beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. good morning from new york. i'm chris hayes. u.n. obseramservers say they f evidence of government vehicles around homes there. the syrian government denies responsibility. 15 people died in new shelling overnight. but i want to started to with my story of the week. the man who may determine the nation's economic future and the winner of the 2012 presidential election. on thursday, federal reserve chairman ben bernanke went up in front of capitol hill to testify.

he faced a skeptical audience, primarily the republicans, who think bernanke has been doing too much to help! i wish you would look the market in the eye and say the fed has done all it can do, perhaps too much. >> the akt has been unprecedented. >> bernanke was his normal, mild-mannered calm sufl. >> given the kind of fragile state that we're looking at from the economic standpoint and, particularly, the situation in europe as it's unfolding, do you sleep well at night? >> do i see? >> do you sleep well at night. >> i generally sleep pretty well, yes. but i have a lot to do during the day. and i need to be well rested. >> he assured the members of congress that if things get really bad, the fed will be there to help. >> as always, the federal

reserve remains prepared to take action as needed to protect the u.s. financial system in the economy in the event that financial stresses es clat. >> the point is things are already bad. bernanke was already asked the one thing i would have liked to ask him. mr. chairman, your necessity, sometimes unprecedented action in the wake of financial crisis in. and yet, as federal reserve chairman, you seem to be entirely ignoring your own research. the fed refuses to address the job crisis in this country. you are ignoring your own mandate, ignoring the misery of millions of americans who are unemployed for no good reason. my question for you, mr. chairman, is are you trying to get president obama reelected? >> we have engulfing labor-force in flames. ben bernanke and the federal

reserve are content to sit back and watch it all burn. meanwhile, the entire block is going to be reduced to ash. of course, because we're in campaign season, most of the median focus has not been on bernanke, but the wake of the next president. president obama and mitt romney had it back and forth this week about the job creation and who is to blame for it. the economy has a net positive of 50,000 private sector jobs which is impressive given the fact that he inherited the worst economy in 70 years. it's almost twice as bad as we thought at the time based on the data we had. and then there's the fact that mitt romney has his own job creation record. and that's pretty embarrassing. in defending that, romney campaign advisor said this.

>> when mitt rom nerks y arrived, if you throw d.c. into the mix, we were 51 out of 51. by the time mitt romney left four years later, we were middle of the pact. we were 30th in the nation. >> in other words, i inherited a very crappy situation and improved it. don't blame me for the job losses, blame my predecessor. you'll note that sounds familiar when the president has tried to make the same argument, this has been romney's response. >> the president is always quick to find someone to blame. >> the may jobs report along with other indicators show an economy that's still suffering stress. the republican party knows full well that continued economic function suits that political interest, which brings us back to bernanke and why we should start viewing his salary as an incline contribution.

ben bernanke holds the fate of the u.s. economy in his hands. now, you will hear from some corners, and even mr. bernanke himself, that there's not much he can do. high inflation on the one hand, and high unemployment on the other. the tool it uses to navigate is short-term interest rates. the fed can raise rates making it more expensive to borrow money, slowing the economy and ultimately bring inflation down. the fed can cut interest rates making it easier to borrow money and giving it a boost in economic growth. you may notice there's a very, very important symmetry at the heart of managing the economy. during the time when inflation is suddenly persistently high, the fed can keep raising rates until the fever comes down. that's what paul volker did

during the 1970s. rates went unto 70 pnt which triggered a recession. what happens if you have persistently high unemployment? well, you can cut rates. after cutting rates a few times, you eventually end up at 0% and there's nothing left to cut. it just so happens that the zero lower bound should deal with it with the subject of much of ben bernanke's research. bernanke studied the aftermath. they were far too reticent and unwilling to turn to unconventional. and this reticence caused a whole bunch of misery in places like, say, japan. here is what he wrote. japan's economy has operated below potential for nearly a decade. nor is it by in means clear that

recovery is imminent. why isn't more happening to this outsider. japanese monetary policy seems paralyzed with a paralysis that is largely self induced. in fact, so unconventional is bernank's thinking on this, if all else fails, the bank could just send out helicopters to dump bags of cash. and, yet, while the federal reserve did take a variety of unconventional steps during the immediate crisis and its aftermath, for the last 11 months, it has been telling congress to do more as an excuse to let its own helicopters sit idle in their hangers. it seems to go against everything ben bernanke said he believed in. how can this be? in fact, a friend and fellow economy has even published a

working paper entitled, "why the hell won't the ben beranke of today listen to the ben bernanke of yesterday." and while it might seem like an academic argument or aer in day game of clue, the question of what's gotten into ben is literally the single, most pressing question in the entire political economy right now. a president can't do very much without them. so bernanke is, for the next six months, if only game in town. not only because he wants mitt rom nerks y reelected, although let's be clear he was appointed to the fed by bush, but rather because he's under tremendous pressure of the ttea party fede reserve not to do anything. remember this? >> if this guy prints more money

between now and the election, i don't know what you all would do to him in iowa. we would treat him pretty ugly down in texas. >> yeah, well, bernanke faces angry questions from bright wingers before congress, democrats exhibited no pressure. it's prolonged unemployment and poverty for millions. not to mention the premature end. so until he answers the question of whether he's trying to get mitt rom nerks y elected, i think it's time bernanke started to feel some heat from the left. i want to find out whether my panel thinks they're trying to put ben bernanke in the white house right after this. wake up!

