'Countdown with Keith Olbermann' for August 31

Video via YouTube: Worst Persons

Guests: John Dean, Richard Wolffe

CHRIS MATTHEWS, MSNBC HOST: A wonderful way to spend your life. My father because doctor. The best kind of politician. Thank you. Thank you for joining us. Join us again Tuesday night at 5:00 and 7:00 eastern for more "Hardball."

KEITH OLBERMANN, MSNBC HOST (voice-over): Which of these stories will you be talking about tomorrow? Resignation day? Senator Larry Craig announces he will announce his future tomorrow. The Associated Press and the Idaho Statesman saying he will resign. This, while a recanted accusation by a congressional aide against the Senator is presented anew by the alleged victim's attorney.

And there was one farewell today.

(BEGIN VIDEO CLIP)

TONY SNOW, WHITE HOUSE PRESS SECRETARY: This job has been a dream for me and a blast.

(END VIDEO CLIP)

OLBERMANN: Press secretary Snow will retire in two week's time. All insists is for monetary, not health reasons. And all give the hope he lives long and prospers.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: It's been a joy to watch him spar with you.

(END VIDEO CLIP)

OLBERMANN: Next and good luck to you, Mr. Perino. Chris Cillizza on the negotiations to get Senator Craig to go. They have apparently no longer been staled.

Dana Milbank on the White House is losing in the reported resignation.

And John Dean on a bad week full of farewells for the president.

And full of farewells, too, is London.

(BEGIN VIDEO CLIP)

PRINCE HARRY: She was the best mother in the world. We would say that, wouldn't we? But we miss her.

(END VIDEO CLIP)

OLBERMANN: From best persons to worst persons, Tom Delay picks his side in the great debate consuming the right - am I wearing a toupee.

And back from the popular demand from the transcript of the undercover officer's police report.

(BEGIN VIDEO CLIP)

DAVID KARSNIA, POLICE SERGEANT: It was Tuesday June 11, sunny and warm. I was assigned to the vice squad working out of the men's room out at the airport. My boss is Chief Dolan (ph). My name is Karsnia. I am a cop, a cop in a toilet.

(END VIDEO CLIP)

OLBERMANN: All that and the breaking news of Larry Craig's reported resignation on "Countdown."

(BEGIN VIDEO CLIP)

SEN. LARRY CRAIG, (R), IDAHO: You are a naughty boy.

(END VIDEO CLIP):

OLBERMANN: Good evening. If his arrest on lewd conduct did not prove to be the undoing of Republican Senator Larry Craig, perhaps the renewed allegation that 25 years ago, he had sex with a teen congressional page did. Our fifth story in the "Countdown," breaking news, Senator Craig's office saying he will address his future tomorrow. The Associated Press says that future is in the past. He will announce his resignation in Idaho. The Idaho Statesman newspaper with its own report that he will end turmoil by leaving office. And now NBC News reporting that he will announce his resignation in Boise.

All this after five days of public and private pressure of the most intense kind following the disclosure of his arrest in June in an undercover vice operation.

Mr. Craig apparently prepared to go. Republican officials saying that the Senator will announce future plans at 10:30 a.m. Mountain Time including his intention, while resigning, to stay in the Senate for another month, through September 30.

The Minneapolis police officer having alleged that the marriage, belligerent, far-right Republican had made a sexual advance in a bathroom in the Minneapolis-St. Paul airport. That allegation only the beginning of his problems. The lawyer of an Alexandria teen, while in 1982 while he was serving as a page, helped set off a sex scandal before recanting his charges. The lawyer saying he believes his client had been truthful in at least one respect of having had sex with then Congressman Larry Craig. His colleague eager to refer to him in the past tense.

The Republican leader of the Senate, Mitch McConnell, calling Craig's conduct unforgivable in an interview.

Time to all in Chris Cillizza who blogs The Fix for the WashingtonPost.com.

Chris, good evening.

CHRIS CILLIZZA, THE FIX BLOG, WASHINGTON POWER: Hi, Keith.

OLBERMANN: Is there a certain inevitability for the resignation?

Have we reached a critical mass for the Republican Party?

