'Countdown with Keith Olbermann' for July 27

Guest: Steve Emerson, Rick Hauck, Jim Vandehei, Mo Rocca

ALISON STEWART, HOST: NASA's return to flight suffers a critical setback, while it's .believed the seven astronauts orbiting right now are not in any danger, they will wake up to the news that the rest of the shuttle fleet has been grounded. The problem that brought down "Columbia" has not been fixed. And the best minds in NASA have to go back to the drawing board before another orbiter blasts off again.

Which of the stories will you be talking about tomorrow?

Serious news tonight for NASA. Foam insulation once again shed from the external fuel tank during liftoff. If the shuttle made it into orbit unscathed, was it just blind luck? And what will it mean for the future of the shuttle program?

One down, three to go. A suspected London bomber is in captivity, and officials hope will he crack under interrogation and lead police to the accomplices.

The CIA leak. Robert Novak was told not once, but twice before he outed agency officer Valerie Plame that her name was off limits. So how will that affect the investigation?

And in a time when image is everything in politics, we'll tell you who's hot and who's not on Capitol Hill. The Hill's 50 most beautiful people. Wait a minute, they actually came up with 50 smoking people in D.C.?

All that and more, now on Countdown.

And good evening. I'm Alison Stewart, in for Keith Olbermann.

Quote, "We decided it was safe to fly as is. Obviously, we were wrong," end quote. That is the word from NASA tonight after finding the same foam debris that doomed the space shuttle "Columbia" flew off the "Discovery" during liftoff yesterday, although at this point, it does not appear to have damaged the craft.

Our top story on the Countdown, with the safety of the "Discovery" and the future of the space program on the line, NASA has grounded all future shuttle missions as of tonight.

The triumphant moment of a seemingly pristine launch yesterday morning gave way to concerns about falling debris by afternoon. And tonight, while the astronauts aboard "Discovery" sleep, NASA struggles to explain the large chunks of foam that unexpectedly shed from their ship's fuel tank.

Our correspondent Tom Costello is at the Kennedy Space Center. Tom?

TOM COSTELLO, MSNBC CORRESPONDENT: Alison, good evening.

In fact, yes, we have the shuttle fleet, or what's left of it on the ground in the United States right now, grounded because of falling debris, the same problem that brought down "Columbia" two and a half years ago. They thought they had this problem under control. But you saw the video of that piece falling off the external fuel tank. And a short time ago, we had NASA managers saying that had that hit "Discovery," it would have been very bad news indeed.

And so tonight, the entire shuttle fleet, with the exception of "Discovery," already in space, is grounded.

(BEGIN VIDEOTAPE)

COSTELLO (voice-over): It is this video image that NASA engineers have been reviewing closely, a piece of debris falling off the external fuel tank after the solid-rocket boosters separate. Today, NASA released still photographs taken from "Discovery" after it jettisoned the external fuel tank. Those pictures show a piece of missing foam below the liquid oxygen feed line.

BILL PARSONS, NASA SHUTTLE PROGRAM MANAGER: If we had understood it before we flew, then we would have made modifications to it. But apparently there's still more understanding that has to occur. And we will go do that, and do it diligently. Until we're ready, we won't go fly again.

COSTELLO: Troubling, since NASA had redesigned the foam to keep it from falling off and striking the shuttle.

If insulation is still breaking loose, future shuttle flights could still be in danger. NASA says it's not overly concerned about a piece of tile that appeared to break away from the landing gear door during liftoff.

"Discovery"'s crew spent the day operating a robotic arm equipped with cameras and lasers to inspect the shuttle for signs of damage, tediously scanning tile after tile, from the crew quarters to the nose and the reinforced carbon carbon on both wings. So far, no signs of serious damage.

(on camera): To emphasize, "Discovery"'s crew already in space is not in any danger. They have yet to find any significant damage on "Discovery." But it does mean that the "Atlantis" space shuttle slated for launch in September is at this point grounded, Alison.

(END VIDEOTAPE)

STEWART: Tom Costello at Cape Canaveral for us tonight. Thanks to you.

For more on the implications of this latest development, we are joined now from the Johnson Space Center in Houston by James Oberg, a former space shuttle Mission Control engineer who spent more than two decades at NASA.

Mr. Oberg, it's great to have you back on the Countdown, although it's too bad that we need to be talking about this.

I want you to be very clear with me. The "Discovery" crew, if it's already in orbit, are they in any kind of danger because of this foam insulation problem?

JAMES OBERG, MSNBC SPACE ANALYST: Does not appear so, Alison. And when I say appear, we really can mean it, because they are looking at the underside of the shuttle, the front edge, checking instruments, looking at more pictures. And so far, everything they've seen indicates that the heat shield is intact and will function properly on landing.

