised between the mayor of
Hoboken`s claims and various other things and the George Washington Bridge
scandal, that it`s an interesting line of reporting. That`s why I went
through Belleville. And I focused pretty much exclusively on Belleville --

HAYES: We`ll see what else is out there.

Matt Friedman from "The Star Ledger" -- thanks a lot.

FRIEDMAN: Thank you.

HAYES: Joining me now, Congressman Frank Pallone, Democrat from New

And, Congressman, you are now calling on there to be more federal
oversight, more federal transparency. What`s your reaction to the spate of
stories you had? First, there`s the Zimmer allegation, there`s a story in
the star leather today about Belleville.

This is, of course, federal money that was appropriated because people had
their lives destroyed by a once in a century storm, it`s quite unclear at
this point whether on the ground this money is getting to the people whom
it was intended for.

REP. FRANK PALLONE (D), NEW JERSEY: Well, I`ll tell you, Chris, it`s not
getting to the people that it`s intended for, because so many of my
constituents still tell me they haven`t received their money, they`re on
waiting lists, they don`t know exactly what that means to be on a waiting
list or what the criteria are.

So, Congressman Pascrell and I basically are asking HUD to look into this
contract. You know, there was a company called HGI out of Louisiana that
was supposed to be running this block grant program. They were hired back
in May by the Christie administration, and then last week, the Christie
administration fired HGI, they actually fired them seven weeks earlier, but
told us last week, they haven`t told us who`s replacing them.

So, we`re asking HUD to tell us, what happened, was there mismanagement?
Why was HGI fired? Who`s running the show? And please look at the way the
state and the Christie administration is basically dealing with this
community block grant because there`s so many people at the jersey shore
and elsewhere that haven`t received their money and aren`t able to rebuild
their homes or their businesses.

HAYES: I just want to repeat something you said there for folks who are
not familiar with the story. There was a contractor who got the
multimillion dollar contract from the state of New Jersey to oversee this
program, community development block grant.

PALLONE: Exactly, $68 million contract.

HAYES: Yes, say that number again?

PALLONE: Sixty-eight million dollar contract.

And this federal money for Sandy was very hard to obtain. You know, we
worked two months in Congress and there was a lot of opposition to it, and
they were saying, you know, New Jersey, New York aren`t going to use it
properly. So, it`s very important that this is used properly.

HAYES: Sixty-eight million dollar contract. That contractor was
unceremoniously fired, apparently some weeks ago. It was only copped to
the fact they had been fired a week ago. And still, no explanation of why
they were fired and who has replaced them on a $68 million federal contract
that is specifically to oversee the kind of grant that we are talking about
when we`re talking about, for instance, the Belleville senior center.

PALLONE: And the point that we`ve asked HUD to have an independent
monitor, I know matt mentioned the legislature asking for an independent
monitor, we`re asking for the shame thing with HUD.

But, Chris, understand this is a problem for a lot of reasons, but you
still have so many people at the shore and throughout the state that have
not received their checks from the community block grant to rebuild their
homes. And so, you know, and they don`t even know why. They`ll call my
office and say, well, I`m on a waiting list, what does that mean? What are
the criteria?

HUD has to look into what this contractor was doing in administering this
money, you know, why was it going to some people and not to others? And
what`s happening with the money now?

HAYES: Congressman, let me ask you this. You`re from the New Jersey
delegation. You have interactions with the governor of your state. There
was an article about the way that office ran. Talked about, you know, the
top 100, the swing town, that Governor Chris Christie wanted to win as he
prepared for a re-election campaign, capturing these towns, sometimes
referred to as mini-Ohios or mini-Florida, would validate the governor`s
argument that he was the most broadly appealing Republican choice for
president in 2016.

In your interaction with the Christie administration, do you get the sense
that they were very detail-oriented and hands on and knew exactly who was
in line for favors or extra attention from the governor?

PALLONE: I think the governor was very much aware of what was going on in
terms of the distribution of Sandy money. You know, I`ve also brought up
to the HUD inspector general, this whole "stronger than the storm" ad
campaign where he chose the higher bidder because that bidder was the one
that agreed to put him and his family in the TV commercials just before the

And there`s no question that his administration was asking that in order to
get the bid. So I mean, these kinds of details are out there. I mean, I
think there`s a clear path of abuse of power here, Chris, and every day,
there`s more and more evidence of it.