CILLIZZA: You know, I think we had to be honest, as soon as I heard and it hit, I sort of started a watch in my mine about how long he could survive. It was a question of if, not when. I am surprised that he has lasted as long as he has. This is a unique Washington scandal. And it happens in the summer when the news media is not doing much else that encapsulates and drives all coverage. Larry was at the center of that storm. His press conference maybe made it worse. We were looking at a resignation. He said in the press conference I want to announce next month whether I will retire or run again. That was never an option.

OLBERMANN: Did the 198w story, reappearing from South Carolina, fix into this because the prospect then arose that we might be dealing with not just evidence of an isolated incident but something that would stretch back literally a quarter century?

CILLIZZA: You mentioned Mark Foley and I was going mention him. That may be more problematic. The Republican leadership in the Senate knows they didn't handle the Foley thing as well as they should. You saw Mitch McConnell and John McCain get out front and say he needs to go. I believe this is an issue of Larry Craig being quietly pushed out. Because he was not ready to jump. We had reports that the RNC, the national party committee was going to put out a statement calling on him to resign. The Republican Party knew we need to act and quickly or the brand that is already very tarnished by the war in Iraq and President Bushes reputation is going get worse.

OLBERMANN: The other part over this that does not make sense, the expectation from Senator Craig in all three of these reports that the resignation will not be effective until September 30. Can he stick around that long? Would he not be advised to dress up as a pinata?

CILLIZZA: I would not pretend to know what his mind is but I do not think that is a possible. The longer he is there - they are coming back after Labor Day. Larry Craig voting every day is a nightmare scenario. They want him out of sight, out of mind as soon as humanly possible. I know he wants to set this time line. I am very skeptical that he will be able to do that.

OLBERMANN: And slightly larger context we hear that John Warner is going end his 30 years it will have been in the Senate. Does this set up a possibility of yet another one of these hair breath battles for the Senate?

CILLIZZA: You know, to be honest this sets up the likelihood that Democrats are looking at a good election in 2008. They started out with the 22 seats up for Republicans and 12 seats up for Democrats. This is not a good election cycle. The best Republicans can do is limit their losses at his point.

OLBERMANN: Chris Cillizza of The Fix at WashingtonPost.com. Thank you. We thought we had the weekend off but no luck there.

CILLIZZA: We'll keep working. Thanks, Keith.

OLBERMANN: Thanks, Chris.

Let's get a little bigger picture from Chris's colleague, Dana

Milbank, national political reporter of the Washington Post

Dana, good evening to you.

DANA MILBANK, NATIONAL POLITICAL REPORT, WASHINGTON POST: Good evening, Keith.

OLBERMANN: Is there another dark cloud in this silver lining that the GOP would see in lancing the Craig boil? Would not some people say what about David Vitters and those prostitutes? How is that less sleazy than Larry Craig?

MILBANK: Well, David Vitter decided that his particular offense was going involve women and the notion of girls in New Orleans plays better than boys in Boise. That is why that one died down quickly. We can talk about the media but it was the colleagues that did that. Once they heard arrest and men's room they said whatever the details it will not work.

OLBERMANN: Is there something self-defeating about getting Republicans getting Craig to quit and throwing him out here over a purported same-sex encounter? If the right did not devote some much emergency into injecting shame and criminality into sexual orientation, they might not have been roasting over this spit all week.

MILBANK: They probably would not be having the numbers that they do have in the Congress if not for the religious conservative. It's a cost benefit analyst. The decision is they are going to dance with the ones that brought them.

OLBERMANN: The assumption is Senator Craig has not been honest with himself about his sexual proclivities. I am not saying that the media has clean hands. We have mocked. Is there anybody in Washington worried about Larry Craig, confused human being?

MILBANK: Very few. And this is not Washington at its finest. This is a cold and bloodless town where people are not interested in human beings but their majorities and numbers. Allen Simpson, the old former Republican Senator, said one day you are toast of the town and the next day you are toast. That's just how it is.

OLBERMANN: Dana, stand by a second. We will return to the Craig story soon but I want to ask about a resignation that has already happened. The news is broke than Tony Snow will no longer be breaking news. He's stepping down as press secretary and sooner rather than the later Mr. Snow hinted at earlier this month.

(BEGIN VIDEO CLIP)

BUSH: Tony Snow informed me he is leaving. And I sadly accept his desire to leave the White House. And he will do so on September 14. It's been a joy to watch him spare with you. He is smart and capable and witty. He is able to talk about issues in a way that the American people can understand. And so, I accept. I love you. And I wish you all the best.

