with an intuitive motion activated lid and seat,ad bold makes sure you'll never have to ask him again. good morning from new york. i'm chris hayes. as you may know we're making changes. on monday i have a new program airing week nights at 8:00. "up" is staying put. we thought this was a good opportunity to revisit some of the segments we think demonstrate the values we tried to bring to this enterprise in the last 18 months. today explorations of government power to control the internet,

to kill without did you process and to mint a million dollar coin. i want to start with the aftermath of hurricane sandy. right now i'm joined by a freshman congress man from new york, a democratic who represents staten island, and vice president of taxpayers for conference sense and a resident of new jersey who is displaced by hurricane sandy. on friday afternoon the new 113th congress including the gentlemen here approved $9.7 billion in immediate aid for victims of hurricane sandy. the $9.7 billion is a frktion of the aid package that passed by the senate without any explanation john boehner decided not to vote on before the 112th congress ended. the decision occasioned a rare full scale, full spectrum my tiny. on wednesday republican

congressman peter king attacked his fellow republicans on tv screens across the country. >> i'm saying right now anyone from new york or new jersey contributes one penny to congressional republicans is out of their mind. they wonder why they are becoming a minority party, why we're going to be a permanent minority, what they did last night is so immoral, so disgraceful, so irresponsible. >> new jersey governor chris christie blamed not only his fellow republicans for what he described as a betrayal but specifically speaker boehner. >> there's only one group to blame for the continued suffering of these innocent victims. the house majority and their speaker john boehner. americans are tired of the palace intrigue and political partisanship of this congress which places one upsmanship ahead of the lives of the citizens who sent these people to washington, d.c. in the first place. new jerseyians and new yorkers are tired of being treated like

second class citizens. >> speaker boehner has responded to the furor by back tracking planning to vote on the aid. if anything his swift reversal gave his country a look not only the internal revisions in the caucus but how woefully the republicans are unprepared for future storms. new member of congress, congressman jeffrey, congratulations, you took the oath this week. >> thanks. >> what ethic happened down there? i mean, the weirdest thing about it i have to say was, and we'll get into this because i was prepping for, you know, for the show and looking at the bill and actually if you start to dig into the bill there's a whole lot of things to object to it. you could have made an argument in it but nobody made an argument against it. they killed it. it was bizarre. >> the events of the last week certainly made won ponder about

a full ring circus. but what's interest is with the election of the speaker, hopefully we can see, you know, the shenanigans of the last week or so put in the past and focus on the business of doing the people's business. what was interesting is that it really does appear that the speaker concluded after the fiscal cliff vote on january 1st that it was untenable for him to bring the $60 billion flood relief bill to the floor given the mood of a significant number of members of the republican congress. >> he alienated members of congress because they felt he caved, the white house won and next thing he'll do that week and last thing they do before they close up the lights $60 billion in spending. >> there's a concern amongst many members on the republican side with the debt and the deficit and after adding at least in the view of many of

them an additional $4 trillion based on the package that was passed to bring another $60 billion in this context -- the problem is disaster relief has traditionally been immune from the stachb partisan politics. yet for the first time in modern american history it was injected. >> fran, i want to get your perspective on this because you're still not in your house, right? >> i'm not in my house. >> you're house flooded during hurricane sandy. how did you respond watching this whole thing go down? >> it's very disheartening. you know, everyone in government constantly tells us, reaches out to us especially right after the storm to say we're there for you, we're going to do everything we can to help you and here we are at day 68 and we have not received anything from our insurance companies. we've had all our adjusters come out. but now we're watching our government officials say it doesn't matter if there's not enough money to pay your claims.

it's not important enough. we'll push this off. we're at day 68 and everyone is displaced. people cannot get back into their homes. >> well, i think that one is it was pure politics, no doubt about it. another package that was going to pass with a minority of the majority and that was an issue for speaker boehner and that's why it went away. part of the problem is it shouldn't have taken this long. we should have debate this a lot earlier. the president didn't submit his package to congress until december 7th. it was well after the storm. certainly the senate took its time and actually added in a lot of extra provision. those provisions are the things that delay it. because it that's $150 million for fisheries disaster in alaska and mississippi. that slows the progress of the bill. absolutely the $9.7 billion

which was to basically to fund, allow the national flood insurance program to borrow from transformationy an additional amount had to be done. we have to keep just like the debt ceiling we have to make sure we pay our bills. people bought flood insurance policies, paid their premiums, we need to pay those off. >> i want to talk about flood insurance in a second. hold that thought. >> let's go back to what happened to speaker boehner. what we saw on display was the worst kind of politics and the kind of thing that turns people off to government in general and to congress. john boehner was not so much about the vote on the sandy relief package he was concerned about the vote on his leadership. he was more interested in acleader than leading on issue that's affecting thousands of people i represent. what's even more distressing is in this whole discussion not whether this bill was lauded up with pork and what pork means.

what was really distressing is there is this narrative that says in order for us from vied relief to fran someone else has to suffer first. that's a very dangerous precedent. >> let me play this sound. this is in the wake of hurricane irene in 2011. whenever something like this happens we'll have some type of emergency. as it should. things get destroyed. core roles of government. up said we hadn't seen this partisanship before but here's eric cantor stipulation as a general principle emergency supplemental has to come out of somebody's post. >> my money that comes out for hurricane irene needs to be met $for $with spending cuts? >> the house has funded over a billion dollars for additional disaster relief money. that money was offset by savings

elsewhere. just like any family would operate when it's struck with disaster, it finds the money i want needs to take care of a sick loved one or what have you and goes without trying to buy a new car or put an addition on the house. >> i'll just point out -- >> please. >> hurricane irene -- >> that was remarkable. say what you will, he was putting his money where his mouth was. >> exactly. i'll point out something i never said pork. oil be clear. there's things in here that are nice to have would like to have that are important. i mean i know that -- >> like tofu. something helpful. >> but we don't need to have right now and it should to be done as an emergency. the key thing is when you designate something as an emergency it means it doesn't count against the budget caps. but it does deed our $1 trillion deficit and does add --

>> it also means it's hard to vote for without getting killed on programs such as these or by chris christie, and finally -- >> you know a couple of differences here. first of all, in this particular instance you have the senate that pass ad bill $60 billion. the speaker promise ad vote on the bill to several people as well as publicly prior to the close of the 112th congress and then he went back on his word as peter king indicated, it was a knife stab in the back. the other thing that's interesting here the states of new york and new jersey along with a few other states california and illinois, new york and new jersey which were hit hard are donor states. these are states that regularly send tens of billions of dollars more to the federal government than we get back in return. we consistently step up for america and in this particular instance we asked america to step up for us and the congress to date has failed.