If they had a problem, though, of any kind, and were stuck on the space station and required what they call the safe haven mode, and a pickup by the next shuttle, that would be a different question. We pressed twice at the press conference tonight whether or not the grounding of the fleet, which is not officially announced, but in practice appears to be, whether they still would have launched a rescue ship, "Atlantis," knowing that the insulation on the tanks, the tank that flew yesterday and the tank that would fly on "Atlantis," is no longer trustworthy.

It's not as much as they wanted. And they would not answer. They said they knew it was a tough decision to make for a rescue flight. They would still face that decision. They haven't given up if they need it. But still, there's no indication that they will need it. And we should be thankful for that.

STEWART: All right, let's all keep our fingers crossed collectively for that.

Is it a matter of sheer luck that this foam insulation didn't cause a major problem for "Discovery"?

OBERG: When that was brought up, we had a very - some very intriguing words. And Wayne Hale (ph), who I've known for 25 years, flown missions with him at Mission Control, I trust his intelligence, his integrity, and his skill as an engineer, and he said, yes, if this thing had come off earlier, if this big piece had come off earlier, it could have been really bad.

Now, as far as hitting the front edge of the wing, making a "Columbia"- like hole, a lethal wound, that's still a question of odds, because it might have hit somewhere else.

This piece is not like the chip that we saw last night. In the video you just saw, it's coming off not from the far end of the tank, where it would have been big and far away, it's (INAUDIBLE) from near the top. And to give an impression of the size of this piece, we have another model here for you. Again, sparing no expense I prepared a scale model of the insulation fragment. I was going to take a nap on it. But it's about pillow sized and probably pillow weight, flying off, missing the shuttle.

But it might have gone differently if the winds were different, if they time and the ascent were different. And if it hit the shuttle, the chances are it would have scoured some tiles, scraped some tiles. Again, probably not a lethal wound, but it's not the sort of thing you want to face, because a piece came off an area of the tank that had been sprayed on years ago, and the NASA engineers decided it was safe. They were wrong, they said they were wrong. Another piece came off near the bipod ramp, which is where the piece came off that killed "Columbia" and its crew. Another piece came off there in a newly redesigned and reconstructed area.

So both the old stuff they thought was OK and the new stuff they'd worked very hard to make OK, both failed, and in a spectacular way. And the mood here has totally swung in the past couple hours, although the...

STEWART: I can imagine.

OBERG:... everyone's happy with the mission, but the mission is going fine, and it's going to work fine, with a link-up with tomorrow. The crew will be home safe in about 10 more days, we can bet on that. But will a shuttle fly again in September as scheduled? Will it fly again this year? Will it fly again in a year from now? Nobody knows.

STEWART: And realistically, how long do you think it'll take to figure this all out?

OBERG: They've got to go and requalify the tank, and they said so. They were - they can't make an estimate now. But let's face it, the tanks they now have at the cape to launch have the foam on them they thought was safe. They've proven it's not safe. So they'll have to probably go back and recoat a tank with new foam once they figure out why the old coating didn't hold. That's going to take more than a month, more than three months.

I'd make a stab at it and say we're lucky to fly by early or the middle of next year.

STEWART: We will all stay tuned. James Oberg, the man you want to talk to when there are any questions about the space shuttle, thank you so much for your perspective tonight.

OBERG: Thanks, Alison.

STEWART: NASA officials tonight making the point that for all intents and purposes, the shuttle mission was still a test flight to assess all the improvements made post -"Columbia." There's only one American alive we can talk to right now that knows the stress of commanding a return shuttle flight after a disaster, Captain Rick Hauck commanded the "Discovery" in 1984 and again in 1988, the first launch after the "Challenger" explosion.

He joins us now on the phone.

Captain Hauck, put us aboard the shuttle "Discovery" right now. What will the astronauts be considering and thinking about when they wake up to this news?

CAPT. RICK HAUCK, FORMER "DISCOVERY" COMMANDER (on phone): Well, I'm sure that they'll be wanting to get the results from their surveys, both from the survey that they are conducting themselves, but also the survey that will be taken with photographs from the space station as they approach it tomorrow.

And I'm sure that they'll be concerned that their families don't get overly worried about their safety. I think Jim Oberg captured the station quite clearly, and it does not appear that the "Discovery" astronauts are in any danger.

The major, major problem, of course, for NASA is, when will they feel comfortable launching again?

STEWART: And certainly it's going to have an effect on those who work at NASA and work so hard and so many long hours and put so much into these shuttles. Tell us a little bit about the effect you think this information's going to have on NASA.

HAUCK: Well, there'll certainly be a lot of frustration and angst by the people that work on the tank. They have worked extraordinarily hard over the last two and a half years to try to understand the mechanism that cause the foam to come off of the tank.

We know, of course, that NASA never said that they could absolutely guarantee that no more foam would come off. That's just too difficult a problem. But clearly, they're going to have to go back to the drawing board, as Jim Oberg said, and that's got to be frustrating.

