'Countdown with Keith Olbermann' for Feb. 5

Guests: Dana Milbank, Jonathan Alter, Russ Feingold, Michael Musto

ALISON STEWART, HOST: Which of these stories will you be talking about tomorrow?

The war over the war resolution. The Senate's plan to criticize the president's troop increase in Iraq brought to a grinding halt by Republicans. The Dems say the vote can't be put off forever.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: You can run, but you can't hide. We are going to debate Iraq.

(END VIDEO CLIP)

STEWART: Our special guest tonight, Senator Russ Feingold.

The race for '08. Can the man called America's mayor become America's president? Rudy Giuliani stops flirting and gets serious towards making it official.

And look who's talking, again. Will Darth Nader be the force that could stop Hillary Clinton's plan to move back into 1600 Pennsylvania Avenue?

In his own words. At the Scooter Libby trial, the jury hears Libby's the grand jury testimony. He says the first time he ever herd about Valerie Plame was from - wait for it - Vice President Dick Cheney. The VP once again placed at the center of Leakgate.

And putting the perc in percolating.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: You got the (INAUDIBLE) outside, honey?

UNIDENTIFIED MALE: It's great coffee, and you get a great view.

(END VIDEO CLIP)

STEWART: And a mischievous little Prince plays the Super Bowl. Or maybe not so little. Pay no attention to that man behind the curtain.

All that and more, now on Countdown.

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

I'll take filibuster to block, Alex. That's what happened about 6:00 p.m. Eastern standard time in the Senate today. There will be no discussion of the nine binding resolution opposing the troop increase in Iraq. So now what?

Our fifth story on the Countdown, the debate over the debate over the war in Iraq, including the debate over how to pay for it.

In a moment, Senator Russ Feingold will join us with his reaction.

But we begin with the details. The Senate showdown on Iraq finished not long after it began, Republicans in the chamber putting the kibosh on a measure voicing opposition to the president's plan to send more troops to Iraq. Any debate, such as it was, squeezed in before the filibuster.

(BEGIN VIDEO CLIPS)

SEN. CHARLES SCHUMER (D), NEW YORK: Let's make no mistake about what's happening today. The Republican side is afraid to debate even a nonbinding resolution as to whether this Senate supports an escalation or not.

REID: The minority can't rubber-stamp the president's policies in Iraq anymore, so they've decided to stamp out debate.

SEN. DICK DURBIN (D), ILLINOIS: If the Republicans in the Senate cannot swallow the thin soup of the Warner resolution, how will they ever stomach a real debate on the war in Iraq?

SEN. JOHN WARNER (R), VIRGINIA: What we have done in two and a half years to train these people, let them take the point, let them take the brunt of the fight, and maybe we do not need a 21,500 together with support troops to go in and do the job that we have trained these people to do themselves.

SEN. MITCH MCCONNELL (R), MINORITY LEADER: Make no mistake about it, this vote at 5:00 doesn't have anything whatsoever to do with scuttling the Iraq debate. We welcome the debate. We're happy to have it. But the minority will assist on fair treatment.

(END VIDEO CLIP)

STEWART: President Bush asked Congress today for billions more in spending for the wars in Iraq and Afghanistan, hundreds of billions, in a $3 trillion budget. That's trillion, with a T. Where are they going to find the cash? Cutting back on some domestic programs.

Chief White House correspondent David Gregory follows the money for us tonight.

(BEGIN VIDEOTAPE)

DAVID GREGORY, NBC CHIEF WHITE HOUSE CORRESPONDENT (voice-over):

Front and center of this year's budget, war spending in Iraq and Afghanistan.

This year, 2007, the White House wants roughly $100 billion on top of the $70 billion Congress has already provided. Total, $170 billion.

Next year, the White House request is for $145 billion.

Reflecting a desire to wind down the war, the budget projects that war spending will be down to $50 billion by 2009, and nothing beyond that. But the president, stressing those were just projections, said there is no timeline.