>> i'm not defending what happened on the floor and the way it transpired. i would have much rather -- i'm all for debate and amendments. that's the american process. that's a wonderful process. often you see one chamber jam the other chamber or what happened here at this time. they should have tone the 9.7 billion. we need to debate the rest of this package. quite frankly, i worked on the senate bill. i read the senate bill many times. in read it just recently after it was enacted or passed. in between sometime on the floor that i missed, they redesignated some of the core engineers construction fund sewing it wouldn't go to sandy reconstruction but dealt with hurricane isaac and portions of states that are in the mississippi valley, division of core of engineers. what are those two states? louisiana and mississippi. who are those people behind that? probably the ranking member of the propositions committee and

senior democrat on the committee. so that to me is part of the problem in the system and i don't want to get jammed. >> why do you think they would be interested in putting that money in there. let's look that. the year of the flood comes every other year. as congressman jeffries says new york and new jersey are donor states. if we get back what we give to washington we wouldn't have a discussion about federal aid. what we do know is the likelihood is that places like mississippi and louisiana and florida and the gulf coast states they are going to get hit again a lot faster than we are and what's going to happen now you'll have members of congress from new york, new jersey and northeast states and look at them you know what we'll parcel out tide you slowly than you gave it to us. >> this is sewing i learned this week in preparation. our flood policy is a total disaster. it's totally disastrous and you noted the experience firsthand. i want to talk about this. it may sound remote to you.

listen to me we're going to have more floods so we need to get this flooded out. more on this after the break.

you are living through flood policy and tell me what the experience has been. you're in an area that is part of the national flood insurance program. you have to buy that government insurance in order to get a loan on your house in your area because it's part of this flood plain. what's happened to you in the past 32 months? >> in march of 2010 our area suffered a very devastating and catastrophic flood. our basements filled with water. our water spilled over into our living space up to four feet in most homes. after that flood we ripped out

our walls, our floors, and we had to dispose of all of our possession, and there was previously an ongoing army corps study. so we requested the status of that army corps project. unfortunately, we were told at that point that the army corps project which had been going on 30 years was still probably decades away from completion. >> 20-year-old project decades away from completion. the army corps of engineers is really -- we can do a whole show on the army corps of engineers. but continue. >> we attempted to find alternative methods to protect our home and our goal was to save our neighborhood and our home. so we researched the feasibility of buy outs, flood protection such as an internal wall and any kind of flood mitigation research and at the end of the day we determined through the

help of our engineer was to build a sheet pile wall that would follow the alignment of the army corps project that is in the design stage and that was, you know, at that time the most economical avenue that we attempted to take. and so we were researching it and working on it and unfortunately after -- it took us about six months to put our houses back together and after less than -- just about a year after that we were slammed by hurricane sandy. and our homes were hit with a flood to the same catastrophic area that we had just gotten hit prior. and so our brand new appliances and our furnaces and air conditioner. >> everything that was rebuilt and replaced. >> the unfortunate part of it your insurance never covers everything you need to replace

your home. so we're a group of homeowners that had to go out and take loans out. we had to take sba loans and second mortgages and those loans were not even paid off when we lost everything all over again. >> listening to this. there are people who say well maybe people shouldn't be living here. it's easy for me to say. it's not my home. if this is a place that flood three times in 32 months and as the climate changes there will be more floods, is there a feasible future? >> well, at this point i think we've all resigned to the fact that after we got hit for the third time, and we just can't keep doing this. our homes are no longer safe to live in. and so now we understand the only alternative that would be available to us would be for our homes to be bought out. >> that's absolutely -- that's something that was pioneered after the '93 floods.

you had the town of arnold, missouri, a town in illinois, they bought out those towns, floodwaters returned two years later and they were flooded. >> national flood insurance program works like this, the private market wasn't offering flood insurance because it's very hard to assess the risk and very expensive. the government came in. you pay the premium. purchased through the private insurer but back stopped by the government and what we've had after katrina it blew a $17 billion hole in the budget of the thing. now we're going to have sandy blow another huge hole in it and it doesn't seem to me the program is effectively -- it seems to me the program is having perverse incentives in that it's incentivizing in areas we shouldn't build in. >> after all these claims are paid, about $30 billion in the hole to the treasury before

sandy the program took in $3.5 billion a year in premium revenues. it's severely, no pun intended under water. >> on the stateside in the senate we created a bipartisan task study the effect of hurricane sandy. sandy didn't trimity across senate districts. the entire coastal community from east end of long island to staten island has been hit including lower manhattan. we don't talk about what happened in lower manhattan. manhattan was off line for quite a while. not to neglect also the effect on our transportation system, the battery tunnel flooded for almost two weeks. what we're trying to do is look at what role local and state governments will play including things like rezoning areas so people won't be able to rebuild there. how do we compensate people for the value of their properties pre-storm not post-storm. one. immediate effects of sandy is she has driven down property

values across coastal communities by at least 25% and that could affect the real estate market in those areas for another 20 years. >> there are two questions that have to be asked. one are there areas where it's not feasible based on the probability of extreme weather events continuing to occur that we shouldn't rebuild. fran has indicated that herself, her family and perhaps some of her neighbors have concluded that it's not feasible. the other question and this was part of the package that was submitted by governor cuomo and governor christie and others, are there areas where restructuring that's done to greater protect against the possibility of extreme weather events, people can build but the government and in partnership with the private-sector can create an infrastructure where we can better protect folks. >> one of the trends we've seen is there's two trends happening here. one a greater share of disaster funding has been coming from federal government as opposed to

state level. we had pre-christian and post-christian. again, the point is this is a risk pooling enterprise and if you have one area of the country, you see the share between insurance and federal aid has really flipped. also the number of weather events per year that's cost over a billion dollars in damages from 1980 to 2012 has speck. i mean now the question there is there's two things going on there. there's more concentration of value in areas that are flood prone and there are worse weather events. the question i want to ask is reconceptualizing federal policy and state policy in the face of climate disaster because no one is talking about that and what we'll do we'll keep passing supplementals and keep programs that were put in place in 1968 when you had a complete lui different climate up into the future and penny wise and pound foolish. i want to talk about that after this quick break. ♪