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and, joining me now to discuss that, we have carl smith -- i'm sorry. if you're just tuning in, i should say that i was just talking about ben bernanke and his performance this week and the fact that it appears to me that he is attempting to get mitt romney elected president because the fed is sitting on its hands idle. peter shift is going to disagree strongly with that. but we have professor smith from north carolina and chapel hill. bet si stevenson, assistant professor of the university of pennsylvania wharton school and former chief economist of the labor department, senior director of the naacm and the aforementioned former economic advisor presidential campaign and author of the real crash, former candidate for the republican senate nomination.

and because i made peter sit through an 8-minute monologue, i will view the floor first to respond. >> first of all, i think you overestimate what the fed can do to help the economy. you don't create economic growth for a jobl by creating money. what you do have to create is money. it is the principle rates that are the principle cause of the housing bubble. and therefore, the fed is to blame for the financial crisis that ensued. so right now, we don't need more cheap money. that is preventing the economy from restructuring that will give us lasting growth. that's going to bring on some short term pain. >> this is the liquidationist -- you know, let prices find a bot tom. let there be suffering and mass misery and that mass misery will sort of wrench the pain out. >> there's more misery if we

don't bite the bullet and we didn't follow andrew carnegie's advice. >> i'm not the economist of the table, so i'll throw it over to you guys. i want to make two points. one whether the fed did or did not cause a housing bubble. if you look at the history, there are all sorts of bubbles that happen all the time. sometimes the central bank, sometimes without them. in fact, he looks at -- and this is the sort of text, right, on financial crashes, is that even when you don't have a central bank, they come up with ways to fund the bubbles. >> it's much bigger when you have a central bank and we're going to suffer. but, you know, the real fiscal cliff is not this phony one when the budget miegt come down a little bit. the fiscal cliff is when the interest rate skyrockets and the government can't afford to pay

the interest on the debt that's been accumulated in the last few years. >> i think it's important to distinguish, and i think they distinguish how the fed is operating in normal times and crisis times. things are different when you have the fall out from the financial crisis. >> so, first of all, i mean, i don't know what point we want to debate this at. that's probably screwing you guys up. >> you'd be wrong. >> so i don't think there's a lot of evidence that the fed caused the housing bubble. >> i predicted in advance. i knew about it. >> if you were not alone in predicting the house -- >> oh, sure i was. >> check it out on youtube. >> no, no, no. you were against some of the guys on wall street. who also don't really know what they're tauking ablt. >> but, you know, i said there was a bubble. paul came and gave a talk in

2007 how there was a housing bubble. >> he advocated for it. he thought it was going to solve our problem. >> lots of us naught there was a bubble. >> they also had the financial crisis from when it would burst. >> i mean, i did. i didn't see you out there with me. but, further more, i mean, we had lots of secure ties through securitization, we had cdos and all of these products. and i think it was probably the heart of what caused the bubble. >> well, it was frannie and freddie. >> i don't want to talk about the cause right now. i want to talk about what we can do now. there is this open question of people on the left and the right. i was making a strong case there for fed action. the fed can do things. people say there's nothing the fed can do. it's "pushing on a string." >> so what the fact that he can easily do is tolerate a little more inflation. that it would allow inflation to go up 3%.

and we can sit and argue about what we really think inflation is, but we measure the p.c. deflator. >> explain what that is. just keep it. >> personal consumption, what normal people buy. and then we go out and the government goes out and buys it every month and then writes down -- >> literally, it's this amazingly thorough process in which they go out and buy it. >> they calculate how much it costs. and so we can just say, look, we'll let that go to 3%, but we'll let that go to 4%. >> how does making that basket more expensive help people. how does it help the economy? >> the fed has -- i'm sorry. >> okay. there's several ways. the most stralgt forward way is that when that happens because people are spending more money, people are buying more stock. you believe in supply and demand, right? >> but supply doesn't go up. it's demand.

>> so demand goes up, right? and then that makes businesses want to supply more stuff. they can do this now because we have unemployed workers who they can hire and then make things. so here's a prime example of this. so we'll talk about the car industry. and this side is algs in the predictions, which is that -- we would have a surge in new car sales, they would go up to 14 million, right? and that would result in workers in the midwest being rehired. you've seen the unemployment rate start to collapse. we've grown manufacturing jobs for the first time in 20 years. we've had growth in manufacturing jobs. that's happening because people are buying cars. >> it's going to create more misery for the people who are unemployed. >> but think, for a second, how you get inflation. >> bunny trending. >> but it's not as if you print money and magically prices go up. >> but sometimes it prevents prices from falling.

>> well, by magic, there's a supply and demand. >> yeah. . and if you have too much money being supplied, prices rise. >> that is actually not the relationship between the monetary supply in prices. it's not a direct relationship between prices and monetary supply. there's this other thing that you learn in the first year of velocity class. and this is why it's important that we actually measure prices because we need to find out what's happening in the prices and it's not enough to say what are we doing to the money supply. so we look and see what's happening to prices. we measure prices. and one of the big mistakes we make is we never know how much to adjust for quality. we know quality is rising, so our price increases might even be lower. >> a lot of times, quality is going down. have you been on an airplane lately? there's a lot of price declines

that don't get captured. >> what the fed does is have two mandates. it's trying to think about maximum em ploimt and inflation. so the point is how doesn't higher inflation help people. what we're trying to do is do something that's not rocket -- that's not very extremely precise. >> we're trying to target something that we have a hard time measuring that we're not exactly sure how to respond and we're trying to target two separate things. we're trying to tar get employment and target prices. and we're trying to miss a little bit on prices. >> i want to talk about the politics of this and the pressure that comes from either side and the kind of questions that bernanke faces at the joint economic committee right after we take that break. advice to help us expand our palette...

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well, it's saturday at 8:24 a.m. and we are debating monetary policy. we talked about the fed. i want to zoom out for just one layer of detail because i think one way you'll understand this, in the way that i understand it, is that there are different pressures on the federal reserve to act in different ways. and what i see when i watched the testimony yesterday of the joint economic committee is that there's one political party that very explicitly is saying the kinds of things that you're saying. you're saying that inflation is higher than the official headline number. that the fed was doing things that is one of the unconventional things to increase the monetary supply and kick start the economy. that that's a disastrous path to follow. ron paul, obviously, has made

these ideas quite famous, but it's spread throughout the republican party. it's kind of a central republican party. . >> i would say most don't understand how bad it's going to get when the fed finally does the right thing after having done the wrong thing for so long. banks are going to fail, the government is going to have to default on a lot of its obligations. you think about how much we borrowed. you mentioned what happened under paul. let's say in a couple yearing s yearingses, the official funded debt is 20 trillion. if interest rates go to 20%, it's going to cost us a trillion dollars a year. >> they're predicting very high levels of inflation. but let me ask you this. >> obviously, the view that is you hold are broadly in the same con sections of ron paul. do you think they've become more popular and have articulated more? >> at first, actually, my math

