'Countdown with Keith Olbermann' for Friday, January 14th, 2011
video podcast

Guests: Ezra Klein, Reihan Salam, Dennis Henigan, Mike Konczal, E.J. Dionne

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CHRIS HAYES, GUEST HOST (voice-over): Which of these stories will you be talking about tomorrow?

After calls for this:

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Only a more civil and honest public discourse can help us face up to the challenges of our nation.

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HAYES: The return to work on the Hill, by setting the date to vote on repealing health care reform. The question: will it be politics as usual?

On gun control, a Democrat's proposed ban on the clips designed to kill as many people as possible. Her bill may never see the light of day. The Brady Campaign calls on the White House for more support.

Congress gets a 77 percent approval rating for one thing - the lame duck session.

A record 1 million homes in the U.S. lost to foreclosure in 2010.

This, as banks parade of profit reports start marching in.

And, are you ready for some softball? Monday night, Sarah Palin will give her first televised interview since the shootings in Tucson. Who better to ask the questions?

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GEORGE W. BUSH, FORMER U.S. PRESIDENT: I'm talking to you, my buddy.

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HAYES: All the news and commentary - now on Countdown.

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SARAH PALIN (R), FORMER ALASKA GOVERNOR: The haters are going to have a whole lot of material.

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HAYES: Good evening from Washington. I'm Chris Hayes, in for Keith Olbermann. This is Friday, January 14th.

And Congress is ready to get back to work with the House GOP leadership striving for thoughtful consideration of the health care bill next week. That bill is called, quote, "Repealing the Job-Killing Health Care Law Act," even though the health care law does not in fact kill jobs, and even though the so-called "repeal" has no chance of passing the Senate.

In our fifth story: welcome to the 112th Congress. The C stands for "civility."

It's back to business next week with the two-day, seven-hour debate on repealing the health care law scheduled to begin next Tuesday. The vote is set for Wednesday.

A spokesman for House Republican Leader Eric Cantor saying, quote, "As the White House noted, it is important for Congress to get back to work, and to that end, we will resume thoughtful consideration of the health care bill next week. Americans have legitimate concerns about the cost of the new health care law and its effect on the ability to grow jobs in our country. It is our expectation that the debate will continue to focus on those substantive policy differences surrounding the new law."

Some Democrats had suggested that Republicans rename their repeal effort as something other than job-killing. And Congressman Mike Pence had said he would prefer to call it the government takeover of health care bill. But Republicans stuck with "job-killing" in the title.

Though that is not necessarily uncivil, it is notable that when President Obama delivered his much-lauded remarks at the Tucson memorial, civility wasn't the only stated aspiration.

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OBAMA: And if, as has been discussed in recent days, their death helps usher in more civility in our public discourse, let us remember it is not because a simple lack of civility caused this tragedy - it did not - but rather because only a more civil and honest public discourse can help us face up to the challenges of our nation in a way that would make them proud.

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HAYES: We'll explore the honesty of the GOP repeal effort with Ezra Klein in a moment.

As for the off-stated Republican claim that Americans actually want the health care law repealed, another reminder: in the latest poll, that a plurality of Americans want the health care law changed to do more, 35 percent. Forty-nine percent either want it to do more or stay the same. Only 43 percent want it to change, to do less or completely repealed.

But in the intellectual honesty department, the most recent egregious failure comes courtesy of Tea Party Republican, newly installed Senator Mike Lee of Utah who, in a lecture, cited a 1918 Supreme Court case that struck down child labor laws as unconstitutional.

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SEN. MIKE LEE (R), UTAH: In that case, the Supreme Court acknowledged something very interesting, that as reprehensible as child labor is, as much as it ought to be abandoned, that's something that has to be done by state legislators, not by members of Congress. This is local. So, the law is no good. It's unconstitutional. As laudable as the objectives may be, the law is no good.

This may sound harsh, but it was designed to be that way. It was designed to be a little bit harsh, not because we like harshness for the sake of harshness, but because we like a clean division of powers.

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HAYES: Senator Lee failed to mention that the 1918 Supreme Court case was unanimously overruled by another Supreme Court case in 1941. Senator Lee pining for 1918. Reactionary much?

Finally, the Republican National Committee has chosen its new chairman and it is not Michael Steele, who dropped out after the fourth round. The winner, after seven rounds of voting, was the Wisconsin Republican Party chairman, Reince Priebus. I think I got that right. Republicans thus declined to elect pharmaceutical lobbyist Maria Cino, who was endorsed by House Speaker John Boehner and former Vice President Dick Cheney.

To look at this issue of civility, what it means and does it matter, let's bring in a blogger at "National Review" and my friend, Reihan Salam.

Good evening, Reihan. How are you?

REIHAM SALAM, NATIONAL REVIEW: Good evening to you, Chris. A very civil good evening to you, I should say.