(END VIDEO CLIP)

OLBERMANN: And I love you from the president might lead one to think that Mr. Snow's battle has precipitated the resignation. No so, says the press secretary. He says he cannot support his family on a salary of $168,000.

(BEGIN VIDEO CLIP)

SNOW: I ran out of money. A lot of people said you make all this money. I made more money when I was in my previous career. And I made the decision not to say to my wife and kids, we finally saved up this money and you will have to give it away so daddy can work at the White House. We took out a loan to work here and that loan is now gone.

(END VIDEO CLIP)

OLBERMANN: Back to Dana Milbank. We can talk at another time about an idea of people having to take out loans to work for the federal government. But how huge will the loss of Tony Snow be to this White House?

MILBANK: One bit of good news for the White House is things are so slow ebb you could bring in Larry Craig to replace Tony Snow and things would not get worse based on where you are at the polls. Tony is about the best there is in this business and we wish him well making large speakers' fees. But the popularity has gone down the low 30s and high 20s. It is not the messenger, it's the message, is the problem.

OLBERMANN: In terms of the perception, if not necessarily poll numbers - maybe more importantly - I have never seen poll numbers on Tony Snow. But they probably rival or exceed anybody in the administration. You got have some of that or the administration would collapse. Why do they get that from if Tony Snow is gone?

MILBANK: You cannot really replace that. He had that rare combination. He was a showman but also highly regarded by people in the Press Corps. He is, in relation to earlier discussion, a fairly decent man in Washington and that is why everybody is rooting for him to make as much money as he can.

OLBERMANN: And spend it in good health as the old joke goes and meant very seriously here. A last question about your name sake the incoming press secretary, Dana Perino. She got herself into trouble about the misstatements in the White House use of RNCE e-mail accounts. Will she find herself overmatched?

MILBANK: She could. But then so would anybody. What she has a very good relationship off camera and stage with the press known as a straight shooter. She has a lot of good will built up. That will take her a long way. Who would you rather watch, her or Ari Fleischer?

OLBERMANN: OK. Dana Milbank of MSNBC and the Washington Post. And tonight, the memorable phrase boys in Boise. Thanks, Dana. Have a good weekend.

MILBANK: Thanks, Keith.

OLBERMANN: Back to Larry Craig. He gets the final word. Detective Dave Karsnia got the first word. Our recreation of the arrest as reported in the undercover officer's own report, reenacted by the "Countdown" players, now run on German television. On YouTube, with a special surprise Larry Craig naughty boy feature that will leave you flushed with excitement.

It has been an exciting and unbelievable week in Washington. The Alberto Gonzales resignation was the beginning of this week.

John Dean next to help put the White House and the Republicans in perspective and in connecting the dots from a disgraced Idaho Senator on the way out to a very troubled American president.

And theirs the war debate or lack thereof. The president, his top general on the ground forecasting there will be no changes in the surge when we get the official report in a few weeks.

That and more on Larry Craig. You are watching "Countdown" on MSNBC.

(COMMERCIAL BREAK)

OLBERMANN: One week ago, Attorney General Alberto Gonzales ran the Justice Department. White House Deputy Chief of Staff Karl Rove ran the president's political operation. White House Press Secretary Tony Snow ran his communications. And Idaho Senator Larry Craig could run into any men's room he wanted without notice. Our number four story tonight, the big picture on the breaking news. NBC News confirming reports from the Associated Press and the Idaho Statesman that, at a news conference he has scheduled for tomorrow morning. Senator Craig will resign just five days after the revelation that he was arrested and pleaded guilty.

And what a difference a week makes for a president and his party. Alberto Gonzales is gone. Rove punched the clock one last time this afternoon. Mr. Snow announced this morning he is leaving next month for more money. And Senator Craig sticking around until September 30, but not leaving before leaving a stain on his party. All of which leaves President Bush with a White House staffed by people whom he did not even consider first choice material for their posts.

David Vitter, apologized for having his phone number show up in escort

services records and Senator Ted Stevens getting an unwelcome visit and

inspection from the FBI,

Joining us now, a veteran of governmental bad weeks, former Nixon White House Counsel John Dean, author of "Worse than Watergate" and the upcoming book "Broken Government."

Welcome and thank you for your time.

JOHN DEAN, FORMER NIXON WHITE HOUSE COUNSEL & AUTHOR: Good evening, Keith.

