1. Headline
  1. Headline
updated 12/3/2012 10:19:22 AM ET 2012-12-03T15:19:22

THE LAST WORD WITH LAWRENCE O`DONNELL
November 30, 2012

Guests: Chris Hansen, Nate Cohn, Victoria Defrancesco Soto


EZRA KLEIN, GUEST HOST: The fiscal cliff talks just turned into the
"Godfather Part 2".

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: America only thrives
when we have a strong and growing middle class.

UNIDENTIFIED MALE: The president hits the road today.

ANDREA MITCHELL, MSNBC ANCHOR: Back on the road today.

UNIDENTIFIED MALE: To sell his proposal to avoid the fiscal cliff.

OBAMA: We`ve got important decisions to make.

ALEX WAGNER, MSNBC ANCHOR: Obama played a kind of hard ball.

CHRIS MATTHEWS, MSNBC HOST: Let`s play "HARDBALL".

OBAMA: All of us have to get out of our comfort zones to make that
happen.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: We are ready to work
for the president.

UNIDENTIFIED MALE: The Republicans rebuffed the president`s proposal.

BOEHNER: It`s the wrong approach.

LUKE RUSSERT, NBC NEWS: Tim Geithner brought them a deal.

UNIDENTIFIED MALE: It didn`t go well.

RUSSERT: They thought was absolutely ludicrous.

UNIDENTIFIED MALE: It gave Republicans nothing.

UNIDENTIFIED MALE: My offer is this.

UNIDENTIFIED MALE: My offer is this.

UNIDENTIFIED MALE: Nothing.

UNIDENTIFIED MALE: Nothing.

RUSSERT: Republicans were very much offended.

UNIDENTIFIED MALE: Mitch McConnell laughed at the offer.

WAGNER: Burst into laughter.

(LAUGHTER)

SEN. BARBARA BOXER (D), CALIFORNIA: Laughing at the president`s
package --

UNIDENTIFIED MALE: Did that catch them by surprise at all?

BOXER: They have to come up with their package.

BOEHNER: We are ready to work with the president.

BOXER: I promise ton laugh at it.

OBAMA: We can solve these problems.

RUSSERT: Right now, we are almost everywhere.

BOEHNER: Republicans not seeking our will on the president.

UNIDENTIFIED FEMALE: Democrats have the leverage and they know it.

BOXER: Listen, this is a negotiation.

CHRIS JANSING, MSNBC ANCHOR: What`s really negotiable?

UNIDENTIFIED MALE: Nothing.

UNIDENTIFIED MALE: Nothing.

RUSH LIMBAUGH, RADIO TALK SHOW HOST: Obama wants to go over the
cliff.

RUSSERT: They`re ready to fight this all the way.

MITCHELL: Only 10 legislative days to go.

RUSSERT: All the way to the bitter end.

LIMBAUGH: What happens when we go over the cliff? A Democrat orgasm
happens.

OBAMA: That`s a Scrooge Christmas.

UNIDENTIFIED MALE: Is America about to go cliff diving?

UNIDENTIFIED MALE: It`s not personal. It`s strictly business.

(END VIDEOTAPE)

KLEIN: There`s a pro tip: when one side is leaking the other side`s
proposals and negotiations, they are not going well, at all.

And the fiscal cliff negotiations are not going well at all. On
Thursday, Republicans leaked the White House`s opening bid and we have some
exclusive tape of that.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: All right. Some people have to play little games.
We`ll play yours.

So let`s just say that you will pay me because it`s in your interest
to pay me. But I want your answer and the money by noon tomorrow.

UNIDENTIFIED MALE: Senator, you can have my answer now, if you like.
My offer is this -- nothing.

(END VIDEO CLIP)

KLEIN: OK. Maybe that`s not actually exclusive tape of the budget
negotiations, but it is kind of the spirit of the thing. President Obama`s
opening bid to the Republicans goes like this. First, Democrats get a
trillion dollars in tax revenue by letting the high-income Bush tax expire.
That matches the roughly trillion in spending cuts Republicans got in the
2011 debt ceiling deal -- a trillion for a trillion.

Then Democrats and Republicans both get $600 billion worth of stuff
they want. Democrats get $600 billion in tax revenues from tax reform, and
Republicans get $600 billion in spending cuts of which $350 billion would
from Medicare and other health problems, and $250 billion comes from
elsewhere.

Then we draw down wars in Iraq and Afghanistan, shaving another a
trillion or so dollars off of the deficit. That gets us to around $4
trillion in deficit over the next 10 years. Adding the savings from
interest on the debt, and we are almost at $5 trillion in deficit
reduction.

But as they say on the game shows, that`s not all. The White House is
also asking for about 200 billion in stimulus. That would include
extending the payroll tax cut for a year.

According to "The Weekly Standard", when Senate Minority Leader Mitch
McConnell saw the proposal, he, quote, "burst into laughter." He literally
LOL`d.

Speaker John Boehner had a more depressive reaction today.

(BEGIN VIDEO CLIP)

BOEHNER: There`s a stalemate. Let`s not kid ourselves. I`m not
trying to make this more difficult. If you`ve watched me over the last
three weeks, I`ve been very guarded in what I wanted to say, because I
don`t want to make it harder for me or the president, or members of both
parties to be able to find common ground.