HAYES: Yes, exactly. I wanted you to come on because, you know, you

I think you've been voted most civil conservative three years running.

And - but I'm genuinely interested in what you made of this week's meta conversation about civility.

SALAM: Well, I thought that President Obama's remarks were really lovely and inspiring, but I do think that the fundamental issue is that America is a very diverse place. We have lots of different kinds of conversation, and I think that one issue is that different communities talk to each other in different ways and that is - that leads to a lot of misinterpretation. For example, you and I are both - I like to think - thoughtful people who try to take in lots of different views, but we have very different views about the health reform debate.

HAYES: Sure.

SALAM: And we have expressed ourselves very differently. And we look at different angles when we're thinking about this debate. And that means that there are a lot of things I say that you might characterize as dishonest - if it were coming from someone who wasn't your friend. And the same goes for me to you.

HAYES: Yes.

SALAM: So, I think that's just inevitable. And I think it's not about civility or honesty, it's about the deep divides that are reality of democracy in a diverse republic.

HAYES: Yes. I basically agree with that. Paul Krugman has a column today where he basically says - he makes that point and the point that he makes is, essentially, look, there's a division, and the division that he notes is a division between basically one portion of the country that has sort of acclimated and accepts the mixed economy and the welfare state and one that doesn't.

And to that end, I wonder what you make of, say, Mike Lee, talking about this child labor law. Is that an accurate sort of characterization of what the kind of bedrock, fundamental disagreement is?

SALAM: Well, I actually think that Mike Lee's position turns out to be very different if you look at it from a different angle. Let's say you believed that Hawaii should be allowed to be much like Sweden and that Utah should be allowed to be much like Singapore.

Let's say you believe that the United States should be a collection of states that are able to pursue very different visions - call it utopia, call it something else. I think that's actually a very inspiring idea that could attract a lot of people who say, hey, you know, here I am in New York City. And New York City is not the kind of egalitarian liberal place I wanted to be because it can't be because Washington, D.C. puts the brakes on it.

I think that actually Mike Lee's vision sounds reactionary to some, but I think it could enable this very different kind of country that could enable these experiments in living.

HAYES: But it also is, but it also is - whether reactionary or radical, it is something that is - would you agree that it's outside of what we sort of think of as a consensus of how we're going to sort of manage the welfare state? I mean, if you're saying, look, we should be looking at a place where we go back to a time where the Commerce Clause does not allow you to ban child labor, you're talking about a really, really, radical, radical change in how, you know, basically, the last 80, 90 years of the mechanics of American self governance, right?

SALAM: Yes, I think that's absolutely right. I think we have radical changes in this country all the time. That's a source of our strength and also a weakness.

For example, the deregulation of financial institutions that you saw stretching from the late '70s to the 2000s - I mean, that was a really radical break with a history in which we settled on a new approach to banking regulation that built up steadily over time. But it was embraced by elites. It was embraced by a consensus.

HAYES: Yes.

SALAM: And sometimes, shaking up that consensus and saying, hey, wait a second, this consensus doesn't make sense, could be a very useful and constructive thing. But the first people who go out there and do that, who break with the consensus, are always going to be characterized as loony tunes.

HAYES: Do you think that there are things that are loony tunes? I mean, do you think -

SALAM: Well, that's a very deep question, Chris.

HAYES: Well, no. But because, I do wonder sometimes - I mean, you can get into asymmetry conversation about who's worse and where is more violent rhetoric coming from, or who is less civil, which seems to me like you're not going to convince anyone one way or the other.

But I do wonder about: do you feel that - what worries me and I think more than civility or not, I feel like the center of American political discourse has moved markedly to the right and that's problematic for me on substantive grounds - do you feel like it's moved to the right?

SALAM: It depends on the time horizon you're talking about. I'd say that, you know, over my lifetime, I imagine it has moved to the right in a lot of ways. But also, it's moved to the left in other ways.

If you look at the way that we talk about civil and equal rights for different kinds of Americans, different - people with different sexual preferences, et cetera, I think there's been a dramatic move in a very healthy and constructive direction towards views that were considered totally marginal and bizarre and on the, quote-unquote, "left" a long time ago.

I think that also when you think about the actual increase in the size of government, it's really happened at the state and local level. And that's because a lot of people have deployed very effective arguments - arguments that I reject, by the way - but about, you know, how we want to approach our public schools and a variety of other questions. So, I actually think that the real story has been an objective shift towards a much bigger government.

And in the guise of things that are really motherhood, apple pie, flag-oriented - everyone loves teachers, everyone loves nurses.

HAYES: Right.

SALAM: And I guess what, we give a lot more money to those groups in the public sector than we did 30 years ago.

So I think that, you know, sure, there are more people who talked about free markets, but even if you look at the real world Republicans, how many of them really go for a 200 proof.

HAYES: That's right.