BUSH: There will be no timetable set, and the reason why is, is, because we don't want to send mixed signals to an enemy or to a struggling democracy or to our troops.

GREGORY: The request comes as Congress is embroiled in a fierce debate about the president's 21,000 troop buildup in Iraq. The House speaker said new war spending will face scrutiny.

REP. NANCY PELOSI (D-CA), SPEAKER: We want to know how this money is being spent, and how it takes us to ending - how soon it takes to us ending the war and bringing our troops home safely.

GREGORY: The budget promises to erase the deficit by 2012. It's now projected to be $244 billion.

BUSH: And I strongly believe Congress needs to listen to a budget which has no tax increase.

GREGORY: The president wants his tax cuts made permanent before they expire in 2010.

To balance the budget, the White House proposes cuts to Medicare and Medicaid and recommends cutting or reducing 141 government programs. Such proposals have been rejected in the past.

SEN. KENT CONRAD (D), NORTH DAKOTA: I would characterize this proposal as filled with debt and deception. It's disconnected from reality. And it continues to move America in the wrong direction.

GREGORY (on camera): The White House will now do battle with a Democratic Congress, which came to power with different budget priorities.

David Gregory, NBC News, the White House.

(END VIDEOTAPE)

STEWART: Let's turn now to our own Dana Milbank, national political reporter for "The Washington Post."

Good evening, Dana.

DANA MILBANK, NATIONAL POLITICAL REPORTER, "THE WASHINGTON POST":

Good evening, Alison.

STEWART: This resolution, well, it seemed to have bipartisan support, yet even Senator Warner voted against his own resolution. How does that happen?

MILBANK: It's sort of tricky. It's - you - what we have is a case of situational ethics here, and, of course, whatever, whether you're in the majority or minority, you have to act the way you're supposed to.

So when Democrats were in the minority, the Republicans were saying, straight up-or-down vote when it came to judicial nominees. Now the Republicans are in the minority, and they're saying that, no, in fact, you need 60 votes to get this through.

And Warner and even Chuck Hagel, who's been outspoken on the war, said, Look, my principles are one thing, but my party leader, Mitch McConnell, has asked me to stand with him, and I've got no choice in this matter. So it was sort of the old party-or-principle, and you always know which way that's going to go.

STEWART: You mentioned Mr. McConnell. He said, Well, hey, Republicans happy to debate this issue, welcome it. Why not right now?

MILBANK: Well, and at another point, he said that there are, in fact, a lot of members of his caucus who do not want to debate it. Now, some of this is just good old procrastination. We should note that the morning business in the Senate today began at 2:00 p.m. So this is not a place that hurries things along to any great extent.

And there are Democrats involved in sort of the lethargy as well. Senator Byrd today insisted on having an hour to talk about coal mining in the middle of all this.

So it's a very unruly institution. I have no doubt that Senator McConnell would rather avoid this debate, but he knows that it's one that he's going to have to have.

STEWART: I'm sort of curious about two Republicans who didn't necessarily fall in line, as you described earlier, with Senator Warner, Senator Collins and Senator Coleman. Is it surprising to you that these choose - these two chose to go differently than their party mates?

MILBANK: Well, a little bit, and the reason is, they are particularly vulnerable. The ones we're really keeping eyes on here are the ones who could lose their seats in 2008. I think it was equally interesting that John Sununu from New Hampshire, perhaps the most endangered Republican, decided to stick with the party on this vote.

The Democrats, of course, you know, Joe Lieberman, the independent Democrat, goes his own way. Much easier a vote for them on this. So they were, in fact, I think, secretly not terribly unhappy with the sort of headlines that are going to emerge tomorrow about the Republicans obstructing a vote on Iraq.

STEWART: OK, so you're a lawmaker who wants to go on the record speaking out against the troop increase. What happens next?

