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updated 9/17/2012 12:11:34 PM ET 2012-09-17T16:11:34

THE ED SHOW with ED SCHULTZ
September 14, 2012

Guests: Rajiv Chandrasekaran, Bruce Bartlett, Bob Greenstein


EZRA KLEIN, GUEST HOST: Good evening, Americans. And welcome to THE
ED SHOW. I`m Ezra Klein, in for Ed Schultz.

We`ve got 53 days until the 2012 election.

And tonight on THE ED SHOW, we have more details on the attacks in
Libya. In fact, details that directly reflect on the policy argument
that`s come to dominate the campaign. Details, which you can`t really
understand the foreign policy argument that`s come to dominate the
campaign.

As Ed would say -- let`s get to work.

The four victims of the assault on the U.S. diplomatic mission in
Benghazi, Libya, were honored today at Andrews Air Force Base. Coffins
carrying the bodies of the slain diplomats arrived in the United States on
a military plane from Libya. President Obama spoke of the sacrifice made
by the Foreign Service workers. The president was joined by his national
security team including Secretary of State Hillary Clinton.

Overseas, protests spread across 17 different countries in the Middle
East as anger mounted over a strange and mysterious and very low-budget
film denigrating the Prophet Muhammad. In Cairo, Egypt, one protester was
killed today in a clash with police who are blocking the way to the U.S.
embassy.

We`ll be monitoring the events in the Middle East during the show
tonight and we will bring you any breaking developments immediately.

But back here, there has been a key question since the Romney/Ryan
ticket launched their attack on the Obama administration`s handling of the
events in Libya and Egypt. That question is, what would they have done
differently?

And the answer, according to the Romney/Ryan campaign, is if we were
in charge, it never would have happened. And why wouldn`t it have
happened? One word: Resolve.

Richard Williamson, a Romney foreign policy adviser said, quote, "The
respect for America has gone down. There`s not a sense of American
resolve." If there had been, then, quote, "You`d be in a different
situation."

Vice presidential candidate Paul Ryan made a similar point
articulating the Romney/Ryan position.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL NOMINEE: In the days ahead
and in the years ahead, American foreign policy needs moral clarity and
firmness of purpose.

(APPLAUSE)

Only by the confident exercise of American influence are evil and
violence overcome. That is how we keep problems abroad from becoming
crises. That is what keeps the peace. And that is what we will have in a
Romney/Ryan administration.

(END VIDEO CLIP)

KLEIN: All right. Moral clarity and purpose. That, that is what
keeps the peace.

Ryan`s statement harkens back to Mitt Romney`s three-point foreign
policy plan he detailed on Wednesday in response to the Libyan assault. It
was his third point after confidence and clarity that syncs up with what
his running mate said.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL NOMINEE: Number three is resolve in our
might. That in those rare circumstances, those rare circumstances where we
decide it`s essential for us to apply military might, that we do so with
overwhelming force.

(END VIDEO CLIP)

KLEIN: It is hard to say what it means to run a resolve-based foreign
policy against your enemies because the question is, what form does all
that resolve take?

For President Obama, there has been a form of resolve, and you can see
it right here. It`s physical. It is an unmanned predator drone.

Regardless of whether he wins a second term, this will likely be
President Obama`s single largest legacy in how the American government
conducts war -- an understanding of the centrality of the drone to American
foreign policy in this era, understanding that in most cases or at least
many cases the drone is now how our most committed enemies experience our
resolve. Helps lift quite a bit of the haste surrounding the events of
this past week.

"The New York Times" reported recently that, quote, "Mr. Obama has
placed himself at the helm on top secret nomination processes to designate
terrorists for kill or capture of which the capture part has become largely
theoretical."

Since 2004, U.S. drone strikes have killed 49 militant leaders in
Pakistan, according to analysis by the New America Foundation. One of
those leaders killed was Abu Yahya al-Libi, a man recently named al Qaeda`s
number two, which turns out to be a dangerous job these days.

"Foreign Policy" magazine connected the June strike on al-Libi with
fatal attacks on the attacks on the consulate in Benghazi, Libya, by
saying, quote, "as details emerge, it appears increasingly probable that al
Qaeda linked groups were behind the violence. Likely acting in reprisal in
for the death of Abu Yahya al-Libi. Just prior to the Benghazi assault on
the 11th anniversary of the 9/11 terrorist attacks, al Qaeda leader Ayman
al-Zawahiri released an internet video in which according to CNN, he said
al-Libi`s blood is, quote, "calling, urging and inciting you to fight and
kill the crusaders."

By the way, that`s something we should be real clear on right now.
From what we think we know attacks in Benghazi were not about the weird
internet video which created the attacks in Egypt. The attacks in Benghazi
appeared to have been a response to an American drone strike against an al
Qaeda leader.

