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'The Rachel Maddow Show' for Monday, July 27

Read the transcript to the Monday show

Guests: Kent Jones, Dave Weigel, Howard Dean, Barney Frank, Ron Suskind

RACHEL MADDOW, HOST:  Hey, Lawrence.  I had such a great job watching you tonight on “COUNTDOWN.”  Great job.  Thank you.

LAWRENCE O‘DONNELL, MSNBC POLITICAL ANALYST:  Hey, can I hang around and co-host with you?

MADDOW:  Yes.  We‘ll just have a split screen for the next hour. 

You don‘t mind, do you?

O‘DONNELL:  OK.  We‘ll do.

MADDOW:  All right.  Oh, no.  Sorry.  Some other time though, I‘ll take you up on it.

O‘DONNELL:  OK.

MADDOW:  All right.  Thank you for staying tune tonight at home.

We will actually have Governor Dean joining us this hour to talk health care before he guest-hosts “COUNTDOWN” tomorrow night and Wednesday night.

Also, this hour, we‘ll have Congressman Barney Frank here to talk about who exactly is fighting to keep the fine print on your credit card statement really, really, really, really small.

We‘ll also be joined this hour by Pulitzer Prize winner Ron Suskind.  He‘ll be here to play-by-play the latest round in the most unexpected Republican boxing match ever: George W. Bush versus Dick Cheney.

Yes, that‘s all coming up this hour.

But we begin tonight with a little unexpected news from “Birther-ville.”  Despite indisputable evidence to the contrary birthers are conspiracy theorists who maintain that President Obama secretly isn‘t president, because he secretly wasn‘t really born in the United States.  The theory has been conclusively disproven by the fact that President Obama has made publicly available his birth certificate from Hawaii, and by the supporting fact that there was an announcement published in a Hawaii newspaper in 1961 when he was born.

That‘s evidence that means these particular conspiracy theorists, the birthers, are rightfully classified as beyond reason, as marginal, liminal, if you will, “Fringy McFringersons.”  This means that we should expect them to disappear from the mainstream of American politics as mainstream American politicians make decisions to disavow these theorists in order not to seen crazy and beyond reason themselves.  You would think, at least.

You would be wrong.  The modern Republican Party is proving to be quite fertile ground for the birther conspiracists.  The fledgling birther causes is headed up, of course, by Representative Bill Posey of Florida.  He is sponsor of a bill that would require birth certificates for presidential candidates.  He has nine Republican co-sponsors for his legislation.

We‘ve known about Mr.  Posey and his co-sponsors for a while.  But now, now thanks to an intrepid reporter from “Fire Dog Lake” and “The Huffington Post,” a man named Mike Stark, we can add some more names to the birther caucus.

Here‘s a peek at what Mr. Stark discovered when he asked members of Congress to go on the record on the issue of whether they‘re willing to defy the crazy birther people and admit that President Obama is a citizen.

(BEGIN VIDEO CLIP)

MIKE STARK, HUFFINGTON POST:  What do you believe, personally?

REP. CATHY MCMORRIS RODGERS ®, WASHINGTON:  Oh!  I‘d like to see the documents.

STARK:  So, you‘re kind of afraid of the lunatic fringe base?

REP. CHARLES BOUSTANY ®, LOUISIANA:  Well, it‘s certainly being looked at.

STARK:  What do you personally believe though?  I mean, do you think there is a question here?

BOUSTANY:  I think there are questions.  We‘ll have to see.

STARK:  Hey, Congressman.  How are you?  My name is Mike Stark.  I‘m with “The Huffington Post” and “Fire Dog Lake.”  What‘s your name?

Well, you were able to say you‘re out of breath.  You can tell me your name and your district, right?  Are you Democrat or Republican?  I‘ll race you.

(END VIDEO CLIP)

MADDOW:  In addition to the sponsor and co-sponsors of the birther legislation in Congress then, we can now add these names to the list of Republican legislators who do not believe or at least will not say out loud that the president is a citizen.  Incredible.

Meanwhile, down the street at the White House briefing room today, White House Press Secretary Robert Gibbs got a break from questions about the Cambridge Police Department, health care reform, Iraq, Iran, Afghanistan, and every other matter of actual importance—thanks today to the birthers.

(BEGIN VIDEO CLIP)

UNIDENTIFIED REPORTER:  Is there anything you can say that will make the birthers go away?

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  No.

UNIDENTIFIED REPORTER:  Do you want to try?

GIBBS:  I mean, the God‘s honest truth is no.  I mean, Bill, let‘s understand this—I almost hate to indulge in such an august setting as the White House and I mean this in seriousness, the White House briefing room, discussing the made up, fictional nonsense of whether or not the president was born in this country.

But I have news for them and for all of us.  The president was born in Honolulu, Hawaii, the 50th state of the greatest country on the face of the Earth.  He‘s a citizen.  Yes, sir?

UNIDENTIFIED REPORTER:  Why does this keep coming up?

GIBBS:  Because for $15, you can get an Internet address and say whatever you want.

(END VIDEO CLIP)

MADDOW:  Actually you don‘t even need the Internet.  You know, Lou Dobbs on CNN says he‘s a birther, too.  You can‘t blame this movement of the fringe into the mainstream on just the online machine—CNN‘s helping.