But when I come out the day after the election and make it clear that
Republicans will put revenue on the table, I took a great risk. And then
the White House spends three weeks trying to develop a proposal and they
send one up here, that calls for $1.6 trillion of new taxes, calls for a
little -- not even $400 billion in cuts, and they want -- they want to have
extra spending, that`s actually greater than the amount they are willing to
cut.

I mean, it`s -- it was not a serious proposal. And so, right now,
we`re almost nowhere.

(END VIDEO CLIP)

KLEIN: Boehner`s frustration is understandable. Obama did not give
an inch in this proposal. It`s pretty much the same as his budget.

The White House would note it is pretty much the same as the budget he
just won an election on, actually.

So it shouldn`t be a shock that Obama`s opening bid is his platform.
He just won an election on that platform. Those are his policies, it`s
what he promised.

Negotiations are beginning but you compromise with the other guy, not
with yourself. It doesn`t mean you`re not willing to compromise. Obama
said as much today.

(BEGIN VIDEO CLIP)

OBAMA: In Washington, nothing`s easy. So, you know, there`s going to
be prolonged negotiations. And all of us will have to get out of our
comfort zones to make that happen. I`m willing to do that. I`m hopeful
that enough members of Congress in both parties are willing to do that as
well. We can solve these problems.

(END VIDEO CLIP)

KLEIN: Boehner`s surprise is in part because this is a different
Obama he is now negotiating with. And it`s not just that Obama won an
election. Up until this point in his presidency, Obama has often
compromised on his own. His pattern has been to offer plans that roughly
tracked where he thought the final compromise would end up.

The White House figured that by being solicitous in their policy
proposals, they would win goodwill on the other side. And even if they
didn`t, the media would come to their side, realizing they sought
compromise in the first place and been rebuffed by intransigent
Republicans.

The White House does not believe that any more. Probably the key
lesson they took from the last couple of years is this: do not negotiate
with yourself.

If Republicans want it cut Medicare, let them propose the cuts. If
they want it raise revenue through tax reform as opposed to marginal rates,
let them tell you which deductions they will eliminate. If they want
deeper cuts to discretionary spending, let them give you a number.

And above all, if they do not like your policies, let them propose
their own. That way if the White House eventually does give in to some of
the demands, Republicans would feel like they got one over on the prose.
They won one, a compromise.

I think is a genuinely important principle in Washington. A
compromise is not measured by what you offer. It is measured by what the
other side feels they made you concede.

The GOP is right. This is not a serious proposal and that Obama
seriously expects them to accept it, expects him to give him a proposal.

It is a serious message though. Obama is no longer negotiating with
himself and his opening bid proves it.

Now that GOP has leaked his offer, the next question is clear. What
is their counter offer?

And that gets to the real game behind the game here. The difference
between what Obama wants out of the fiscal negotiations and what
Republicans want out of the negotiations is as Jonathan Chait noted at "New
York" magazine, that Obama`s demand it raise taxes on the rich is popular.
People like it. He just again won an election.

The GOP`s demand to cut Medicare spending is unpopular. People don`t
like it.

And so what the GOP wants is for Obama to propose the Medicare cuts
for them. They want him to take the heat.

Democrats find this ridiculous -- I think is the right word -- given
that the Obama administration would happily raise taxes without cutting
Medicare, but that Republicans will only raise taxes if we cut Medicare.
They think it falls on Republicans to name their price. Obama isn`t going
to negotiate on his own and Republicans now are scared to negotiate with
him.

Joining me now is Jared Bernstein, a senior fellow at the Center of
Budget and Policy Priority, a great blogger, a master of all budgetary
data, and a former chief economist for Vice President Joe Biden.

Jared, it is good to see you. Thank you for being here on a Friday.

JARED BERNSTEIN, MSNBC CONTRIBUTOR: I can`t imagine a better way to
start my weekend than talking fiscal cliff with you.

KLEIN: I`m happy to hear it. It means a lot to me.

BERNSTEIN: I know.

KLEIN: Andrew Sullivan at "The Daily Beast", he said that Obama just
got re-elected. It is a classic time for magnanimity, which I think I just
mispronounced.

Do you agree -- do you think that Obama is coming out with a hard line
offer at the wrong time?

BERNSTEIN: No, I mean, if what Andrew Sullivan means by that is that
president should be negotiating with himself, which as you correctly
pointed out: (a), hasn`t worked for him before, and (b), really isn`t the
way it move forward once you won an election on a very principles you`re
arguing over, well, then I would very much disagree.

I mean, the right way to negotiate here is not to come out and say,
here`s what you want Republicans. It`s to come out and say, here`s what we
want. Here`s our opening bid as you correctly name this, let`s hear yours.

KLEIN: We`ve seen -- one thing I was surprised to see in the White
House`s opening bid, the fiscal cliff, which we like to call the austerity
crisis because it is just too much austerity, too quickly, has weirdly had
a negotiations entirely centered around deficit reduction.

BERNSTEIN: Right.

KLEIN: Despite the fact the problem is too much deficit reduction.
The White House proposal actually had a lot of stimulus which folks like
your group and you in particular have been calling for, for some time.
Were you surprised to see it in there?

BERNSTEN: I was surprised to see as much as I did, and I was very
happy to see it in there. You are absolutely right. If you think about --
remember the economy, that old thing?

KLEIN: I`ve heard of the economy, yes.

BERNSTEIN: So, the unemployment rate is still way too elevated, 7.9
percent. I mean, GDP got a decent pop in the third quarter, but most of us
agree that it`s growing well too slowly. And this is our biggest near term
problem.