And that drone strike wasn`t an anomaly. It wasn`t some rare event.
This is how the Obama administration has chosen to prosecute its offensive
against terrorism.

Although the U.S. government has only officially acknowledged drone
strikes in Pakistan, nongovernmental organizations and civil rights groups
which have monitored alleged U.S. drone strikes in Yemen, in Somalia, and
in Afghanistan under the Obama administration.

In Pakistan, alone, though, there have been 344 known drone strikes
from 2004 until today and President Obama has already authorized six times,
six times as many strikes as President George W. Bush.

Those strikes have killed between roughly 1,900 and 3,300 people
according to estimates by independent groups and although U.S. officials
have gone on record saying the number of civilian casualties from drones is
zero or next to zero, independent estimates believe there have been between
282 and 881 civilian deaths in Pakistan alone -- Pakistan alone -- as a
result of drone strikes.

In fact, the government has claimed extraordinary legal authority to
what are called, quote, "signature strikes". These are attacks that are
based on patterns of behavior, either among individuals or groups, not
attacks on a specific terrorist presence. And the Obama administration has
been utterly immune to criticism on this score.

As CNN reports, Pakistani parliament voted in April to end any
authorization for the drone program. A vote the United States government
has simply ignored.

The validity of the program is questioned by not only foreign
governments by American civilians. American Civil Liberties Union is
taking the government to court over targeted killings. Oral arguments in
the D.C. circuit court begin on this case next week. As ACLU legal
director Jameel Jaffer sees it, "The president has created a bureaucratized
killing program that will be available to every future president and
against every future enemy or purported enemy."

Right now, the current purported enemy is broader than it was eight
years ago. There`s been a shift in targets from al Qaeda leadership to
Taliban foot soldiers. Under George W. Bush, about 25 percent of targets
were al Qaeda leaders, 40 percent were Taliban targets. Under President
Obama, those numbers are 8 percent and 50 percent.

An unnamed Pakistani militant told a "New York Times" reporter in 2010
-- I think this quote is kind of amazing -- "It seems they really want to
kill everyone, not just the leaders."

Even Osama bin Laden toward the end of his life was increasingly
concerned about drone attacks decimating his rank-and-file. In a 2010 memo
discovered in his Abbottabad compound, he advised his men, to, quote,
"leave the Pakistani tribal regions where the drone strikes have been
overwhelmingly concentrated."

And that brings us back to Libya. Today, commercial airspace in
Benghazi was shut down as drone aircraft flew over the city. A Libyan
official told "Reuters," "Two American drones flew over Benghazi last night
with knowledge of the Libyan authorities. They were visible to the eye and
came under attack by anti-aircraft weapon used by armed militias."

This is the form of President Obama`s resolve. It`s a resolve the
American government can and should kill those it believes to be its enemies
and it`s taken the precise shape and included the fire power of the
unmanned aerial drone. That resolve, some believe, may not be lawful, but
it is definitely forceful. It`s almost ruthless.

And we now think it`s part of what led to the attacks in Benghazi
which is not to say it`s the wrong thing to do. That`s a more complicated
question. But it is to say that the idea that more assertive application
of American power will lead to less violence against America is a hard idea
to find evidence for in recent history.

And so, the question for Governor Romney is what exact form his
resolve would take such it would simultaneously be more effective and
encourage less backlash from the terrorists who feel their power is
slipping away?

Joining me now is Rajiv Chandrasekaran, associate editor at the
"Washington Post" and someone I`m proud to call a colleague.

Rajiv, it`s good to see you.

(CROSSTALK)

KLEIN: So you know all of this 100 times better than I do. So, I
want to begin by simply asking you, is this right? Is the drone warfare
under President Obama really a central and unprecedented as it seems from
the numbers?

RAJIV CHANDRASEKARAN, THE WASHINGTON POST: Oh, most certainly. I
mean, there`s been a massive uptick under President Obama. It is a
fundamental, principal tool of the way this administration wages war. It`s
been the principal tool we`ve used to decimate the ranks of al Qaeda.

Yes, SEAL Team 6 was responsible for the killing of Osama bin Laden,
but really the evisceration of the middle and upper ranks of al Qaeda`s
leadership in the tribal regions of Pakistan has been because of a result
of drone strikes targeted and operated by the Central Intelligence Agency,
as well as our most significant inroads in some cases against Taliban
figures in Pakistan.

Yes, Obama surged lots of conventional troops into Afghanistan but
it`s been Special Forces activity in Afghanistan and drone strikes in
Pakistan that have really had the biggest impact there.

So to suggest that, you know, this is somehow demonstrating a lack of
resolve, quite frankly, Ezra, is absurd. I mean, I talk to lots of senior
U.S. military and intelligence officials and over the past couple of years
with regard to the situation in Afghanistan and Pakistan.