HAYES: Congressman Frank Pallone of New Jersey, thank you.

PALLONE: Thank you.

HAYES: Coming up, confused by all the moving parts in Chris Christie`s
bridge scandal? And its subsidiaries? Well, you`ll want to stay tuned for
our handy guide, next.


HAYES: It is really, really bad down South right now. While a serious
situation, it`s generated some pretty awesome finds, like this one of the
Weather Channel`s Jim Cantore being video bombed as he was doing a live


JIM CANTORE, WEATHER CHANNEL: Gotten into the worst part of this storm
yet. That is its --


CANTORE: -- a little bit later on tonight. So --


HAYES: Let`s see that again in slow mo. Jim was in Charleston, South
Carolina, where they got freezing rain, sleet and a screaming person got a
knee in the crouch.

And then there`s Atlanta which promptly became a parking lot after they got
2.6 inches of snow. But don`t worry, WSB`s severe weather team two was on


TV ANCHOR: Twenty-five reporters spread out all over metro Atlanta in
north Georgia, updating you on the conditions on the road.


HAYES: Yes, the legendary 25 box. And, of course, the obligatory bonus,
now that you`re up to date on all the snow related Vines.

Steve Kornacki will join me to help us keep track of the multiplying
Christie scandals, next.


HAYES: Every day since the release of that infamous time for some traffic
problems in Ft. Lee e-mail, seems a new allegation of abuse of power or
further piece of evidence supporting a previous allegation has surfaced
against Governor Chris Christie. Sum total of this is taking its toll on
the governor politically.

His favorability ratings plunging since the scandal surfaced. It`s getting
harder and harder to keep track of all the various investigations,
allegations of abuse, and other possible scandals that have suddenly come
to the floor as the dam of silence has broken in the wake of bridge-gate.

So, here`s a handy ALL IN guide. It was bridge-gate, of course, that
started it all, an allegation the governor`s aides and appointees contrived
a massive traffic jam in the town of Fort Lee for several days as some form
of punishment, the punishment for what exactly is open to debate.

The early theory, to get back at Mayor Mark Sokolich for not endorsing
Christie and his reelection bid. And then about a week later, Mayor Dawn
Zimmer of Hoboken came on MSNBC`s "UP WITH STEVE KORNACKI" and alleged that
the Christie administration held up federal Sandy relief funds for her city
in exchange for green lighting a development project for politically
connected firm.

The connection between bridge gate and Mayor Zimmer`s allegation was two-
fold. One, the idea of punishing a mayor, and two, the Port Authority --
the crucial body involved in bridge-gate, which was also involved for
pushing for the private development in Zimmer`s Hoboken through a study
that they funded.

And there`s David Samson, a Christie appointee in the Port Authority whose
law firm represents the private developer in the Hoboken allegations. We
do not know if Samson was any part of the Fort Lee traffic plot, though
he`s the head of the whole Port Authority and is referenced numerous times
in the e-mails.

But here`s where the accusations really started to flow, the idea of
punishment and rewards as the M.O. for the Christie crew. So, there`s
possible political reward as we just covered at the top of show in

There`s also Mayor Steven Fulop of Jersey City, alleging that a host of
meetings between the mayor and the Christie administration dried up after
the mayor said he would not be endorsing Christie, leaving Jersey City to
fill its budget without money from the Port Authority of New York and New
Jersey. Its request for help with Hurricane Sandy recovery, transportation
and other issues is falling on deaf ears. So, that potentially affected
Sandy funds and other possible revenue streams as well.

The picture that`s come into focus for everyone is an administration that
has been ruthlessly specific and obsessive about punishing their foes and
warning their friends. Sometimes it could be argued it`s within the bounds
of hardball politics. Sometimes, it appears, as alleged outside, those

Indeed, one story that has been reported and no one paid really attention
to until now is this -- a former Hunterdon County prosecutor Ben Barlyn
saying he was fired in 2010 because he refused to drop a case against
Sheriff Debra Trout, a Christie ally, an allegation which if true could
rank up all the others in its outright abuse of power.

Joining me now is MSNBC`s chief New Jersey expert, Steve Kornacki, host of
"UP", which airs weekend at 8:00 a.m. Eastern.