Our biggest near term problem is not the budget deficit. That`s a
medium term, a long-term problem, a serious problem. We have a chance with
these cliff negotiations to do something about it.

But if we can at the same time, help the 2013 economy by giving it a
bit of a boost, that`s` going to mean a lot to workers, to their paychecks,
to their job availability. I`m very happy to see that that was in there.

KLEIN: When you look at the White House`s proposal, what do you think
they can -- what do you think they think they can actually get?

BERNSTEIN: I think they think they can get the increase in the top
rates. That`s the biggest kind of thing to finally break the mold on that,
to really push back against the kind of Grover Norquist-ian tax asymmetry
that you can only lower taxes, you never raise them.

I think they can get that. I`m not sure we end up at 396 for the top
rate, but I do think they`ll get that. I think probably by giving some on
the entitlements as was in their opening bid, they`ll be able to get back
to perhaps some of the stimulus ideas as well.

So, certainly on the taxes, and maybe something on the near term to
help the economy.

KLEIN: On the entitlements, I`ve been talking to a number of
Republican offices. And one thing I`ve come to think has become a problem
in the negotiations is Republicans, aside from premium support in Medicare,
which they know they can`t get, they actually don`t know really what
Medicare cuts they want. They don`t know what a middle ground is for them
on entitlements.

So, how do you see that part of the negotiation going, because
Republicans really don`t have -- they don`t have a set of, here are our
asks, and here is what can you give us. That`s part of why they want Obama
to tell them what they want.

BERNSTEIN: Correct. This is a big problem for Republicans. It`s one
of the reasons why the president is starting out in the right place,
because so far, it`s all been 40,000 feet up for them. We want it clean
out the tax code, close deductions, you know, cut entitlements.

They have to get specific. And, frankly, I don`t think they know what
their specifics are, because as you said in your introduction, the public
doesn`t want to hear it. The public doesn`t really want -- they don`t want
it necessarily. People who are running for office in 2014 don`t
necessarily want to go out and say, here`s how I think you should cut it.

So, I think they`re probably going to start from where the president
is. He does have hundreds of billions of dollars of savings in Medicare
that he is bringing to the table.

KLEIN: Yes, you don`t want to set up a (INAUDIBLE) you think people
will hate you for it.

BERNSTEIN: Right.

KLEIN: Jared Bernstein, thank you for being here. It`s great to see
you. And have a great weekend.

BERNSTEIN: Thanks, Ezra.

KLEIN: Coming up, what cheese and insects have to do with tax reform
and what people really mean when they say the words, "tax reform"?

And what if I told you Mitch McConnell and President Obama had a
secret plan that could save the world. It would even begin by saving
America about $18 billion without raising any taxes or cutting anything.
Would you believe me? Believe me. It is coming up.

(COMMERCIAL BREAK)

KLEIN: People in Washington keep saying tax reform, like it`s a magic
spell. It does not mean what you think it means. That is coming up.

And later, the epic fail that was the Romney campaign`s polling. We
knew it was wrong. We had no idea how wrong it actually was. That is
ahead.

(COMMERCIAL BREAK)

KLEIN: There`s an app that does menu translation. You hold up your
phone and it instantly translates a foreign language menu into words can
you actually understand. How about that?

This is important if your taste buds have outpaced the Spanish or
French or Italian you remember from high school. Say you are in Italy and
you see Formaggio Marcio on the menu. And no, I have no idea if I
pronounced it right, that`s why I need an app.

You think Formaggio is a familiar-ish word. You`re pretty sure it
means cheese something and you like cheese, so you order. And it is a
cheese with live maggots in it. A Sicilian delicacy, but one you maybe
didn`t mean to order. If only you knew what it meant.

There is no menu translator app for policy. There is "Wonkblog" at
"The Washington Post", sorry, I have to do my plug. But it is not quite an
app.

Still, we`re going to tell you tonight. You might have heard a term
floating around Washington, tax reform. Or when politicians get specific,
quote, "base broadening or rate lowering tax reform." It is the new black.
In Washington, it is Bieber and Honey Boo Boo and Gangnam style all rolled
into one.

(BEGIN VIDEO CLIPS)

MTIT ROMNEY (R), FORMER PRESIDENTIAL CANDIDATE: When Ronald Reagan
ran for office, he laid out the principles that he was going to foster. He
said he was going to lower tax rates. He said he was going to broaden the
base.

Those are my principles. Bring down rates. Broaden the base.
Simplify the code. And create incentives for growth.

BOEHNER: We`re willing to accept some additional revenues via tax
reform. Simpler, cleaner, fairer tax code with fewer loopholes and lower
rates for all.

(END VIDEO CLIPS)

KLEIN: It was in Simpson-Bowles, Democrats love it too. Base
broadening and rate lowering tax platform. It sounds so good, doesn`t it?

It certainly sounds better than charity-destroying, home-shrinking,
state-burdening tax reform. But that is what it actually is.

The actual definition of base broadening, rate lowering tax reform
that is emerging in the ongoing fiscal cliff negotiations is tax reform
that limits itemized deductions among high income taxpayers. That is a
very boring sentence.

Do not be bored. This is important. Here`s what it actually means:
as former Budget Director Peter Orszag pointed out in a "Bloomberg" column,
90 percent -- 90 percent -- of the value of those itemized destructions for
the rich comes from just three categories. Deductions for taxes paid,
mostly state and local, home mortgage interest and charitable
contributions.