Meanwhile, everyone else on the NASA team is probably going to be spinning their wheels as the focused effort takes place on the tank.

STEWART: I suppose you could also maybe look at this as the glass is half-full scenario, where it could possibly be a rallying point, a motivating factor.

HAUCK: Well, every challenge brings the best out of people. And I believe that this challenge will bring the best out of the NASA team. And five years from now, we'll look back on this as a trying, difficult time. But my guess is, people will be able to say that it was one of their better hours.

STEWART: And finally, is there a point when improvements that need to be made, considering the fleet was going to be retired in five years anyway, not really worth it?

HAUCK: Well, you always have to do a risk trade versus cost. Of course, where you have the problems that we had with the foam on "Columbia," the risk trade is balanced very much in favor of fixing that problem. There certainly have been other improvements that were going to be made to the shuttle fleet that have not been made because of financial considerations. But those are taken one at a time, and think are fairly judged.

STEWART: Captain Rick Hauck, former NASA astronaut, thank you so very much for your time tonight, captain.

HAUCK: My pleasure, Alison.

STEWART: In London, a big break in the terror investigation there.

One of the suspects behind the botched attack is in custody.

And ominous warnings of homegrown terror right here.

And the outing of a CIA officer, Valerie Plame, new information that Robert Novak, the original leaker, was allegedly told twice by the CIA he better not write her name, buddy.

You're watching Countdown on MSNBC.

(COMMERCIAL BREAK)

STEWART: Three weeks after the city of London was first attacked by suicide bombers, police have netted their biggest fish yet, the prime suspect in last week's failed attempt to repeat the horror of July 7.

After nearly a week on the run, the would-be suicide bomber is behind bars tonight at the most secure police station in all of Great Britain.

Our fourth story on the Countdown, the hunt for the London bombers. Police raiding four homes across Britain today, an early-morning assault in Birmingham, capturing a man believed to be one of the fugitive bombers in last week's failed attacks. He is Yasin Hassan Omar (ph), thought to be responsible for the botched blast at the Warren Street Tube station.

Police had to use a powerful stun gun to detain this 24-year-old Somali man. At least three others believed connected to the attacks were picked up today as well, but none are thought to be part of the July 21 foursome seen here.

Today also gave us our first glimpse at the London bombers' tools of destruction. Photos of homemade bombs that Scotland Yard recovered after this July 7 bombings, a small bottle ringed with large nails or tacks intended to inflict maximum injuries. This is an X-ray of a similar bottle bomb, also packed with nails. It is thought they police recovered this explosive device in a car abandoned by the 7/7 bombers.

There are also concern tonight about the threat of homegrown terror cells here at home. Only days after a false alarm forced the evacuations of New York's Penn Station, a federal official is now warning that New Yorkers have more to fear from homegrown terrorists than from al Qaeda operatives sent to America to carry out attacks.

This warning comes from one John Brennan, the interim head of the National Counterterrorism Center, who is actually leaving the job. His remarks the kind of thing that's a lot easier to say when you're on your way out.

Here's the good news. Brennan says the U.S. has succeeded at disrupting al Qaeda's operations. The bad news, Brennan also says that has made radical Muslims from local communities more willing to take part in smaller-scale attacks, well, at least compared to 9/11, smaller attacks like London and Madrid bombings.

Now, for a reality check on all of this we are joined by Steve Emerson, head of the Investigative Project on Terrorism and author of "American Jihad: The Terrorists Living Among Us."

Steve, nice to see you.

STEVE EMERSON, INVESTIGATIVE PROJECT ON TERRORISM: Good after - good evening, Alison.

STEWART: Officials in Great Britain are calling today's developments their most significant breakthrough yet. Do you agree?

EMERSON: Absolutely. This is this strand they've been looking for, and it possibly could lead to the unraveling of the entire mystery behind the second set of bombings and even the first set of bombings.

Clearly, if he talks, he could provide a wealth of information. And even if he doesn't talk, he may have personal information on him, cell phones, computer, laptops, whatever, PDA, that will help provide identification of where the other bombers are, and they're still missing, and potential would-be attackers again.

STEWART: There's been so much information floating out there as this investigation continues. I want to run one theory by you, the one that questions whether the July 7 bombers actually intended to die. Apparently they had bought round-trip train tickets, they paid for long-term parking, and they didn't leave suicide notes or any sort of taped messages. What's your take?

EMERSON: Well, it's an interesting debate, and I think they need to find out. On the other hand, I'm not reassured, as some people are, by the notion that somehow, if they weren't suicide bombers, we can be less concerned. It's if they're still willing to kill, but unwilling to take their own life, I'm still very worried.