was wrong. it's 220 a year. but, look, i don't think that people understand how the feds roll. how instrumental it has been to creating all of the macro economic problems that are plaguesing us right now. by keeping interest rates too long, we don't save enough. we have too many people in government, banking, retail and education. meantime, we can't produce the things that we need to consume. this economy dunt work anymore because all the resources are misallocated. it's going to be painful to put them back together. but if we don't do it, we're going to have a real crash in this country. >> i just want to put forward, i think the focus, the conversation has kind of been

over overly to kused on one particular area. i don't see how we can blame it on the fed and see that the solution to everything is going to be strictly a monetary policy. and i think most people generally agree that you talked about that there's overall political crisis. and i think it would behoove us to talk about how maybe the fed fits into that. it's not the fed or nothing. >> well, it wasn't really the fed. >> that's a really important point. and that's, in fact, the point that bernanke made. you guys have a job together. >> but he's wrong and he knows that. so, i mean, we can say whatever. but bernanke is -- i mean, what -- what -- what -- monitor is on the riekt, cane to understanding of in the '90s or whatever is that the primary driver of business cycles is action bid the federal reserve.

and ben bernanke can alleviate the entire recession by himself if he so chose. >> no, he can't. he can make it much worse. >> here's my point. he has said that. >> here's my met point, which is pornt. you, peter shift, your views have a lot of traction in the republican party. >>. >> maybe with ron paul, but he's not the typical republican. >> well, let's show mitt romney talking about ben bernanke just as an example of this. this is an nbc debate about whether mitt romney would apoint him. >> i'd be looking for somebody new. i'm -- i think ben bernanke has over-inflated the amount of currency that it's created. we r. >> now, my point here is that the position that you just said.

you just say ben bernanke can solve this by himself, which is a view you never here articulated anywhere in politics. my point is that there is an asymmetry in politics and in the debate that we have. they've gained a lot of traction. i didn't realize until very recently that there was the view that you have articulated and a lot of economists have been saying. that the fed is doing too little and the fed could solve the business cycle. so what it seems to me is that the seesaw is only being produced on one side. >> doesn't every single mainstream economist think that the fed has done too little? this is actually really unusual, usual time for the fed. the fed has often faced political pressure. political pressure because it's not doing enough about employment. and this is a very new time

where it's facing a lot of political pressure from the right, from people who are paranoid about inflation going crazy. and are really paranoid about how they act. i think they have to respond to this pressure because one of the things we know when we look at central banking is actually what prevents inflation from getting out of control. and what they're fearful of is losing that independent. dense. we know if we turn it over to people like ron paul, we will end up with a disaster. so they've got to balance a very tight line of being able to work within the political system and not lose that independence, but, yet, do the actions that we want them to do in order to help the economy. >> inflation is going to run out of control. it's going to devastate the economy. the fed has no tools to obama feign it. if they have to raise interest

ratin ratings, the u.s. government is going to have failures without any bail outs. it's going to be a much bigger collapse than we had. >> all right. >> have you been to a supermarket? >> i want a real bet. >> do you have to go? >> peter, thank you for your time this morning. i really appreciate. how did bill clinton mess up obama's week. up next. olay moisture bars help lock in moisture... while five blades get venus close. revealing smooth and goddess skin begins. only from venus & olay. want to start the day with something heart healthy and delicious? you're a talking bee... honey nut cheerios has whole grain oats that can help lower cholesterol. and it tastes good? sure does! right... ♪ wow. delicious, right? yeah.

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but centurylink is committed to being a different kind of communications company. ♪ we link people and fortune 500 companies nationwide and around the world. and we will continue to free you to do more and focus on what matters. we're back and i've broken karl smith's heart. he said he wanted to do that for two hours. he's raring to go. we have jonathan now sitting at the table. thank you for coming in. you know him as msnbc analyst. i want to talk about -- we've been talking a lot about monetary policy this morning. the reason why i talked about

it, you struggle as a journalist on this. and i do feel that the playing field is empty on one side. if you read conservative media, if you watch fox business news, if you listen to that world, they're talking about the fed all of the time. they are putting pressure on the fed not to do anything. if you watch progressive media, there's just less discussion of it. and so i'm trying to fill the vacuum. but it's hard because it's technical stuff. it take as lot of explaining. even getting through the phrase, monetary policy. >> liberals are not as concerned about money as conservatives. >> they honestly, pound for pound, liberal pun dants know a lot less about the fed than conservatives.

people who are devoted to -- not just ron paul, people from the business community and wall street. they understand more about monetary and fiscal policy. some of what they understand is wrong. but you noticed this just the other day when bernanke was just up on the hill. and the liberals, except for carolyne from new york, none of them say hey, whatever. >> so i think that's actually why they typically -- looks like they've prioritized inflation over employment even though it's supposed to be a dual equally weighted mandate. and we haven't had people -- we haven't had conservatives, really, i don't know houls to say it, but, like, have crazy views about inflation until more recently.

as a result, some people on the left would say hey, wait a minute, you need to care more about employment. and i think we've actually moved it away where the rights views on monetary policy have gone into a direction that's sort of hard to understand. and the left cares less than they've ever cared before. >> right. and that's creating part of the crisis. >> why dnt that i have push back? why didn't they say at 9% employment, we should be doing nor. more. >> there's a deeper sickness in that. i don't think by any means i'm progressive. but the right, i guess, leaning economist who believe what i believe have stopped talking about it. there are plenty of conservative economists who believe that the fed should do more and they stop talking about it. and they've let ron paul and peter schiff have the conversation. and that, i think, is shocking and jarring for several years into it.