Back in Congress today, Hawaii Congressman Neil Abercrombie introduced a simple resolution commemorating the 50th anniversary of Hawaii‘s statehood, recognizing it as the birth place of the 44th president of the United States, a man named Barack Obama.  A sort of clever bid of parliamentary chess, because a vote for the resolution would constitute de facto recognition that Obama is a natural-born American born in Hawaii.  And that, of course, would be de facto rejection of the crazy birthers.

Well, the resolution, after an initial delay, did pass the House unanimously.

So, does this mean that the birther caucus among Republican members of Congress will disband?  Will the fringe go back to the fringe now?

Joining us now is David Weigel.  He‘s a reporter for “The Washington Independent,” who‘s done a lot of the national ground breaking work on this subject.

Mr. Weigel, thanks very much for coming back on the show.

DAVE WEIGEL, WASHINGTON INDEPENDENT REPORTER:  Thanks.  I‘m happy to be here in honor of the American soldier.

MADDOW:  Well, man.  Today‘s resolution in the House could have been a political maneuver on the part of the Democrats to put the birther Republicans on record, to split the Republicans from the birther movement that seems to be sort of capturing them.  Do you see it that way or do you think it was an accident?

WEIGEL:  I don‘t think it was an accident.  This is something that some Democrats, and some pundits and liberals who talk to Democrats have been talking about for about a week.  It‘s really devious.

Republicans did the same thing before the 2004 election when they forced the House to vote on Charles Rangel‘s bill on whether or not we should bring back the military draft.  They did this to disabuse the nation of a rumor and get all of the Democrats on record saying they—or Republicans on record saying they opposed it.

So, I think it‘s the same thing.  This is very clever though because it‘s not so much of a distraction that you can call it out as one.  It‘s something that Congress really does.  It is a distraction from Thaddeus McCotter‘s Gates apology resolution.  But other than that, it‘s pretty legitimate.

MADDOW:  Senator James Inhofe of Oklahoma today was interviewed for a piece in “Politico” about the birthers and about this now difficult situation that the Republican Party is in vis-a-vis this very loud, active crazy group of people who maintain this conspiracy theory despite all the evidence.  And Inhofe, in response to “Politico‘s” question, said that the birthers have a point.  He then backtracked and said later in the day that the only reason they have a point is because the White House has screwed up this issue somehow. 

Can you give me a political take on where Inhofe is coming from on this initial response and the backtracking?

WEIGEL:  I think he‘s coming from Oklahoma which contains no county that voted for Barack Obama.  Look, the—congressmen and senators don‘t get where they are by alienating voters.  And I think a mistake they make sometimes is not alienating anyone.  I don‘t think there‘s a great political downside to taking the Buzz Aldrin approach to a conspiracy theorist and, well maybe not hauling off and whacking them like he did but saying, “No, you‘re wrong.”

And Bill Clinton actually is a master at knocking down a heckler.  Ronald Reagan was good at knocking down hecklers.  I mean, and taking it back to these people, if they‘re not hecklers, they are people who don‘t have a legitimate point and who make you seem crazy by agreeing with them.

As safe a red state as Oklahoma is, Inhofe is really just appeasing a small part of his base and he‘s conditioned to do that as a politician, but it‘s bizarre.  I don‘t know why they can‘t get this right and say, “No, you‘re wrong.  Here are the facts.”

MADDOW:  Well, I think this gets to the most serious and important part of this story though.  If the birther conspiracy movement essentially dovetails with some of the right-wing hatred of Obama as president on the basis of his race, this idea of his foreignness essentially standing in for people‘s discomfort with the fact that he‘s African-American—is it possible that the reason so many Republicans are having a hard time just flat-out disavowing this movement is because they are counting on that discomfort with the president‘s race, that sort of racial anxiety created by having a black president in order to drive some Republican votes?

WEIGEL:  I wouldn‘t—I wouldn‘t—I‘m cuing that motive—giving them all that motive.  Let‘s remember, he was—he was still an African-American in 2008 and they lost the election to him by a lot.  So, I think it‘s just—from the Republican case—feeding the base here.

From the perspective of the conspiracy theorists, it‘s hard not to see a racial element to this.  I heard Michael Medved (ph) today said, “Well, Alan Keyes is on board with this” and he is kind of the exception that proves the rule.  I mean, this is not a rainbow coalition asking these questions.

One thing I‘d add, almost tongue in cheek, but who knows anymore is that the current brand of this conspiracy theory is that if Obama is disqualified, it will disqualify him, Joe Biden because he ran with him, and Nancy Pelosi because she signed on and vouched for his citizenship.  That would, of course, make the president of the United States, Robert Byrd, who is the only current member of the Senate who is in the clan.

And at this point, maybe that‘s their plan.  I don‘t know.

MADDOW:  Maybe those folks would finally find somebody they‘d be constitutionally comfortable with.

WEIGEL:  We know where he was born.

MADDOW:  Yes, exactly right.  Yes, I mean constitutional in a lot of different senses there.

Dave Weigel, reporter for “The Washington Independent”—thanks again very much for your time tonight.

WEIGEL:  Thanks a lot, Rachel.

MADDOW:  OK.  Coming up next: Dr. Howard Dean will be joining us to talk health care.  There is big, big news on that front today, both on the Democratic side and the Republican side.

Stay with us.

(COMMERCIAL BREAK)

MADDOW:  The Republican Party has decided to go all in, all in on their effort to kill health care reform in this country.  If you‘ve been following the health care debate even a little bit over the past month, you‘ve probably heard President Obama calling on Congress to vote on health care reform before the August recess, before members of Congress go home to their districts for the whole month of August.