So, in fact, the likelihood is if they were not suicide bombings, there are more of them out there. So the debate still needs to take place in a forensically - I think they'll pretty much solve it in the end.

STEWART: The investigation has taken them from Leeds to London to Birmingham. We are talking 125, 200 miles. How widespread is this network we are talking about?

EMERSON: Well, the network actually goes as far as France, Pakistan, Egypt, the United States. This is a global jihad village today. And with the Internet, with the spread of Wahhabism, with radical Islamic clerics around the world, with them having, you know, status as local, as citizen s(INAUDIBLE), as citizens in Britain or the United States, that is, they're not foreigners, it's not a problem that can be contained to the Middle East or to large cities. It's all over the United States, for that matter, as John Brennan stated, at least specifically with (INAUDIBLE) reference to New York today.

STEWART: And are you talking about, when you say it's homegrown, the concern that we should have, should that be about cells, or should that be about recruiting?

EMERSON: It's about both, because in the end, before you have a cell, you have to be recruited. And what we have seen, with respect to terrorists, is that first they are recruited and indoctrinated with this militant Islamic theology, and then it's a small step toward then taking that plunge into jihad, willing to kill or be killed (INAUDIBLE) for a larger cause of advancing Islamic extremism.

That theology is rampant around the world and rampant in the United States. The only problem is, you can't contain them any longer, with the Internet and with the fact that people have constitutional right to say what they believe.

STEWART: Steve Emerson, head of the Investigative Project on Terrorism and the author of "American Jihad: The Terrorists Living Among Us." Thanks so much for joining us.

EMERSON: Sure.

STEWART: Taking a turn from the more serious news of the day, we'll take a walk on the wild side, the fashion show to end all fashion show. That was (INAUDIBLE) nice moves.

Oddball's ahead.

And would those models be brave enough to walk down this? Plans unveiled today for the Windy City to build the new tallest building in the world.

(COMMERCIAL BREAK)

STEWART: We're back now. We pause the Countdown news caravan to tour the day's sillier offerings. It's bad boys midair, fashion on the edge, and the shocking video that is just too good to miss.

Let's play Oddball.

Well, Tuesday's majestic return to flight of the space shuttle "Discovery" captured the imagination of a nation and the attention of the American news media, which may explain why just about everybody missed Monday's gravity-defying feat. Puffy can fly. That's rapper producer Clodera (ph), now flying guy, Sean P. Diddy Colmes, arriving via jetpack at the MTV VMA nomination festivities.

Regarding his entrance, the player in midair said, "I like to do it big. If I'm going to do it, I am going to do it big all the way." Of course, like most everything Diddy does, he sampled this stunt from Mary Poppins.

Speaking of gravity defiance, Target, or rather, Target, is turning the fashion world on its head, or at least making the fashion world turn its collective under fed heads. This morning, it was billed as a vertical fashion show when a troop of world-class athletes moonlighting as models rappelled down a building in New York City's Rockefeller Plaza, touting Target's new fall line. Either that, or they were trying to get a really good spot to see Katie Matanal (ph) tomorrow morning.

Mosimo (ph) is Isaac Mizrahi. Those are the designer people were part of the sidewalk sale. Target says they, quote, "want to inspire our guests with our fall collection and want them to have fun with fashion."

They also say, All the fashion seen here is perfect for the window washer or cat burglar in your family. We made that part up.

And it's been a big week for TASERs. First, the company that manufactures the stun gun for police use announced a major campaign to begin selling these bad boys to real live people. Then news today that a TASER was used to apprehend one of the suspects in the London bombing. Naturally, our British partners, ITN, decided they'd better shock one of their own guys to show us what it feels like.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (screaming)

(END VIDEO CLIP)

STEWART: OK. Clearly, they've never seen this tape.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: (screaming)

It hurts.

(END VIDEO CLIP)

STEWART: Never gets old.

The headlines hurting Robert Novak today. Remember him? He's the guy that he outed the CIA officer, Valerie Plame. Well, word came today he was warned by the CIA that he shouldn't name her. That happened on two separate occasions.

And the other Capitol Hill gossip, who's hot and who's not. D.C.'s top 50 list of beauties is out. We'll tell you who the hottest elected official in all the land.

Those stories ahead.

But first, here are Countdown's top three newsmakers of this day.

Number three, an unnamed German man, pulled over on the Autobahn for doing six kilometers an hour in his electric wheelchair. The 80-year-old man was spotted by other motorists (INAUDIBLE) the shoulder of this dangerous German highway. Police rounded up the elderly rascal, took him back to the retirement home.

Number two, Gladys Gaffoor of Trinidad, who said she's almost died after getting food poisoning at a government-run hospital. Well, the irony here is that Gladys is the head of the commission investigating Trinidad's health care sector. (INAUDIBLE) Gladys (INAUDIBLE) at the hospital.