Let`s start with Hunterdon County, because I think, we -- one of the things
we`ve been doing as we`ve been going through this is, and Darryl Isherwood
is a reporter from New Jersey said the other day, you know, everyone starts
popping up with stories of bullying. And some of them were like, well,
they`ve played a little political hardball, they didn`t want to use this or
that. You`ve got to separate the wheat from the chaff.

The allegations on the table in Hunterdon are if true pretty damning. I
mean, you have a situation which a local prosecutor that has an indictment
of a local sheriff goes to a grand jury, gets the indictment, and a
Christie employee comes in, vacates the indictment, fires the people
because allegedly this person was a Christie ally.

I mean, particularly from a former federal prosecutor, that is a pretty
intense allegation.

STEVE KORNACKI, UP: Right, it calls into question the allegation. And I
think the interesting thing to consider about this is that story was
reported, either in September or October of last year, a few weeks before
the election. At the time Christie was 20 to 30 points ahead in the polls.
It was reported in "The New York Times". It was reported in several other
outlets, and it got absolutely no traction.

I was thinking of that this week in the context of Dawn Zimmer, when she
came on our show. I asked her, and the first skeptical question everyone
asks after the interview was over was, why did you wait so long?

HAYES: Right, right.

KORNACKI: This happened a year ago, why did you wait so long?

She said, basically, I didn`t think in the climate of early 2013 people
would have believed me.

And I think you think about that Hunterdon story, that`s the climate she`s
talking before. The climate where that Hunterdon story can be reported I
believe on the first page of "The New York Times," it can be reported in
other major outlets. And it had -- it just landed with a complete thud.
Nobody even knew it happened.

Now, in this climate, because of Dawn Zimmer, because of many other things,
that story is getting a second look, people are willing to consider what
Dawn Zimmer has to say, take it seriously. But I think she`s whatever you
think about -- I think she`s absolutely right about that.

If she had come on any show a year ago and said that, it`s the same thing
as the Hunterdon story.

HAYES: And the Hunterdon story, we should also say, there is some -- I
mean, there`s four members of that grand jury who say, this was craziness.
We`re on the grand jury, this was legitimate, and you have a civil case
right now, by the prosecutor who was fired. He`s asking for records from
the state, they`re stonewalling him on that. That is an active situation.

More broadly, the thing you heard always about Christie from New Jersey
people when you talk to them, was just like, man, this guy -- everyone`s
scared of him. This guy and scared can mean a lot of different things.


HAYES: I mean, you can be scared of someone who`s a really good
politician, doesn`t mean they`re corrupt or abusing power. But he did have
a hold on that state. He really did.

And right now, the question is, was that a legitimate or illegitimate hold,

KORNACKI: The thing you heard was, and there`s a lot of truth to this --
he was good at being governor.

HAYES: Right.

KORNACKI: In a lot of ways, New Jersey has the most constitutionally
powerful governorship in the country. It gives whoever has that office all
sorts of levers to potentially use at all levels of government. Whether
it`s in Trenton, whether it`s all the way down to a town or municipal
level, the governor has more power to appoint people at all sorts of
levels, to control authority, to veto things out of the budget, to reward
and punish people.

They always get to that gray area. Christie more than Jon Corzine,
Christie Whitman, he was good at knowing what those levers were and how to
use them. So, it was that aspect of it, the inside game.

What buttress that, though, and I think made him a particularly effective
governor was the outside game, he had such a great reputation with the
people of New Jersey, and nationally, both because of what happened with
Hurricane Sandy -- that`s the obvious one, but his style, I think, wore
really well, with the majority of New Jersey. The idea that this guy was a
straight shooter, he was different than any politician you had ever seen,
and that`s why the turning point in all of this, we can talk about the
traffic. When he got up there and gave that press conference for 1:45, it
was about an issue that was so local and so trivial, that everyone could

HAYES: Totally.

KORNACKI: And you`re watching that press conference and saying, I don`t
know what the full story is here, but he`s not telling it. That`s the
turning point.

HAYES: Yes, that`s exactly right. And that`s also the trajectory of
former federal prosecutor puts people away for corruption. Now, he`s like,
well, I don`t know what people were doing. And that`s the other part of

Steve Kornacki, you can catch his show "UP", weekends at 8:00 Eastern on
MSNBC -- thanks a lot.