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steve. >> well so we were talking about the flood insurance program and some of the problems with the flood insurance program. one of the things i find interesting when you look at the senate bill is that for sandy relief is that it requires that the corps review existing projects that were built to provide flood protection and storm reduction and in six months come back and tell them how they performed. in three months they are to start building new projects. we're most likely going to put back in place spending billions of dollars the same structure. we'll rebuild with the same manner, beach replenishment project, berms and dow jones that will keep people in harm's way and encourage people to remain in hampl's way. wean the flood insurance program one of the things is the only time you have a mandatory purchase requirement is if you're in the 100 year flood plain. it doesn't mean it only floods

once every 100 years it means there's a 1% chance every single year it will flood. in a 30 year mortgage you'll flood at least once is the way it works out the. what we found is that that has dumbed down our nation's flood policy but in a lot of places in the country get 100 year protection and you're fine. there's a 200 year event which has half a percent chance of happening. >> the point is those are moving figures. so what 100 year storm was 20 years from now is different than what a 100 year storm now because -- >> the subdivision up the stream from you, you're now much more likely to flood because that water is running off through the subdivision faster. it's a dynamic environment. we're not arming people with information or arming people with facts that they need to be purchasing this flood insurance. >> the other problem we have

particularly with respect to insurance not just flood insurance. we had homeowners across this region who are fighting with their insurance companies right now. what we're finding people who have insurance, who think they have the coverage to protect their home, forget about the flood insurance, think about hurricane damage or within damage their insurance company is not responding to them. that's a chronic problem. most people are underinsured. when you think about an insurance it's an industry predicated on people betting against themselves. insurance companies are not in the basis of paying out claims. what we're finding a lot is people think they have a particular level of coverage but when you delve into their insurance policy they may not have it. we see with it people with flood insurance. they have it for structure but not content. insurance industry think structure of a house is not necessarily what the local building department says is a

structure. they say structure is your foundation and roof. you know what makes the house habitable. it doesn't include sheetrock, insulation, floors. we would not allow you to live in a house with those things but the insurance company says that's not a structure. >> the broader problem is insurance is a way of dealing with rick of catastrophe. and has been since the dawn of civilization. and inform people of that risk. the risks are changing. this is the thing that i think the policy apparatus and united states congress of which you are now a member is completely in the dark about which is that we are entering the era of climate disaster. it's already here. it's only going to get worse. that means what the risks are and if you look at the reports written by the insurance companies they see it. they see the writing on the wall. they are putting it into their balance sheets but not happening in the united states congress. >> we have to re-evaluate the

manner in which the national flood insurance program is put into place and implemented and have that policy discussion moving forward. we obviously hopefully on the 15th take care of the remaining $51 billion in aid. >> which i'm sure are important and -- >> we have to move forward provide relief to fran and other people we represent. but the existence of the national flood insurance program is a necessity for the very reasons that we've discussed that the private market will not step into this situation, it didn't in 1968 moving forward which is why we created a program. it will not now given the extreme nature and increased risk with severe weather. >> clearly there was a market failure, a lack of a market in 1968 when they created the program and they tried to write a program that was done on a

risk based rates and nobody bought it. in the early '70s we jacked up subsidies and that started our problem we had underpriced insurance which created some of the problem in our balance sheet and also induced people to build in harm's way because it hasn't informed them of the risk, hasn't charged them. >> i want to be clear here. you guys are saying opposite things. you say insurance is underpriced and you're saying it's overpriced. >> i pay $3,000 a year in flood insurance. it's not underpriced. >> because the way the system is and because we have a flood insurance program, it is what they call adverse selection. the only people who buy flood insurance are the people most likely to need it. that's all we require. so we don't have -- whereas if you have, you know you have insurance for homeowners they are selling policies all over the country so we don't have that in the flood insurance program.

it's intensified this problem that's there. >> one of the things we're seeing when you look at the flood insurance program, this is the problem, flood plain zones will expand. weather-related damage and catastrophe will become more common. everything that's conceptualized around what the roll of the dice is has to change because the snake eyes will come up more and more and more and right now federal policy is absolutely totally and completely blind to that basic fact and the irony of it all as we're talking dollars and cents it will cost more money unless we get it right. we're going to produce not only more disaster and more human suffering and more misery, more being out of your home and having to deal with the consequence of that but dealing with a situation where we're spending billions much dollars more in money. thank you all for being here. really enjoyed that

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hi everybody i'm thomas roberts. north korea says it's in a seat of war with south korea and sats will act without warning against any provocations by the u.s. and south korea. this latest tough talk comes after the u.s. flew two stealth bombers during a training exercise in south korea thursday. back in this country health officials in tulsa, oklahoma today begin offering free testing for 7,000 dental patient whose may have been exposed to hiv and hepatitis. they are linked to two shuttered dental clinics. atlanta's former school superintendent and 34 other educators have been indicted on a series of charges in a cheating scandal. now since test scores were tied to bonus money for teachers the charges include theft. much more news coming up in one

hour. you're watching the best of "up." my commentary on drones and targeted killing how america kills is right after this.

right now for my story of the week how america kills. over the last 17 months that we've been on air we talked quite a bit about obama's administration secret targeting killing of suspected terrorists. a small number of those tar get and killed have been american citizens while some unconfirmed killed elsewhere have been innocent civilians, mothers and children, young and old men at the wrong place at the wrong time. people in the administration have told reporters they implement ad rigorous screening process inside the white house to decide who ends up on that list as the president approaches that prom with care. the policy has been efficient and effective in decimating al

qaeda and other terrorist groups. an official said as early as 2009 the enemy is struggling. these attacks produced the broadest and deepest reduction in al qaeda leadership. before any of the specifics of the programs mr. recipient kansas be properly and fully debated it has to be brought out from the veil of skrecy. that process started this week when a department of justice outlines the legal arguments for why it believes it has the legal authority to use force against a u.s. citizen who is a leader of al qaeda if quote an informed high level official of the u.s. government has determined it's appropriate. at thursday's confirmation hearings, white house counterterrorism advice are john brennan widely reported to be the chief arc i can tent of the policy face ad series of questions.