And number one, you may remember the Kansas student accused of intentionally vomiting on his Spanish teacher. Well, today the 17-year-old was found guilty of battery with barf, and the judge got a little creative with the sentence. The teen faces four months of having to clean the puke out of the back of cop cars. So if you're looking for a place to get arrested and honk in the back of a cruiser, the town is (INAUDIBLE) Kansas.

(COMMERCIAL BREAK)

STEWART: Since, the CIA leak probe began a year-and-a-half ago, one question is obvious: Who leaked the name of a CIA covert operative? That's Valerie Plame. Not so obvious, whether the special prosecutor would ever be satisfied answering only that question.

Our third story on the Countdown tonight: The what and the who of the CIA leak investigation apparently is broader than anyone knew. "The Washington Post" reports that special prosecutor Patrick Fitzgerald has interviewed a wider range of administration officials than previously known, including former CIA director George Tenet, former deputy director John McLaughlin, and former CIA spokesman Bill Harlow, as well as State Department officials.

And Fitzgerald is not just interested in who leaked Valerie Plame's identity, he is interested in how the Bush administration shifted blame to the CIA for the claim that started the controversy in the first place, those 16 words in the president's 2003 State of the Union address, that Iraq tried to acquire uranium from Africa.

And "The Washington Post" report makes one other key element quite clear. According to its sources, former CIA spokesman Bill Harlow confirmed that Valerie Plame was an undercover officer, and he did this before Robert Novak outed Plame on July 14, 2003. While Harlow did not describe Plame as undercover, he did tell Novak not to use her name.

Walter Pincus and Jim VandeHei of "The Washington Post" have been at the forefront of the reporting on this leak investigation, and we're joined now by Jim VandeHei, the White House correspondent for "The Post." Jim, good evening to you. These ex-officials from the CIA that Fitzgerald's interviewed - what seems to be the main message there?

JIM VANDEHEI, "WASHINGTON POST": Clearly, he was looking, at least early on in the investigation, at a much larger damage control effort by the White House to protect President Bush from any blame for including those now famous 16 words in the State of the Union address. Basically, he's trying to figure out how that leak, the leak of that CIA operative's name, fit into this larger effort and what role the CIA played in this and what role the White House did.

STEWART: There have been so many twists and turns in this case, including someone who apparently approached Robert Novak on the street about this. Explain to people this part of the story.

VANDEHEI: It's truly one of the most bizarre things I've heard so far in reporting out the story. Apparently, according to Joe Wilson, who told us on the record that a stranger had approached Bob Novak before he published his column and had asked about this uranium charge and about what led to those 16 words you mentioned before. And Novak said, you know, that, basically, Joe Wilson's wife had sent him on this mission and that she was CIA.

And it turns out that this person was friends with Joe Wilson, went back and told Joe Wilson about the conversation. What we learned from our reporting is that this stranger has been called before the grand jury and has talked to the prosecutors about his conversation with Novak.

STEWART: Now, if Robert Novak was not told point-black that Valerie Plame is undercover, is it still a problem for him that he leaked her name?

VANDEHEI: It's not a problem for him legally. The leak investigation centers on did any government officials, because if you look at the law, the law says that any government official knowingly leaked the name of a covert CIA operative, knowing that the government was trying to protect the identity. I think what we've learned from the CIA spokesman, who told us on the record for the first time, was that he did warn Bob Novak. Before, we had heard - I think Bob Novak even wrote a column about it in October of 2003 - oh, that he was told - that he did not get any signals that it could put her in harm's way or that he should not report her name. And what Harlow told us was that he said in as certain terms as he could, given that he cannot himself out a CIA operative, warned Bob Novak not to use her name.

STEWART: And so long, all the heat was on Karl Rove in terms of this case.

VANDEHEI: Right.

STEWART: Haven't heard his name in a few days. Why?

VANDEHEI: Right. I think that there's many different aspects of this investigation. And truth be told, nobody knows, except for Fitzgerald, who's the special prosecutor in this case, and people around him, what direction he's going. So most of the reporting, most of our reporting, is based on talking to people who've either gone before the grand jury, talked to prosecutors or represented people in those two instances. So what we can glean is what kind of questions they're being asked, what kind of testimony they're being asked to give. So I think what you're seeing in this story are just different aspects of it being explored.

STEWART: Building blocks and building blocks. Jim VandeHei, White House correspondent for "The Washington Post," thanks for helping us out tonight.

VANDEHEI: Yes. Have a good evening.

STEWART: You, too.

And further evidence today that the public has doubts about whether the Bush administration was honest in its run-up to the war in Iraq. For the first time, a majority of Americans, 51 percent, say the Bush administration deliberately misled them about whether Saddam Hussein had weapons of mass destruction.