HAYES: There`s an agency that oversees the bulk of Hurricane Sandy aid,
the Department of Housing and Urban Development. The man who heads up that
agency joins me next.


HAYES: A big part of making policy is sitting in an office and crunching
data, digging into statistics, staring at spreadsheets and all that is, of
course, really important. But sometimes, to solve a problem, you have to
find the people you`re trying to help -- talk to them, listen to what they
have to say.

Every January, the Department of Housing and Urban Development led by Shaun
Donovan, organizes tens of thousands of volunteers who spend the night
walking through the streets, shelters and subway stations to identify
America`s homeless. And what they learned drives policy to combat

Since the Obama administration launched the opening doors program to end
homelessness in 2010, the population of homeless in America has fallen by 6
percent, chronic homelessness is down 16 percent, and homelessness among
veterans has fallen a pretty incredible 14 percent. There are still
610,000 Americans who are homeless, including nearly 58,000 veterans.

And tonight, after the show, Shaun Donovan will be joining volunteers to
walk the Capitol Hill neighborhood in Washington to learn more about how
these folks are and what they need.

Joining me now is the secretary of the U.S. Department of Housing and Urban
Development, Shaun Donovan.

And, Secretary, the goal of ending homelessness sounds in some ways
impossible. But there is reason to believe that this is a problem that
government can solve with the right policy in place.

You know, I`m so glad you started that way, Chris, because I`m a guy who
got interested in housing by volunteering at a homeless shelter in college,
and if you had asked me back then, if you had asked just about anybody who
was volunteering with me, we could have never imagined that we would be
talking about ending homelessness.

But through the remarkable efforts of volunteers like I`m going to be with
tonight out on Capitol Hill, remarkable mayors, non-profits, the private
sector, and some good work on the federal government side as well, we can
actually talk about, and actually have a president who has a plan to end

And one of the reasons why this is working is because the more work we`ve
done on ending homelessness, the more we realize it not only saves lives,
it actually saves money as well. It`s more expensive for somebody to be on
the streets long term than it is to house them. That`s part of why this
has gained such traction.

HAYES: One of the things if you encounter folks who are homeless, you live
in a major metropolitan area, particularly in New York City you do often.
The people that are battling mental illness in some way or another that our
social contract doesn`t do a great job of figuring out what obligations we
have for people who are struggling with mental illness.

This chart has always struck me. This is people that we have
institutionalized. One of the things you see is basically there is a long
period of time where we had people in mental institutions, and then we made
the right policy choice to let them out of mental institutions. And right
around there, incarceration rates shoot up.

And it`s hard enough to thing that we have a society solved this problem we
don`t know what to do with by either putting them in prison or just letting
them be on the streets.

DONOVAN: This is one of the key things that have allowed us to make
progress. We used to say that if you were mentally ill, living on the
streets, you might be able to get into a program. We might be able to help
you with your substance abuse that often comes along with it, but we were
only going to help you into housing once you graduated from that effort,
and you were successful.

One of the things that has really transformed our efforts around
homelessness, we call housing first. It may sound simple now, but it was a
major step forward. Look, somebody is going to be able to get the help
they need if they have mental illness, take their medication much better if
they`re housed than if they`re on the street.

HAYES: The way to solve homelessness is to give people homes, right? The
home is the cornerstone, right? That`s the thing you start out with.
Since I have you here, I need to ask you about this because it is in the
news right now, about the Sandy money.

HUD has overseen the bulk of that money? There are a lot of allegations
flying around, not just in New Jersey, but generally, that this money is
not getting to people quickly enough, that it`s not been overseen in a
transparent enough fashion, since the bulk of the money comes through the
cabinet agency you oversee, are you confident that that money is the
monitor adequately?

DONOVAN: Well, first of all we just talked about the tragedy of
homelessness. Sandy was a tragedy of a scale I`m a New Yorker that I have
never seen. And by definition, money can never get to families fast enough
to repair that damage. And so are there things that could move faster?
Absolutely right.

But if you look at overall, this money is moving faster than in any prior
major disaster and also remember, the CDBG money is really the last resort
for families who haven`t been able to get help.

They get immediate money from FEMA. They get money from their insurance
programs, and this is the last step, so it`s not unusual that we would have
folks a year after the storm who are still rebuilding. Remember, these are
the folks whose homes were devastated the worst, and where we knew the
rebuilding process would be a long one.