there's this understanding that we all circled around wagons and we don't air our dirty laundry. you tell other economists we need to be doing more, but nobody else has allowed. >> i think also part of the problem with the whole monetary discussion is when we talk about the fed, it seems like we're only talking about the issues within the fed. and i don't hear people generally talk about in ways that the average person could understand how it relates to the larger jobs. any idea that ben bernanke without the idea that he, too, is part of a larger political structure and problem challenge that we need to deal with the whole i shall shoes of the kind of political roadblock of going around the economy. >> and that's where these critiqu critiques, there's interesting axes upon which these debates

are about. it's sort of left right and there's also long term, short term. there's also did we have this coming, in a way, this crisis? or was this just a random forest fire? there's different ways to think about where we are. one of the things that i think that we're seeing is whatever we're going to do going forward, and the president has talked about this in a variety of speeches. there's low-hanging fruit that we are not dealing with. and it drives me nuch to watch it. one of those is not firing a bunch of teachers and policeman and firefighters at the local level just not doing that. we don't necessarily know how we can create jobs, but what we can do is not be firing people. the president and mitt romney have been tauking about that right after this break. [ male ] this is the at&t network. a living, breathing intelligence helping business, do more business. in here, opportunities are created and protected.

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between the president and mitt romney about jobs. and one of the points that has been made here is when you look at the trajectory of jobs, one of the low-hanging fruit is that we've lost 600,000 jobs in the public sector in the last few years. those were people that were laid off largely not because they were doing a bad job rkts right? not because people thought we need less firefighters in this town in california. but because all the states have to balance their budgets. and when there's a recession like there is now, you've got to cut somewhere. and the cuts have come on a lot of municipal and state workers. here's president obama making that point. >> one of the biggest weaknesses has been state and local governments, which had laid off 450,000 americans. these are teachers and cops and firefighters. congress should pass a bill putting them back to work right now, giving help to the states so that those layoffs are not occurring.

>> he wants to hire more government workers. he says we need more firearm, plr policeman. the american people got the message. it's time fortous cut back on american government and help the american people. >> i think we were talking about this during the break where it's amazing that just to argue that the government shouldn't be a drag on the economy. that the government government shouldn't be doing mass layoffs. and the debate that that hurts the economy shows that we're in a very backwards type of discussion. you figure at the at least, we don't want government to be a drag on the economy. and i was a supporter of the american jobs act. in many wayings, it was too limited. it was kind of defending jobs. we need to do much more to build out jobs and to create pipelines. again, we're not just in a bad sechuation the last few years. >> diedrickk, what is your

understanding of why is there this gap? why is something as simp as ksh. >> something called revenue sharing, right, which happens during recessions. >> that was a fairly noncontroversial yeah. it was originated by richard nixon. why has that become uncontroversial. >> it's very much an ied logical piece where people hear their kind of representatives from the conservative forces that this idea that any type of government spending, except for government spendings that might really help them, like, maybe medicare or if you're in the military. any time the government spending is bad and somehow destructive to your economy, we need to get behind that. >> to my mind, it's a little bit

complicated that the growth in government has not been at the federal level. it's all been at the state and local level. and a lot of it has been fat, right? white collar, state employees who the public, with some justification, believes isn't always doing all that much. and they're getting big pensions. well, romney stepped in it and it made a much bigger gaffe than obama did yesterday is by saying no, we don't need more police, fire and teachers. every american knows that we do. and they are our heroes. they are engaged in the most noble profession. so for romney to get on the wrong side of that was idiotic of him, politically. but when the conversation is about police, fire and teachers, obama is going to win. if the conversation is about state bureaucrats and their penchs, he's going to lose. >> here's my own pet theory for

why the conversation has gone the way it is. here, the unemployment ralts for dimpblt people. people with a bachelor's degree or higher, it's a 3.9% unemployment rate. it's essentially full employment. there is no recession. >> no, it's higher! but look at -- >> but it's not as painful. >> look at some college or associate degree. and i think there's just a radical disconnect between the elite circles of policymakers and the people that are in the media who are moving in which everyone has bachelor lor's degrees and the high water mark of desperation and misery has receded. and the rest of the country in which the levels of unemployment are much higher. that disconnect means there is no natural energy. there's no fire being lit under anyone to do anything about jobs. >> this recession has really

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former president bill clinton with the opening act for three separate fundraisers for president obama on monday where he helped raise over $3 million to the obama campaign. on tuesday, clinton sat down with cnbc and was asked whether president obama should extend the bush tax cuts. >> what i think we need to do is find some way to avoid doing

anything that would attract the economy now. and then deal with what's necessary in the long-term debt reduction plan as soon as they can, which presumably will be election day. >> so does that mean extending the tax cuts? >> when he wiell, i think what is they will have to put everything off until early next year. that's probably the best thing to do right now. he needs to agree to extend the tax cuts permanently, including for upper income people. i don't think the president should do that. i don't have a problem with spending all of it now, including the current spending levels. >> those comments because an unwanted distraction. after the republicans ran with the idea that there was no daylight between president clinton and president obama when it comes to the desire to extend tax kuts and eliminate the tax cut for the rich in the long run. he supports president obama's

position and was only scoring a much bigger analysis of the country's up-coming fiscal cliff which essentially consists of a bunch of mshls to pull $500 billion out of the economy beginning in january. >> i'm very sorry about wlapd yesterday. i thought something had to be done at fiscal cliff before the election. apparently nothing has to be done until the first of the year. >> so president clinton knows he can call out. he's the only democratic president to win the second since fdr. he's become a consensus figure. but as hillary clinton learned in 2008, employing bill clinton as a surrogate also comes with cost. >> i want to get to the other flat that happened this week with the business record. but one thought i had watch gd this play out and then thinking

of 2008 when he caused a lot of headaches for hillary clinton, as well, is that, you know, the modern campaign, the trait that it selects for above all else is discipline. when you look at mitt romnea and barack obama, they were very disciplined individuals. and it's a strange kind of process we run the candidates through h is say the same -- talk all of the time and never say anything noteworthy. that's your task, if you're running for office. and i wonder if bill clinton's gas are an indicator of how restrictive this kind of compulsion towards discipline and the gaffefie nature of campaigns has changed since his time in '92. >> i actually don't think it's changed. i don't want to date myself, but this is the 7th or 8th

presidential election. it's an easy kind of reporting i go. >> mitt romney's father. >> right. there are literally hundreds of examples of gaps. almost none of them except for gerald ford saying in october of 1976 that poland would you describe not under soviet domination so close to the election, he probably lost to karlter because of those gaps. none have been desooifive. this one was a classic one. clinton didn't really say anything wrong. it's e he's a little built rusty. you ctell from the end of the sound bite that fox cut that he wasn't endorsing the decision. >> to me, he also perfectly