And, Ezra, not once have I heard any frustration, consternation from
them that they have not been able to take out a target that they thought
was a legitimate target in Pakistan or in Afghanistan using a drone.
Getting any sort of pushback from the administration. It just hasn`t
existed. There`s no record to support that.

KLEIN: And what have been the kind of consequences in terms of
backlash here? Because one thing that I think is implicit in Romney`s
remarks is the idea if we`re more resolute in our application of force and
our communication of our willingness to use force, you would not be seeing
enemies dare to launch strikes like the ones that were launched in
Benghazi. But it now appears, at least potentially, that Benghazi strike
was a reaction to the force that we`ve used in trying to prosecute the war
on terrorism.

So how does this work? How do you kind of evaluate that claim?

CHANDRASEKARAN: Well, OK, so let us assume that that connection holds
up and, in fact, the militants that were responsible for the horrific
attack in Benghazi were somehow seeking to exact revenge for the killing of
al-Libi. You know, yes, that is a dreadful turn of events, but when you
look at that, when you look at the outrage in Pakistan, when you balance it
all out, it`s actually not all that significant of a blow-back.

Yes, a significant number of civilians have been killed. That is
tragic. I don`t accept the administration`s claim that zero civilians have
been killed. So, let`s assume it`s somewhere in the 100s in all of this.

What are our other options? If we were to send in ground forces there
or Special Forces by helicopter, let`s say into the tribal regions of
Pakistan, that would put our troops at much greater danger and probably
lead to even greater civilian casualties.

The other option would be to simply leave those figures alone and not
target them and that would pose significant other risks for the stability
of that region and for U.S. interests. And this White House is determined
that those are figures that simply can`t be left alone.

KLEIN: Yes, this is a common problem, I think, in these
conversations, we don`t sufficiently consider the other options.

Rajiv Chandrasekaran, thank you so much. It`s always a pleasure to
talk to you on these issues.

Coming up, we will show you Mitt Romney`s very unusual definition of
middle income and break down his mathematically impossible tax plan. That
will be with Bruce Bartlett, next.

(COMMERCIAL BREAK)

KLEIN: Welcome back to THE ED SHOW.

Last night on the show, we quoted a line from "New York Times"
columnist David Brooks who wrote, quote, "Romney was extremely detail-
oriented in his business life. He once canceled a corporate retreat in
which Abba had been hired to play saying he found the band`s music too
angry."

This was a funny line. It was not, however, a true line. The part
about Abba wasn`t true. It`s a joke -- a satire column Brooks wrote two
years ago.

I`d like to blame our mistake on David Brooks for being not funny but
actually the column was completely hilarious. It`s not his fault at all.
It was just a very dumb error on our part and we are very sorry.

As far as we know, Romney has not revealed his opinions on Abba. But
for the record, we at THE ED SHOW and me, Ezra Klein, are pro-Abba.

Coming up, the numbers don`t add up for Mitt Romney. Find out why the
Tax Policy Center and others say Mitt`s tax plan is not mathematically
possible. Stay tuned.

(COMMERCIAL BREAK)

KLEIN: So here is the story on Mitt Romney`s tax policy so far. He`s
got this very, very big tax cut. It`s trillions of dollars big. And it`s
particularly big at least on paper for the rich.

But he`s also got these four promises he made. He says his tax cut
won`t cost anything. It won`t raise taxes on the middle class. It won`t
cut taxes on the rich. And it won`t end the tax breaks for saving and
investment.

The Tax Policy Center, the sort of gold standard in nonpartisan tax
wonkery looked at this and declared it, quote, "not mathematically
possible." Even if you erased literally every tax break and deduction for
people making over $250,000 except for the ones for savings and investment
which Romney says he`ll keep, there`s just not enough money there to pay
for Romney`s tax cut. The math simply doesn`t work.

For a while the Romney campaign had just no answer to this at all.
They just said they didn`t believe the Tax Policy Center. They called
them, quote, biased even though they`re directed by one of George W. Bush`s
top economists.

Then slowly, right-leaning economists began releasing their own
studies showing if you made some really questionable and really different
assumptions you could kind of sort of maybe make Mitt Romney`s math look
like it might add up if you did some really weird things. And this was
great news for the Romney campaign.

On "Meet the Press" with David Gregory, Romney trumpeted these
studies, said they closed the case on his plan.

(BEGIN VIDEO CLIP)

ROMNEY: The good news is that five different economic studies
including one at Harvard and Princeton, at AEI and a couple at the "Wall
Street Journal" all show if we bring down our top rates and actually go
across the board, bring down rates for everyone in America but also limit
deductions and exemptions for people at the high end, why you can keep the
progressivity in the code, remain revenue central and you create an
enormous incentive for growth in the economy.

(END VIDEO CLIP)

KLEIN: The good news, and that would be good news. We can slice and
dice.