OLBERMANN: If you look at this from way outside, you might say, well, it is an Idaho Senator. What practical impact could it have on a White House, even a White House in crisis? How would you answer that logical question, from your perspective?

DEAN: Well, I think what actually - if it happens tomorrow and he resigns that will help the White House and keep this problem from spilling over on to the party and causing more problems. The Warner decision to not run for reelection probably had more practical effect, short term, on the White House, given his independence and his strong credentials on defense and his current position on the war than, say, the Craig vote was very solid and looks like it will be replaced by a similar vote.

OLBERMANN: Let's talk about Warner - 6 percent of those 49 Republican Senators have pleaded guilty or apologized or had their homes searched with connection of a crime. Two of those seats among the 22 must defend next year. Do we have something now of a lame duck Republican Senate? How does it affect the remainder of Mr. Bush's tenure?

DEAN: It does - it is a lame duck in a very classic kind of way. But it also is not quite so lame as to be crippled and unable to do anything. That is because the Democrats still don't have that magic number of 60 votes with which they can block a filibuster. And the Republicans have been using that or the threat of it to tie up the Senate.

OLBERMANN: The Justice Department is investigating the ex-attorney general, Alberto Gonzales. The GAO felt the need to get the Iraq report out in advance of whatever the White House might do to alter it? In these things are we seeing a glimmer of reemergence of checks and balances?

DEAN: I think it is a glimmer but a glimmer of the more traditional type of oversight. It does not come close to the kind of oversight that was partisan during the time that Clinton was in the White House and the Democrats were helpless when the Republicans just went with no-holds bars with Clinton and beat up on him and used their power in an abuse manner. That hasn't happen. It's a rather legitimate oversight that's going on. It has not brought back the balance and separation of powers as fully contemplated by the Constitution.

OLBERMANN: Let me again, with Senator Craig, John. You have been in those crises, what-in-the-world-do-we-do-next meetings inside the White House. Are there phone calls going be made to Larry Craig to say what in the world do you mean you will resign, but you are going stay around and be in the Senator until September 30? Is that one of the least likely political predictions you have heard?

DEAN It is - he is a man who is determined, apparently not to concede he has done anything wrong. He is fighting against the pressure of the party now. He is posturing himself. I think that will hurt a little longer. I think the White House should call and say it is over.

OLBERMANN: Is there - what in the world happens if they don't convince him? Can they drag him beneath the Mexican border to get him out of town for the last 30 days?

DEAN: I don't think that is an option. That's an old Gordon Liddy trick. We will not go there. It is a nightmare if he does not leave and leave quickly. And just get out of the headlines. It is going hurt the Republicans for a long time.

OLBERMANN: John Dean author of the soon to be released book, "Broken Government." And that was before all this happened. Have a great weekend. Thank you.

DEAN: Thank you, Keith.

OLBERMANN: And that the serious take on the end game with Senator Larry Craig. We will also dive back into the less serious start of this mess. First comes defeat, and then comes the waterworks. That is an interesting segue off the Larry Craig bathroom story, is it not? Ahead, on "Countdown."

(COMMERCIAL BREAK)

OLBERMANN: The legendary journalist Daniel Shore turn 91 years old today, breaking in with a tip to the Bronx Home News in 1928. A veteran of 23 years at CBS, six more on CNN and now 22 at NPR. He survived Nixon's enemies list and a later Republican push to black list him. And is still so unhip that he defines hip. In illustration of that, we worked congruently at CNN, and he his nightly political news cast once was scheduled to be interrupted by a breaking sports story. "I'm Daniel Shore," in intoned. "Tonight, the latest on a bombing of the Marine barracks at Beirut, but first, breaking news, the final poll of the college football season. Here is Keith Olbermann with the urgent details -

Keith?"

On that note, let's play "Oddball."

(BEGIN VIDEOTAPE)

OLBERMANN (voice-over): And we begin not in college football, but on the baseball diamond and a squeeze play gone horribly gone. Batter misses ball, runner on third gets hung up, and here comes the sprinklers. Holey cow. It is in the New York Pen league. The Tri-Valley Cats of Troy, New York were in the field. The batters were from the Vermont Lake Monsters. The runner expecting a bunt to be laid down was tagged out just before the ump called time.

]

So if you are scoring at home, or even if you're alone, the play goes two to six to eight to two.