MILBANK: Well, the wonderful thing about the Senate is that nothing's really gone forever. I think negotiations have broken down at this point. Everybody wants to stew over it a bit. The predictions are, if it's not back within a few days, it certainly will be back within a few weeks. This issue is not going anywhere.

STEWART: All right, Dana Milbank, national political reporter for "The Washington Post." Thanks for joining us today.

MILBANK: Thanks, Alison.

STEWART: Among those planning to vote against the Warner-Levin resolution, if it ever gets to the floor, Republican Senators John McCain, Jeff Sessions, and Pat Roberts, independent Senator Joe Lieberman, we talked about him there, and Democratic Senators Christopher Dodd and Russell Feingold.

Senator Feingold joins us now.

Thank you so much for your time tonight, Senator.

SEN. RUSSELL FEINGOLD (D), WISCONSIN: Thank you, Alison.

STEWART: Want to talk about your proposal, but we really do need to discuss the news of the evening, what happened on the Senate floor. Republican Senate leader Mitch McConnell said his successful move to stop debate was about, quote, "fair treatment," his words. What's your reaction to that, Senator?

FEINGOLD: That's not what it's about. The fact is, the president and the Republican leadership are so out of touch with reality of the American people is, they don't understand that this war is a disaster, and the American people want us out of there.

Now, the problem is, it's a little easier for them to pull a stunt like this, because the Democrats are being too weak as well. We're talking about primarily just whether or not we're going to have a weak resolution about the escalation.

But the election in November, we hadn't even heard about the escalation. The issue here is, how can we, as Democrats, working with some Republicans, find a way to end this war, to have a timetable to end it, and to get tough on this thing? It's going to take forever just to get to this escalation resolution, if we don't come up with something that's a lot more serious.

And that's my concern on the Democratic side is, we're being too timid. We've got to take on this war directly.

STEWART: Let me ask you about a word you used. You used the word "stunt" to describe what happened this evening. Why the word "stunt"?

FEINGOLD: It's a stunt. The fact is, there should be a debate on this. It's a bipartisan resolution that I think is too weak. I'd like to fix it. I'd like the chance to have amendments. But if nothing else, whether you're on one side or the other, we should have a chance to amend it and to debate this war and to debate it now.

So the idea that they are somehow not getting treated fairly, to simply have something like this come up, is a - in my view, a ridiculous argument.

And it is time to debate the Iraq war. More importantly, it's time to debate getting out of Iraq, not just figuring out a way to prevent this surge or escalation by the president.

STEWART: And Senator, considering the minority just managed to prevent something basic as a debate on Iraq, what can happen now? Is there any possibility of getting debate without the 60 votes?

FEINGOLD: This requires public pressure. It requires people to let their elected officials know that not only do they want a debate, but they want action. They don't want just nonbinding resolutions that say, Hey, we don't to have more troops. We want a resolution, we want legislation that says that here's a time frame during which this war needs to end, let's say six months from the enactment of the bill, and that the Congress is going to cut off the funding for the war.

If we, as Democrats, don't start talking like that, and respond to what the public really thinks, then we're only going to have ourselves to blame for the Republican ability to sort of finesse this and massage it. We are playing into their hands by not having a strong enough agenda that fits the will of the American people as expressed in November.

STEWART: You've presented your own plan. You've written about it extensively. I read one of your essays on why you oppose the Warner-Levin compromise. You called it a symbol of a timid Congress. Can you explain to us why Congress is so timid?

FEINGOLD: Well, I think part of the problem is that obviously a majority of the Senate voted for this war, and a lot of them have a real concern about how they're going to come off if they just have to admit that this thing was a mistake and we need to get out.

And so you have, in the Warner resolution, some nice language, but it talks about not withdrawing any of the troops in the near future. It talks about increasing the war in al Anbar Province, which was really another form of escalation. It talks about saying we can't consider cutting off the funding.