>> your view is to kill them rather than detain them or let them go free. >> is your testimony today that the huge increase in the number of lethal strikes has no connection to the change in the obama administration's detention policy? >> do you believe the president has an responsibility to let an american to surrender before we attack them. >> given the constant and criticism and obstruction the president has faced i can understand why liberals and democrats might view the cynicism expressed by conservatives this week. much of which has been more

focused on liberals hypocrisy than the underlying policy. i had to laugh myself when rupert murdoch tweeted how do liberals explain complaints about guatemala with silence on drone killing, civilians and all without arrests, trials et cetera. when we have discussed and criticized the secret kill program many viewers who responded online or through e-mail accuse me of being naive. a majority support targeting killing and drone strikes. partly i think that's due to the fact the public hasn't been given much information about how the administration has come to the conclusion in carrying out these killings even against citizens and partly because the worst effects of the policy, the collateral damage or more accurately the children as young as 1-year-old who our weapons

kill are almost entirely invisible to us. it's possible to me even with a full accounting of the program many perhaps a majority of the democrats might support the targeting killing policy for the same reason a blogger named lucy gave this week. he wrote though this may sound like a cold war liberal defending cia-led coupes and military interventions i support president obama's drone attacks. in a admit that i'm a hypocrite. if a republican administration were executing these practices, i'd probably join the chorus. but i trust this president's judgment that the drones are a legitimate way to take out terrorists who would, if they could, kill thousands of americans. i think that's the most honest defense of the program you'll hear from liberals. they trust president obama to yield broad authority and it's war. would you rather i'm often asked by supporters of the kill list

we have boots on the ground, big expensive destructive land invasions of countries like the iraq war. isn't the move of warriors to surgical strikes in yemen the change we were promised? this narrow choice between big violence and smaller violence shows, i think just how fully we have implicitly adopted the conceptual framework on the war on terror. how much george bush's advisors set the terms of our thinking years after they were displaced from office. that argument presupposes we're at war and must continue to be at war. what people ask is the alternative to small war if not big war and the answer no one of seems to consider is no war. if the existence of people out in the world who are actively working to kill americans means we're still at war it seems we'll be at war forever. we'll surrender control over whether that's a state we do in fact want to be in. there's another alternative. we could be a nation that declares its war over.

declause itself at peace and goes about using nuclear weapons and diplomacy and well resourced police work from text us from future attacks. the obama administration jettisoned the war on terror from its rhetoric but furthered its legal architecture. even after the troops come home from afghanistan we'll still be a nation at war. in 1832 carl von clausewitz said war is an act of force. much of the history of war and international law in the last century particular after the horror of the second world war was an attempt to prove him wrong. we shouldn't fool ourselves. we mine ourselves at some point facing a stark choice between the war we're now fighting and the law which we all at least pretend is the bedrock of our republic. i say we choose the law. hey, it's sara. i'm going pro.

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right now my story of the week. the magic coin. you've heard something about the

trillion coin idea thanks to several others has managed to catapult from the margins of internet to center of beltway conversation. the idea first proposed in 2010 by a georgia lawyer commenting on a blog under the screen name beowulf has received endorsements. on wednesday white house spokesperson jay carney even fielded a question about the proposal from our own chuck todd. >> following up on debt ceiling. i know your position hasn't changed on the 14th amendment. do you guys have a position on the trillion coin business? >> i would go back to what i said. the option here is for congress to do its job and pay its bills. bills that have already been racked up. >> would you rule it out? >> you can speculate about a lot of things. nothing needs to come to these

kinds of speculative notions about how to deal with the problem that's easily resolved by congress doing its job. >> okay. sure. but if congress doesn't do its job here's how the coin would work. republicans are once again threatening to hold the debt ceiling hostage as they did in the summer of 2011. they won't raise the limit the u.s. can borrow unthese three agree to spending cuts. we're already slated for european levels of austerity this year. if no deal is reached the u.s. has to start stiffing its creditors deciding how to prioritize payments. enter the coin. it turns out there's a subsection of the u.s. code called denominations and specific occasions. the secretary may mint and issue platinum bouillon coins in accordance with such specifications designs varieties, quantity, denominations and inscriptions

in the secretary's discretion may prescribe from time to time. the original intent was to give the secretary latitude. the plain meaning of the statue the treasury can issue a platinum coin in any dede nomination. the president would direct the treasury to mint a trillion coin and deposit it in the bank account and we now have a trillion more dollars in the bank and we don't have to worry about the debt ceiling. if this sounds surreal or ridiculous or magical to you you're not wrong. it's totally bizarre and unprecedented. even if it's legal, it seems to run against our expectations about how our government does and should behave. it's the kind of thing that isn't done. but that you see is the entire point. behavior of individuals within an institution is constrained by the formal rules explicit

prohibitions that aren't spelled out but just aren't done. what the modern republican party has done is exploiting the gap between these two. they made a habit of doing the thing that just isn't done. requiring a 60 vote majority for nearly every simple procedural vote wasn't done and republicans did it. refusing to confirm any candidate for an open position because you object to the positions very existence just wasn't done but senate republicans did precisely what the a newly created consumer finance protection bureau which they boycott and most clearly before the summer of june 2011 they used the debt ceiling as a bargaining chip. they didn't credibly threaten to default as a means to gain political leverage. the president has been reticent to meet this degradation of previous norms. he is at heart an are a dent institutionalist. there's no way to unilaterally maintain norms. once they are gone they are