Well - and that's actually one of the irony, right, is when we have the civility discussion, we have discussion about the polarization that - you know, the polarization that we experience both as sort of participants in the political sphere, as voters, across the dinner table at holiday dinners, right, that the pitch of it, the sort of intenseness that it's felt doesn't necessarily map onto the intenseness in terms of certain big consensus issues. I mean, when you're talking about growth of government, what we saw in Republican Congress last time was a growth in government.

When you talk about bank deregulation, we had bank deregulation that was being, you know, engineered by a Democratic president and Republican members of Congress.

So, there's this - there's this disconnect, it feels like to me, between how harsh those partisan divides are in the polarization of how we talk about politics and, necessarily, what gets produced sometimes under the rubric of consensus.

SALAM: Yes.

HAYES: But that's me opining.

SALAM: Well, here's really, really sad news for the audience. I think that what we see is a lack of civility and a lack of honesty in public debate is structural. I think the stakes of these debates are incredibly high. There was a time in the '70s when people said, you know, there's not a dime's worth of difference between the parties, that actually, Americans are not passionate and engaged enough in public life. And guess what? People are very passionate and very engaged right now.

HAYES: Yes.

SALAM: When you feel the stakes are really high, that means the rhetorical temperature is going to be high.

HAYES: Yes.

SALAM: And the tragedy of that is that it does mean a lot of shouting matches and it also means people cocooning. And I think that's not good for any of us.

HAYES: "National Review" blogger, Reihan Salam, that was great. I really appreciate you coming on. Have a great weekend.

SALAM: Thanks for having me, Chris.

HAYES: All right. Let's turn to "Washington Post" staff writer, "Newsweek" columnist, MSNBC contributor, the job-killing, Ezra Klein.

Good evening, Ezra. How are you?

EZRA KLEIN, MSNBC CONTRIBUTOR: Good evening, Chris.

HAYES: So, OK, I guess the first question is: where does the "job-killing" phrase come from? I feel like watching cable TV, I have seen this phrase invoked like every three seconds by Republicans recently.

KLEIN: It comes from polling. People like jobs. If something kills jobs, that's not a good thing.

But if you say substantively where does it come from, where does it come from - if you don't want to feel like that you're a bit of a hack, there was a Congressional Budget Office report, and it showed the health care bill would reduce employment. And to some degree, it's true, except they did it in the opposite way.

Here's why the health care bill might reduce the labor supply, the number of people who want jobs by 0.5 percent down the road. When you give people more money, which essentially if you're helping them purchase health care benefits is what you're doing, and when you make it so older people have an easier time buying health in the individual market so they don't have to be with an employer, they don't like anymore, for the sake of their health care, people can make the decision to retire early, to stay home with their kids, to do the various things that people sometimes like to choose to do.

And so, a certain number of them, not many, but a small number, are expected to make that decision. But that isn't job killing. If you believe that's job killing, then Social Security is a giant job killer. Then the way we increase jobs is to keep people poor and make it harder for them to get health care outside of their employers, I don't believe Republicans think that. I'm a civil guy.

But I also think that by the same token, they shouldn't accused - they shouldn't be twisting the CBO's words to say job-killing when they mean making people richer and making it easier to buy health care, even if you've been sick before.

HAYES: How do you - how do you interpret this as a signal of what this sort of Republican Congress going to be like? At one level, it seems like it's - you know, it's going to integrate the Tea Party and this is going to be this sort of right wing Congress. And at the other level, it feels - it also feels like maybe this is just the symbolic bone-throwing and they're going to get down to getting those farm subsidies through.

KLEIN: It feels fairly symbolic. I don't tend to get very exercised over bill names. I mean, look, the bill is named the puppies, puppies and kittens act in the first place. It is unusual for bill to be named the "destroy America repeal act" bill, so you don't usually have it framed in the negative, but it's usually so absurd the way they name bills anyway that I don't take it too seriously. And they know they're not going to repeal it.

So, down the road, we could see more defunding efforts. We could see more subtle efforts to undermine the bill. But the symbolic act here is not something I think people should get overly excited about and certainly not uncivil about.

HAYES: If this - if this is symbolic, then what are the areas where we are going to see real substantive changes that are going to improve or hurt the legislation that has been passed?

KLEIN: We don't do a great job of watching the regulators. What's going on right now, the thing that's more important than this go-around in Congress is the regulators right now are trying to define what counts as an essential health benefit, what is the minimum level of creditable coverage under the bill.

And when they decide that, that decides, when you're on an exchange, when you go into your small employer and they give you health care, how good that health care be, how comprehensive it will be. That's a tough call to make. It's tough to say how many specifications, how many regulations you actually want, telling people, this is the only type of care we'll accept.

But, of course, on the other hand, you don't want to be the person who gets cut off when you actually get sick because they didn't actually say, listen, you can't rule out, say, therapy for multiple sclerosis because people don't actually improve. They just are able to keep their functioning.