To India, for the fourth year in a row Oddball brings you lousy distant video of the Champawa (ph) stone pelting festival. Wimpy camera guy. The stone pelting is part of the Debi Drura (ph) Festival, in which village youth divide into two groups, chucking rocks at one another, and occasionally protecting themselves with wooden shields. It is not very effective.

The violent ritual performed to celebrate victory over a great demon.

Coincidentally, many Americans were happy to see Karl Rove go as well.

(END VIDEOTAPE)

OLBERMANN: Controversy over the way forward in Iraq? What controversy over the way forward in Iraq? President Bush assures the Australian media that this country is completely behind his strategy in Iraq. And this had such an impact that a German TV network asked us to let them run it. The dramatic reenactment of the arrest of the Larry Craig arrest on the eve of his reported resignation, in the words of Officer Dave Karsnia (ph). These stories ahead, but first Countdown's top three news makers of this day.

Number three, you, Mr. and Mrs. Countdown viewer, you made us number one last night in the Nielson ratings, as they say, live plus DVR, viewers aged 25 to 54. At 8:00 p.m. Eastern, Countdown, 318,000, John Kacich (ph) filling in for Bill-O over on Fox Noise, 224,000, CNN 190,000 and Nancy "I Know What You Did Last Summer" Grace 161,000. I am just looking through this. I think so. We had high score for all of prime time. Most watched show on cable news last night. Thank you very much. Thank you, come again.

Number two, Prince Yohan Friso (ph) of the Netherlands, and his wife Princess Mabel. You know the scandal where people have been editing the Wikipedia entries about themselves or their rivals, Fox Noise, "New York Times," et cetera, yes, the prince and princess of the Netherlands did it to, to clean up her past dating history with a slain drug lord.

And number one, an unnamed man in the Rayazan (ph) region of Russia, near Moscow. Police have arrested him for stealing a piece of public property, which he went up to, dismantled and then hauled off in a truck and sold for scrap metal. The object was a five meter long bridge. Authorities fear he may come back later to get the river.

(COMMERCIAL BREAK)

OLBERMANN: To recap the night's breaking news, NBC News has now confirmed earlier reports from the Associate Press and the newspaper the "Idaho Statesman" that the embattled Senator Larry Craig will resign his office tomorrow. More on the Craig exit in Boise tomorrow ahead. But in our third story on the Countdown, the saga of three of his soon to be erstwhile Senate colleagues. They were only in Iraq for 24 hours. But as Republican Senators James Inhoff of Oklahoma, Richard Shelby of Alabama, and Mel Martinez of Florida, along with Democratic Congressman Bud Kramer of Alabama, were leaving Baghdad in their military plane last night, they were nearly hit by what were believed to be rocket propelled grenades fired from the ground 6,000 feet below them.

And yet, according to those three Republican senators, and, of course, the president, the security situation in Iraq is improving thanks to the surge. Mr. Bush spending his afternoon listening to the individual opinions of his Defense secretary and the Joint Chiefs of Staff about the war, though by all appearances his mind has long since been made up to keep the 160,000 U.S. troops in Iraq, as he explained to a Japanese television network. Quote, the surge from a military perspective, from a security perspective, is successful.

And "I believe, one, we can succeed. Two, I know it's important that we do succeed. And I'm looking forward to our people on the ground coming back and charting a way forward, so that we can continue to be in that position to succeed."

General Petraeus echoing the president's rosy vision of the surge, telling an Australian newspaper, there has been a 75 percent drop in religious and ethnic killings since last year. His assessment coming as 52 people were killed and 200 more injured a religious festival in Karbala on Wednesday. Joining us now, our own Richard Wolffe, senior White House correspondent for "Newsweek Magazine". Richard, thanks for your time tonight.

RICHARD WOLFFE, "NEWSWEEK": Good to be with you, Keith.

OLBERMANN: A 75 percent reduction in what they called ethnic violence, but the Associated Press was reporting earlier this week that Iraqi deaths have doubled from last year. Are we cherry picking numbers here, General Petraeus and President Bush?

WOLFFE: Well, he's passing on definitions of ethno-sectarian killings. It seems that the Defense Department does not include a whole series of deaths actually, things like the unidentified bodies that turn up in Baghdad at the rate of about 400 a month, Shia on Shia violence, which is a big cause of instability in the south, never mind Sunni on Sunni violence.