gone. you can tell i think the trillion dollar coin idea spoox republicans precisely because it's so out of character. so gleefully and florida grantly violate their own expectations how democrats play the game. the national republican committee has sent out press release railing against the coin. the chair spying a political opportunity rushed into the fray. >> the last thing we need is for the treasury to just simply mint a new coin made out of platinum that would weigh, by the way, 44 billion pounds if it was tied to the value of platinum. that would sink the "titanic." >> he completely misunderstands the cull idea. just as a $100 bill isn't made of $100 worth of cotton a platinum coin wouldn't be made

of platinum. just a small bit of platinum. economist john kenneth gal britain the process by which banks create money is so simple that is mind is repelled. it creates money out of thin air. at moments of profound crisis it was this kind of monetary magic that helped the u.s. avoid catastrophe. abraham lincoln printed green backs to fund the union. his opponents attacked him mercilessly. fdr ditched the gold standard to get us out of the great depression. both of those ideas at the time were as ridiculous as a trillion dollar coin. there's rules that guide legal tender. at base is social convention, a norm. we all agree it's valuable so it's valuable. the genius of the trillion dollar coin isn't that it

provides leverage, it illustrates the reality of modern capitalism. money is nothing more than a shared illusion. a kind of magic. a good magic or bad magic? i want to ask my panel right after this. who thinks more is better than less?

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[ robert ] we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side. as we mentioned earlier my new program starts this monday and air week nights here on msnbc at 8:00 p.m. eastern. the new host will start on april 13th. we've chosen our favorites moments. we're looking at government power. this summer the government will likely reach its debt limit. republicans in congress have refused to raise that limit.

to get around that fight which would be massively damaging to the u.s. economy some commentators propose using a little known statute that gives the treasury department the power to mint platinum coins. the government would mint a platinum coin worth $1 trillion, deposit it and continue to pay its bills. take a listen to what my guests had to say about it.

you said this is a ridiculous idea. >> which is self-evident. we're not debating this is ridiculous. to take to it the base it sounds like, okay, there's a thing, congress is not is going default. congress is not allowed to not pay its debts. when you say we're going create an imaginary default to match your imaginary default, oil take my nurse bat and ruin your super soaker. we could be talking about education, programs going to be cut. >> let's establish the realness here first. if they do go over, they don't vote to raise the debt ceiling

there will be consequences. no disagreement about that. >> clearly. >> we're take revenue more than paying interest paints which is not true because there's days when we don't take in as much. >> we're still a rich country debating are we going to honor our promises that we made which is preposterous. not the super soaker nerf thing. >> said real threat? it's not a threat priced in to the market.

the market thinks it's a silly consideration. >> the idea republicans would take us through a partial default. >> i think the markets, governments around the globe would like to see the united states government be responsible. the responsible thing is figuring out a way to not give an additional credit card to a child that has already sfoepent its borrowing limits without putting in a regime. >> every time i hear this from someone, you have to give me a coherent account of why that is not being priced in right now. everyone will go around and say that you have to have -- long term deficit reduction.

treasury is trading negative interest rates. >> at some point to music stops. >> you have to give an account why the markets are systematically dysfunctional and not pricing the proper risk of u.s. debt. >> first and foremost i think markets are smart enough to know this is the currency of the world. and so on and so forth. second of all, you know, if the policymakers in washington, d.c. aren't grown up enough to come up with a scheme that enables us to meet our current obligations which everybody around this table and everybody in this country knows we will. but at the same time be responsible in the future on new obligations that we take on, you know, then there's a problem. >> talk about this responsibility and the role that fiat currency place. this idea of trillion dollar coin is interesting, from a game theory perspective you have two

people playing chicken. i want allows one side to make a kind of similar bluff that the other side can. also when you think about creating money out of thin air it gets to something very profound about whether or not dillon is right we have to responsibly pay off these debts. >> he's not right. the reason why he's not right. we don't pay off the debt. we'll never pay off the debt. what the u.s. government does is redeem treasuries. when you and i go into debt we pay by transferring liability to a third-party. when the u.s. government issues debt it doesn't transfers liabilities it issues it's own currency to redeem the outstanding debt. the government can never run out of dollars, they come from united states government. they don't come from china, we're not going broke. we're not putting our children into bankruptcy. >> we're putting the federal reserve balance sheet at work which is fine so we don't need a coin actually because that's

where we are. >> i should explain to people when we talk about federal balance sheet to work what we've done is increased the money supply in different methodologies during the crisis called quantitative easing. the trillion dollar coin idea is just basically a way of doing sterilized what's called sterilized quantitative easing through the back door. it's a way of creating a mechanism. >> it would allow the united states to put the federal reserve's balance sheet to work for the rest of us, maybe for a change. so when we talk about the trillion dollar coin nobody says who is going to buy the coin and where will they get the money to do it. that was your point in the opening. if the federal reserve is required to take the coin then use the keyboard and they mark up the size of the treasury's account the same way the federal reserve pace for everything. the federal reserve does not have a bank account in any other bank. there's only one way they can

spend. that's by creating money out of thin air. >> we're in the weed here. if i'm hearing you at home, hearing you at the table it's like if that can work then let's just make a $10 trillion coin and zero out the deficit or the national debt and then just like forget all this fiscal cliff stuff and all these grand bargains, let's just throw it in there. why stop at 10, 20 trillion, an endowment of $100 trillion we draw on for the next hundred years. why can't we do that. >> we can do that. >> this isn't nam. there are rules. in order for our credibility what the credit of the u.s. government does what it has always done since its creation by alexander hamilton is create credibility for a country that had known when it was born. if we don't treat our debt in a credible way, we don't pay our interest on time, pay our bills we lose essence of what the

entire government and politics is based on. >> there are a few things. one of the things you say that we should have a discussion about our long term fiscal future. that's a reasonable discussion to have. it's illegitimate to have that discussion around the debt ceiling. there's other ways the republicans could establish leverage for example not passing the continuing resolution and have a '95 style government shutdown which is not great and would hurt the government. so when people say we don't want to have this, specifically we don't want to have this conversation around the debt ceiling where there's this potential for catastrophic event. >> two ideas here i want to pursue. one i want to ask you if you think the kind of -- i want to get back to whether we think the republicans are bluffing. then i want to come back to this. the man is repelled by the idea you can create $10 trillion out of air. >> a teachable moment.