Why does the timing of this matter?  Why was the president so insistent on getting something done before lawmakers leave D.C. for the month?  Well, today, we learned that during a recess, the Republican National Committee will spend a million bucks over the course of just one month campaigning against health reform.

A million dollars to offer their own health care reform idea?  No.  A million dollars to suggest Republican alternatives to the Democrats‘ plans?  No.  A million dollars to stop the whole idea of health care reform in its tracks?  Ding, ding, ding, ding—yes.

Over the course of the next month, the Republican National Committee says it will blanket the country with TV and radio ads attacking health care reform.  The ads will reportedly run in 33 states, denouncing the whole idea of changing the health care system as dangerous.

Now, Democrats have 60 seats in the Senate.  They have a huge majority in the House.  Because of that, ultimately, it‘s on them to get health care reform done.

But Republicans are doing their darnedest, and even as Democrats split and split and split on this issue, Republicans have carved out a singular, unmistakable role for themselves here.  They aren‘t just trying to be a speed bump on the way to health care reform; they‘re trying to be a spike strip.  They are trying to stop the whole idea of it dead.

Why exactly are they doing this?  Well, presumably, they think it‘s a good way to hurt President Obama, to chip away at his political capital, to make him fight a long battle that‘s almost impossible to win, and, hopefully, he‘ll lose in his first term and we get all swamped in the process.  That‘s the obvious politics at work.

But maybe there is something else going on here, too.  Have you noticed that when Republicans talk about why health care reform is such a dangerous idea, they keep citing the same sources over and over and over again?

(BEGIN VIDEO CLIP)

SEN. JOHN BARRASSO ®, WYOMING:  According to the Lewin Group, 119 million Americans would lose the coverage that they currently have.

REP. JOHN BOEHNER ®, MINORITY LEADER:  Lewin and Associates, a consulting firm, health care experts.

REP. TOM PRICE ®, GEORGIA:  In fact, the Lewin Group did a study.

NEWT GINGRICH ®, FORMER HOUSE SPEAKER:  Well, the Lewin Associates, which is a very respected technical firm.

UNIDENTIFIED MALE:  There is one study from the Lewin Group.

REP. PAUL RYAN ®, WISCONSIN:  One firm, the Lewin Group, is telling us.

SEN. CHUCK GRASSLEY ®, IOWA:  What you‘re going to have according to the Lewin think tank that specializes in health care.

(END VIDEO CLIP)

MADDOW:  This Lewin Group is very influential among the Republicans.  They‘re supplying tons of the Republicans‘ information about why health care reform is such a bad idea.  Thank goodness they‘ve got the Lewin Group to cite for research.

Want to know who the Lewin Group is?  As reported in “The Washington Post” recently, it‘s the insurance industry.  Specifically, it‘s one particular insurance company, United Health Group.  United Health, one of the nation‘s largest insurers, operates a subsidiary that‘s called Ingenix.  And Ingenix operates a consulting firm called the Lewin Group, which top Republicans call “nonpartisan and independent” when they use Lewin Group insurance industry talking points to make us all feel afraid of changing the health care system.

And if the name United Health Group is making your Scooby news sense go all tingly, it might be because you remember United Health Group from your corporate crime blotter.  In January of this year, United Health agreed to pay $400 million.  That was the settlement -- $400 million for essentially defrauding patients.  The New York Attorney General‘s Office accused the company of skewing data in order to shift medical expenses onto consumers.

So, if the Democrats really don‘t get health care passed before the recess and that gives Republicans a full month to talk about what a bad idea it is to change the health care system, because they love it the way it is and it would be so dangerous to change it—consider who exactly they‘re representing.

(BEGIN VIDEO CLIP)

BARRASSO:  According to the Lewin Group.

BOEHNER:  Lewin and Associates.

RYAN:  One firm, the Lewin Group, is telling us that.

UNIDENTIFIED MALE:  There is one study from the Lewin Group.

(END VIDEO CLIP)

MADDOW:  Opposition to health care reform brought to you by the people making a mint off the system being the awful way it is now.

Joining us now is the former Democratic National Committee chairman, former governor of Vermont, Dr. Howard Dean.

Governor Dean, thanks very much for joining us tonight.

HOWARD DEAN, FORMER DNC CHAIRMAN:  Rachel, thanks for having me on.

MADDOW:  Let me ask you first about the premise here.  My sense is that there is not a Democratic-Republican debate about how to reform health care.  My sense is that it‘s more like Democrats think there ought to be health care reform, and Republicans think there ought not be health care reform.  Do you think that‘s true?

DEAN:  I think it‘s even deeper than that.  I do think that‘s true.  This is not even about Democrats versus Republicans.  This is about the health insurance agency versus the American people.

Seventy-two percent of the American people want a public option.  We want them to be able to make these choices.  Fifty percent of Republicans - grassroots Republicans think they ought to have a choice.

So, anybody who votes against the public option is not just voting against the Democratic bill or something like that; they‘re voting for the insurance companies and against the American public.  And that is going to be the cry in 2010.

MADDOW:  Well.

DEAN:  Who are you going to vote for, the people who sent you there and who pay your salary, or you‘re going to vote for the health insurance industry?  That‘s your choice.