So it essentially cuts the - cuts us off at the knees in terms of our ability to get out of this war. And I guess it has to do with the continuing feeling that some members of the Senate want to have it both ways. They want to sort of say they're against the war, but they don't want to take the steps to end the war. And we need to take the steps to end the war now.

STEWART: And that's what you're proposing in your bill.

FEINGOLD: That's correct.

STEWART: Can you explain, just briefly, what are some of your proposals?

FEINGOLD: It's pretty straightforward. It says that the Congress should enact a timeline, and have the president sign a bill that would say six months from the time the bill is enacted, the troops need to be out of Iraq, very similar to what we did with Somalia in the early '90s. That worked after Black Hawk down. We lost 18 men there. We decided, this isn't working, it doesn't make sense.

And we set a time frame, and troops were out of there safely.

The way to enforce it in my bill is to simply say the funding is no longer there at the end. But this idea that somehow we're going to take away something from the troops that are there already, that's just not true. Our proposal is that the troops will be out of there. That's the safest thing for the troops is to not be there.

And that's what our proposal would do. It wouldn't take away their equipment. That's just one of the red herrings or phony arguments that the Republicans use, and usually effectively scare the Democrats into not standing up for what is right, and that is to end this mistaken war and get back to fighting the real issue, which is those that attacked us on 9/11.

STEWART: One editorial I read praised your consistency on the war in Iraq and your thought process, but suggested that your bill is too inflexible. Are you flexible on any portions of your bill?

FEINGOLD: Sure, if people want to talk seriously about ending the war, if they want a little different time frame, they want to talk about how the power of the purse would be used, of course I'd be flexible.

But the problem is, people are being way too flexible the other way. They're so flexible, they're not doing anything. They're just talking about keeping this war going, maybe stopping the escalation, but they're not talking about actually getting our troops out of Iraq, figuring how to deal with Iraq after we get out of there, and refocusing on the 80 countries in the world where al Qaeda is actually operating.

So this is what the real challenge is.

STEWART: Senator Russ Feingold of Wisconsin. We thank you for your time tonight on Countdown.

FEINGOLD: (INAUDIBLE).

STEWART: The race for '08, Rudy Giuliani does a little filing, and whammo, he looks like a presidential candidate. Will there be a new big man on campus in the class of '08? Jonathan Alter joins me.

Let's go to the audiotape. Scooter Libby is not on the stand yet, but the jury is hearing from him. The tales of the tapes, a courtroom round-up of testimony and jury watching.

And you are watching Countdown on MSNBC.

(COMMERCIAL BREAK)

STEWART: The netherworld of candidates who are kind of, sort of testing the waters, could be interested in running for president, is growing in population tonight.

In our fourth story on the Countdown, OK, you can be sure Rudy Giuliani is almost maybe definitely joining the race. It seems that deciding you want to be the Decider is the most drawn-out decision of all, the former mayor of New York today filing what is known as a statement of candidacy with the Federal Election Commission, a move already undertaken by fellow Republicans Senator John McCain and former governor Mitt Romney.

Not one of them is an actual full-fledged candidate for the Republican nomination, but they are mighty close. They are men who are flirting hard, but making no commitment yet.

For more on where the man known as America's mayor can become America's president, we're joined by our own Jonathan Alter, of course, a senior editor at "Newsweek" magazine.

Nice to see you, Jon.

JONATHAN ALTER, SENIOR EDITOR, "NEWSWEEK" MAGAZINE: Hi, Alison.

STEWART: You know, you live in Jersey, I live in New York City, and there's sort of a joke that when the tristate area that on September 10, 2001, Rudy Giuliani not that popular, frankly, kind of a local politician, controversial time in office, messy personal issues, that ugly divorce. Could that Giuliani have even considered running for president?

ALTER: No, it would be like saying, you know, is Mayor Daley of Chicago a candidate for president? There's absolutely no chance, if it hadn't been for 9/11, that we'd be talking about him.