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first this political question. talking about the trillion dollar coin. i understand, i'm aware this idea is bonkers but sometimes bonker ideas are right. >> sometimes they are just bonkers. >> if we know anything about the nature of the obama presidency it's an incredibly small conservative respect for

institutional norms and a real, particularly in these kinds of like procedural ways just not real like innovative or out the lines. so the odds of the white house actually ever doing there are slim. i want to make sure that's clear. the reason this is important is because a, we do have this actual political battle that's coming up and b, it gets to the heart of what we are talking about with we talk about debt, when we talk about the debt ceiling, and the deficit. everyone throws these words around. this is the subject of every conversation in the beltway, deficit, debt. my sense is no one knows what those words means. what that thing is pointing to and what the implications of that meaning are. dillon on the political question, do you think -- is the idea that we should all be thinking the republicans are essentially hinting they will cause a half shutdown but not immediately. here's john boehner on the debt limit fight indicating back off

and hedge a little bit. the debt is one point of leverage but he hedges noting it's not the ultimate leverage. boehner believes the sequester will trim all discretionary spending. how do you read this? >> i read it as responsible lawmakers will not walk us over this unprecedented silly, you know, exercise. however it's a point of leverage. and i think that, you know, you'll probably see some sort of deal that has a short term increase in the debt limit, three months, six months. and a conversation of what's the appropriate amount of spending cuts that goes along with that. >> the funny thing about that statement, the responsible lawmakers part and leverage is the second one has to negate first one to be true. if everyone believes responsible lawmakers won't do it then the leverage disappears. >> what bugs me with this

conversation, they are not going to do that. we won't default. but it is point of leverage and actually they are talking about exactly that. >> there's three branches of government. this is an appropriate conversation whether we like it or not. there are duly elected members of congress that have the right and constitutional right here and they should be heard in how they work through this is part of the process. >> the rubber hits the road at some point and you get to the point where you could have a situation where congress doesn't approve it at which point the executive branch has to do something save the country. >> that's the idea behind the leverage part of this conversation. to get to the substance of the trillion dollar coin idea. the republicans don't take us over and there are some deal cut or we swerve out of the way at the last moment. then we this crazy mint the coin idea that's been planted in the minds of american policymakers so we say forget about the debt ceiling, why don't we mint some

coins like i was saying. if we can mint a trillion dollar coin let's mint a $10 trillion coin and you said we can do that. >> of course we can. if we stab bhish the treasury secretary has the capacity to mint a trillion dollar coin and deposit it into the account put a 10, 15 or 100. so of course they could do that. the question is should they do that? when a would be the ramifications of doing that. there's no doubt in my mind it could be done. it appears to be by all accounts harvard law professors, yale law professors -- >> the former, just another data point, former mint director, the treatment of the trillion coin. the accounting treatment of the coin is identical to the treatment of all other coins. the mint strikes the coin, ships

to it the fed, books $1 trillion and transfers $1 trillion. >> all it is are digital entries locked up on a spreadsheet. when the federal reserve credits the bank account. it's locked up. they can't go anywhere. they can't do all of these things that people are terrified of. >> what are the limits? in some ways the moral subtext of the deficit conversation is this debate about virtue, right? virtue and kind of licensousness that we ran wild. moses went up to the mountain and we went crazy with the golden calf. now we're going to get good again and that getting good, that virtue is paying, is reducing the deficit and paying the debt and you're telling me no you can be licensous all the time, no limits on the behavior. >> i didn't say that at all.

no there are limits. of course there are limits. the limits are on the real side of the economy not on the financial side and what we're so accustomed to hearing is we can't aforward to it. it's always the financial side. there are not enough numbers on the balance sheet. we can't spend because we don't have the money. let's take the hypothetical and say $100 trillion. take that hypothetical. >> we mint $100 trillion coin. >> and the fed credits the treasury's account. what happens? nothing. the question is what then would happen to those dollars if congress appropriated some spending because the government can't spend unless congress appropriates. if congress said look we have $2.2 trillion infrastructure we'll appropriate funding to start repairing and building. those funds can flow out. >> they move into the real economy. >> as long as real resources are

there, 23 million americans want full time work and can't find it. >> let's mint a coin and put them to work. >> that's what she's saying. >> why on earth would we allow 23 million americans would want to contribute that we have useful things for it home to do, we have unemployed construction workers, they have the skill set we need -- >> the only thing they need is this dollars 22 trillion coin. >> they just need congress permission to do it. >> the only way we can make money from a $100 trillion we started a museum exhibit. >> if you want to talk about the constraint. make the argument. you say let's play this through. we put -- you deposit the coin. >> it's a hypothetical. >> in reality my sense is financial markets will go bananas and part of the fear of the trillion dollar coin if it ever came to that it would represent something to international financial markets

about the nature of american governmental institutional dysfunction that would negatively impact the price of treasuries. >> right. first of all, forget the fact that government spending which is a whole different conversation, the issue of our credibility in the world, we do become greece at some point. at some point germany doesn't want to give greece money because they don't think they can repay their debts. we can become the laughing stock of the world's financial markets. >> you asked this question about constraint and what's the actual constraint. >> hold that thought. that's what i want to get to. i think we all agree -- let's talk about that after this break. [ jackie ] it's just so frustrating...