But if you take a look at some of those studies, things get a little
different. In particular the Harvard study which is the most credible of
the bunch. The Harvard study was done by economist Martin Feldstein, a
former top economist for Ronald Reagan.

And he makes a very important decision in his paper. He says, and I`m
quoting, I think it is very reasonable to say that people in that high-
income group, by which he means people making over $100,000, are not the
middle class.

And so under really, really unrealistic assumptions, he shows math can
kind of work. But that Romney`s policies would mean a really big tax
increase for people making between $100,000 and $250,000 in order to pay
for big tax cut on people making more than $250,000. But that`s OK because
people making over $100,000 are not in the middle class. They`re above it.

And Romney`s been all over the place trumpeting the study. It`s the
good news. It shows his math works out.

But then he said this to ABC`s George Stephanopoulos.

(BEGIN VIDEO CLIP)

GEORGE STEPHANOPOULOS, ABC NEWS: A hundred thousand dollars a middle
income?

ROMNEY: No, middle income is $200,000, $250,000 and less. So, number
one, don`t reduce -- excuse me, don`t raise taxes on middle income people.
Lower them.

(END VIDEO CLIP)

KLEIN: All right. I need to do a real quick digression here. This
just drives me crazy.

President Obama and Mitt Romney actually agree on this. But you know
that you shouldn`t do anything to folks making less than $250,000.

You know what percent of Americans make more than $250,000 a year?
About 4 percent. You can see this graph from my friend Derek Thompson at
"The Atlantic." That little red slice, that`s how many people aren`t in
the middle class or working class, that`s how many people we can raise
taxes on according to our top politicians.

I think that`s kind of insane. I don`t think that makes intellectual
sense, I don`t think it leads to good tax policy. But nevertheless, that
is what Romney is saying and what it means is in the study he is promoting,
the study he`s saying shows his math works out, that study actually shows
he is raising taxes on the people he defines as middle class. That he is
raising taxes on the people he says he`s going to lower taxes on.

The study Romney chose which just gets us back to where we were
before. The math for Romney`s plan, it just doesn`t work out. It`s
impossible.

Joining me now is Bruce Bartlett, former deputy assistant secretary
for economic policy in the George H.W. Bush administration and author of
"The Benefit and The Burden: Tax Reform, Why We Need It and What It Will
Take."

Bruce, it`s good to have you here.

BRUCE BARTLETT, AUTHOR: Happy to be here.

KLEIN: So, you know this stuff better than anybody. You`ve looked at
these different studies.

Help me check my math. Does it add up? Are there things I`m missing
here?

BARTLETT: No, that`s basically right. The things that Romney said
are in his plan are mutually exclusive. So he`s either not going to be
able to cut taxes on the wealthy or he`s going to have to do something
else, such as blow a hole in the deficit. One something has to give.

KLEIN: One of the things I think is kind of amazing about this
conversation, he has such a low bar here. The question isn`t is it good
policy to have a tax cut right now, if this is a good tax cut, if it makes
sense to take out the deductions. Just literally if you do everything you
can to make it work, can you make it work as a matter of arithmetic?

We can`t clear that bar. But what would happen if we began getting
rid of deductions like the mortgage interest reduction, the charitable
deduction? I mean, that`s a radical set of changes to the tax code that
would change whole industries in this country.

BARTLETT: Well, of course it would. That`s precisely why Mitt Romney
is desperately trying to avoid putting anything remotely specific on the
table. If he said, we`re going to have to get rid of the mortgage interest
deduction, then all of a sudden every homeowner is going to start worrying
about the loss in value of their house. If he says the exclusion for
health insurance is on the table, then everybody worries they`re going to
lose their health insurance.

So he`s trying to have it both ways by saying very specifically here
is exactly how much and who and how taxes are going to be cut, but ask me
after the election, you know, how I`m going to pay for it.

KLEIN: But I think this is an important point, it`s in sort of what
you said there, that politicians of both parties, and Democrats do this all
the time, they pretend the tax breaks in the code are for yachts and for
oil companies. When you`re talking about these big rate reductions, these
kind of big plans, you`re talking about things -- you`re talking about
things know in life, you are talking about home mortgage interest
deduction, the employer tax deduction.

I mean, what are the breaks in the code?

BARTLETT: Well, aside from the ones we mentioned, deduction for state
and local taxes is very big, and savings incentives for retirement, IRAs,
401(k)s, all that kind of stuff. Those are really -- those five or six are
the biggies.

KLEIN: And what do you think -- I kind of look back on this election,
and early on, Mitt Romney did a very different tax plan. He said he was
going to continue the Bush tax cuts and give the tax cut for savings and
investments, people making less $250,000. There`s Herman Cain in 9-9-9 and
Newt Gingrich.