So there are a number of things out there that he's ignoring. I don't want to be cynical here, but Petraeus made his comments in an interview with a Rupert Murdoch owned Australian newspaper at a time when Bush's friend down under, John Howard, is in some significant political trouble, against a leader who wants to pull all of his troops out of Australia - that's all 500 Australian troops. There is a lot of politics going on here.

OLBERMANN: Who is the whole September rigmarole (ph) about the Petraeus report that isn't actually by General Petraeus? Who is this all intended for? Is it for the benefit of the American public? Who is supposed to believe this?

WOLFFE: Well, this was a policy, a strategy, not the surge but political strategy that the Bush administration signed up for when it thought it was in trouble. And it thought that the Democrats stood a real chance of turning over Republican votes, and they thought the funding might come short.

That's all changed. As you saw from the president's remarks, he - if you haven't heard it already, he wants to succeed. He believes he can succeed, in spite of what we have seen on the ground in Iraq. He thinks he can at least succeed when it comes to fighting Democrats.

This is not about the reality on the ground. This is about politics, which the president has decided.

OLBERMANN: Reality on the ground versus politics; how far can politics take you if you have three Republican senators and a Democratic Congressman and you nearly get hit by rocket propelled grenades as a C-130 leaves Baghdad last night. And afterwards Senator Inhoff says this is proof that we need to be here, proof that we know what we're doing out here.

How can anybody - so many people who almost lost their lives last night claim the security situation is improving?

WOLFFE: They have been studying at the Cheney school of half glass full ideology. I can say from my experience in Baghdad with President Bush that the thought of rocket propelled grenades flying near me did not fill me with glee. It's a desperate tactic.

OLBERMANN: And lastly here, Richard, this "Washington Post" report that, as another group of Congressional delegates, including the Democratic representative Ellen Taucher and James Moran of Virginia, and Republican Representative Porter of Nevada met with national security advisor from Iraq, Mr. al-Rubiya (ph).

He was apparently distracted from their conversation by a large wide screen TV that was playing cartoons behind their heads. When they asked him to switch that TV off, he laughed and said it was his favorite program. That is the national security advisor of Iraq. Do we now have an answer to why only three of the benchmarks have been met?

WOLFFE: It fills me with confidence. It could have been the Simpsons, in which case it's forgivable. If it's Tom and Jerry, and he's trying to get ideas, not so good. You just scratch your head and wonder. That flat screen TV was probably paid for with American tax payers money, and was probably designed for things like video confrencing. You just hope that someone in Iraq and in the Iraqi government is actually doing some work.

OLBERMANN: Maybe it Futurama, Family Guy. Those are OK too. Richard Wolffe of "Newsweek" and MSNBC, thanks for your time and have a good weekend.

WOLFFE: Any time.

OLBERMANN: Their father's new wife conspicuously absent from the events. Princes William and Harry remember Princess Diana's life. And back by popular demand, our Dragnet inspired reenactment of Senator Larry Craig's apparently career ending bathroom escapade on the eve of his apparent retirement from the Senate, ahead here on Countdown.

(COMMERCIAL BREAK)

OLBERMANN: Let's update you on the latest on the breaking news from Idaho. NBC News has confirmed that Senator Larry Craig will resign his seat tomorrow, less than six full days after news first broke of his arrest in a Minneapolis airport men's room in June. We supposedly will stay on until September 30th in the Senate, unless someone in the Republican party talks him out of what seems at the face of it as an ill advised idea.

We will revisit this in a moment. First our brief number two story tonight, ten years after here death in Paris, Diana, the people's princess, still a formidable presence. There is no official memorial near the tunnel where she died along with her boyfriend, Dodi al Fayed, in 1997. Still people left flowers near the accident site this year, as they do every year.

Today's official memorial at the Guard's Chapel in Central London attended by her former husband, of course, Prince Charles, Queen Elizabeth and other members of the royal family. Music and psalms chosen by Diana's sons, Harry and William, who were only 12 and 15 respectively when she died.

The most emotional moment coming when the younger prince remember her life and theirs.

(BEGIN VIDEO CLIP)

PRINCE HARRY OF ENGLAND, SON OF DIANA: William and I can separate life into two parts. There were those years when we were blessed with the physical presence beside us with both our mother and father. And then there are the ten years since our mother's death. When she was alive, we completely took for granted her unrivaled love of life, laughter, fun and folly.