Look at each of them in turn. First, home mortgage deduction. Most
economists will tell you that cutting the home mortgage deduction
particularly for rich people is a good idea. There is no real reason the
tax code should subsidizing the purchase of more McMansions. So, I`m not
particularly worried about that.

Second, the deduction for state and local taxes paid. Now, that`s
just a tax shift. Instead of raising taxes on you by simply raising them
on you, we raise taxes on you by making our state and local tax bill
higher. Removing that deduction would pound taxpayers who reside in high
tax cities or states, which means it will hit those cities and states by
making them less attractive places for people to live.

There`s a political valiance here too. All 10 of the highest tax
states went for President Obama in 2012, while eight of the lowest tax
states went for Romney.

So, that would be a particularly tough tax for blue states.

Third is limiting the deductions on charitable contributions. And
this is the big one. Charitable giving is by far the most sensitive to tax
incentives. After all, you got to live somewhere, you need a home and it
is hard it move to a new state because taxes went up.

You don`t need to give to charity. Nobody makes you. People give to
charity because they want to and also -- let`s be real -- because the
government encourages through the tax code.

Orszag reports in "Bloomberg", quote, "In 2009, households with
incomes of more than $200,000 claimed almost $60 billion in charitable
deductions or about 20 percent of total charitable giving in the U.S. that
year."

He goes on to cite one study that found charitable donations are cut
almost dollar for dollar to the increase in the donor`s tax bill. So that
could be a $60 billion cut to charities` coffers.

Other studies said it could be half that, although still likely in
many billions of dollars of cuts to charities. That is the reality behind
base broadening, rate lowering tax reform. It`s not magic. It`s more of a
magic trick that relies on obfuscation and misdirection to distract the
audience from where the tax increases really are.

But it is tax increase. It is just on charitable giving, on home-
buying and state and local taxes.

Now, perhaps it is a better kind of tax increase than raising taxes on
marginal rates. That is a fair argument to have. But it is the argument
we need to be having.

Joining me now to have some of that argument is Chris Hansen,
president of the American Cancer Society, the Cancer Action Network.

Thank you, Chris. You do great work. I`m a big fan of your effort.

CHRIS HANSEN, AMERICAN CANCER SOCIETY: Thank you very much. Good to
be here.

KLEIN: Now, as I said, we all support what you do. But why should we
be subsidizing you? Why should my taxes subsidize you? And not only you,
but operas and museums and rich guys` alma maters, why is this part of the
tax code and should be kept?

HANSEN: Let me make a couple of points. One, first of all, we`ve had
charitable deduction in this country since 1917, I believe, is when it went
into effect. It`s part of our society. It leverages a whole variety of
things.

If all of the services that are done by not-for-profits, and there are
all kinds of not-for-profits out there, and what happen says they do a lot
of things that governments would have to do otherwise. I mean, when people
talk about making governments smaller, it`s going to be a lot harder if you
don`t have charitable organizations that do disaster relief and any other
number of things, health services, et cetera.

Let me give you an example of the American Cancer Society. So, we are
the largest funder of cancer research in the world. We -- in 2011, just to
give you an example, we spent $123 million funding cancer researchers.
We`ve spent $3.8 billion over the lifetime of the organization.

And you might say, why don`t we just do that through government
instead of doing it through you? Because we do find cancer research at the
federal level through the federal government.

Well, the reality is, what we do compliments what you do at the
federal level. So we bring people into cancer research. We fund the early
researchers. And we get them started. We get them going -- 46 of the
researchers we have funded have gone on to win Nobel Prizes.

KLEIN: Well, let me ask you about that, though. Have you guys run
the numbers on what a proposal like this would mean for your work? Do you
have an estimate?

HANSEN: I don`t think we know how to estimate. You know, to be
really honest with you, because we haven`t been through it before. We
don`t have a history on this. The history is the giving that we have.

We know that a lot of people do give because of the deduction that`s
available. We what we don`t know is how behavior will change if it goes
away. We know it would hurt us, we don`t know exactly how badly it will
hurt us.

I make one other point. We have for most charitable organizations,
for the whole -- for all charitable organizations, about 75 percent of the
contributions come from individuals. In our case, it`s actually much
higher than that. It`s closer to 90 percent.

But these are individuals that are contributing to what they want to
contribute to. Another point that I would make is that a lot of times, the
money that is being spent in these organizations is leveraging volunteer
act.

KLEIN: Right.

HANSEN: And so, that`s part of our society, really. That`s the way
that this country is different from a lot of other countries and we
leverage, you know, all of the human capital that we have in this country
and not-for-profits are particularly good at doing that.

We have 3 million volunteers with the American Cancer Society. A lot
of the money we raise charitably actually helps them do the things that
they do, like drive cancer patients to treatment and things like that.

KLEIN: Chris Hansen, we have to leave it there, but thank you so much
for the work you do and for being with us here tonight.

HANSEN: Good to be with you. Thank you.

KLEIN: Coming up: we now have the polls, the actual polls, that led
Mitt Romney`s team so very astray.

And later, the way Congress and President Obama can stop a big chunk
of Capitol Hill drama, and maybe even save the world. Really. That is
coming up.

(COMMERCIAL BREAK)

KLEIN: Coming up, you knew the Romney campaign`s numbers were off.
Now we know just how far team led by Mr. I Love Data Romney really was.
Alex Wagner joins me next.