But the Iraq war has often produced conflicting poll numbers because it generates mixed emotions. Now a veteran of the Iraq war has come home and is asking his community to elect him to Congress. We're joined now by Countdown's Monica Novotny. Hi, Monica.

MONICA NOVOTNY, Countdown: Hi, there, Alison. A special election next week in Ohio will fill the congressional seat vacated by current U.S. trade representative Rob Portman. And hoping to succeed him, a Marine reservist who wants to become the first Iraq war veteran in Congress.

(BEGIN VIDEOTAPE)

PAUL HACKETT, OHIO DEMOCRATIC CONGRESSIONAL CANDIDATE: I'm running for Congress. I need your vote August 2.

NOVOTNY (voice-over): You're watching one man's journey from a war zone to a political battlefield, Paul Hackett, the first veteran of the Iraq war to run for Congress, a Democrat fighting for every vote in a deep red Ohio district, grabbing the attention of local Republicans by placing his war experience and the president front and center in his campaign ads.

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: There is no higher calling than service in our armed forces.

HACKETT: Hey, look, in the military, we were taught maneuver warfare, and we make the best out of what we're given.

NOVOTNY: This 43-year-old lawyer, husband and father of three disagreed with the president's decision to go to war but volunteered last year, serving in Iraq as a civil affairs officer with the 1st Marine Division.

HACKETT: It's my country, Democrat or Republican. And I just - I saw it as the best way that I could serve.

NOVOTNY: His opponent, Republican frontrunner Jean Schmidt, a former state representative who is not convinced that time served in battle can compare to experience at home.

JEAN SCHMIDT, OHIO REPUBLICAN CONGRESSIONAL CANDIDATE: Everything's local. Of course, it's more important here. The issues that the people have are more important to those individuals than anything outside of that region.

HACKETT: I'm more than just a reserve Marine. Look, there's literally millions of men and women who've done what I've done in Iraq. But I'm a little bit more than that, and I think that I bring a fresh, honest, direct approach to the political debate today.

NOVOTNY (on camera): While Hackett may be the one gaining national attention this week, Republicans still like their odds. In fact, it's been more than 20 years since a Democrat filled this seat. But Hackett says he's not your typical Democrat.

HACKETT: I'm very conservative on some issues. I own a number of guns that I enjoy doing everything from hunting to skeet shooting to target practice. And I think the Democratic Party's wrong on it.

NOVOTNY (voice-over): Hackett, abortion rights advocate, says he's for limited government and is strong on national defense. Schmidt is anti-abortion, believes the 10 Commandments should be displayed in area schools, and says she and her opponent clash most clearly on one issue.

SCHMIDT: I support our president, as does this district. My opponent does not.

HACKETT: Didn't vote for him, willing to die for him.

NOVOTNY: The race has Republicans talking.

UNIDENTIFIED FEMALE: My father was a veteran of World War II. I'm not sure I would have voted for him to go to Congress. I'm seeing apples and oranges here.

UNIDENTIFIED FEMALE: Mr. Hackett is new, but he's an Iraq veteran, which I think makes a difference, too. A lot of us are impressed with that.

NOVOTNY: Another battle between blue and red where the issues aren't black and white.

(END VIDEOTAPE)

A spokesperson for Schmidt says their polling has the Republican ahead by 17 points and that one out of five voters remains undecided in that district. Now, the race is attracting high-profile support, with Schmidt receiving campaign donations from House Speaker Dennis Hastert and Majority Leader Tom DeLay, while James Carville and former senator Max Cleland of Georgia stumped for Hackett in recent weeks - Alison.

STEWART: And what will Mr. Hackett do if he does not become the first Iraq war vet in Congress?

NOVOTNY: You know, it's interesting. He says he really is this Washington outsider, so he - he hasn't had political ambitions his whole life. He says if this doesn't happen, he'll move on. He'll go back to private practice. He is a lawyer. He says he'll go on vacation with his family, and then he has plans to go back to Iraq with his...

STEWART: He's actually going to go back to Iraq?

NOVOTNY: He says he'll go back year if he's not elected.

STEWART: Monica Novotny, thanks so much. Great report. Appreciate it.

Burning questions from the nation's capital tonight. Like, Is your representative representing? Is your senator a stud? Coming up, we'll kick off the Beltway's top 50 hotties, elected and otherwise.

And reaching for the skies. The race for the world's tallest building now centers on this planned skyscraper in the city of Chicago. And guess who's not happy about it? The Donald.

(COMMERCIAL BREAK)

STEWART: A little history lesson. A hundred and twenty years ago, the world's first skyscraper was built in Chicago. OK, so it was only nine stories tall. The name didn't exactly sing, but the Home Insurance building gave birth to more than a century of skyscraper wars. In the late '20s and early '30s, The battle for the tallest building bragging rights centered on New York. The Chrysler building trumped the Bank of Manhattan by keeping it's signature steel top a secret until its unveiling, only to have the crown snapped away just two years later by the Empire State building.