MADDOW:  Well, “The Associated Press” and NBC News are both reporting tonight that a bipartisan group of senators is making some sort of progress on some sort of compromise bill, but it wouldn‘t include this government insurance option.  It wouldn‘t include the public option.  And it wouldn‘t require businesses to offer coverage to their employees.

Now, we‘ve heard a lot of reports along the way about what‘s going to be in the bill or what‘s not going to be in the bill.  What‘s your take on this latest news?

DEAN:  Well, that‘s all very nice.  I‘m glad they‘re bipartisan but that‘s not health insurance reform.  That‘s—that is insurance reform but it‘s not health reform.  It‘s not going to—what it will do, I assume there is guaranteed issue and so forth in there, and if that‘s true, if the guaranteed issue is in there and community rating, then it‘s insurance reform.

It‘s not going to do anything to curb expenses.  It‘s not going to change the health care system.  It‘s not going to insure anybody extra.  That‘s what I call the fake public option.

And it‘s a shame really, because the Democrats are going to end up being responsible for killing this bill.  If we stick together like the Republicans are, we can get this passed.  But, unfortunately, that doesn‘t seem to be the case.

MADDOW:  I feel like it‘s not surprising to see the industry, the people who profit from the system being the way it is now trying to stop anybody from changing the system.  It‘s working great for the insurance companies right now.

But how do they get politicians, Democrat or Republican, to make that case for them?  Is there an ideological fit here or is it just campaign contributions—or what is it?

DEAN:  It‘s just about—it‘s about money.  It‘s about money, because when you have 72 percent of the American people thinking that they should have the choice instead of Congress, this is about money.  And the insurance industry gives out of a lot of money.

And, you know, this is going to be a hell of an issue in 2010 because—you know, honestly, what‘s the point of having a 60-vote majority in the United States Senate if you can‘t produce health insurance reform out of it?  I don‘t—or excuse me, health care reform.  You can get health insurance reform.

This bill is going to cost a lot of money and isn‘t going to do anything if this compromise, this so-called compromise is true.  This compromise does nothing except it will reform insurance.  That‘s a good thing to do, but they ought to strip the money out of it because we reformed insurance like this in Vermont 15 years ago.  It‘s a fine thing to do, but it doesn‘t insure more people.

MADDOW:  If the problem is.

DEAN:  It does make it fair.  It‘s not worth—it‘s not worthless because it makes it fair, but it‘s not health care reform, and nobody should pretend that it is.

MADDOW:  As you said, the Republicans—as you implied, the Republicans are very unified on this, and it seems to me like their strategy is that they don‘t want anything to change.  And as you point out, it‘s not just the Democratic-Republican divide.  There‘s also a divide within the Democratic Party and that—and you can—you can trace that divide down to where the insurance industry influences.

So, what can happen within the Democratic Party to hold the Democrats together, to make conservative Democrats and those aligned with the insurance industry do the right thing?

DEAN:  Well, some insurance—some conservative Democrats are doing the right thing.  I don‘t mind the blue dogs holding their feet to the fire on issues like fiscal responsibility.  I think that‘s good.  What‘s bad is coming out against the public option because that‘s what their constituents want.

This is, again, not a conservative-liberal divide.  The constituents want a choice.  They‘re tired of politicians telling them what to do.  They‘re frankly tired of insurance companies having bureaucrats telling their own doctors what to do—which is what happening now.  The Republicans are completely bankrupt on the issue.  Half these things they say are just not true and made up by spin doctors.

So, the question is: will the Democrats reform health care or will they not reform health care?  The House did a great job.  The Health, Education, Labor and Pension Committee did a great job.  The Senate Finance Committee is really in trouble.  And if this is true about this so-called compromise, I really—I fear for the future of health care reform because that‘s not health care reform.

MADDOW:  Well, what I really want now is I want you to host

“COUNTDOWN” tomorrow night and Wednesday night on MSNBC so you can keep sort of helming this coverage.  Will you do that?

DEAN:  I will actually.  Actually, it‘s good suggestion.  I‘ll go right over and see if I can arrange that.

MADDOW:  Excellent.  Former DNC chairman and former governor of Vermont, Howard Dean, who will be hosting “COUNTDOWN” tomorrow and Wednesday night.  We‘re really looking forward to seeing you then, Governor.  Thanks a lot.

DEAN:  Thanks for having me on.

MADDOW:  OK.  Coming up, part of Congress would like to protect you from getting totally jacked around by your credit card companies.  Another part of Congress favors letting you get totally jacked around by your credit card companies.  Congressman Barney Frank will join us in a moment.

Plus, beers of choice have been revealed for the President Obama, Henry Louis Gates, Sergeant Jim Crowley, big, awkward, knees up at the White House this week.

That‘s all coming up.  Stay with us.

(COMMERCIAL BREAK)

MADDOW:  Did you know that the average Goldman Sachs employee will make more money this year than he or she did in 2007 -- which was before ye olde disastrous financial crisis that required a massive taxpayer bailout?  Barney Frank will be here to discuss that with us in just a moment.

But first, it‘s time for a few holy mackerel stories in today‘s news.  In the six and a half year course of our war in Iraq, 18 American servicemen are known to have been killed not by enemy fire but by electrocution—electrocution in American-maintained facilities in Iraq.  In early 2008, Staff Sergeant Ryan Maseth, a green beret, was killed while he showered in Iraq when an ungrounded water pump failed that electrified the metal shower and the hose.