So, that stuff is more difficult, but it's harder for us to report on and it doesn't get as much attention because it isn't done in as controversial a way. The secret about incivility is that it's fairly good for ratings.

HAYES: Ezra Klein of "The Washington Post" - thanks so much for your time tonight and have a great weekend.

KLEIN: Thank you.

HAYES: The attempts by members of both parties to introduce gun control legislation aren't being welcomed by the Republican-led House. The Brady Campaign wants the president to step in, next.

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HAYES: He mentioned gun control in his Tucson speech. Now, advocates want more than just words.

And 1 million homes lost in foreclosure in one year, as the creditors doing the foreclosing show big profits.

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HAYES: He'll take away your guns. In fact, the feds are coming to round them up now.

That's what the gun lobby would like you to believe about a man who has received repeated failing marks from gun safety advocates.

And in our fourth story: despite several proposals from both sides of the aisle, President Obama continues to treat the issue of gun safety as a political third rail.

Congresswoman Carolyn McCarthy, Democrat of New York, today releasing text of a gun safety bill she plans on introducing next week. The legislation would outlaw high-capacity clips, the kind allegedly used by Jared Lee Loughner to fire off 31 rounds of ammo in a matter of seconds. The kind used in the mass shooting on the Long Island railroad in 1993 that killed McCarthy's husband.

McCarthy's proposal goes further than the assault weapons ban that expired in 2004 by outlawing the sale or transfer of magazines that hold more than 10 rounds, even those obtained before the law takes effect. It will be paired with legislation on the Senate side sponsored by Democrat Frank Lautenberg of New Jersey.

Despite an uphill battle in a Republican-controlled House, McCarthy tells "Talking Points Memo" momentum seems to be building for the bill. This as an aide to Speaker of the House John Boehner tells "Politico" it's unlikely that Mr. Boehner will support the legislation.

Boehner already nixed gun safety legislation proposed by fellow Republican Peter King of New York.

Yet, Congresswoman McCarthy is also optimistic President Obama won't sit this one out. "Hopefully, Senator Lautenberg and I can convince him that this is the one to take a stand on, because it has nothing to do with the gun, it's an addition to the gun."

While the president touched on gun control in his Tucson speech, a White House official issued this cool response. "There have been a number of proposals put forth in the days since these tragic shootings and we're going to be taking a close look at all of them. Obviously, reducing gun violence and increasing access to mental health services are policy goals that the president shares."

Meanwhile, many news outlets, including this news hour, have reported that gun sales have increased since Saturday's shootings. NBC News has learned officials close to the numbers are skeptical. They say gun sales were higher the week before the shooting. The week after, there was no increase in sales, both nationwide and in Arizona.

While sales may not have increased, interest hasn't waned either. The Crossroads of the West gun show will go on as planned this weekend. It will be held at the Pima County fairgrounds, just 13 miles from the shooting.

Lois Chedsey of the Arizona Arms Association, a sponsor of the show, tells "The New York Times" her group had, quote, "no hesitation" with going ahead with the show so soon after the incident.

Joining me is the vice president of the Brady Campaign to prevent gun violence, author of "Lethal Logic: Exploding the Myths That Paralyze American Gun Policy," Dennis Henigan.

Thanks for your time tonight. I really appreciate it.

DENNIS HENIGAN, BRADY CAMPAIGN: It's nice to be with you, Chris.

HAYES: What is your sense of what the lay of the land is in terms of Congress and bill that Carolyn McCarthy and Frank Lautenberg are going to propose?

HENIGAN: Well, I agree with Representative McCarthy that momentum is building on this issue. I mean, you have to realize that this horrific shooting was an extraordinary event on a number of levels. I mean, not only do we have another mass shooting, taking the life of a 9-year-old child, but here, the violence strikes very close to home for the United States Congress. We have a very well-respected, very well-liked member of Congress lying critically wounded in a hospital.

There is an emotional wallop to this event that we hope will cause those in Congress and in the White House to take a new look at this issue. What we are calling for is a demonstration of some modicum of political courage on this. The gun issue is never easy.

But in this case, who really can defend the distribution of 30-round ammunition magazines to the general public that allows a degree of extraordinary firepower that you simply do not need when you're hunting?

HAYES: Let me ask you this question. It's so striking to look at the politics of this particular issue over the last decade, say, in 2000, the presidential candidate-then, George W. Bush, was saying he was going to renew the assault weapons ban. But now, you basically have a Democratic president who appears to not want to touch the issue.

What is your understanding of what changed in this last decade in terms of the politics of this issue?

HENIGAN: Well, we think that, first of all, the Democratic leadership vastly exaggerated the actual capacity of the National Rifle Association to work its political will. There are many demonstrations of members of Congress who have stood up to the NRA and have survived politically.