In our number two story on the Countdown tonight: A new crop of towers are now clamoring to throw Taiwan out of the current top spot. Among them, as our correspondent, Kevin Tibbles reports, a high-rise in the city that started it all.

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KEVIN TIBBLES, NBC CORRESPONDENT (voice-over): In the city already home to the nation's tallest building, the Sears tower, it may soon be time to look up, look way up.

MERT SAHINOGLU, REAL ESTATE BROKER: The skyline is there for us to create. We cannot just remain constant and happy with the past. We have to grow and we have to develop..

TIBBLES: The new high-rise, dubbed the Fordham spire, would twist into the skyline, some say, like an over-sized birthday candle, a 115-story tower with a glistening steel spire that would spike at over 2,000 feet, 400 feet taller than the current world's tallest building in Taiwan.

UNIDENTIFIED MALE: That would be enormous.

UNIDENTIFIED FEMALE: No, I don't like that at all.

UNIDENTIFIED MALE: I think it's very artistic, for one thing, but I think that it's going to be just a little too artistic for Chicago.

TIBBLES: A new shot in the bragging rights war. The Fordham spire would surpass the planned Freedom tower in New York and dwarf Donald Trump's new building already under construction in Chicago. Not surprisingly, the Donald is not amused.

SAHINOGLU: I believe that bigger and better is better, and if Mr.

Trump is (INAUDIBLE) he should build a bigger one.

TIBBLES: Chicago architect Frank Lloyd Wright proposed a building that was a mile high. That dream was never fulfilled. This new tower, if built, would be close to a half mile high and once again prove that in Chicago, size does matter. Kevin Tibbles, NBC News, Chicago.

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STEWART: We descend from on high now to those stories of celebrity news and gossip we call "Keeping Tabs." O.J. breaking the law, a federal judge ordering the former football star to fork over $25,000 in fines, plus legal fees, for stealing satellite TV signals. Authorities recovered several illegal devices used to unscramble the signals. They got them from Simpson's Miami home during a 2001 raid. A DirecTV spokesman coined (ph) the evidence in the civil suit, quote, "overwhelming."

Simpson's attorney plans to appeal the summary judgment, that being one made by a judge, no jury required. I guess O.J. just wanted a chance to use a line he'd been rehearsing: If the signal's legit, you must acquit. Rest in peace, Johnnie.

There are no signals to unscramble here. Burnt Sienna - that girl's moved on. Just a week after calling it quits with her philandering fiance, Jude Law, the actress and former model has been caught canoodling with a former love, "Lord of the Rings" star Orlando Bloom. The two were spotted together at a polo match in Windsor, England, over the weekend, one witness telling British tabloid "The Sun," quote, "They spent ages cuddling, kissing and gazing at each over. There was real chemistry."

Decidedly bad chemistry for former NBA star and perpetual C-lister Dennis Rodman, and this while the man was just trying to do a little bit of good. A mere four days into the eight-day 3,000-mile Bull Run, a charity rally, Rodman was pulled over twice by Colorado police for speeding. In a race.

Not so bad until you consider that in between the two citations, he was allegedly involved in an accident and apparently stole a hat, a spokesman for the celebrity saying the accident was minor, a car hired by the sponsor to photograph the race got too close. And for the hat, that apparently was just a misunderstanding, Rodman saying, quote, "The lady gave it to me." He then added, "Is everyone picking on me today?" That's it, Dennis.

Beauty and the bureaucracy. It's been a hot summer thus far in the nation's capital. Find out which pretty politicos and lovely legislators are giving off all that heat. Washington, D.C.'s 50 most beautiful people is the subject is next.

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STEWART: It is as true as it is cliche, Washington, D.C., is Hollywood for ugly people. Well, there are exceptions, occasionally, when Hollywood makes a call. Most recent visit yesterday by Oscar-nominated actress and Latina lovely Salma Hayek. But it's not like anyone who actually works in D.C. is topping any 50 most beautiful people lists.

Our number one story on the Countdown tonight: My bad, Washington, D.C., newspaper "The Hill" today releasing its 50 most beautiful list. Hotties on the Hill. Who knew?

Apparently, the people who work with Hanz Heinrichs in California congressman Buck McKeon's (ph) office. This 23-year-old aide is number five on the list. Number four, Katelin Dial. The coat-check chick of Bungawait (ph) has nothing on this Senate Republican cloakroom gal. Olson twins, no thanks. This lady hangs with the Bushes. Bring in the heat all the way from Miami. Miguel Mendoza - Hello! - legislative correspondent for Florida congressman Mario Diaz-Balart. What, no elected officials? Number two, the distinguished senator from Illinois, Barack Obama. I'd sign on for this one! When "The Hill" told him he was number two, his response was, quote, "Who's number one?" That'd be beauty queen turned research assistant Kate Michael. This Georgia peach turned in her crown to work on the Senate Health, Education, Labor and Pensions Committee. Now, that is hot!