That system was set up by Kellogg, Brown, and Root, also known as KBR, which used to be part of Halliburton.  They had the giant, multibillion dollar logistics contract for supporting American troops in Iraq.  According to a brand new Defense Department report, KBR did not properly ground and inspect their electrical equipment in Iraq.

Also, the Army itself failed to set standards for contractors, like KBR, and never even bothered to ask them to repair like—oh, say, the electrical grounding system.  Improper grounding and faulty equipment was reportedly responsible for nine of the 18 electrocution deaths known in Iraq.

Staff Sergeant Maseth‘s mother Cheryl Harris is suing KBR.  She told “The Associated Press” today that she was pleased with the report‘s findings.  She said, quote, “The results are revealing and contrary to what KBR and its president have continuously stated.”

At first, Ms. Harris was told that her son had brought some sort of appliance into the shower with him.  Then they told them a story that he had touched hanging wires while showering.  Neither turned out to be true.  Staff Sergeant Maseth‘s death was just your standard potentially criminal contractor negligence.  There‘s more to come on this story undoubtedly.

Now, how much more to come about Sarah Palin‘s political career?  Remains to be seen.  But she is, as of today, a private citizen.  The former vice presidential candidate stepped down as governor of Alaska yesterday, about a year and a half before the end of her first term.

And so, to commemorate the handover of power in Alaska, Ms. Palin gave a farewell speech.  It was a speech that sounded very much like a retro campaign speech from the fall of 2008.  It was a speech that included this nugget about the terrible, horrible, no good, very bad media, and its compulsive obsession with the families of Alaska governors.

(BEGIN VIDEO CLIP)

SARAH PALIN ®, FMR. ALASKA GOVERNOR:  How about, in honor of the American soldier, you quit making things up?  And one other thing for the media, our new governor has a very nice family, too.  So, leave his kids alone.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MADDOW:  Just a guess, but I think the media is almost certain to leave Gov. Parnell‘s kids alone, and almost surely would have left Sarah Palin‘s alone if not for the fact that the person who most often put Sarah Palin‘s kids in the media spotlight was Sarah Palin. 

(BEGIN VIDEO CLIP)

S. PALIN:  On September 11th of last year, our son enlisted in the United States Army.  Track now serves in an infantry brigade.  And on September 11th, Track will deploy to Iraq in the service of his country. 

Being a mom, being one who is very concerned about a son in the war,

about a special needs child, about kids heading off to college, how are we

going to pay those tuition bills -

What I know is that my son has made a decision.  I am so proud of his independent and strong decision he has made. 

Bristol can be used as an example of taking less than ideal circumstances and still making the best of these circumstances.  And that is who she is.  She‘s strong.  She‘s kind hearted.  She‘s going to be just fine. 

MATT LAUER, NBC CORRESPONDENT:  When you were traveling do you miss your friends back home? 

PIPER PALIN, SARAH PALIN‘S DAUGHTER:  Yes.

LAUER:  That‘s the hard part isn‘t it? 

P. PALIN:  Yes. 

LAUER:  Did you miss much school? 

P. PALIN:  A lot of school. 

LAUER:  Yes.  And how is that now?  Is it hard to catch up? 

P. PALIN:  Yes.  It‘s really hard. 

LAUER:  So you‘re seven now, so if your mom comes in four years, you‘ll be 11.  And she says, “Piper, kids, here we go again.  Another campaign.”  How would you feel about it? 

P. PALIN:  I don‘t know. 

(END VIDEO CLIP)

MADDOW:  So who brought up Gov. Palin‘s kids in the media?  Who‘s the big, bad, exploiter of the Palin kids for political gain?  Good luck in private life, governor, honestly.  Good luck to you and to your family.  Am I allowed to say that? 

And finally, an update on the controversial arrest of Harvard Professor Henry Louis Gates at his home in Cambridge, Massachusetts.  President Obama made a surprise visit to the White House Press Corps last week to announce he had spoken with the arresting officer in the case, Sgt.  James Crowley as well as with Professor Gates. 

In the interests of advancing the conversation on racial profiling and racism in America, the three men said that they would have a beer together at the White House.  And that is now apparently official.  The beer will reportedly happen sometime this week. 

OK.  So controversy over, right?  Wrong.  Because as I said last week, you have to pay attention to the people who try their very mightiest to keep this story alive.  Exhibit A is Michigan Republican Congressman Thaddeus McCotter who plans to introduce a resolution in the House calling on Obama to apologize to Sergeant Crowley. 

A brow beating over a controversial presidential sound bite is not a constitutional power given to Congress, so Congressman McCotter‘s bright idea is unlikely to make much more news than to expose his position. 

What is news is the kind of beers that the president, the professor, and the sergeant will be enjoying at the White House.  The White House has revealed that the president will be drinking Budweiser.  Sergeant Crowley will be drinking a Blue Moon.  And “The Boston Globe” reports that Professor Gates does like a beer every now and again.  He prefers Red Stripe or Beck‘s.  That‘s all the booze that‘s fit to print.

(COMMERCIAL BREAK)

MADDOW:  If you were applying for a credit card 30 years ago, you‘d probably be asked to sign off on a one-and-a-half page contract each.  Today, credit card contracts are 30-page novellas crammed with tiny print full of financial traps and hidden penalties. 