And this is an issue where we have a broad national consensus on what needs to be done. Republican messaging maven Frank Luntz did a survey about a year ago of NRA members and other gun owners where he found, for example, that 70 percent of NRA members actually favor extending Brady background checks to all sales at gun shows - closing the gun show loophole, a very practical measure that the vast majority of the American people support.

The problem you have is a well-funded and very, very intimidating lobby representing a tiny minority of gun owners that continually frustrates the national will on this. And it is time for the voice of the American people to be heard here.

I appeal to your listeners, get on the phones. E-mail your members of Congress, your senators and the White House, and tell them you're sick and tired of the NRA holding hostage our gun policy and guaranteeing that we're going to lose more and more innocent Americans as we go forward.

HAYES: Dennis Henigan, vice president of the Brady Campaign to Prevent Gun Violence, thank you so much for your time tonight.

HENIGAN: Thank you.

HAYES: The worst year ever for foreclosures in America, and the group that would like to improve the housing market by making the foreclosure process faster. Next.

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HAYES: What would be worse than one million homes foreclosed in 2010? It could easily have been closer to three million. But first, it's time for the sanity break.

On this date in 1943 began the Casablanca Conference. Headlined by Franklin Roosevelt and Winston Churchill, the conference was held to plan European strategy of the allies during World War II. Soviet Leader Joseph Stalin was also supposed to attend, but he backed out when he was shocked - - shocked to learn that Rick's Cafe American did not actually exist.

Let's play Oddball.

We begin down the road in Smaram (ph), Morocco, where Ydrees Gorod (ph) could be the biggest fan of the movie "Tangled" ever. To illustrate his point, he is going to attempt to pull three buses and an SUV using only his luscious locks.

After a supporting line snaps in his first attempt, he gives it another shot. Using pure determination and what I can only assume is very expensive shampoo, he is able to move the vehicles almost 38 feet. Still unsatisfied, he then lets people smash 350 concrete bricks on his head. Talk about a splitting headache.

To the Internets, where we get a quick lesson on how not to remove snow from your roof. Down goes Frazier. It's not really clear why this poor man's Oliver Twist decided the best way to clear the roof was to stand on the roof and bang it with a shovel. But ironically he was saved in his fall by the very snow he was attempting to clear.

In his defense, he did succeed in clearing the snow. Maybe next year he just calls it a double black diamond course and charges people for the ride. Wheee!

Coming up, why a drop in foreclosure rates at the end of 2010 was not good news.

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HAYES: More Americans lost their homes in 2010 than any year in history. Our third story of the night, why that record will be broken this year and why banks hope Congress will help them clean up their own mess. U.S. banks repossessed more than one million homes in 2010, up 14 percent from the year before, and crossing the one-million home threshold for the first time ever.

All foreclosure filings, including loan defaults and home auctions, on top of actual repossesses, another record was broken. That total was 2.8 million, a two percent increase on foreclosure filings in 2009. Foreclosure tracking company RealtyTrac reporting the numbers, with company CEO James Saccacio saying total claims, quote, "would have easily exceed three million in 2010 had it not been for the fourth quarter drop in foreclosure activity."

The drop in foreclosure activity at the end of the year - well, that sounds positive, until you realize it's because many banks were forced to put a temporary hold on foreclosure proceedings. You may remember last Fall, mortgage companies were revealed to have rushed paperwork on thousands of foreclosures, sometimes falsifying documents and creating fraudulent loans.

The so-called robo signing scandal prompted a halt on foreclosures by several leaders in the final months of 2010. Once banks resume repossessions this year, Realty Track forecasts a 20 percent spike in 2011, creating a new peak for the housing crisis.

What's worse, banks will be repossessing homes faster than they can sell them, creating a backlog of unsold housing units across America. Fewer houses sold means housing prices will stay down or possibly go lower. Fewer new homes also means fewer new jobs in the home construction industry.

Coinciding with the release of these numbers today, JP Morgan Chase announced a huge profit surge in the final quarter of 2010. The country's number two lender made 4.8 billion dollars last quarter. Those gains would have been even higher were it not for the 1.5 billion dollars the bank set aside for litigation related to, quote, "mortgage-related matters."

JP Morgan's CEO Jamie Dimon downplayed the impact of the foreclosure crisis in October, back when the company stashed away one billion dollars for pending litigation.

But now with nearly three billion dollars, it would be profit - it would be profit going towards the mortgage mess, clearly JP Morgan and other banks wish it would go away.

Enter the centrist Washington think tank Third Way. Yesterday, Third Way released a policy memo entitled "Fixing Foreclosure Gate," urging Congress to intervene.

While the memo presents this as a solution to, quote, "keep the housing market moving," it would help banks through the legal process at a rapid pace, by giving homeowners less ability to fight against foreclosure. At least six individuals on Third Way's board of trustees have worked in executive positions at major investment banks.