And he came out with his very kind of Tea Party-flavored plan. How
different do you think this election would be for him if he had been able
to stick with that original plan?

BARTLETT: Oh, I think he`d have a great deal for flexibility. But
his initial plan, I think, running for this election, was to try to avoid
making any really difficult right-wing promises so that he could run as a
sort of technocrat, run toward the center. You know, play up his
governorship in Massachusetts.

But that just got totally blown out of the water when one after the
other, you know, Rick Perry and Herman Cain and Newt Gingrich and Rick
Santorum all tore him to shreds and were leading in the polls, and I think
this tax plan was part of his comeback, his way of responding and I think
it was just slapped together, you know, in the middle of the night by a
couple of his political advisers. And I would be surprised if his economic
advisers had any input at all.

KLEIN: Bruce Bartlett bringing the tax knowledge as always. Thank
you very much.

BARTLETT: Thanks.

KLEIN: There is this term you may have heard before now and that you
are definitely going to be hearing in the months to come. That term is
sequester. And what it really means is big, dumb spending cuts that nobody
at all wants to happen but may happen because Congress is terrible at its
job.

Bob Greenstein will join me next to explain what you need to know.

(COMMERCIAL BREAK)

KLEIN: If you want a perfect illustration of the dysfunction
afflicting Washington today, you don`t have to look any further than the
sequester.

Let`s not call it the sequester. That is a name chosen because no one
understands what it means which is helpful for congress because that helps
them keep anybody from knowing the awful, horrible thing they`ve done.

Let`s call it what it is -- the big dumb spending cuts that nobody
wants.

The basic story is that back in August 2011, the United States almost
defaulted on its debts. You may remember this. The reason the richest and
most powerful country in the world has ever known almost became a deadbeat
is that congressional Republicans refused to cleanly raise the debt
ceiling, as Congresses controlled by Republicans and Democrats had done
some 70 times before.

And they refused to pass a compromising debt deduction plan that had
about a trillion dollars in new taxes and more than twice as much in
spending cuts. In fact, Speaker John Boehner simply stopped returning the
president`s calls during the negotiations. That`s how they ended.

But something still had to be done so the United States didn`t default
on its debts and spark a global financial crisis. So congress decided
something would be done, but it wouldn`t be done by them. Or at least not
by most of them.

They created the Joint Special Committee on Deficit Reduction, better
known as the Supercommittee. The idea was that this 12-member bipartisan
committee, made up of members of Congress, would do what the larger
Congress couldn`t and agree on a deficit reduction package.

But Republicans wanted more than that. They wanted some kind of a
guarantee. And so the initial idea was that if the Supercommittee failed,
there would be automatic spending cuts, which Democrats wouldn`t like, and
automatic tax increases, which Republicans wouldn`t like. This way, both
parties would have reason to compromise because they`d both have something
to fear.

Republicans refused to have tax increases in the sequester, so instead
the two sides settled on automatic spending cuts to domestic programs to
hurt Democrats and automatic spending cuts to defense programs to hurt
Republicans. And that is how we got the big dumb spending cuts that no one
wants in to law.

Now, as you probably remember, the Supercommittee went on to fail.
Thus the big dumb spending cuts that no one wanted sort of armed. They
became a real possibility. There hasn`t been any other deficit reduction
deal, because Republicans still won`t agree to a deficit reduction deal
with taxes. Democrats won`t agree to one without tax.

So the big dumb spending cuts are becoming more and more inevitable.
Now, you might wonder why Republicans and Democrats, both of whom agree we
should cut spending, at least to some degree, are so dead set against these
particular spending cuts. And the answer is that they are very, very
stupid, the spending cuts, no the members of Congress.

A certain number of programs, Social Security, Medicaid, Medicare
beneficiaries and a lot of these spending directly benefiting low-income
Americans, that stuff is exempt. It won`t get cut. But beyond that,
everything gets pretty much the same size cut. As a senior administration
official said on a conference call today, quote, "the administration has no
discretion in deciding the cuts identified in this report. The exempt
versus nonexempt determinations are based on requirements in the law. The
administration can`t choose which programs to exempt or what percentage
cuts to apply."

In others words, spending we consider super important and really
worthwhile gets the exact same cut as spending we consider completely
wasteful and to have no reason to keep in existence. There`s no ability to
make the cuts to farm subsidies a bit bigger than the cuts to, say, the
FBI. It`s 1.2 trillion in deficit reduction in which we pretty much don`t
make a single choice about what is and is not worth funding.

Now that administration conference call today, that was happening
because the administration by law had to release this almost 400-page
document. It was very, very long, telling us exactly where these
sequestered cuts would fall. Their bottom line from the text of their
report, quote, "education grants to state and local school districts
supporting smaller classes would get cut. After-school programs and
children`s with disabilities would suffer. The number of Federal Bureau of
Investigation agents, Custom and Border Patrol agents, correctional
officers and federal prosecutors would be slashed."