So what I will tell you is, could it be going faster? Yes, are we doing
everything we can to cut red tape? Absolutely, but I am confident that we
are monitoring this money closely.

HAYES: HUD secretary Sean Donovan, stay warm out there. Thanks for
joining me.

DONOVAN: Thank you.

HAYES: I know you watched the state of the union last night, did you watch
the response? You may be saying, there were so many, which one. Don`t
worry. We`ve rounded up the best.


HAYES: Republicans have a lot to say about the president`s state of the
union address last night. Between the official response, the adapted
Spanish language response, the Tea Party response, the special Rand Paul
response and the good old internet, we`re talking high volume respondage.

If you have a busy schedule, I know, there may be entire 6-second Vines the
Republicans complaining about the president you haven`t seen yet. Worry
not, we`re here to help you with the best caught on camera responses to the
state of the union address and/or annoying screechy college kids.


and God bless the United States of America.

BRET BAIER, FOX NEWS: Welcome back to Washington. We are awaiting the
Republican response.

UNIDENTIFIED FEMALE: The Republicans offered four responses.


UNIDENTIFIED FEMALE: Tonight, we honour America.

UNIDENTIFIED MALE: Is that Santa Claus?

UNIDENTIFIED MALE: It is Santa clause. We`re going to be listening to
Santa Claus tonight.

UNIDENTIFIED MALE: The ticket for the middle class is not higher taxes.

UNIDENTIFIED FEMALE: The president talks a lot about income equality.

UNIDENTIFIED MALE: Obamacare all by itself is an inequality Godzilla.
Inequality Godzilla.

UNIDENTIFIED MALE: Is that Santa Claus?

president said tonight.

UNIDENTIFIED MALE: Mr. President, where are the jobs.

BOEHNER: None of those Americans are asking the question, where are the

UNIDENTIFIED MALE: We have not gotten into the worst part of this storm

HAYES: On floor House waiting for commandant-in-chef.

UNIDENTIFIED MALE: That is the story a little later on tonight.

HAYES: I don`t even understand what that means.

UNIDENTIFIED MALE: You say you have a pen and a phone to work around
Congress. I have an oath and a constitution.

UNIDENTIFIED MALE: The president has a pen, let him use that pen to sign
laws made by the Congress.

UNIDENTIFIED MALE: The Republicans are talking about opportunity, jobs,
economy, national defense, we need those now.

UNIDENTIFIED MALE: We need the president to work with us, to get the
economy booming again.

UNIDENTIFIED MALE: That is to come a little later on tonight.

UNIDENTIFIED FEMALE: That`s the genius of America.

UNIDENTIFIED MALE: Thank you and God bless America.

UNIDENTIFIED MALE: Good night and God bless.


HAYES: That was on the tape. None of those responses is the Republican
response that everyone is talking about today, none of that. Today America
is talking about one and only one GOP response from last night, and it is
this one.


UNIDENTIFIED MALE: We haven`t had a chance to talk about.

UNIDENTIFIED MALE: This is only about the president.

UNIDENTIFIED MALE: I am (inaudible).


HAYES: That now famous scene played out as a local New York City reporter
tried to ask Republican Congressman Michael Grimm about an investigation
into his campaign finances. We`ll talk about that incident along with last
night`s less physically threatening Republican remarks up next.


HAYES: Congressman Michael Grimm is the only member of the New York City
delegation for the Republican Party in Congress. He introduced himself to
the country last night. Most New Yorkers know Grimm because of the federal
investigation into the congressman`s campaign fundraising. Last night a
reporter caught up with him and tried to ask him about that ongoing federal


UNIDENTIFIED REPORTER: Just finally, before we let you go, since we have
you here, we haven`t had a chance.

CONGRESSMAN MICHAEL GRIMM: This is only about the president.

UNIDENTIFIED REPORTER: Well, what about -- all right, so Congressman
Michael Grimm does not want to talk about the allegations concerning his
campaign finances. We wanted to get him on camera, but he refused to talk
about that, back to you.


HAYES: Joining me now, Congresswoman Debbie Wasserman Schultz, a Democrat
from Florida and the chair of the DNC and Katrina Vaneen Heuvel, my boss,
at "The Nation" where she is editor and publisher. Congresswoman, during
the commercial break, you said if I didn`t go to you first you would break
me in half like a little boy.