Is it uncivil to say this is totally corrupt? To help us sort through this is Mike Konczal, a fellow with the Roosevelt Institute. He writes on the economy at RortyBomb.wordpress.com (ph).

Mike, thanks so much for being here.

MIKE KONCZAL, ROOSEVELT INSTITUTE: Thanks for having me, Chris.

HAYES: So I think we all understand that foreclosure is an awful thing for a family to go through. Does it pose macroeconomic problems for the recovery broadly? If I'm not getting foreclosed on, is it a problem for me?

KONCZAL: Absolutely. It continues to decrease consumer spending, which means less jobs. All these homes that are being repossessed are going to kind of go into a phantom zone on the bank's balance sheet. So we won't really know when to start up housing again. There's going to be increased uncertainty in the sector.

We're very likely to see another decrease in housing prices, which will lead people further under water, and devastate state and municipality budget sheets, which means they're going to lay off teachers to help cover for these losses.

HAYES: So we've got this big problem. There are too many foreclosures. You have households deleveraging. Third Way has proposed one of the solutions. What do you think of this proposal of there's?

KONCZAL: It's important to understand that it's great that they're actually trying to do something about this. For a long time, people were hoping that this problem would go away. Now, the central problem with their approach is that it leaves Wall Street still in the driver's seat.

The way that they deal with foreclosures, something called the servicing industry, is completely unregulated. It is - has huge conflicts of interest, where Wall Street profits when people go into foreclosures. Both investors and borrowers lose.

It doesn't have the information. Or it's too thin of a model to actually deal with a nationwide housing bubble. And they're still left in the driver's seat.

It also puts on the sideline our bankruptcy courts. It doesn't expand their powers. In fact, it limits them. Our bankruptcy courts are one of our best institutions in the country, and an institution uniquely situated to handle foreclosures.

HAYES: So that sounds like a gesture towards a solution. If what Third Way is talking about - and it's looking like the banks we know are going to be working on Capitol Hill to basically get bailed out of this situation through some kind of statutory means. What is the solution? What should we be doing to deal with this problem?

KONCZAL: It's very important to think of this as a bank bailout. We go back to Tarp and you can see letters from people like Larry Summers saying if you vote for Tarp, to continue the funding in 2009 - this was the second wave of Tarp - we'll make sure cramdown happens. Cramdown did not happen.

HAYES: What's cramdown?

KONCZAL: Sorry. Basically, there's a defect in our bankruptcy code which doesn't allow judges to modify primary debt. Now, if you had multiple homes, you know, that would happen.

Our bankruptcy courts are uniquely situated to handle these problems. And we have not had any change in our bankruptcy code to basically allow these judges to handle this. Instead, we're going to continue with the failed shadow servicing industry inside Wall Street.

You know, this is a major problem for our economy. And it's a major problem for our communities.

HAYES: Mike Konczal, fellow with the Roosevelt Institute, one of the best people to read on this issue, thanks for your time tonight. Really appreciate it.

KONCZAL: Thank you.

HAYES: The safe zone for Sarah Palin and countless others. The Countdown crystal ball can predict what Sean Hannity will ask.

And this is unexpected, 70 percent of Americans approve of something Congress did.

And when Rachel joins you at the top of the hour, the mess that Michael Steele leaves behind at the RNC.

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HAYES: Sean Hannity is awkwardly billing his upcoming interview of Sarah Palin as her, quote, "very first TV appearance since the tragedy in Tucson." In our second story, a preview of what you can expect the hard-hitting interview to look like.

The network was never in question. Not only are they overwhelmingly friendly to Sarah Palin over at Fox News, they also pay her as an analyst. The only question was which interviewer would administer Palin's re-entry into the non-lame stream atmosphere.

Monday, Bill O'Reilly made a plea for the governor to pick him, after he took on the rest of the media for what he deemed unfair treatment of Palin and Michele Bachmann.

Instead, as we learned yesterday, the ratings bonanza will begin an hour after O'Reilly's show when Palin gets Hannitized. Before yesterday, that term had only meaning. Hannitized describes a cable news viewer or radio listener who's been converted to conservatism by Fox News Channel host Sean Hannity.

But because Palin's appearance is just the latest of the series of Republican presidents to pageant winners who have used Hannity's show as a friendly venue for PR rehabilitation, yesterday "Slate's" Dave Weigel came up with a second definition of the term Hannitized.

"Verb, to clean up a messy situation with a softball interview, typically one conducted by Sean Hannity."

Here now, the evidence to support Dave Weigel's definition.

(BEGIN VIDEO CLIP)

SEAN HANNITY, FOX NEWS ANCHOR: I looked at your statement. When I first saw the news coverage of it, I said, what, he doesn't support the Civil Rights Act? That's how it was portrayed, and you clearly laid out just the opposite. And it was very clear. Go ahead.

Why does everyone benefit if the rich pays less or everybody pays less in taxes? Why is that good for the economy?