"The Federal Aviation Administration`s ability to oversee and manage
the nation`s airspace and air traffic control would be reduced." Hope you
don`t have to fly anywhere. "The Department of Agriculture`s efforts to
inspect food processing plants and prevent food borne illnesses would be
curtailed." Hope you don`t have to eat anything.

"The Environmental Protection Agency`s ability to protect the water we
drink and the air we breath would be degraded." Hope you don`t have to
drink anything. "The National Institutes of Health would have to halt or
curtail scientific research, including needed research into cancer and
childhood diseases. The Federal Emergency Management Agency`s ability to
respond to incidents of terrorism and other catastrophic events would also
be undermined. And critical housing programs and food assistance for low-
income families would be cut."

Now, let`s be very clear. The only thing Congress would need to do to
prevent these big, dumb cuts that no one wants would be to agree on an
equivalently sized deficit reduction package they prefer of smarter cuts.
But thus far, because they`re Congress and they are terrible at their jobs,
that has not happened.

Let`s turn now to Bob Greenstein, executive director of the Center for
Budget and Policy Priorities and the man who knows the budget better than
anyone else in Washington.

Bob, it is always intimidating to have you here on the show. So let
me ask you, who loses? And I don`t mean politically, I mean actual people.
If these cuts go in, what are the big losers? What should we expect to
happen? Was that summary from the administration accurate?

BOB GREENSTEIN, CENTER FOR BUDGET AND POLICY PRIORITIES: Yes, it was
entirely accurate. Everybody loses. As you said, this is the ultimate in
blood instruments. Cutting valuable programs that reduce low birthrate,
infant mortality, protect the food and water supply, cutting them the same
percentage, just as deeply as things that, let`s say -- you mentioned farm
subsidies, other forms of corporate welfare, things that would be high on
the list to cut first.

So there`s -- there would be damage all over the place. And it would
be done in the most -- I think the word that comes to mind to me, the most
mindless way possible to cut the budget.

KLEIN: Now, this would be -- that would be terrible to compare it to
a mindful way of doing it. But we are talking about Congress. And so I
feel like we have to judge this against reasonable alternatives. And one
thing I`ve heard people say, and even sort of an argument I`ve considered
myself is, look, in this package, a lot of good spending is exempted. I
mean, the Medicaid and Food Stamps and a fair amount of low-income
spending. And you get pretty big defense cuts, which have been
traditionally very, very hard to do.

Maybe given the kinds of deals that this Congress is likely to make,
maybe this isn`t such a bad deal after all. It`s a dumb way of doing it,
but maybe the priorities are in the right place and folks should sit back
and let it happen.

GREENSTEIN: Well, it is very dumb. It does brings to mind the adage,
even things that are bad, there are often alternatives that are even worse.
In this case, due to the insistence of the White House, it does exempt from
the automatic cuts the most basic assistance for the poorest people in the
country. There are -- it limits the cuts in Medicare to two percent, and
those are aimed at Medicare providers, not at Medicare beneficiaries.

And you`re right, it does really put defense on the table. But having
said that, in every area where it does cut, it`s not the intelligent way to
do it. And the program managers don`t have the ability to go find where is
the weakest part of the program, or what`s the least essential thing you
would cut first? Their hands are basically tied.

KLEIN: Right. And this is possibly how Congress wants to do this,
because they can`t get anything done. They will choose to tie their hands
and let it get done for them.

GREENSTEIN: Well, to be clear, the whole point of this is that it is
supposed to be so mindless and stupid that everyone finds it unacceptable.
And it was supposed to, in part, frankly, help bring the Republicans to the
table to agree that there should be some revenues, some loopholes closed,
some moderation of big tax breaks at the top, if the Democrats would then
agree to various spending cuts. But if the Republicans won`t move an ounce
on taxes, here we are stuck with the mindless guts.

KLEIN: We will have you back to talk on this tax part. I want to get
into that. Bob Greenstein, thank you so much for being here tonight.

GREENSTEIN: My pleasure.

KLEIN: Coming up, Mitt Romney might be a successful businessman, but
his latest ad blitz is making us wonder if he needs a bit of an economics
lesson. The candidate is a Keynesian. He just doesn`t seem to know it.
Find out why next.

And later in the program, President Obama and Secretary of State
Hillary Clinton paid tribute to the four Americans killed in Libya this
week. We`ll have that.

(COMMERCIAL BREAK)

KLEIN: So we just told you about the big, dumb spending cuts nobody
wants. And part of nobody wanting those big, dumb spending cuts is
Republicans not wanting those big, dumb spending cuts. But those aren`t
the only spending cuts Republicans don`t want.

Lately, their presidential candidate Mitt Romney has kind of opposed a
lot of spending cuts. Take his acceptance speech.