HAYES: What is your response to that?

SCHULTZ: I mean really, it`s pretty disturbing. I have to tell you, I`ve
been in office for 21 years and I admit there are times when a reporter
asks me a question I`d rather not answer. But my instinctive reaction has
never been to threaten them with physical violence.

HAYES: Have you ever seen? This is an honest question across the aisle
for Republican, Democrats. Have you ever seen a member of Congress talk to
a reporter that way?

SCHULTZ: Not to a reporter.

DONOVAN: All the time, are you kidding?

SCHULTZ: Each other. Constituents like Joe Walsh. Don`t forget Joe

HAYES: I`ve actually -- Katrina, I`ve spent some time with Michael Grimm,
and I interviewed him. That was not a side of him that I ever got to see.
I should say, there was a long New Yorker piece about Michael Grimm, one
that he called fiction, a witch hunt and a hatchet job. There was a report
of him leaving a club at 4:00 a.m. just before the club closed, and he
returned with a gun.

KATRINA VANEEN HEUVEL, "THE NATION": It`s like bully boy time in politics.
I mean, we`re seeing it with Christie. We`re seeing it with this guy. If
you go into politics, excuse me, Congresswoman. You don`t have a thin
skin, and you learn to deal with the media. And you`re there to respond to
questions. The media, unless these people think the media doesn`t play any
role, which I don`t think this guy does, are there to raise questions --

HAYES: Let me stick up with Chris Christie. There`s metaphorical bully
and threatening no one had ever Michael Grimm, though, is the one sort of
GOP response that everyone`s paying attention to today. Here`s the thing I
thought was interesting. The speech was billed as the president`s going to
go it alone. The Republican response was primed to be in response to that,
and go apoplectic about an imperial presidency. What the president was
talking about was pretty marginal stuff. This is not like some huge
restructuring of federal power.

HEUVEL: No, where was this GOP when Dick Cheney decided, you know, erosion
of executive power after Watergate, we`re going to restore the imperial
presidency. The nation is not for extreme manifestations of executive paw,
but in support of the jobless, the planet, the homeless, there was one
executive order last night, in order to raise minimum wage for workers and
federal contractors.

HAYES: Executive power, we should make this point. Executive power not
just in pursuit of the goals, but within the four square of the
constitution, it`s not like he was testing out some novel theory in signing

SCHULTZ: Juxtaposed against Congress doing nothing. We passed 72 bills
into law last year. It`s the do nothing Congress. What President Obama`s
speech was about last night, look, I have a phone and I have a pen. The
phone is available for you to call me, and I`ll sit down with anyone and
find common ground, but I am not going to allow you to stall progress.

HAYES: But here`s --

HEUVEL: The country faces multiple crises. We have a Republican Party
which has obstructed a jobs bill, infrastructure funding, and all kinds of
things that could bring some relief to Americans. In my mind this is not
about left and right this is about right and wrong. The president last
night used his power to say, hey, we need to find a way forward in this
time of crisis and inequality.

HAYES: Here`s the thing I thought it was to me, the message wasn`t even
and I thought Chris Matthews said this and I was sort of surprised by the
fictive that came from the speech. I thought the speech the message last
night was for the love of God just don`t do anything to screw this up.
Please, no more crises.

SCHULTZ: The message of the speech was we need to work together. It
wasn`t just the minimum wage that the president proposed. He talked about
creating the IRA Treasury bond so the low wage workers can create a
retirement account for themselves. He talked about making sure we can
focus on those manufacturing hubs, we`ve been able to establish two --

HAYES: Here`s the thing.

HEUVEL: He also it comes against the backdrop of the upcountry that is you
know, there`s this populous resurgence, there are people in the streets,
fast food workers that have been agitating for some of what the president
spoke to yesterday. That is often how change comes about. The
Republicans, the desperation of their response are a measure of the
cluelessness, the out of touch, the desperation.

SCHULTZ: Particularly in light of the fact that President Obama in his
first term issued the smallest number of executive orders of any president
in history, not just of the last few.