She was our guardian, friend and protector. She never once allowed her unfaltering love for us to go unspoken or un-demonstrated. She will always be remembered for her amazing public work. But behind the media glare, to us, just two loving children, she was quite simply the best mother the world.

What is far more important to us now and into the future is that we remember our mother as she would have wished to be remembered. As she was, fun loving, generous, down to earth and entirely genuine. We both think of her every day. We speak about her and laugh together at all the memories. But put simply, she made us and so many other people happy. May this be the way that she is remembered.

(END VIDEO CLIP)

OLBERMANN: Also during the memorial, the bishop of London called for the end of the media fury that, of course, still surrounds Diana. But that controversy won't die anytime soon. A new poll finding that 25 percent of Britains believe Diana was murdered.

Speaking of controversy, just the facts, ma'am, as we reprise our Dragnet edition of the Larry Craig arrest with a special Naughty Boy bonus. That's ahead, first here are Countdown's latest list of nominees for Worst Person in the World.

The bronze to Holly Schnobrick (ph) of Lafayette, Indiana. You heard about her. She was the mother too stoned and drunk to drive, so she let her son do it. Her son being five years old. She explained she had taken dozens of prescription pills in the preceding two days, mostly Percosat, quote, for when the kids are acting wild.

Her son says he was driving just fine, but he was having trouble reaching the pedal.

Our runners up tonight, whoever is censoring the military Internet in Baghdad, evidently honked off by an op-ed written by retired John Batiste about the war on the website ThinkProgress.org. Censors blocked members of the military in Iraq from reading ThinkProgress.org. What is it we are supposedly fighting for for the Iraqis? Democrat - freedom? Freeman? That's it. We are fighting for the actor Morgan Freeman.

But our winner, disgraced former House Majority Leader Tom Delay, complaining NBC will not run the pro-death ads produced by a front group called Freedom's Watch. He says the companies policies are inconsistent with our willingness or unwillingness to run ads from the American Medical Association and the Save Darfur Coalition.

Tom, those sponsors are principally about saving innocent people, not

killing them. There's one more point. Delay's online complaint includes

this pithy observation; quote, "These are also the same network execs who

find Keith Olbermann fit for public consumption, clearly putting their

political judgment into question," unquote

Tom, I hate to break it to you, I am still involved in politics. What are you doing these days? I mean, since your own party ran you out of Congress? Also, Tom, your schpeel links to an audio clip in which a clear and compelling intellectual argument is made against me.

It is some bald guy named Mark Levin (ph) repeatedly insisting that I am wearing a toupee. Hold on a second. Pull it. All harder than that. OK, that is enough. Tom Delay, today's Worst Person in the World.

(COMMERCIAL BREAK)

OLBERMANN: Repeating the breaking news that NBC News has confirmed reports tonight that Republican Senator Larry Craig will announce his resignation tomorrow, effective September 30th. This according to unnamed officials in the state party. Meantime, the staff here first realized we might truly be onto something about Craig, when a German television network called and asked for permission to run this thing, context unknown, but somewhere somebody's introducing his version of Oddball. The next thing his German viewers will here is my voice narrating the official police report of the arrest, while the Countdown players assume the roles of Craig and Dave Karsnia, a sergeant, Minneapolis Airport Police, under cover division, toilet squad.

Our number one story tonight, gather the family and call anyone just emerging from a coma. We're going to play this one again. But first, as added value, let's watch something you may not have seen before as a short, before our feature presentation. It's the highlights of Senator Craig's in retrospect bizarre and revealing appearance with Tim Russert on "Meet the Press" on Sunday, January 24, 1999.

He is talking about the impeachment of President Clinton. He sure as hell thought he was talking about the impeachment of President Clinton. In light of recent developments, maybe not so much.

(BEGIN VIDEO CLIP)

SEN. LARRY CRAIG (R), IDAHO: I don't know where the Senate's going to be on that issue of an up or down vote on impeachment. I will tell you that the Senate certainly can bring about a censure resolution. It's a slap on the wrist. It's a bad boy, Bill Clinton. You're a naughty boy.

The American people already know that Bill Clinton is a bad boy, a naughty boy. I'm going to speak out for the citizens of my states who, in the majority, think that Bill Clinton is probably even a nasty, bad, naughty boy. The question issued now is simply this, did he lie under oath? Did he perjure himself? And did he obstruct justice.