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the trillion coin, course. joe, we were talk, basically we've gotten to this point where we got, why does the government have to pay its bills. that's the fundamental question. at the end. day that's the question. why do they have to pay their bills. who do they pay them to. what's the constraint on the u.s. government with the reserve currency in the world, what's the constraints on our ability to print money? that i think is the heart of the question we're talking about. >> so, i think, you know, this week the 100th birthday of richard nixon and richard nixon was the president who killed the gold standard. what hasn't died is the gold standard mentality where we think money is something we'll run out of. so that is a false constraint

this idea we're going to run out. there's a real constraint. let's talk about $10 trillion coin. >> you cut her by 90%. >> so if we put that, obviously as stephanie put that out if we put it in the bank account there's no hyper inflation. where you would get a constraint the the government said let's spend $10 trillion on infrastructure projects. you have a real problem. there's not $10 trillion of real resources in the economy. you push this in the economy and get inflation and wages would surge, price of commodities would surge. there's your constraint. you hit the point where you're putting too much money or real resources and you get the push back. it's not about money running out it's about too few goods to be in there. >> let's get back to something slightly more resembling reality let's say we're getting to a

showdown and let's say the white house does start to make noises about doing that. again, it seems incredibly unlikely. let's say they did. or let's say this time around they don't but another disastrous debt ceiling showdown and next time john boehner gives them a month. this is grover norquist idea, that clip where he says the leverage we'll have is we'll extend the debt ceiling a little bit. if you're good you can come back for more. we get to a point where they say this has become a habit. we can't teal with this. we'll seriously pursue this trillion dollar coin idea. you write for a publication that people in financial markets read. the actual tangible people out there in financial markets aren't they going to balk. won't this have an adverse effect on people's judgment of the government to do the things we need to do? >> i don't think so. i mean look we're already having a debate right now. this is the point we need to come back to.

we're having a debate at the highest levels about whether we'll pay our bills. that's the debate we're currently having. >> can i debate that debate i don't think we're having that debate. mitch mcconnell said that. >> the gop leader in the senate is debating with the president whether we'll pay our bills. >> this is clearly an issue of political leverage. this doesn't come down to tissue of congress defaulting on its bills which constitutionally it cannot do and last time they threatened to do it the blame fell on republicans disproportionately. these are people who care so much about their jobs they are willing to hold even in a political sense the u.s. economy hostage. what makes you think that they are going to be able to pull this off and keep their jobs? it's the only think they are worried about. everyone knows that if the republican is seen as having thre threatened the u.s. government they will be thrown out of office. >> here's an important point. with this kind of threat on the

table of we're not going raise the debt ceiling, one way to respond to that politically from a game theory sense well you're not going raise the debt ceiling we'll mint a trillion dollar coin. the other way to respond to it is the way you're responding which, you're bluffing. right? that clearly is not true you clearly aren't going to do that. let's put that all aside. there's something to that. there's something to not making more of the threat. i'll give you the last word. >> we have a spending problem in this country. everybody in this table and congress understands that. they don't want to do anything about that. >> no consensus on that. i would argue strongly there's a spending problem in this country and no political will to do anything about it. the president voted six years ago against raising the debt ceiling so this is a little bit of a red herring and him being, you know, above the fray on this which is absolutely not true. he was completely complicit in trying to use it as leverage back then and has been a point

of bringing information the table. >> let me make a point about that. the norm has been that there's a symbolic vote that people in the minority party will cast -- >> generally because they get a free ride. >> but not credibly threatened. there was something distinct in a difference about the behavior in the 2011 congress. democrats all the time voted against debt ceiling hikes because what they want to do is make the other party walk the plank and own that. >> absolutely. you're watching the best of "up." there's more after this. ♪

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i'm thomas roberts. more tough talk from north korea. north korea said it entefengint state of war with south korea. police in southeast tennessee are looking for a pilot who was thrown from an experimental plane he was learning to fly. he was not wearing a seat belt when the plane's canopy opened and he was ejected. his instructor was able to land that plane safely. the area near a lands lied in whidbey island will remain off limits's geologists determine the stability of the land. one home was destroyed and more than a dozen remain inaccessible. prosecutors in maine say they will seek a 10 month prison sentence for a zumba instructor who pleaded guilty to charges she used her studio for prosecution. now back to chris hayes.

one of the most unusual discussions we had here on "up" was unusual was because of the executive vice president of nbc universal. he's advocating for passage of a bill. you're about to see our conversation. by the end of the following week in the face of mounting opposition congress shefld it. here it is. >> a lot of news this weekend. the house oversight and government reform committee is set to hold a hearing. senator issa decided to postpone it. the bill's author lamar smith decided not to include one of the more controversial provisions.

there was push back from the white house. any effort to come back online piracy must guard against the risk of online censorship of lawful activity. here's a response by rupert murdoch. so obama has thrown his lot with silicon valley pay masters who threaten all software creators piracy. right now i would like to break in co-founder of read it.com. thank you for joining us. richard, you've been working on this issue for quite a while, in internet terms. >> yes. >> i want you to explain and you're coming from a different place than i am, i think. i want you to explain what do you see as the core issue particularly because we have legislation right now, the dnca that does provide some protection for copyright holders. youtube has to have an employee

whose job it is to supervise copyright infringement. >> let's take a big step back what is it we're talking about? we're talking about jobs. we're talking about websites that are wholesale and i repeat the word wholesale devoted to theft. districting illegal counterfeit goods that are produced by iconic u.s. brands who have devoted themselves to researching and produce innovative products. this legislation is devoted to and outside of the united states. what this legislation is addressing are websites as i say wholesale devoted to illegal activities if they were in the united states would be subject to criminal prosecution and to

shutdown. this legislation would not affect a single site in the united states, so to mention a u.s. site affected by these, by this legislation is wrong. and is totally wrong to say that a single post or a small amount of legitimate activity would be threatened by this legislation. so the difficulty with the policy debate is that we have to separate out what the legislation actually does and what is an extraordinary amount of disinformation that has been distributed. >> in terms of what the legislation does saying this wouldn't affect a single u.s. site. you run a u.s. site and there are people that run -- there's a bunch of companies that run a bunch of websites. >> but, chris, seriously that's wrong. the problem with this debate is that this -- >> then why are they making it up? >> this legislation is devoted exclusively to foreign sites. look at the legislation. it is devoted to foreign sites. saying that it would affect the

u.s. site is categorically 100% wrong. >> alexis respond. >> the policies would lump a site any site where users can post content that could be deemed illegal if it's instructing someone as to how to get around -- >> that's wrong. >> furthermore, the bigger problem i have here is that this legislation will not only break the internet but it won't even work to curb piracy. i'm a businessman. i'm a entrepreneur. my best interest as someone who is work on a book is to couple with a solution that works and i believe that innovation not legislation is the solution. >> i want you to pursue this because i've read some legislation, i've been through the manager's amendment which came out of the house. i read interpretation by a harvard law professor. >> you know it applies only to foreign websites.