Lots of people get that envelope with the block letters that says, “You can have a free credit card now.  Free, free, free.”  They sign up for all that freeness.  They don‘t fully absorb the text and meaning of the microprint contract‘s novella. 

And then, they find out later about the rate hikes and the inexplicable fees and ultimately, the damage to their credit.  That same sort of change over the last generation, change that swindled consumers but helped short-term corporate profits, is also the kind of change we saw laid bare in the mortgage industry meltdown. 

Millions of people steered toward complicated loans full of traps and risks they weren‘t really assessed to bear, ultimately defaulting, blowing up whole portions of the financial sector that made subprime mortgages a mythical source of profit based on willful ignorance of the real people in real houses with real debt burdens that were being traded and bid up like so many baseball cards or beanie babies. 

Whatever became of the geniuses who used to make money signing people up for mortgages they couldn‘t afford?  As the “New York Times” has been reporting this month, quote, “Many of the same people who dispensed risky mortgages during the real estate bubble have reconstituted themselves into a new industry focused on selling loan modifications.” 

So the people who made money issuing bad loans are now making money fixing bad loans.  Be afraid.  Be very afraid.  The good news is Congress is working on some legislation right now that would make it harder to make money on financial products just by swindling people requiring simple, clear, readable language and non-loan-shark-y terms for doing business with American consumers. 

Part of the great big reform package on the table is the creation of something called the Consumer Financial Protection Agency.  Its goals would include bringing us back to the days of understandable, page-and-a-half long credit card contracts, warning labels for complex, dangerously risky financial products, think subprime mortgages, setting official standards that all home mortgage lenders would have to follow. 

Guess who is against an agency like this?  Wall Street.  Flush with taxpayer-provided bailout cash, Wall Street‘s number one lobbying priority right now is killing the Consumer Financial Protection Agency, naturally. 

Joining us now is the member of Congress who more than any other is the gatekeeper on these issues.  He‘s the chair of the House Financial Services Committee, Barney Frank.  Mr. Chairman, thanks very much for joining us again tonight. 

REP. BARNEY FRANK (D-MA), CHAIRMAN, HOUSE FINANCIAL SERVICES COMMITTEE: 

I‘m glad to, Rachel.  This is about as important an issue as consumers can deal with. 

MADDOW:  Do you think that we ultimately are going to get a Consumer Financial Protection Agency? 

FRANK:  Yes.  Look, the conventional wisdom and the way Washington has worked has been that the powerful lobbies line up.  And they‘re the ones that are on the scene.  They‘re right here.  They‘re the ones people hear from. 

Ordinarily, it‘s very hard to mobilize the average citizen.  You know, people have their own jobs.  They have their families.  They have other things to do.  Consuming is kind of a small part of what they do.  They‘ve got to worry about where the income comes from. 

But the abuses in the financial area have been so egregious and the consequences so negative because as you pointed out it wasn‘t just that with some of these mortgages people were getting hurt.  The whole economy suffered. 

I believe the public is now ready to speak out.  And I told my associates in the banking industry, the people I deal with, I think they‘re making a mistake.  I‘ve invited them to work with us.  We want to do this consumer agency in a sensible way.  We want to make it work. But if they are going to try and kill it, then they will be outside the process and they‘ll lose. 

I don‘t have any doubt that the American people will do this.  Look, you‘ve got people obviously watching here tonight.  If every one of them calls his or her U.S. representative and senators and says, “Don‘t you dare come home without a consumer product agency,” at the end of the year, then we‘re going to win. 

MADDOW:  Common wisdom in Washington is that when people slow something down, that‘s the first step toward killing it.  And the people who are against the Consumer Financial Protection Agency think that they have succeeded in slowing it down. 

But just to be clear you think that the more time there is to debate this, the more likely it will pass because people are so (UNINTELLIGIBLE).

FRANK:  Absolutely.  Let‘s put it this way.  We‘re sort of holding the fort here.  And the people attacking the fort - they were the ones on the ground.  But the reinforcements are coming. 

My advice to the banking industry was, look.  I don‘t think you‘re all evil people.  You have an important function in the economy.  Let‘s work together to make sure this works.  Too many of them said, “No, no.  We‘re going to beat it.”  I said fine.  Let‘s have this debate. 

I think it will be very healthy for the country to have this debate for the average citizen to speak out and talk to his or her representative.  No, this bill is getting stronger, not weaker.  It is going to get more sensible. 

There are some things in it that I thought were excessive.  I worked very closely with Elizabeth Warren who is a very creative consumer advocate at Harvard Law School whose basic idea this was. 

And yes, I believe that over the next couple months, by the time we vote on this in September, six weeks from now, it‘s going to be a very strong, very effective piece of legislation, because I think part of the problem people in the financial community have, they don‘t understand how angry people are. 

Look, you saw it last week, some of the people to whose rescue we had to go in the financial crisis.  Now, we didn‘t want to rescue them.  We had to rescue the economy and there was no way to, you know, rescue them without - to rescue the economy without them. 

They started to go back to their old ways.  And I said - Rachel, you were probably too young to remember the radio series.  But there was a radio series which began with, “Return with us now to the thrilling days of yesteryear, when the lone ranger rode again.”

And I said, these aren‘t the lone rangers.  These are the loan arrangers.  They‘ve arranged loans and arranged it badly.  And if they think that they‘re going to take us back to those thrilling days of yesteryear, they‘re crazy.  We‘re going to beat them.  I‘d rather work with them.  But if it becomes a fight, we‘re going to beat them. 