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good morning from new york, i'm chris hayes here with carl smith, assistant professor of the yooumpblt of north carolina. diedrick muhammad from the economic department and msnbc political analyst. so we're talking about bill clinton. we're talking about the stir that he created this week. but i thought he had these two moments during the week, the past week, that, to me, embody the contradiction both of bill clinton and the modern democratic party that he has bequeathed to barack obama, in some ways. here he is on piers morgan with

guest host harvey weinstein and more or less defending the enterprise of mitt romney's business career. >> if you go in and try and save a failing compliment, then you can invest in a company, run up the debt, loot it, sell all of the assets and force all the people to lose their retirement and fire them. or, you can go into a company, have cutbacks, try to make it more productive with the purpose of saving it. and when you try, like anything else you try, you don't always succeed. i don't think that we ought to get into the position of where we say this is bad work. this is good work. >> so he was making this distinction be bad private equity and good private equity. he said the latter type is good work and the good is sterling. so then, the day before the

wisconsin recall, here he is trying to get out the vote for challenger, tom barrett who, of course, lost by 7 points. >> i can just hear it now. wednesday, all of those people had poured all of this money into wisconsin. and if you don't show up and vote, we'll say see, we got them now. we're finally going to break every union in america. we're going to break every government in america. we're going to stop worrying about the middle class. wo we've got our way, now. >> so here's what i find fascinating. that moment when he says you and i -- bill clinton is a wealthy man. and, you know, he represents a democratic party that simultaneously is trying to rep the interest of bain capital, of capit capital, and the interest of workers.

on one day he's saying they're friends and on the next he's saying they're trying to beat the middle class. >> the investors are big pension funds, even, you know, big unions. churches, big educational institutions. so the american economy, the global economy is all tied together. which side are you on? labor or capital? they don't really apply in the modern world. >> oh, i think they do. >> no, not -- if you have so many working people whose pensions, whose retirement is tied up in the success of bain capital, they're in a position where they need to root for the list of bain capital. you need rules of the road. you cannot have unsupervised capitalism. and this is the argument that goes back a hundred years.

if yoi're going to have the bain capitals of the world, they have to be very heavily regulated. that's the difference. >> i take a stronger position in that. i think dix matters. and i think if you look at the distribution between capitol and labor, you have seen that the distribution has skewed. and so it doesn't -- and that matters over the life of someone, whether you have money that's in the state pension fund that has some bit of money in bain capital. >> do you want bain capital to go away? >> see, what i don't get is when people are critiquing and romney is going to run on his private sector work because he refuses to run on his record of governor of massachusetts, and people start critiquing that, then it's like no, we shouldn't talk about private equity. >> no, it is completely something.

>> we should talk about private equity and we should talk about the way the power of this economy has transformed. we should talk about distribution and talk about economy and we should talk about the fact that there is -- that people that are doing the hiring in this economy, the job creators, and the people that are taking the profits in this economy, and, again, some of those are people in the pension funds. but let's remember how well it is concentrated. it is not broadly distributed. elt's very, very highly concentrated. concentrated levels that hasn't been seen in a hundred years. the people on that side of the ledger are doing much better. wages have stagnated and working people have not. >> it's not just what the feds are doing. >> but the democratic party can not guilty talk about that for precisely the reasons that i've just said.

that's not exactly true that capital is doing much better than labor. technically, i know this is hard. but the guys who work for goldman sachs, those guys are labor. >> but i'm actually talking about profits versus wages. >> yeah, but it's not spilling out. who goes to people are dividends. dividends are not normally higher than they are. >> um, yeah, they are. this is one of the bush's big mistakes. investment in, you know, retraining and all of the kinds of things that companies should have been investing in, instead, because of the structure of the 2001 tax cut, it went into dif kend dends. this is one of the huge mistakes that bush made with that tax cult. cut. >> i think profits are really high mainly because they're such huge margins.

but there's a deeper issue because you're concerned about distribution and people who are poor. >> or middle class. >> or not very rich. so you're saying we should get rid of bain capital. why don't we just give them money? >> well, sure. whoa's -- but -- here's why. fist, we've tried that. there's a certain kind of approach to this which is this very stragt forward, redistribution through earned income tax right. it was nixon who floated the guaranteed income which is an idea that's preposterously radical in 2012. here's the problem with just giving them money. i understand the clean efficiency of it. and i lieblg redistribution. i think i'm fairly frank on that point. but power matters, too. and the political power that underpins a system of permanent transfer is completely tenuous. it's gossamer thin.

you cannot just create a system of rule that is just redistributes and think that that system will endure. it's precisely the means testing. universal benefits, right, higher taxes and universal benefits create an enduring, political base of the support for what i'm talking about that simply translates to the poor. i think economics bears that out. >>. >> and i think there's a way that you -- a way that you transfer. and i don't know exactly, carl, what you were trying to imply. but if you look at other countries, other industrialized countries, they do it by having a broader safety net and much higher minimum wages. they do it by having a much more progressive tax system. and that way of transferring munl from rich to poor seems to produce stable, prosperous economies. take a look at australia. i think the minimum wage is $15

an hour, but their unemployment is something we would die to have. to critique private equity and say it might be more of a destructive thing doesn't mean we're going to get rid of private equity and give money to poor people. a lot of times, it's destroying middle class jobs. it's also a fake thing to say the rich and the poor. no, the bigger critique of private equity is when it is negative, it can be more middle class jobs. >> so instead of getting rid of bain capital, we do need to focus on it. >> but no one is saying get rid of it. >> so it's totally care giving. >> so that's one point. anybody says it's irrelevant, it's totally relevant. agreed. but what we need to do with the bain capitals of the world is

make sure that their executives don't get these obama scene pay outs when they're cancelling people's pensions and throwing hundreds or thousands of people out of work. that can be done through the law. >> right. hold that thought. we're going to take a quick break. more on this after that. wake up! that's good morning, veggie style. hmmm. for half the calories plus veggie nutrition. could've had a v8.