(COMMERCIAL BREAK)

KLEIN: In the Spotlight tonight, if you were in the Mitt Romney
campaign, election day was a very, very surprising day. Something you
never expected to happen happened. He lost the election.

A couple days after Romney lost, one of his senior advisors told CBS
News, "we went into the evening confident we had a good path to victory. I
don`t think there was one person who saw this coming."

There were people who saw it coming. They just weren`t in the Romney
campaign, apparently. And they weren`t on the media outlets the Romney
campaign appeared to be paying attention to.

(BEGIN VIDEO CLIP)

BILL O`REILLY, FOX NEWS ANCHOR: I think Romney will take Florida and
Virginia and North Carolina, based on what I`ve seen.

CHARLES KRAUTHAMMER, FOX NEWS CONTRIBUTOR: I agree.

KARL ROVE, FOX NEWS CONTRIBUTOR: I think Romney gets 279 to 281 or
286 in the electoral.

SEAN HANNITY, FOX NEWS ANCHOR: I`m sticking with you. I think it is
a two point race to three point race.

DICK MORRIS, FOX NEWS CONTRIBUTOR: We`re going to win by a landslide.

RUSH LIMBAUGH, RADIO TALK SHOW HOST: All of my thinking says Romney
big, not even close, 300 plus electoral votes for Romney.

(END VIDEO CLIP)

KLEIN: Outside of that group, pretty much everybody was predicting an
Obama victory. That is because all of the polls were predicting an Obama
victory and all of the betting markets were predicting an Obama victory.
Suspected wizard Nate Silver had a model based on public polling that
showed President Obama with a 91 percent chance of victory.

On election eve, the popular prediction market Intrade gave President
Obama a two to one chance of winning. That is a lot of wizards. So how
could Mitt Romney have gotten in it so very, very wrong and all of his
campaign people have gotten it so very wrong?

This is a guy who made a fortune as a super analytical private equity
manager who once told the "Wall Street Journal" editorial board, quote, "I
love data. I used to call it wallowing in the data. Let me see the data.
I want to see the client`s data, the competitor`s data. I want to see all
of the data."

On election day, Mitt Romney was looking at the data. It`s just that
the data was off. It was a bit -- well, you might call it skewed. And
today we learned how skewed it was.

"The New Republic" has obtained some of the Romney campaign`s final
internal poll numbers. The numbers are based on a two-day average from the
weekend before the election and are from six key swing states. In New
Hampshire, the Romney internal poll had Romney up 3.5 points. Obama won
the state by 5.6 points. The Romney poll is off by over nine. Ouch.

In Colorado, the Romney poll had Romney up 2.5 points. Obama won the
state by 5.4. Romney poll was off by almost eight. Again, ouch.

In Iowa, the Romney poll showed a tie. Obama won the state by almost
six points. In Minnesota, the Romney poll showed Obama up by four. He won
by 7.7.

In Wisconsin, the Romney poll showed Obama up again four. He won by
6.8.

In Pennsylvania, the Romney poll showed Obama up three points. He won
by 5.4.

So these are big swings. This isn`t a little bit off. So the
question becomes, why were the Romney numbers so very off? Noam Scheiber,
the reporter who got the polling data, posed that question to Romney
pollster Neil Newhouse. He said, quote, "I`m not sure what the answer is,
Newhouse said." His future client may want to know that. He was
explaining his polls were more accurate in most of the other swing states.

Though Newhouse did acknowledge the campaign poorly predicted the
demographic composition of the electorate, he said, quote, "the Colorado
Latino vote was extraordinarily challenging, as it was in Florida."

The Romney campaign`s optimism also stemmed in part from the internal
polls on voter intensity. Their polls asked voters how interested they
were in the election on a scale of one to 10. Among voters who scored an
eight, nine or 10, Romney led in three of the six key states. It just
turned out that those voters accounted for a smaller percentage of the
electorate than Team Romney had anticipated.

Another reason for their optimism was the appearance in the final days
of momentum, the magic momentum. Newhouse said his numbers showed Romney
stalling out around the time of Hurricane Sandy, the week before the
election, then recovering in the final few days of the race.

He said "we thought we had, in the last 72 hours of the campaign, made
up some of the ground from the challenging messaging period during the
hurricane."

That moment never actually materialized, unfortunately, and Romney, of
course, went on to loose. But again, the question still is why?

Joining me now, "New Republic" staff writer and master of all polling
date, Nate Cohn, and MSNBC`s very awesome Alex Wagner. Thank you guys both
for being here.

ALEX WAGNER, MSNBC ANCHOR: Thanks, Ezra.

KLEIN: Nate, let me begin with you on the polling. What can we learn
here? You went through all of the polling throughout the campaign. What
was your conclusion when you looked at how far off the Romney campaign got
it?

NATE COHN, "THE NEW REPUBLIC": Well, the first thing that you have to
notice is that it is so much worse than the public polling. I mean, the
Romney polls show Obama performing 5.2 points worse than he actually did.
The public poll only showed Obama performing two points worse than he
actually did.

So they are performing 3.2 points worse than the public polls, which
are not getting paid by the Romney campaign to produce the right answers.

The second thing is that their explanation doesn`t really line up. I
mean, they didn`t show diverse states like Florida or Virginia. They are
showing huge eight-point errors in some of the whitest states in the
country, where messing up the minority vote doesn`t get you all the way
there.

I mean, New Hampshire is 93 percent white and Obama won the white
vote.