MADDOW:  People who work at Goldman Sachs are supposedly going to make more money this year on average than they made in 2007 before the crisis.  Is there going to be action from Congress on top of this message? 

FRANK:  Yes.  Tomorrow, the committee that I chair will be voting on a piece of legislation to deal with executive compensation at two levels.  First of all, we‘re going to let the shareholders vote on the pay.  The problem is that the boards of directors and the CEO 00 they‘re very closely connected.  They don‘t have an average (UNINTELLIGIBLE).  They shouldn‘t, but they kind of compete. 

You know, everybody wants his or her CEO to be above average.  It‘s kind of like Lake Wobegon.  What we‘re going to do is to pass a law that says if you‘re a public corporation and you‘re spending shareholders‘ money, the shareholders get to express their opinion on the pay.  We call it say on pay. 

And we believe that will be very effective.  Beyond that, we‘re going to tell the Securities and Exchange Commission that they have to, with regard to all financial institutions, investment banks, commercial banks, any financial institution.  Here‘s the problem.  It‘s not just the amount they pay themselves, it‘s how they do it. 

They give themselves incentive bonuses and they work under the general principle of “heads I win, tails I break even.”  Because if they take a big risk and it makes money, they get some of that money.  If they take a big risk and it loses money, then it was a nickel. 

Well, if that were the situation you were faced, take a risk and you only get a benefit if it pays off.  You lose nothing if it doesn‘t.  You‘d have to be pretty dumb not to take too much risk, and that‘s how we got into trouble. 

There was this incentive to take too much risk.  So we‘re going to let shareholders vote on the pay and give their opinion.  And we‘re going to have the Securities and Exchange Commission mandate, refuse to allow any compensation system that has these incentives to make money. 

Because, as we said, in 2007, things went good and made money.  2008 - bad year.  They didn‘t lose any money.  Now, they want to go back to winning.  You can‘t have this win, win, win, and breakeven.  There has to be a win-lose situation. 

MADDOW:  Congressman Barney Frank, Democrat of Massachusetts, these are complicated matters that I feel like I understand better after I talked to you about them.  Thanks for coming on the show tonight, sir. 

FRANK:  Well, thank you.

MADDOW:  Appreciate it.  The new weird battle royale between George Bush and Dick Cheney over who gets the less icky legacy rages on.  After taking the fight to his former boss in the early round, Cheney has been knocked back on his proverbial heels by reports that Bush was protecting America from Cheney the whole time. 

Got that?  Bush protected us from his own administration.  That‘s the argument they‘re asking us to swallow.  Pulitzer Prize-winning author, Ron Suskind, will join us for a little fact check, next.

(COMMERCIAL BREAK)

MADDOW:  The “New York Times” reports that in 2002, Vice President Dick Cheney argued that U.S. troops should be dispatched to Buffalo, New York to arrest terrorism suspects.  Why use the military and not just the police, the FBI like we normally do? 

Well, in the words of “The Times,” the suggestion was Mr. Cheney‘s strategy for, quote, “testing the Constitution.”  Even though active duty troops hadn‘t been deployed in the U.S. for law enforcement since the Civil War, even though using our own military to arrest Americans on American soil is so blatantly illegal that it causes the Posse Comitatus Act to spontaneously combust in protest, Mr. Cheney argued it would still be worth a try, worth testing it to see how it would work out. 

According to the “Times,” quote, “Several top Bush aides argued firmly against the proposal to use the military.”  And quote, “Mr. Bush ended up ordering the FBI to make the arrests in Lackawanna.”

Now, the case that‘s being made in the press right now by lots of unnamed former senior Bush officials is not just Dick Cheney as bad guy, Bush as good guy.  It‘s Cheney as bad guy thankfully constrained by George W. Bush, the noted civil libertarian equal protection anti-Cronyism defender of the rule of law. 

The George W. Bush legacy project is full effect.  And its strategy, it seems, is to blame Cheney for all the worst stuff. 

Joining us now to sort this out is Pulitzer Prize-winning author and journalist, Ron Suskind.  He‘s author of the book most recently, “The Way of the World: A Story of Truth and Hope in an Age of Extremism.”  Ron, it‘s great to see you.  Thanks for being here.

RON SUSKIND, PULITZER PRIZE-WINNING AUTHOR:  It‘s great to be here.

MADDOW:  Do you think this is the George W. Bush legacy project at work? 

SUSKIND:  Well, it‘s two projects that are head-to-head in battle, the Cheney legacy project versus the Bush legacy project.  And you know, it‘s two presidents in competition.  It‘s an extraordinary thing to watch.  I mean, it‘s like the Ali-Frazier fight, two champions fighting it out.  And it‘s going on for as long as Cheney keeps it going, frankly. 

MADDOW:  While Cheney is fighting his own battles, Bush has unnamed senior Bush officials fighting it in his name. 

SUSKIND:  Yes.  Let‘s be very clear here.  What happened here was a deniability strategy.  Bush and Cheney talked through all the key issues.  And then, Bush essentially unleashed his Cheney and says, “I don‘t want to know the details.  I want to know the top line.” 

And essentially, Bush then becomes deniable if there is an emergency of transparency.  That‘s the actual model here, to sever basic issues of accountability that the president is supposed to be, you know, constrained by. 