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nchtsd we're talking about bill clinton. we started the conversation on bill clinton and the way in which he is a figure represents the battling inside the democratic coalition when he's raising money during the week, the same week that he's stumping tom barrett in the big battle for the would recollecting class and the billionaires that are pouring money in the state. the democratic party is raising

money from those hedge funds. and jonathan, the which side of the fence are you on mentality. >> should there be unilateral disarmament then? >> no, i'm not that naive. i understand. i cover politics. i understand the way it works. >> the big difference, and i don't think it's getting enough attention, is obama has millions of donors. and i think 98% have given less than $250. and the romney super-packs are 50 or 60 donors. so we have a few dozen people who are essentially trying to arguably hijack our political process against millions of donors on the other side. i get annoyed when people are very critical of the democrats going to wall street. of course they have to d that. but that's not what they're relying on. it used to be 20 years ago, the democratic party was reliant on big donors. they're no longer a hundred

percent relient. >> all tho that may tip, again, depending only how the super-pacs operate. there's a super-pac with the president which its fund raising has been quite lackluster. >> and it's not going to change. it's possible that george and a few others will come up with their own superpacs, maybe and he's trying to play on the congressional and senate gubernatorial elections. but right now, even obama's biggest backers and closest friends are not giving to that super-pac. it's just not happening. >> well, i don't have something for that. >> well done. you want to get back to whether we should band bain capital. >> the question of how it funds the democratic party. do you think the democratic

party has been vocal enough -- has the president been vocal enough around things like revenue sharing and some sort of fiscal stimulus and the american jobs act. the president did go br congress and say pass this bill. we end up not covering it because it's not going to go anywhere. but that doesn't mean that there's not been effort. >> well, and i would, you know, that's part of a grass roots organization. i wouldn't look just for the elected democrats to be the ones pushing this. and i think this has to be the grass roots movement. i think it's a little built of a problem that you saw in 2008. it's a much more conservative, radical policies and not enough on the ground for the type of inv investments that are needed. i think the american jobs act was a stech in step in the right direction. but i think the idea is if we just leave it alone, no. we need to get out there. if you really want to advance the economy, and that's why i

don't want to limit conversations to what the fed is doing or isn't doing because we need a lot more than that. >> i actually want to double down even more on the american jobs act. he should go before the country and say we need a million youth jobs. and they can do it through ameri-corps. they approved 250 thou. a lot of which hasn't been funded. there's a lot of work to do. so a million youth jobs and then another million on top of the million in the americans job act in public sector, wpa, direct-hiring style jobbings. republicans woent like that, but the american people will. obama needs to get out front and add a new american renewal jobs agenda. >> the american jobs act was spg that didn't design to be

bipartisan. no one thought that anyone would go for a million. it was designed to be something that could get americans back to work and should, in normal circumstances, have been easily passed by both parties of congress. >> and, you know, if you -- maczanby added 1.9d million jobs. almost nothing in that bill were passed. that's, you know, i think the estimate, the campaign uses a million jobs on the table. i think that's an underestimate. it wasn't -- even the full pay-roll tax cut that got passed, none of the su port for state and local governments got passed. there was so many things in there. none of the infrastructure stuff. >> forget bipartisan now this is what i'm running on.

this is what we need to do. three or four million new jobs, youth jobs. and say what he actually wants. that's what an election is for. not what maybe gets through. >> and i think almost every -- there are a large number of democrats out there who would support something like a public work's project. there's a lot of people that can be done. there's a lot of people that can do that work. no one's been willing to talk about it because we know it's so far from the center of politics right now. >> so is capital hill. so what if it's d.o.a. maybe you should do it anyway. >> why hasn't there just been more pressure? why not have a massive cut. >> so they do that for a little bit. but say you say to penn state we're going to have to spend the payroll tax, employer and ploy yee side.

>> there eegs some word about how that gets undone. there's already worries about where -- we have shown a complete inability, politically, to raise taxingses in anyway for any reason at a very long time. at a certain point, we're going to have to raise taxes on some people at some point. and i think you do begin to worry about what glad path you put us on. although, that would be the equivalent of a helicopter drop which could be financed by the fed. msnbc plit kal analyst. thank you for your time. >> a new study looks at the way that racial polarization has afekted public opinion in the obama age. fascinating, fascinating, draw-dropping stuff up next. in here, heavy rental equipment in the middle of nowhere, is always headed somewhere. to give it a sense of direction, at&t created a mobile asset solution to protect and track everything.

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2008 presidential election was never supposed to be about race explicitly. but ultimately, that's how it turned out. the partisan divide between red and blue and the racial divide between black and white. which is why on the night when president obama is elected, one of the firgs things he said is change is coming to america. we see corners of american politics previously untouched by race become racially unpolarized. joining me now is michael tessler who has some amazing data who plays this out. saschaizenberg wrote a tip about this. so what broadly does the data show about the relationship between people's racial attitudes and their opinion about the president or things the president proposed? >> so what we started out

looking at is the correlation between racial attitudes, we measure them in a variety of ways and get similar results across the variety of measures we use. and what happened was we started to see that barack obama moves racial attitudes much stronger than previous presidential candidates. so that's a starting point. racial attitudes were just much more accessible when it comes to barack obama. >> so they were driving the way people felt about the president? >> yes, more so than other. and especially so in the primaries. so in the general election, it's a little hard because there's a lot of other things that are influencing votes simultaneously. once you strip away the primary logo, i can say a hundred percent is the most important factor in the primary. >> that's an incredibly controversial proposition. you're saying that racial attitudes was the driving factor