KLEIN: Right, it wasn`t a huge Hispanic turn out in New Hampshire.

COHN: And in Colorado, you know, OK, they were off by more than eight
points in a state where Latinos are 14 percent of the electorate. So they
must have been off by orders of magnitude to get that wrong. And it`s just
not plausible. So their explanation doesn`t completely add up.

And their momentum argument doesn`t add up either. I mean, these are
one-day samples. No responsible pollster is reading into one day swings
and deciding that things are going to go over the top.

The final thing is even if they thought all these numbers were true,
they were still losing. These numbers add up to 267 electoral votes. They
were still down in Ohio by two. And was momentum going to make two points
worth of difference in the final two days? Maybe. But that`s not enough
to not write a concession speech.

KLEIN: If your numbers say you are losing and you lose, that
shouldn`t be something no one on the campaign saw coming. Alex, John
Bernstein, who is this political scientist who writes a plain blog about
politics that`s called -- had a really I thought interesting point on this.
And he said, what the Romney campaign did here was completely rational.
Every campaign needs to believe they can win. If they don`t believe they
can win, they are going to lose.

So fooling yourself is a totally rational thing to do if you are a
campaign. Do you buy that reasoning? Was there a kind of master plan
here, at least internally?

WAGNER: I think the hive mentality on some level is I guess excusable
in a political campaign. But this is a will disavowal of reality, Ezra.
Remember, if you will, this is the same campaign, the same party that sort
of said these polls, they are partisan polls, and these polls are showing
Obama up because they want to disenfranchise and discourage Romney voters
from coming out and voting on November 6th.

That -- an incredible amount of hubris. Who is running that closely
and doesn`t write an concession speech? Ann Romney had a victory bouffant
on her head. This family was ready to win. And you know, it is part and
parcel of the broader strategy. Time and time again, people would say,
Romney, you can`t run on this. You can`t win an election on this. They
doubled down.

I mean, this was a group of people that underestimated the American
public from the very beginning. So the fact that they had these polls that
were, A, not very good, but they would believe them until the bitter end
and make no concessions otherwise is not that surprising.

KLEIN: To be fair, I would never miss an opportunity to wear my
victory bouffant.

WAGNER: I know you wouldn`t, Ezra. But you`re a special category.

KLEIN: But there is one -- there is a mystery. We`ve spent so much
time I think in the media broadly asking why Romney`s internal polling was
so off. The one thing we haven`t talked I think that much about was that
Obama did finish beyond where the public polling would have suggested. He
over-performed his own polling.

What is your thinking on why that was? Why did he -- he made Romney`s
numbers a lot more off than they would have been otherwise.

COHN: Yes, I think the gap was about two point. I think from
methodological perspective, the best explanation is cell phones, that so
many of Obama`s core voters, young voters and minorities, are only
accessible by cell phones. It is very expensive to contact them.

So most media outlets and their polls under-represented cell phones
voters as a composition of their samples. If that`s not it, I think the
next best explanation is that there were a bunch of latent Obama voters
that switched to being undecided after the debates, that had kind of
resolved on Obama after the convention, knew that`s where they were going
to go, had some second thoughts after the debate. But deep down, they
weren`t prepared at any point to vote for Romney, and then in the final
days swung back to his side.

KLEIN: Alex, how much credit do you give to the Obama ground here?
Because that is something that people -- if it did work, if it did create a
two point swing, or at least part of it, that is something that future
campaigns, both Republican and Democrat, can actually copy and replicate
elsewhere.

WAGNER: I guess I agree with you to a point. One, I give the Obama
ground game a huge amount of credit. I think Sasha Eyesenburg (ph) best
sort of describes the sophistication of that operation in his book, "The
Victory Lap," which is beyond anything that modern political campaigns have
seen. And to the degree that Fortune 500 companies are asking the Obama
campaign about consumer data, I mean that`s how much they had drilled down
into the electorate.

The other things is, in terms of replicating it, I think that, look,
what we are learning about the Internet voter outreach communication among
groups of the American public, it is complicated and it`s ever changing.
What we saw was a 2.0 of the Dean campaign. I think we are going to see
another version of it in 2016.

But this is the line in the sand where you really have an ADBC thing
in terms of data and reaching out to voters. And the Romney campaign -- I
think it amazing that their digital operation, Operation Orca. And it was
complete failure, both in semiotics and in actual practice.

KLEIN: Alex Wagner and Nate Cohn, thank you both for joining me
tonight.

(CROSS TALK)

KLEIN: Have a great weekend Coming up, Obama`s plan to save the
world. Really, it starts out saving 18 billion dollars. And it might
actually end up saving the world at least from drama in Washington. I`ll
explain it coming up.

And how deeply embedded is Grower-think in Washington? It is even
infecting immigration reform. That is next.

(COMMERCIAL BREAK)

KLEIN: Yesterday, a stunning report was released by the Pew Research
Center finding that the U.S. birthrate dropped to its, quote, "lowest ever
recorded last year," to 63.2 births per 1,000 women of child bearing age.
To put that into perspective, during the Baby Boom years, the birthrate
reached a high of about 123 births per 1,000 women.

So why the decline? According to the Pew report, it was due to a 14
percent drop in the birthrate among foreign-born women, which is, quote,
"more than it had declined over the entire 1990 to 2007 period."

Among Mexican immigrant women, the rate dropped by a whopping 23
percent. The thing about a low birthrate is it is really bad for the
economy. It leads to too many older people and not enough young people.