MADDOW:  But to have Dick Cheney explicitly attacking the president for not pardoning Scooter Libby, other issues like closing Guantanamo, torture regime, why is Cheney overtly attacking Bush now? 

SUSKIND:  Cheney thinks he was right and that Bush peeled back some of the extra legal stuff in 2004 and 2005 and 2006.  And Cheney says, “I‘m right.  You are wrong.”  The legacy of this period, the War on Terror era, our era, it‘s my legacy.  I was driving the ship.  And my ideas, Mr. President,” that‘s Cheney‘s view, “were the right ideas.”  And the ones history will affirm is right. 

So at this point, you‘ve got, I think, open warfare.  And a lot of this, you know, Bush as sort of the propitious constitutional guardian is just absurd. 

MADDOW:  No one is above the rule of law, said Bush, right? 

SUSKIND:  Actually, Ashcroft was the first one to say it. 

MADDOW:  Exactly.  It just makes me cough out the words “Geneva Conventions.”  What do you make of this reporting about 2002 specifically, the administration considering sending in active duty troops, sending the Army into an American suburb to arrest people?  What do we know what was going on there? 

SUSKIND:  Well, this is very important here.  You know, first off, the intelligence was very thin on the Lackawanna group.  There was a lot of debate as to what to do, because these guys were sitting around not doing almost anything.  And frankly, much of their engagements looked like summer camp, a jihadist summer camp. 

What was interesting at this point is Cheney had his eye on the 9/11 one-year anniversary.  He wanted a big show, a show of force, a show of resolve, a show of expanded power.  And that‘s part of what I understand was driving Cheney‘s desire to send troops into downtown Lackawanna. 

MADDOW:  For the political anniversary, for the political resonant anniversary, let‘s test the Constitution, show how much we‘ve changed as a country because of the anniversary.

SUSKIND:  Cheney is a big believer in demonstration models, so-called, to shape behavior, to shape expectations and to shape essentially other people‘s actions.  This was part of that thinking. 

Now, it‘s interesting because up in Lackawanna, I talked to the folks in that case.  The FBI guys were so conspicuous.  Everyone knew the FBI was watching the guys.  The guys knew they were being watched.  Everyone was sitting doing nothing. 

And even at the end of the day, there was very little evidence on the Lackawanna group.  But Cheney still said this is an opportunity to show our newfound resolve as to the powers of the president. 

MADDOW:  Thank God we had that great civil libertarian holding down the west wing. 

SUSKIND:  I know.

MADDOW:  Incredible spin here.  Unbelievable.  Ron Suskind, thank you so much - Pulitzer Prize-winning author and journalist.  The latest book is “The Way of the World: A Story of Truth and Hope in an Age of Extremism, which I read and I loved.  It‘s great to see you, Ron.  Thanks.

SUSKIND:  It‘s great to be here. 

MADDOW:  Coming up on “COUNTDOWN,” a fun look back at the last 10 months on Sarah Palin.  And next on this show, Comic-Con.  It‘s not just for costume-fake superheroes anymore though you can still find a lot of them there.  Trust me. 

(COMMERCIAL BREAK)

MADDOW:  We turn now to our parallel reality correspondent Kent Jones.  Hi, Kent.

KENT JONES, POP CULTURIST:  Hi, Rachel.  You know “The Gigantor” comic book festival known as Comic-Con was held just this weekend in San Diego.  They previewed some new movies that are coming out.  I‘m officially psyched. 

MADDOW:  OK. 

(BEGIN VIDEO CLIP)

JONES (voice-over):  Don‘t worry, Comic-Con is still a place where you can walk around dressed like this in a nonjudgmental, wedgy-free environment.  But now that mainstream has been successfully bet geek word, all the major studios line up at Comic-Con to sneak their fave fall movies. 

This week‘s faves?  Remember “Tron,” that 1982 movie where Jeff Bridges gets trapped inside a computer and has to play video games to survive?  Well, check out the sequel, “Tron Legacy,” where Jeff Bridges gets trapped inside a computer and has to play videogames to survive, only this time with way better special effects. 

You‘ll have to pardon me, but my fan boy meter is crashing on this.  Now, I‘m not saying I have a “Tron” costume at home, but I‘m not saying I don‘t either. 

UNIDENTIFIED MALE:  It‘s just a game. 

UNIDENTIFIED MALE:  Not anymore. 

JONES:  Also hot is “New Moon,” the sequel to the teen vampire smash “Twilight.”  Looks like once again, we are in for some super-hot not-sex scenes.  The not-sex is positively -

UNIDENTIFIED MALE:  I promise never to put you through anything like this ever again.

JONES:  Explicit.  And finally, Johnny Depp thrilled the Comic-Con people by showing up to plug director Tim Burton‘s movie “Alice in Wonderland.” 

JOHNNY DEPP, ACTOR (as the Mad Hatter):  Alice, you‘re terribly late. 

You‘re naughty. 

JONES:  Depp plays the Mad Hatter in the trippy kid‘s classic by Lewis Carroll.  Just so you know, most scholars agree that Carroll was not on drugs when he wrote this.  I know, curiouser and curiouser. 

(END VIDEO CLIP)

MADDOW:  Great.  I‘ll have cat nightmares.  Thank you very much, Kent. 

JONES:  Sorry.

MADDOW:  All right.  Thank you for watching tonight.  We will see you again here tomorrow night.  “COUNTDOWN” starts right now. 

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

END   

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