You know, I was with Giuliani on September 14, and then four additional times when he went down to ground zero. I went to all those press briefings. And he did a magnificent job in that period. And that's why he's now the frontrunner for the Republican nomination.

The question is whether the rest of his record, and his temperament, which some people believe is unsuited to the presidency, will get in the way.

STEWART: And is he a suitable enough Republican? is a big question.

ALTER: Well, that's a very big question too. You know, he is pro-gun control, pro-gay rights, and pro - if not pro-abortion, pro-choice. And the question is, how much are the Republican Party whoever's going to care about that? The conventional wisdom is that that will disqualify him, once people know about it.

I'm not sure that's true, Alison. There are actually some interesting polls out now that show that even voters who are very well informed about Rudy Giuliani's views, and quite conservative, are still for him.

So I think he's going to be formidable in this race, and we'll see whether some of these temperamental issues surface, and whether some of the other things about his background come to dominate this campaign.

STEWART: All right. Mr. Giuliani had a statement of candidacy. All those folks hemming and hoeing. Why do so few candidates come out and say definitely, I'm running for president?

ALTER: Yes, it's a real fan dance that they all seem to go through. Barack Obama's going through it now too, you know. He's not formally announcing until this coming Saturday. But people have known for months that he is going to run, and the same thing is true now of Giuliani.

There was a little bit of a sense last week that maybe he wouldn't go, so this decision today indicates that he really is serious.

There are a series of legal things that they need to do, but also, dragging all this out gives them more opportunities to stay in the news, with exactly what we're doing now, this kind of speculation about will he or won't he. That is more effective for a would-be candidate than, say, examination of the fact that he's on his third marriage. You know, we could be talking about other things.

And a lot of those other things will come up once he gets in the race. It's in his interest to delay it, because the sooner he gets in, the sooner the scrutiny really begins.

STEWART: Let me run to the Democrats really quick. A new poll shows Senator Clinton leading over Senator Obama and others in Iowa and New Hampshire, yet at the DNC's annual winter meeting, Mr. Obama warmly greeted Mrs. Clinton, not so much, some boos over her war position. So polls versus perception, which one matters more?

ALTER: Well, I wouldn't make too much about those boos. You know, a few hecklers in the audience or some people who are not too receptive doesn't necessarily tell you very much in any particular situation.

I don't think either the polls or the perceptions right now make a hell of a lot of difference. There's so much time to go. What I really think is ridiculous is when people try to proclaim one of these races over before it even really begins. These perceptions are going to change a lot over the course of the next year, and, you know, it's going to be very, very exciting, Alison.

So beware of people who give you definitive judgments about perceptions or polls.

STEWART: And it gets just a little more exciting, considering that Ralph Nader has hinted he might dive in the race, and he's not a fan of Hillary Clinton's. Given the climate and issues, could he have the same impact as he had in 2000?

ALTER: Well, in 2000, he gave us George W. Bush. So, you know, clearly, if he had told his supporters in Florida, Hey, this is a close state, vote for Al Gore, then Al Gore would have been president. So there's a lot of resentment toward Ralph Nader in the Democratic Party. He's not going to go anywhere if he were to get into those primaries. And as an independent candidate, I don't think he'll be effective.

STEWART: Senior editor at "Newsweek" magazine, Jonathan Alter. Nice to see you, Jonathan.

ALTER: Thanks, Alison.

STEWART: Moving from future contenders to the current occupants of the White House, Vice President Cheney. Well, his former aide is embroiled in a perjury trial, the grand jury today hearing just what Scooter Libby claims the vice president said to him about Valerie Plame.

It was just like the real Super Bowl, only with a 90 percent better chance of a mauling. Join us for bear versus Manning ahead on Countdown.

(COMMERCIAL BREAK)

STEWART: I'm Alison Stewart, in for Keith Olbermann.

And we pause the day's news for a moment, for our own version of a halftime show. No lewd gestures, no surprise boobs, and no geriatric rock. But we do have some other junk that could be really interesting.