>> that's not true. >> it is true. it's what it applies to. >> you're saying that when you say you'll cut off, you know, the dnca blocking or cut off a mastercard to a certain site. >> after a judge has ruled that it is wholesale devoted to illegal activity, only wholesale devoted to illegal activity and outside of the united states. >> okay. if that is the case if your interpretation of the law in a read the legislation and i read the law professor's -- >> that's what the law says. >> if that's the case what's the nature of the massive -- what is the goal of a disinformation campaign that unites all the people that i've cited and google and all these companies that might have domestic sites, what is alexis motivation. this interpretation of the law you say it's clear as day. doesn't apply to u.s. sites. if that's the case why is

everybody wasting their time? >> i do think what lies behind it is there's a policy disagreement. and the question, the big issue here is, in fact, about the rule of law on the internet. the internet is very young. i want has grown up with a certain ethos that anything goes. over time you can't have something that's the pillar of 21st society be rampant with lawless activity. and so what the accurate policy discussion is how do you actually go about reducing the amount of illegal activity on the internet. what i would say is there's a philosophical disagreement. the question is for a site wholesale devoted to illegal activity should we allow easy access to those sites and what i would say to you is when they are outside of the united states and not subject to our criminal enforcement we have to use technological tools and those technological tools do involve

as you said trying to cut off financial support sites that are wholesale devoted to illegal activity and trying to make it difficult to access sites outside the united states that are wholesale devoted to illegal activity. >> the question is making the change to the architect of the internet to prevent what your signing what are those changes? i want to get alexis response to this after we take this break. having triplets is such a blessing. not financially.

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it's delicious. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm janet long and i formed my toffee company through legalzoom. i never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams. go to legalzoom.com today and make your business dream a reality. at legalzoom.com we put the law on your side. as you can tell from our programming here this is a very hotly disputed piece of legislation. the white house has had some concern about it. richard from nbc and alexis

here. i want to you answer that question, your misinformed? why are you -- what is your concern about the legislation if as mr. cotton says it only applies to foreign sites? >> i first want to make a note the internet is not a lawless place. the dnca has been working and abused in certain instances. but what we're talking about with this current legislation with protect ip and sopa it's the equivalent of being angry and trying to take action against ford because a mustang was used in a bang robbery. this is not the proper course and won't solve the problem. >> why? there's a bunch of arguments that people make against sopa. one there's different levels of which the argument happens. the pragmatic argument is, okay, fine we agree and i'm just talking for myself ate problem that there are websites with you can go and download these

things. >> agreed. >> why won't it solve the problem? >> piracy is a service program. solve the problem in bad markets like russia by offering a service more valuable to people than piracy. >> what do you mean by service? >> pirates can deliver something easier than you can get otherwise when you have to wait three months to get access to something. when there are bar towers getting the information the content you want people will go through other means. if you can provide a service that's better you can win with business. as an entrepreneur i see piracy as an opportunity. >> let me respond to that quickly. people make that argument. in the era of when file sharing first explode with college dorms downloading i think there was a strong case to be made a lot of what was happening it was convenience. i don't want to buy cds and burn them. what has happened since then with netflix and itunes, you can

get most of what you want, right on the internet. that convenience aspect to me seems greatly reduced. there's some innovation on the part of big media companies. you can watch the iconic "saturday night live" video that was downloaded on youtube. you can watch it on hulu. that argument is a little specious. >> continue. >> actually to go back to the earlier point what scares me the most is whatever they do is going to be circumvented anyway. the state department right now is giving people the same tools that would be used to circumvent

dictatorial regimes. >> you talk about losing jobs here. yet the government accounting office said last year they looked at this and can't substantiate any evidence that this has had an impact. in fact the industry the media industry the entertainment industry has grown since 2007 at 1% over the rest of the economy and most of its profits come from overseas where piracy is rampant. in short this piece of legislation is the right step in the wrong direct. if you look at another bill out there the open bill by issa which goes after those websites overseas through the itc where both parties can go before it for both parties to have their side listened to and then strangles the money that goes to them like we did wikileaks that's a way to think about this. >> i want to give you a chance to respond to that. we'll take one break.

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richard, i want to you spo tond to what alexis was saying about alternatives to this and this problem strikes me as fairly fundamental. the economists compared this to the war on drugs. it's squeezing the balloon problem. we increase the amount of money on enforcing drugs. there's a demand for it and it

moves around. why will be this affected and other things haven't been? >> all law enforcement is cat and mouse. that is not a recipe for doing nothing. if you care about a burglary in your neighborhood. your reaction is not let's shut down the burglary unit of the police department. so this is a first step. it's not a silver bullet. right now it's rampant. it's out of control. the websites are offshore. they're 100% devoted to illegal ak tiflt. they're undermining our jobs, our economy, our key businesses. we need to take some steps. in the netherlands, bay the way, there was a court order traffic declined 80 kt.

we have to start down the path to make it more inconvenient to get stolen content while everyone is trying to make it convenient. >> this analogy of the neighborhood, i'm imagining it like we're about to obliterate the neighborhood that just had a burglary. whether it's a startup in new york, working on the general assemb assembly, just getting started. >> and this legislation would not have a single impact on all of that. >> there's a lot of concern about liability cost. >> this legislation specifically says there can be no secondary liability. the only thing that can happen pursuant to a court order is an ad network, a credit card company or a search engine has to respond to be whole sale.

the only thing that they have to do. >> if they don't respond ux why raise the question? >> they have to do that. but that's a specific action required by a specific court order after a judge has made a full finding. zl thank you for your time. i really do appreciate it. i think it's a really important issue. i want to return to it in the future. >> that was our discussion on the anti-piracy bill. part of today's look at government power. stay tuned for melissa harris perry coming up next. i hope you will join me monday night at 8:00 for the launch of my new program right here on msnbc. do not forget to come back on saturday for "up." ♪ i am stuck on band-aid brand ♪

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