(BEGIN VIDEO CLIP)

ROMNEY: His trillion-dollar cuts to our military will eliminate
hundreds of thousands of jobs and also put our security at greater risk.
His 716 billion dollar cut to Medicare to finance Obamacare will both hurt
today`s seniors and depress innovation and jobs in medicine.

And his trillion-dollar deficits, they slow our economy, restrain
employment, and cause wages to stall.

(END VIDEO CLIP)

KLEIN: Did you hear that? You don`t want to cut spending because it
could hurt jobs and the economy. Government spending, jobs and the
economy. You might have this big idea that the real cleavage in American
politics right now is that Democrats believe government spending can help
create jobs, particularly in a recession, and Republicans believe
government spending hurts, and we need to cut it, particularly in a
recession.

That is not true. You listen to the Romney campaign and they are
committed Keynesians. I mean, Romney says cutting military spending would
eliminate jobs. He promises to set core defense spending at a floor of
about four percent of GDP. That could cost an extra one to two trillion
dollars over the next decade.

Romney says cutting Medicare hurts jobs. Again, the logic is spending
on Medicare helps boost employment, at least in part. He even talks
through just balancing budget as hurting jobs. When Mark Halperin of
"Time" asked if he would balance a budget in his first year, he said no.
Why did he say no? Because government spending, it creates job.

Halperin asks, "you have a plan, as you said, over a number of years
to reduce spending dramatically. Why not go all the way and propose the
kind of budget with spending restraints that you`d like to see after four
years in office? Why not do it more quickly?"

Romney answers, "well, because if you take a trillion dollars, for
instance, out of the first year of the federal budget, that would shrink
GDP by over five percent. That is by definition throwing us into recession
or depression. So I`m not going to do that, of course."

That, Governor Romney, is by definition being a Keynesian. That
wasn`t some kind of one-time mistake, a Keynesian slip so to speak. Here`s
Governor Romney on this weekend`s "Meet the Press."

(BEGIN VIDEO CLIP)

DAVID GREGORY, "MEET THE PRESS": Will you balance the budget in your
first term? Is that a commitment you can make?

ROMNEY: I`ll balance the budget by the end of my second term. Doing
it in the first term would cause, I believe, a dramatic impact on the
economy, too dramatic. And therefore the steps I put in place -- and we
put together a plan that lays out how we get to a balanced budget within
eight to ten years.

(END VIDEO CLIP)

KLEIN: They haven`t put out that plan, but I do like that, a dramatic
impact on the economy. I agree, governor, it would. What`s interesting
here, though, is that it would be one thing if Romney were just a
Keynesian. Republicans have a long history of being Keynesians. In 2008,
President George W. Bush pushed and signed the Economic Stimulus Act of
2008. It was literally called the Stimulus Act. And it had a lot of
Republicans on it and a Republican president behind it. And you see Mitch
McConnell and John Boehner behind him there.

But since Obama took office, Republicans have changed their mind on
the idea that government spending can create jobs. And when you ask Mitt
Romney if he agrees with them, he does. He says it can`t work.

(BEGIN VIDEO CLIP)

ROMNEY: Government doesn`t create jobs. It`s the private sector that
creates jobs.

(END VIDEO CLIP)

KLEIN: He even pokes fun at fellow Republican Newt Gingrich for
claiming Congress helped create jobs.

(BEGIN VIDEO CLIP)

ROMNEY: Congressmen taking responsibility or taking credit for
helping create jobs is like Al Gore taking credit for the Internet.

(END VIDEO CLIP)

KLEIN: But at the same time, Romney`s become what Greg Sergeant at
the "Washington Post" and Paul Krugman with "the New York Times" are
calling a weaponized Keynesian. You can spend more on the military to
create more jobs, and no matter what you don`t cut that federal spending,
right?

(BEGIN VIDEO CLIP)

ROMNEY: Now, I`m not going to cut a trillion dollars in the first
year. And I heard a question, why not? And the reason is, taking a
trillion dollars out of a 15 trillion dollar economy would cause our
economy to shrink, would put a lot of people out of work.

(END VIDEO CLIP)

KLEIN: So he can be anti-Keynesian in his general rhetoric. But when
things get specific, will you cut a trillion dollars, he gets real
Keynesian real quick. And frankly, he`s been a lot clearer on all the new
defense spending and putting back the Medicare spending and his new tax
cuts than he`s been on all the spending he`s going to cut and the taxes
he`s going to raise to pay for those tax cuts, which is a part you`d
expect, someone who believes in austerity, to really be emphasizing, to be
clear on.

Which is, I should say, fine with me. This is a moment for Keynesian
stimulus. So welcome to the wide worlds of Keynesian economics, governor.
It is nice to have you aboard.