SARAH PALIN, FORMER GOVERNOR OF ALASKA: That's a great question.

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: I was fortunate to be an eight-year president. And eight years is a long time.

HANNITY: A lot of pressure.

BUSH: Yeah, a lot of pressure, a lot of opportunities. A lot of issues came to the desk, some of which I could anticipate, some of which I didn't anticipate.

HANNITY: 9/11, the biggest.

BUSH: 9/11 was the biggest.

HANNITY: All right, you've already explained. I don't really think we need to cover old ground. You've explained that you were sorry. You spoke out. It was an emotional moment. It's all squared away with the White House.

But did you dress up as a repair guy?

UNIDENTIFIED MALE: Yeah, we did. We did, yes.

HANNITY: And your attitude is this is something that investigative journalists will do.

The people of Alaska get - for example, there's no income tax.

There's no sales tax in Alaska.

PALIN: There are in individual communities.

HANNITY: But no states sales tax.

PALIN: Correct.

HANNITY: The average citizen - if I was a resident of Alaska, you would write me a check every year for 2,069 dollars?

PALIN: Depending on how the stock market is doing over the last five years.

HANNITY: Just this morning, you were on "The Today Show." You were on "Good Morning America." You were on "The Early Show." You were on CNN. You were on all those liberal shows?

CHRISTINE O'DONNELL, FORMER CANDIDATE FOR SENATE: I was. I was.

HANNITY: So my question is why have you decided to subject yourself to the what I would argue probably biased, tough questions and obviously the advancement of some of the attacks against you?

O'DONNELL: Well, because I wanted an opportunity to counter those attacks.

(END VIDEO CLIP)

HAYES: That's awesome.

The lame duck session was supposed to be a terrible thing for the country. According to a new poll, most people thought it was absolutely fantastic, next.

(COMMERCIAL BREAK)

HAYES: After a delayed start, Congress is set to dive into legislative issues on Monday. As they do, one factor to keep in mind is the political consequences of the lame duck Congress last year.

Our number one story tonight, the first poll is out. Americans have spoken out about exactly what they think about Democrats ramming through controversial laws after the Tea Party helped drive Republicans to big wins in the Senate and the House majority.

First, a quick reminder. Republicans warned over and over again last year, before and after the elections, just how wrong it would be for the lame duck Congress to pass laws, just how badly voters would punish them. The warnings began last Summer about the threat posed to America by a lame duck.

(BEGIN VIDEO CLIP)

REP. JOHN CULBERSON (R), TEXAS: The Democrats are right now trying to find enough votes to pass some of the things they couldn't get passed before the election. And I hope for the sake of the country, they fail.

(END VIDEO CLIP)

HAYES: Continuing to vote would be unfair to voters.

(BEGIN VIDEO CLIP)

SEN. JOHN BOOZMAN (R), : Bringing controversial bills to the floor after the November elections is unfair to the voters who have expressed their overwhelming opposition to these issues.

(END VIDEO CLIP)

HAYES: Republican Senator Tom Coburn complained that Democrats were abusing the lame duck session to help 9/11 responders.

(BEGIN VIDEO CLIP)

TOM COBURN (R), OKLAHOMA: This bill hasn't even been through a committee. We haven't had the debate in our committee on this bill to know if it is the best thing to do. We haven't had the testimony to know whether - this is a bill that's been drawn up and forced through Congress at the end of the year.

(END VIDEO CLIP)

HAYES: Never mind his committee actually did have a hearing on the 9/11 bill last summer. For many Republicans, lame duck passage of everything from a treaty to secure loose nukes in Russia and stop discrimination against gays was, in a word, awful.

(BEGIN VIDEO CLIP)

GRETA VAN SUSTERAN, FOX NEWS ANCHOR: How is lame duck different from behind the scenes from the other part of the session?

REP. MICHELE BACHMANN (R), MINNESOTA: If you want my real opinion?

VAN SUSTERAN: Yeah.

BACHMANN: The lame duck is awful. I mean consider, we're doing all of the spending, the tax bill. We're doing a nuclear disarmament treaty, Don't Ask, Don't Tell. They're trying to do amnesty for illegal aliens, all of this in a couple of weeks.

(END VIDEO CLIP)

HAYES: Some Republicans barely survived their encounter with the lame duck.

(BEGIN VIDEO CLIP)

SEN. LINDSAY GRAHAM (R), SOUTH CAROLINA: It's been a week from hell. It's been a week where you're dealing with a lot of big issues, from taxes to funding the government to special interest politics. And I've had some time to think about Start, but not a lot. And it's really wearing on the body.

(END VIDEO CLIP)

HAYES: Before it all began, House Republican Leader John Boehner, the speaker in waiting, issued a grim warning to Democrats, insistent on holding the lame duck session. "The American people," he said, "will not forget."