For reasoned analysis in these irrational times, we turn now to television personality and hotness wonk Mo Rocca. Hi, Mo.

MO ROCCA, TELEVISION PERSONALITY: Hi, Alison. Kate Michael is hot. She was Miss Gwinnett County in Georgia. But Hanz Heinrichs looks too much like a role from "The Sound of Music."

STEWART: I want to see him in some Lederhosen now!

ROCCA: Yes.

STEWART: OK. These 50 people on this list - let's going to only focus on the top 10. Only one of those people is actually connected to the Democratic Party. So does this mean Republicans are hotter in 2005?

ROCCA: Well, hot Republicans go to Washington. Hot Democrats star on network sitcoms and hour-long dramas. It's just a fact. The issue here for Democrats is that hot Republicans are taking over Washington. They control two branches of the government. And look what's happening at the Supreme Court. I mean, John Roberts is a good-looking guy. Now, John Paul Stevens is a liberal and is good-looking in sort of an older, distinguished way, but it's like comparing Jeff Bridges and Lloyd Bridges. I mean, it's not that much of a competition there.

STEWART: And then there's always poor Bo Bridges.

ROCCA: Well, exactly. He's an independent running somewhere.

(LAUGHTER)

STEWART: So does hotness equal power, if the Republicans are hotter?

ROCCA: I think it does equal power. I mean, you know, it's important to note that not a lot of these hot people are elected officials because to be elected in Washington, you have to be ruthless and have a modicum of brains. It's what do you with that elected power that matters. And in most cases, you hire hot staffers. And I think constituents are very happy about that.

I mean, some of these staffers are piping hot. I mean, they could be strippers at Scores (ph), to be quite frank about it. None of them are strippers, as far as I know, and that wouldn't be right because tax-paying constituents shouldn't have to tip their representative's staffers, you know, $100 for a lap dance. I mean, they're already paying them enough in taxes, I think.

STEWART: OK, so we talked about the elected officials a little bit. Do people just not - there aren't that many elected officials on this list. Do people not vote for pretty?

ROCCA: Look, these elected officials don't have much time to be hanging out in gyms, I guess. But no, I don't think that there are - there are some elected officials on this list, though. You pointed out Barack Obama, and there are others.

STEWART: All right. Let's - there's one we've been trying to figure out. Some of the ladies in the office were all sitting around. Oregon senator Gordon Smith. Could you walk throughout hotness of this man for me and explain that to me?

ROCCA: Well, hello! Gordon Smith is only the hottest U.S. senator from Oregon! I mean, come on. Compare him to Senator Ron Wyden. I mean, with all due respect, it's like Senator Wyden, if he weren't so wide in you know where, he might have made the top 200, not - I mean, let's face it. Like, Senator Wideload, maybe you could spend more time on the Oregon Trail because right now, you're bigger than Lewis and Clark combined.

I mean, I don't want to be rude about it, but Senator Gordon Smith is super-hot. I mean, he's got this whole Wink Martindale (ph) thing going on. It's, like, tick (ph), tack (ph), don't you want to know who he's canoodling with?

STEWART: I love it when...

ROCCA: And the answer is his wife, Sharon, by the way. Yes, he looks a little bit like Chuck Woolery, too. It's - and you know, it's true. He'll be up for reelection in two and two, in four years. It's true.

STEWART: Any glaring omission? Who do you think should have been on this list?

ROCCA: Mary Landrieu is luscious. And she's hot. I know her, so I don't think it's appropriate for me to say that. It's kind of like talking about your sister. It's a little bit creepy. Blanche Lincoln is someone I don't know, but is super-duper hot. She's the hottest person on the Senate Finance Committee. And during their hearings, she's known to put on various sort of sexy librarian glasses and take out a big adding machine and sort of very coyly punch numbers, adding, subtracting. She's got a lot of money in front of her. You know, if you please her, she'll appropriate you. If not, she'll withhold. She's really got it going on.

And if you're bored tonight, Google images of her. And there's a wonderful shot of her receiving a meritorious service award from the American Soybean Association, and she looks amazing in it.

STEWART: Soybeans?

ROCCA: Yes. I have to issue a quick apology...

STEWART: (INAUDIBLE) out of time.

ROCCA:... to Senator Ron Wyden. I really don't know what he looks like.

STEWART: Television personality and Countdown cultural visionary Mo Rocca. As always, it's a pleasure.

ROCCA: Thank you.

STEWART: That's Countdown. I'm Alison Stewart, filling in for Keith Olbermann. It's time to find out what THE SITUATION" is with Tucker Carlson. I'm going to make Barbara Eden proud.

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