Luckily there is a way to solve this problem. And it is not just a
higher birthrate. It is an immigration. Immigration can be a difficult
fix, of course, if nobody wants to come to your country, or if, like Japan,
you are not willing to let anyone into your country.

But if you are the United States of America, you are in luck because
everybody wants to come to you. Which brings us to today. The House voted
and passed a jobs bill. I repeat, because that`s important. The House
passed a jobs bill today. And it was based on one of Mitt Romney`s best
ideas in the entire campaign.

(BEGIN VIDEO CLIP)

MITT ROMNEY, FORMER PRESIDENTIAL CANDIDATE: I also think that we
should give visas to people, green cards rather, to people who graduate
with skills that we need. People around the world with accredited degrees
in science and math get a green card stapled to their diploma, come to the
U.S. of A.

(END VIDEO CLIP)

KLEIN: But don`t get too excited. The STEM Jobs Act would give visas
to 55,000 immigrants who receive advanced degrees in STEM fields. That is
science, technology, engineering or math, STEM, from an American school.
The problem with this bill, of which, by the way, only 27 Democrats
supported, is that it would eliminate 55,000 visas from the diversity visa
program.

The diversity visa program is basically a lottery system designed to
provide immigrants from areas with low immigration rates with the chance to
come to America. Democratic Congresswoman Zoe Lofgren of California
represents Silicon Valley. They are the prime beneficiary, arguably, of
more high skilled immigration.

She is not a fan of this bill. She said this give and take approach
to immigration is like a, quote, "Grover Norquist-style pledge. They --
Republicans -- have essentially signed with anti-immigrant groups to never
create a green card for an immigrant without taking one away from someone
else."

The House STEM Jobs Act is not expected to pass in the Senate,
particularly since Democratic Senator Charles Schumer and Chris Coons
introduced a STEM bill that adds visas without eliminating the diversity
visa program.

On Wednesday, the Obama administration said it would not support the
House bill. But one little change could do it. At a moment when the
birthrate is falling, when we know we need more young workers to support a
rapidly aging population, we could just let more immigrants in, more
immigrants total. It would be good for the economy. It would be Good not
-- not for nothing, for the immigrants.

There is no reason to make immigration a zero sum game, not in
America, particularly not when our birthrate is dropping. The fact that
people want to come here, that is one of our greatest strengths. We should
use it.

Joining me now, MSNBC contributor Victoria Defrancesco Soto. It`s
very nice to have you here this evening.

VICTORIA DEFRANCESCO SOTO, MSNBC CONTRIBUTOR: Thank you, Ezra.

KLEIN: In your piece for NBC Latino, you wrote, "the removal of this
class of visas puts us on a dangerous slippery slope towards a restrictive,
racially and ethnically based quota immigration system, such as those in
place for half of the 20th century."

Could you expand a bit on the history there?

DEFRANCESCO SOTO: Sure. Regrettably, we have a bit of a dark history
in terms of immigration and excluding people who we deem desirable and
undesirable. So starting with the Chinese Exclusion Act, the gentlemen`s
agreement excluding Japanese Americans, and then getting into the 1920s, we
had the national origin quotas, where you started to see an outright
exclusion of southern and eastern Europeans.

So all of these folks deemed not mentally and cognitively and morally
fit to be in this country. So we are saying, these are folks we want to
let in and these are folks that we don`t want to let in. And we seeing
that with the STEM Jobs Act. It is just eerily reminiscent.

And what we know is that there`s room. We are on the brink of a
population crisis. And not only in terms of the decreased birth rates, but
last year, we saw net migration from Mexico, the largest sending country,
go down to zero. So we are going down in terms of our birthrate. And
immigration is stalling.

What is going to happen to this country? We need our population
growth and it doesn`t look like the Republicans are going to want to play
ball. If they keep putting forward propositions such as the STEM Act,
we`re not going to have any advancement on this issue. We need
comprehensive immigration reform.

KLEIN: There are different reasons that we give in our different
immigration bills for immigration. So in your view, is there a tension
between directing immigration towards our economic needs, by bringing the
STEM folks, and towards reuniting families, and towards assuring global
representation? Do these things have to be kind of pit against each other?

DEFRANCESCO SOTO: Absolutely not, Ezra. They are not mutually
exclusive. You know, we absolutely need high-tech skilled workers. But we
also need people in the low skill jobs. We need folks who will do those
janitorial services, who do those folks that the higher skill folks --
because in the U.S., our educational rates are at such a level where folks
are not going to be filling those jobs. So we need folks to fill all sorts
of jobs. And it should not be mutually exclusive.

KLEIN: Victoria Defrancesco Soto, thank you so much for joining me
here on a Friday night.

DEFRANCESCO SOTO: Good evening .

KLEIN: Up next, the best idea anybody in politics has come up with in
a long, long time.

(COMMERCIAL BREAK)

KLEIN: At the beginning of tonight`s show, we went through the White
House`s opening bid on the debt ceiling. If you remember, it`s 1.6
trillion in tax increases, 600 billion in spending cuts, 200 billion in new
stimulus, and a very clear message to the Republicans: if you would like
more Medicare cuts, then you propose them. Go right ahead.

But that actually wasn`t all that was in their opening bid. There was
something else too, something kind of awesome. There is also a proposal to
end debt ceiling crises forever more. The idea comes from a most unlikely
source. Senate Minority Leader Mitch McConnell proposed in July 2011 to
permit the president to unilaterally raise the debt ceiling unless Congress
affirmatively voted to stop him and as long as he proposed some
accompanying spending cuts.