in people's choice between hillary clinton or barack obama. >> yeah, so racial attitudes have a very strong impact. at the end of the day, you have to control for bungt things and there's a lot of things that can overlap. but one really pops out in the primaries. and there's another book out of the university of michigan that argues the same thing. >> we have a chart of hillary clsupport. it's a complicated chart, but it's an amazing -- no, that's not it. that's health care and resentment. since we have that up, let's talk about this. one of the points of your research is that not only is it the case that attitudes towards barack obama are being driven by people's racial attitudes, but now, in the obama era, you can predict people's opinions about

policy issues based on their rakt at tuds. so this is what we call the spillover of racialization. and what the spillover says is that racial attitudes are chronically assessable and how i view president obama. and then when he gets associated with a policy like health care, what you will see is racial attitudes come to influence that policy more. so we've come to do this with a number of policies over time. these are the same individuals that have been reinterviewed. more porntly, though, we've also done experiments where we've altered the frame of how it's worded and attributed to president obama.

>> there's an pornt caveat which is it doesn't necessarily make the policy more popular because everybody hates congress. it will drive down the rationalization. but it doesn't necessarily make it more popular. >> let me make sure that i'm tracking this. you have groups of people. we talk about racial attitudes, there's a small battery of tests that are given in the national election survey and given quite often. here's an example of the kind of questions that we're sort of trying to get at people's raishl attitudes. this is a racial resentment question posed by ugov. it's really a matter of some people not trying hard enough. if blacks would only try harder, they could be just as well off as whiets, agree or disagree. so when you're looking at people, you kind of give them a

racial resentment score. >> yeah, there's four questions. what they really do is they gauge whether you think racial inequality is due to structural factors, like past discrimination, current discrimination or whether they're due to individual shortcomings. >> that's a question about me because isn't what's really just different here is that we have a black president? welfare didn't always have such a negative connotation. but then as the welfare reform comes out of the civil rights union that allows more minorities to participate in welfare. >> well, there's some great work on this in political science about how welfare became racialized. >> hold that thought for one second. i want to answer that and talk about health care and what this means for the election in 2012 right after this. [ male announcer ] it made a big splash with the employees. [ duck yelling ] [ male announcer ] find out more at... [ duck ] aflac!

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sds. we're talking about the political science professor at brown university and how an mists can prediblgt your policy opinions on thing that is don't, at first blush, have anything to do or seem to have anything to do with first brace. even things like you like this dog. you show them an example of the president's dog and you say it's ted kennedy's dog. and then people are like i don't like that dog. >> so it might be harder to move. >> incredibly cute. you were making this point before we went to break about the fact that, you know, we've seen -- before president obama, certain issues became racialized in the way that we talk about them and then they have a connection to racial attitudes. and obviously, there was a

concerted effort to racialized welfare. and i think the discussion about obama care started to get very racialized, as well. >> yeah, i would completely agree. there's two aspects and this is something i've been unable to sort out. one, just the association with barack obama and, two, also the frames and connotations that got put on obama care. and that's what the previous political science research showed on welfare. it was really about how welfare was framed and was undeserving african americans. and that's exactly what this research that's been done by a professor and political science at princeton, he shows this really very convincing. >> we were talking earlier about cuts and states and local govlt.

and that's been minorities and african americans. and i wonder if that bleeds over to some type of connotation of racial minority and others? >> that's a really important point because the people have been disproportionately hurt have been women and minorities. >> let me ask you this question. people are going to be watching. are you saying that they're racists? >> absolutely. it gets picked up and tsz, if you read the research that it's become more racialized, that i'm saying that o poents of obama care are racists. that's not what i'm saying. what i'm saying is that the correlation between your racial attitudes and your support for obama care are stronger, or for universal health care coverage

are stronger than they were beforehand. so a way to think about it, particularly people who don't know a lot about what's in a health care bill, something's got to determine whether they're against it. >> and people have no real sense. >> and there's a lot of people who are uninformed about it and there are things that are going to look silly to us that are going to be correlated with our preferences over the bill. and that doesn't necessarily mean that they're a racist. but since they don't have concrete information, it's hard for us to figure out what else is deciding there. and you had said that low information voters are ones who are more likely to have their opinions driven by racial pref renszs. >> or, just an experimental frame. so you framed it as bill clinton. you framed it as barack obama.

it's substantially greater when you frame it as barack obama and bill clinton. >> so among the information, voters that's driving it. >> the idea of racial an mists or attitudes. it seems to me the lack of information is the structure and equality that we have today. those that don't understand is due not to just people failing, but due to a long history of racial inequality that that's still living today. it's of white supreme si and racial inequality. those who don't have an understanding, i think, have this negative racial an mist that you pult down. so many people take that as personally i don't like black people. i think there's a lot of people who might score high and have personal problems. >> and that's why these tests are -- the questions are designed the way they are. let's talk more about this research right after break. don , our town had a "brilliant" idea. support team usa and show our olympic spirit

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talking to michael tessler about how racial at tupds structure public opinion in the obama era. there's a flip side to this. it iesz not just the people who score high on the racial animist test, i think you called racial conservatives in your lit rature. their opinions have a lot to do with whether barack obama is associated with them or not. it works in the other direction. it's the people who score low on the racial resentment or more egalitarian or more inclined to see structural racism. their views on a policy are positively impacted by obama's association. >> right, so when we look, for sbansz, in the bow versus splash, it's not just that bow is less popular among racial conservatives than splash. bow is also more popular than

splash among racial liberals. and this is something we saw extremely strong in the primary where barack obama has a 25 point increase in the support from december to much. and when we looked at that, that is plm completely driven by white, racial liberals coming into the flock. >> i thinke and it's a little confusing. i think you basically need to walk us through this. the smoking gunl is what happens in 2 0e 08, right? when you're asking what's driving people's attitudes about hillary clinton, it's ied i don't go and they're equal drivers of their opinion. and then all of the sudden, she's up against barack obama. and the people that don't like her because they're conservative, still don't like her. >> right. so there was a turn around in hillary clinton.

as you can imagine, people who are liberals and score low liked hillary clinton since she came upon the scene in 1992. one, once we interviewed another group of people in march, 2008, in the height of her contest with bar obama, we see a complete shift. and when we reinterviewed and she's obama's secretary of state, it reverts back to normal. >> what implications do you think this has for -- someone on twitter when i was talking about your research was saying that you were blaming the president for this state of affairs. that somehow, the president was mucking everything up in terms of polarization. every time he talked about an issue, he would racialize that.