HAYES: The smallest number, this is always to me, the amazing kind of
Obama paradox, someone who is so sort of to his bones a kind of
institutionalism, pragmatic, very cautious in certain ways is viewed
through this prism in which he is this absolutely tyrannical extremist,
even when he comes and says, I`m going to issue one freaking executive
order to give some people a raise.

HEUVEL: I mean, there`s disconnect. You had Lindsey Graham escorting the
"Duck Dynasty" cast member and saying that President Obama`s call for Iran
will lead to us being bombed.

HAYES: Well, Lindsey Graham, give the brother a break about he`s got a
primary to win, and if he`s got to win by parading around "Duck Dynasty"
let him do it. Congresswoman Debbie Wasserman Schultz and Katrina Vaneen
Heuvel, thank you both.

When we come back, a prize winning columnist will be here with his review
of the president`s inequality agenda, stay with us.



PRESIDENT OBAMA: So wherever I can take steps to expand opportunities for
more families, regardless of what Congress does, that`s what I`m going to
do. Because I am determined to work with all of you and citizens all
across this country on the defining project of our generation, and that are
to restore opportunity for every single person who`s willing to work hard
and take responsibility in this country. That`s what I`m committed to


HAYES: That was President Obama speaking this afternoon at U.S. steel in
Pittsburgh, touting what he is calling his opportunity agenda. Joining me
now is Novel Prize Winning economist, Joseph Stiglitz, who wrote a book on
equality. Your reaction to the president`s speech last night, the
centrality of inequality, some of the prescriptions for solving it.

thing that he continued to talk about inequality. I think he`s giving sort
of a mixed picture of what`s going on. He championed the fact that America
is the land of opportunity, talks about himself and other people making it
from the bottom to the top. What he didn`t point out was those are
exceptions. We talk about the opportunity is, what is the probability,
what is the chance, and the prospects of young Americans are more dependent
on the income and education of his parents than in other advanced

HAYES: And in fact we have some new data on this that suggests this is a
long term enduring feature of the American economy. One of the things that
strikes me when I watch a speech like that, when I watch the political
conversation in Washington, it`s the distance between the size of the
problem which is just how much money is going to last and the labor market
and the solutions that are being offered are politically possible. We`ll
have job training centers and a manufacturing hub. That`s great, but
you`re talking about a massive problem.

STIGLITZ: That`s right, one of the difficulties it, it didn`t provide any
diagnosis of how we came into this situation. It was like suddenly
something`s happened in the last couple years to create this, it`s been an
enduring problem over the last 30 years getting worse, and he didn`t talk
about for instance how our tax structure contributes to the growing
inequality. He didn`t talk about how our corporate governing laws allow
the CEO`s to take a larger and larger share of the corporate pie. He
didn`t talk about how the financial sector has preyed on the poorest
Americans, predatory lending, and abuse of credit card practices. He was
really being very conciliatory.

HAYES: Right, as is his way, that`s his sort of signature talk.

STIGLITZ: And talking about important things --

HAYES: Raising the minimum wage.

STIGLITZ: That`s very important, although he couldn`t get it through
Congress. I`ll have to do it by executive order.

HAYES: Let me ask you this. It seems to me part of the mismatch is, when
it comes down to it, inequality isn`t something that can be solved by
technocratic policies. It`s a problem of power. Who has power in this
society and who doesn`t?

STIGLITZ: That`s right. Although there are some real important economic
issues, economic policies that would make a difference, the deep question
is, why we don`t do those things that we know could make a big difference.
And that comes down to politics. Politics that really drives this, it`s
not just politics. It`s the way we structure our economy. The weakening
of unions over the lasts 30 years has meant the voice of workers has not
been adequately heard either in the political sphere or the bargaining

HAYES: We see that the way the gains of the productivity and what goes to
profits and what goes to wages has gotten totally out of whack.

STIGLITZ: To illustrate how bad things have gotten, 95 percent of the
gains that have happened since the end of the recession 2009 have gone to
the upper 1 percent.

HAYES: That`s crazy.

STIGLITZ: For 99 percent of Americans there`s not a recovery.

HAYES: Economists Joseph Stiglitz, thank you so much for your time.
Always great to have you at the table. That`s ALL IN for this evening.
"THE RACHEL MADDOW SHOW" starts. Good evening, Rachel.

RACHEL MADDOW: Good evening, Chris. Thanks to you at home for staying
with us for this hour.


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