Now those spending cuts, they didn`t have to pass. Congress didn`t
have to like them or even vote on them. He just had to propose some, send
them on over at the same time. Even if Congress did vote to stop him from
raising the debt ceiling, a vote of disapproval, it would be called, the
president could veto that. Congress would need to overturn his veto in
order to keep the debt ceiling from going up.

The White House wants to take this policy that Mitch McConnell
proposed back in 2011, and make it law for all of time. They would ditch
the spending cuts part. But the rest of it is pretty much the same. The
effect would be to finish off the debt ceiling forever, make it no longer a
threat to the economy. The president could raise the debt ceiling and
Congress, frankly, couldn`t do much about it.

Republicans are laughing this part of his opening bid off as a
ridiculous pie in the sky proposal. McConnell, for instance, who abandoned
it long ago because Republicans hated it the second he proposed it, he is
totally against it now. But it is actually a great idea, one that could do
more to protect our economy in the future than anything else in the debt
deal.

Even better, it would cost us nothing. Measured by its cost
effectiveness, it is perhaps the single best idea in American politics
today. The debt ceiling is an anachronism. It is an accountability
mechanism from the days when Congress didn`t really involve itself very
much in federal budgeting.

Today, Congress exerts full control of the federal budget. The debt
ceiling isn`t imposing accountability on a run away executive anymore. It
is calling into question whether Congress will pay the bills it has already
chosen to incur, like buying a TV and then taking a family vote on whether
or not you will pay for it when the check comes due.

But the debt ceiling is not an adorable anachronism like grandfather
clocks. It is a dangerous one, like blood letting, lobotomies and burning
people you suspect to be a witch. If we crash through the debt ceiling, a
global financial crisis could and probably would result.

Even if we return back to sanity and began paying our bills again,
America`s borrowing costs would be forever higher and the market`s
confidence in our political system would be permanently harmed. The
Bipartisan Policy Center estimates that the near miss we had in 2011 cost
us 18.9 billion dollars -- billion with a B. That is 18.9 billion we lost
for no reason. It didn`t buy us any government services or lower anybody`s
taxes by even a dime.

It is time to get rid of the debt ceiling. And don`t take it from me.
Take it from the policy makers who have had to deal with it before, like
Alan Greenspan, former Federal Reserve chairman.

(BEGIN VIDEO CLIP)

ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: I have a more
fundamental question. Why do we have a debt limit in the first place? We
appropriate funds. We have tax law. And one reasonably adept at
arithmetic can calculate what the debt change is going to be. The Congress
and the president have signed legislation predetermining what that number
is. Why do we need suspenders and belts is something I`ve never
understood.

DAVID GREGORY, "MEET THE PRESS" MODERATOR: Now that we got them, the
question is --

GREENSPAN: Now that you`ve got them, the question essentially is
there is a major problem in cutting spending. And anything that works in
my regard is probably helpful. The difficulty that I have is you cannot
have a position which stipulates that I will never allow the United States
to default. But on the other hand, I will not allow the process to go
forward unless there are additional actions with respect to the debt.

GREGORY: So you can`t let it default.

GREENSPAN: Well, you can, but you shouldn`t.

(END VIDEO CLIP)

KLEIN: Former Treasury Secretary Robert Ruben agrees, as do a number
of his successors in that position, including Treasury Secretary Larry
Summers and former Treasury Secretary Paul O`Neill. Paul O`Neill said "it
is hard to make a rational argument for the debt ceiling."

You can make one. This is the one you actually hear, the rational
argument for the debt ceiling. Is it that the minority can use it to
extract policy concessions from the majority, as Republicans did in 2011.
In other words, the argument for the debt ceiling is that we should enter
the American economy into a never-ending game of Russian Roulette, because
whichever party a majority of Americans did not vote for wants to keep
their shot at the winnings.

That is not a very good argument. It is long past time to get rid of
the debt ceiling. And the modified McConnell/Obama plan is as good a way
as any to do it. It gives lawmakers more than a chance to avoid a fiscal
cliff or a fiscal curve. It gives them a chance to end America`s
flirtations with fiscal suicide.

That is THE LAST WORD. I`m Ezra Klein, in for Lawrence O`Donnell.
You can read my work at WonkBlog.com. "THE ED SHOW" is up next.

END

Copyright 2012 CQ-Roll Call, Inc. All materials herein are protected by
United States copyright law and may not be reproduced, distributed,
transmitted, displayed, published or broadcast without the prior written
permission of CQ-Roll Call. You may not alter or remove any trademark,
copyright or other notice from copies of the content.>

Watch The Last Word With Lawrence O'Donnell each weeknight at 10 p.m. ET

More on TODAY.com

  1. Mark Winans

    ‘It’s a miracle:’ Oregon dog survives 150-foot fall

    10/23/2014 9:08:40 PM +00:00 2014-10-23T21:08:40
  1. New York checks suspected Ebola patient

    A health care worker who recently returned from West Africa is being isolated and checked for Ebola virus at New York’s Bellevue Hospital, city health officials said Thursday.

    10/23/2014 7:47:58 PM +00:00 2014-10-23T19:47:58
  1. Getty Images file

    Conan O'Brien gets zinged by Madeleine Albright in epic Twitter

    10/23/2014 11:50:22 PM +00:00 2014-10-23T23:50:22