>> i think one of the things is how quiet obama's been on race tlchlt's a study right now out of pennsylvania's political science department that's tracked barack obama's racial rhetoric compared to previous democratic predecessors. he talks about race substantially less. so it's nothing that barack is doing. >> and rngs again, this is an old issue. the democratic party has been, for the last four years, hasn't won. >> michael from brown university, political scientists, researcher is really fascinating. thanks so much. >> actually, you're going to stick around.

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a quick update on the state's latest attempt to remove people it says are noncitizens. not only refused to stop the purge, but accused the federal government of violating the constitution's equal protection cause by diluting the votes of its citizens. florida's 67 county election supervisors will not be doing so now. the american civil liberty's union sued. and the personal up sdat you may have hear me say before, i have a book coming out on tuesday. it's called twilight of the

elites, america after amer tok ra si. it's about the national mood of distrust of our pillar institutions. it's available for preorder at online retailers. i'll be doing two book events in new york city next week. on tuesday, i'll be doing a reading at barnes and noble and on thursday, i'll be doing another event at the new school. you can find them at facebook.com/twilight of events/elites. if you're not able to make a person, i'll be doing a video chat on wednesday at noon. and i'll be taking questions. so what do we know now we didn't know last week? >> we now know not only purging voters in defiance of the justice department, but also eliminating funding for the florida innocence commission which is created after 23 death row inmates and 12 others were

exonerated. we know it's because of systemic errors like created after 23 de inmates and 12 others were exonerated. thanks for the "guardian" newspaper we know that while the queen celebrated the diamond jubilee, the private company in charge of the security bussed in long-term security personnel but told them to sleep under the bridge and change into the guard gear in public, and no access to private toilets, and we know that as much we want to believe that such dramatic inequality and exploy toigs could only happen in a country that parades queens and princes we know that wage theft in our own country is endemic. there is a study cited by the national employment law project which found that 64% of low wage

earners experience wage theft each week, and only average they have $2,500 stolen from their paychecks each year which amounts to 25% of the income. and we know what the violent core of fascism looks like in 2012st century europe. [ cross talk ] >> that is the spokesperson for greece's fascist golden dawn party assaulting the members of the right wing, and after the station cut to commercial, they tried to cut the man to a room in the building, but he broke the door and then left. police pursued him. we know that greece has a bloody history of political violence and as slapstick as this seems, it portends bad things for the future of greece politics. now the find out what the guests know now that they didn't know when the week began.

beginning with professor carl smith. >> we have more confirmation that the reason that 14 million people are unemployed is because ben bernanke believes that the world is that way, and he wants them unemployed and said as chairman before congress that he has ways of reducing unemployment but he will not use them until we go off of the fiscal cliff. >> and is this something that we talked about in the beginning of the show, is it because he wants them to -- because he thinks it is fine that way or he is pressured by other members of the federal reserve board who have voted against him in recent action and political pressure coming from the ron paul, and the republican party? >> well, there is pressure, but i mean, i do believe that he has not used the forces in the way he could and that is a choice he is making, and he could push the board in the opposite direction and he is not. >> i should note that you are not a some sort of namby pam bb liberal and so folks know that, because you are a proud center-right economist, right.

>> yes. >> betsy. >> so on that theme, i think that what we know now is that the fed has been promising us low rates through 2014, and we now know that is going to expect the economy to stink through 2014 and not because they are making some commitment not the choke off a recovery by raising the rates too early but because the economic forecast is because we are not doing so well. so what we need is them to actually make that promise that they will keep rates low and not choke off a recovery and not tell us that they see bad times ahead. >> is there anything that can be done in the short term by the administration, unilaterally without congress that could help the jobs picture? i ghaes tuess the answer to tha no. >> that sis a tough situation ad not a lot of options and not a lot of things that the president

can do. that is the way that our system is designed for compromise. and when you have parties, in particular, right now the republican party saying we don't want to compromise, that is saying that they don't like the system that the founding fathers set up. >> and mr. muhammad. >> well, there is an event around father's day that is called stop and frisk silent march. there was a famous march on fifth avenue to help highlight the issues around lynching and racial discrimination and we were talk tact racialization of issue issues a hnd in the past there was nothing more american than standing up against unwarranted search and seizure, but in new york city in particular, we see that stop and frisk is everyday occurrence for african-american, and latino males and on father's day we want to come forward to say this is something that we don't tolerate here in new york city, and across the country. >> the stop and frisk policy has received a lot of attention and something that we want to talk

about more on the show, because it is really important. michael tesler? >> well, there was a fabulous 100-plus page report released this week of an interview of the longstanding value study which is to interview people over the last 25 years. what they found is that partisan polarization in the mass level is growing substantially across several different values. so it looks like a elite polarization is filtering down to the elite level. >> we had norm on the show last week, and asymmetrical polarization is important to point out in the way it is working in congress, and i used to not be like into the people decrying gridlock and paralysis and dysfunction, but given the economic emergency that the country finds itself in, it is increasingly maddening. than you, karl smith.

and betty stevenson. dedrick muhammad, and michael tessler, and thank you for joining us on "up" and join me tomorrow when i will have be joined by the national democratic committee careman patrick gaspard. coming up next is melissa harris-perry on today's mhp, polls show that half of americans know little or nothing about the mormon faith, and the mormon faith is having a moment with the romney nomination, and melissa will take a personal and historical and theological look at the church. she has a close connection to the church, and you will learn about that. and do we still believe in american exceptionalism anyway and the concept of being american changed? and the showdown of the voter purge in florida coming up next on melissa harris-perry. we will see you tomorrow morning at 8:00.

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