KLEIN: Coming up, the powerful ceremony bringing home the bodies of
the four Americans who were killed in Libya speaks for itself. And we will
let it. Stick around.

(COMMERCIAL BREAK)

KLEIN: An update from Wisconsin now. Late this afternoon, a Dane
County circuit judge ruled that Wisconsin Governor Scott Walker`s law that
effectively ended collective bargaining rights for most public workers was
unconstitutional. Judge Juan Colas (ph) ruled Friday that the law violates
both the state and the U.S. Constitution and is null and void.

The collective bargaining law Walker championed has been in effect for
a bit over a year. A short time ago, Walker Tweeted a response to the
court`s decision. He said "the people of Wisconsin clearly spoke on June
5th. Now they`re ready to move on. Sadly a liberal activist judge in Dane
County wants to go backwards and take away the law-making responsibilities
of the legislature and the governor. We are confident that the state will
ultimately prevail in the appeals process."

At this hour, it is unclear if the law will be in effect pending the
appeals process. We`ll be, of course, following this story as it develops
and bring you more on it next week.

Next, remembering the four Americans killed in Libya this week. We`ll
have some of President Obama and Secretary of State Hillary Clinton`s
incredibly moving remarks.

And don`t forget, you can read more of my work at the "Washington
Post" Wonk Blog. You can follow me on Twitter at Twitter.com/EzraKlein and
at Facebook.com/EzraKlein. We will be right back.

(COMMERCIAL BREAK)

KLEIN: Today, President Obama, Vice President Biden, and Secretary of
State Hillary Clinton and Secretary of Defense Leon Panetta joined the
families of four Americans killed in Libya this week for a ceremony at
Joint Base Andrews to bring home the bodies of these four fallen Americans.
Here is some of that ceremony.

(BEGIN VIDEOTAPE)

HILLARY CLINTON, SECRETARY OF STATE: Today we bring home four
Americans who gave their lives for our country and our values. To the
families of our fallen colleagues, I offer our most heartfelt condolences
and deepest gratitude. Sean Smith joined the State Department after six
years in the Air Force. He was respected as an expert on technology by
colleagues in Pretoria, Baghdad, Montreal, and the Hague.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Tyrone Woods devoted 20
years of his life to the SEALS, the consummate, quiet professional. At the
Salty Frog Bar, they might not have known, but Tyrone also served in Iraq
and Afghanistan. Today Tyrone is home.

Glen Doherty never shied from adventure. He believed that in his life
he could make a difference, a calling he fulfilled as a Navy SEAL. He
served with distinction in Iraq and worked in Afghanistan. And there in
Benghazi as he tended to others, he laid down his life, loyal as always,
protecting his friends. Today Glen is home.

CLINTON: I was honored to know Ambassador Chris Stevens. During the
revolution in Libya, he risked his life to help protect the Libyan people
from a tyrant. And he gave his life helping them build a better country.
In the days since the attack, so many Libyans, including the ambassador
from Libya to the United States, who is with us today, have expressed their
sorrow and solidarity.

This has been a difficult week for the State Department and for our
country. We`ve seen the heavy assault on our post in Benghazi that took
the lives of those brave men. We`ve seen rage and violence directed at
American embassies over an awful Internet video that we had nothing to do
with.

It is hard for the American people to make sense of that because it is
senseless. And it is totally unacceptable. The people of Egypt, Libya,
Yemen, and Tunisia did not trade the tyranny of a dictator for the tyranny
of a mob.

If the last few days teach us anything, let it be this: that this work
and the men and women who risk their lives to do it are at the heart of
what makes America great and good.

OBAMA: They had a mission, and they believed in it. They knew the
danger, and they accepted it. They didn`t simply embrace the American
ideal; they lived it. They embodied it. But amid all the images of this
week, I also think of the Libyans who took to the streets with homemade
signs expressing their gratitude to an American who believed in what we
could achieve together.

I think of the man in Benghazi with his sign in English, a message he
wanted all of us to hear. It said, "Chris Stevens was a friend to all
Libyans."

Chris Stevens was a friend. We will never stop working for the
dignity and freedom that every person deserves, whatever their creed,
whatever their faith. That`s the essence of American leadership. That`s
the spirit that sets us apart from other nations.

This was their work in Benghazi. And this is the work we will carry
on. Their sacrifice will never be forgotten. We will bring to justice
those who took them from us. Most of all, even in our grief, we will be
resolute, for we are Americans. We hold our head high.

Greater love hath no man than this, that a man lay down his life for
his friends. The flag they served under now carries them home. May God
bless the memory of these men who laid down their lives for us all.

(END VIDEOTAPE)

KLEIN: That is THE ED SHOW. I`m Ezra Klein, in for Ed Schultz. "THE
RACHEL MADDOW SHOW" starts right now. Good evening, Rachel.

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

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