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: The American people have a right to know what is being planned post-election. I think this is an awful way to do business. As most of you know, we've wobbled around here for the last three months doing virtually nothing, and now they're going to wait until after the election.

And to bring the surprise to the American people. The American people won't forget.

(END VIDEO CLIP)

HAYES: Well, he was right. The American people did not forget the lame duck Congress. According to a new poll, they freaking loved it, even Republicans.

"Congress and Obama agreed recently on issues including tax cuts, unemployment benefits, gays in the military, and nuclear arms treaty and aid to 9/11 responders. Good thing or bad thing?" Seventy seven percent said good, including 62 percent of Republicans; 17 percent said bad.

Let's bring in "Washington Post" columnist E.J. Dionne, also a senior fellow at the Brookings Institution. E.J., good evening.

E.J. DIONNE, "THE WASHINGTON POST": Good to see you.

HAYES: So John Boehner said the American people - Americans would not forget the Democratic lame duck Congress and -

DIONNE: He suggested it would go down in history, and he was right about that. Sometimes politicians inadvertently sometimes say absolutely true things. When John McCain said that Barack Obama was the biggest celebrity in the world, that was a negative ad, but he was right.

I think voters, in some ways, look at - you know, you look at a car maker, he's supposed to make a lot of cars. You look at a potato chip maker, you want him to make potato chips. You look at a lawmaker. They look around and say, well, when they actually produce stuff, that's a good thing.

I think the second thing that happened is because so much of this had at least some bipartisan buy-in, and the big tax deal - if you throw 900 billion dollars around, you're going to get a lot of bipartisanship. You don't have the attacks in quite the same way.

As the lame duck went on, you saw less and less of this, more and more of, gee, something good is happening. When you don't have the attack going, voters don't sort of - don't say, well, whatever they're doing must be awful.

HAYES: Yeah, I think it brings up - it's as if there's a kind of signaling, right? If they're agreeing there, then something good must be produced.

DIONNE: And I also think the middle of the road mainstream media, I think, have a bias in coverage in favor of can't these guys get along and get things done. And so this part of the Congress is probably the only part of this entire Congress, even though the whole thing was productive - but it's the only part that got really good, consistent press.

HAYES: So according to ABC, 62 percent of Republicans give credit for all this stuff passing in the lame duck Congress to Republican leaders, which I thought was interesting. What does this say about the way this reality is filtered and what incentives it is going to create for the next Congress.

DIONNE: You'll have to play that tape over and over again for these folks. First of all, I think for a lot of Republicans, there was one thing they really wanted out of this. It was the extension of the Bush tax cuts. Guess what, they got it. And I think for a lot of Republicans, that is what they remember.

Secondly, given that the - sort of the image of this lame duck was much better at the end, people kind of want to give their guys credit for something that has come to be seen as a good thing. I hope my friends credit me with things I have nothing to do with too.

HAYES: Here's a question that I think I have now for this Republican House, in terms of the lesson from the lame duck. It seems pretty clearly the fact that if things are bad in the country, the economy is bad and it feels like Washington is broken, Barack Obama gets most of the blame for that.

Has that changed? Has that dynamic changed anymore? Or there's a group of people who are arguing, well, now they're responsible for governing and so they can't just sort of throw stones anymore?

DIONNE: Well, I do think, in the end, if things look bad, the person who gets blamed is the president. But now that they have a House of Congress, I think it's a little harder for the Republicans to blame everything on Obama. I think they made a mistake coming out of the box, doing it next week, repealing the health care bill without having anything to put in its place.

I think Obama strategy is going to say, gee, I want to work with them like we did before, getting all this stuff done. It starts with a negative and they don't have anything to put in its place. And I think it will help feed that narrative, well, what are these guys for. They're going to have to answer for that.

HAYES: How do you see the White House dealing with this from their end? I mean, they ended up getting a lot of stuff done in the lame duck. And they, I think, feel like they reaped political benefits. It seems like they now have tremendous incentives to find shared areas, which we saw during the Clinton years, the Gingrich Congress, can be a little dangerous in terms of policy making.

DIONNE: I think there's kind of a misreading of the Clinton years, because everybody looks and says well, Newt Gingrich and Bill Clinton did the welfare reform and some other bills. What people forget is that didn't happen until after there was a great big fight, where - and Clinton drew some lines around Medicare, Medicaid, education, the environment. I can recite it in my sleep.

And after he won that fight, the lines were clear. Then he could move on to compromise. So I think he's going to look conciliatory, but he's going to need to draw a line.

HAYES: E.J. Dionne of the "Washington Post," thanks so much.

DIONNE: Great to be with you. Good to see you.

HAYES: That's January 14th. I'm Chris Hayes, in for Keith Olbermann. You can read more of my work at the Nation.com, "The Nation Magazine," or follow me on Twitter. Username @ChrisLHayes.

Have a great weekend. "THE RACHEL MADDOW SHOW" is next.

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