And that's where we're trying to go now in this truth seeking process. I hope we can get there. I'm going to have the chance to decide and vote up or down on those articles.

(END VIDEO CLIP)

OLBERMANN: And now, as promised, with only the dramatic introduction and conclusion added as writer's embellishments and the rest taken exclusively from Sargent Karsnia's report, here's Countdown's version - our, if you will, wide stance on the arrest of Senator Larry Craig.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: The story you are about to see is true. The names have not been changed to protect anybody.

OLBERMANN (voice-over): This is the city, Minneapolis, Minnesota. I work here. I carry a badge. It was Tuesday, June 11. It was sunny and warm for Minneapolis. I was assigned to the vice squad, working in the men's room at the airport. My boss is Chief Dolan. My name is Karsnia. I'm a cop, a cop on the toilet.

At 1200 hours I was working a plain clothes detail involving lewd conduct in the main men's public restroom of the Northstar crossing of the Lenburg Terminal. From my seated position, I could observe the shoes and ankles of the person seated to the right of me. An unidentified person entered to the left of me. From my seated position I was able to see his shoes and ankles.

At 12:13 hours, I could see an older white male with gray hair standing outside my stall. He was standing about 3 feet away and had a roller bag with him. The male was later identified by driver's license as Larry Edwin Craig. I could see Craig look through the crack of the door from his position.

Craig would look down at his hands, fidget with his fingers, and then look through the crack into my stall again. Craig would repeat the cycle for about two minutes. I was able to see Craig's blue eyes as he looked into my stall. At 12:15 hours, the male in the stall to the left of me flushed the toilet and exited the stall. Craig entered the stall and placed his roller bag against the front of the stall door.

My experience has shown that individuals engaging in lewd conduct use their bags to block the view from the front of their stall. From my position, I could observe the shoes and ankles of Craig seated to the left of me. He was wearing dress pants with black dress shoes. At 12:16 hours, Craig tapped his feet. I recognized this is a signal used by persons wishing to engage in lewd conduct.

Craig tapped his toes several times, then moved his foot closer to my foot. I moved my foot up and down slowly. While this was occurring, the male in the stall to my right was still present. I could hear several unknown persons in the restroom that appeared to use the restroom for its intended use. The presence of others did not seem to deter Craig as he moved his right foot so that it touched the side of my left foot, which was within my stall area.

At 12:17 hours, I saw Craig swipe his hand under the stall divided for a few seconds. The swipe went from the direction from the front door side of the stall back towards the back wall. Craig swiped his hand again for a few seconds in the same motion to where I could see more of his fingers. Craig then swiped his hand in the same motion a third time for a few seconds.

I could see that it was Craig's left hand due to the position of his thumb. I could also see Craig had a gold ring on his ring finger as his hand was on my side of the stall divider. At about 12:19 hours, I held my police identification in my right hand down by the floor so that Craig could see it. With my left hand near the floor, I pointed to the exit.

Craig responded, no. I again pointed toward the exit. Craig exited the stall with his roller bags without flushing the toilet. Craig handed me a business card that identified him as a U.S. senator as he stated, what do you think about that. I responded by setting his business card down on the table and again asking him for his driver's license.

Later, in a recorded post-Miranda interview, Craig stated the following; he's a commuter. He went into the bathroom. He was standing outside the stall for one to two minutes, waiting for the stall. He has a wide stance when going to the bathroom and that is foot may have touched mine.

UNIDENTIFIED MALE: The story you have just seen is true. On August 8th, Larry Craig pleaded guilty to misdemeanor disorderly conduct in court number one for the County of Hennepin. He never told anybody about it. Not his family, not his constituents, not the U.S. Senate's, not until his conference on August 28th. In one moment, the results of that news conference.

(END VIDEOTAPE)

OLBERMANN: The first result of that news conference, of course, was that police in Minneapolis released the audio transcript of Sergeant Karsnia's official interview with Senator Craig in response to what he said. The final result comes tomorrow. NBC News confirming earlier reporting by the Associate Press and the Idaho newspaper the "Statesman" that tomorrow morning in Boise, Senator Craig will end all this by resigning.

It almost calls for some kind of dramatic - no we've done that already. That's Countdown for this the 1,584th day since the declaration of Mission Accomplished in Iraq. From New York, I'm Keith Olbermann, good night and good luck.

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