So let's play Oddball.

We begin outside Los Angeles, California, and because I'd have to sell a kidney for the NFL to allow us to show actual Super Bowl highlights, we instead bring you this Countdown Super Bowl reenactment. It's a guy in a Peyton Manning jersey battling a man-eating Kodiak bear.

Nip and tuck early, with both teams exchanging score strikes. It was anybody's game until the fourth quarter. That's when a Kevlin Hayden (ph) interception and a run back for a touchdown sealed the bear's fate, just like the guy wearing the Peyton Manning during the Colts would charge on to victory.

Unfortunately, while the real Colts would celebrate their win with a ring and a trophy, this gentleman would eventually be caught and mauled by the bear. We were kidding that, about that.

To Thailand, where Oddball staple Ashrita Firmin (ph) is back. And after you've set 56 different Guinness world records, the attempts started to get a little bit boring. That's why Firmin decided he wanted to break the skipping record. He tried to break it while walking a tiger. This might be a little skitter (ph) to me. And while this may work with Tigger and Winnie the Pooh fame, real flesh-eating kitties don't enjoy skipping a whole lot.

So before he became lunch, Firmin ditched the attempt. He went on to skip, sans tiger, three miles and 35 minutes, which breaks yet another record that nobody knew existed. Happy guy.

Finally, to Mexico City, and someone who hopes to break a world record one day. It's taxi driver Manuel Piros (ph), born with an immunity to the spicy stuff in food. Piros thinks he can wolf down more chili peppers than anyone in the world. The heat doesn't bother him on the way in and apparently out isn't an issue either. Feeling no pain, he can spread peppers all over his face. He can drip the spicy juice in his eyes. He can even rub it all over his chest and down his - no need to know that.

We're going to roll the next cue, please. No more B roll, thank you. He's not testifying, at least not yet anyway, but a jury got to hear from Scooter Libby in his own words today, so they can decide if he just plain lied.

Is it espresso exploitation or a storm in a tea cup? The sexification of coffee in Seattle ahead. But first Countdown's top three newsmakers of this day.

At number three, Frederick Evan Young, the guy in a Chewbacca costume outside Brama's Chinese Theater in Hollywood. After being asked by a tour guide to stop harassing two women on the tour, Young allegedly head butted the tour guide, exclaiming, nobody tells this Wookie what to do. Chewy has been booked on misdemeanor battery charges. According to the LAPD, quote, you can have the force with you, you just can't use illegal force.

At number two, the city of Toledo, Ohio, where it is freezing cold today, around zero degrees. In face, it's so cold there the town has decided to close its outdoor ice skating rink. A city spokesperson says, quote, the irony is not lost on us. You had us worried Toledo.

At number one, new mother Nairi Thompson (ph), who gave birth to a healthy baby boy Saturday morning in Atlantic City, in a casino, at 9:30 in the morning. Thompson thought she might be in labor when she alerted casino security. That's when her water broke and before an ambulance could get there, Miss Thompson doubled down. The new mom and her boy are doing well, and luckily they have that eye in the sky security footage as a keepsake.

(COMMERCIAL BREAK)

STEWART: For the first time today, a federal jury heard from Vice President Cheney's former right hand man, Lewis Scooter Libby, in his own words. On tapes, Libby said it was none other than Mr. Cheney himself who first told Libby that the wife of ambassador Joe Wilson was a CIA operative. Wilson, of course, is the man who publicly questioned the administration's justification for war in Iraq.

And that's not all Libby said. It's an eight hour tape of his 2004 Grand Jury testimony. Our number three story tonight, part of Libby's ongoing trial on charges he lied to cover up the leak of Valerie Plame Wilson's identity. More of the tape will be played in court tomorrow, after which the entire tape will be released to the public.

Libby's lawyers had fought against the release, but the judge ruled that all eight hours, audio tape only, can and will be made public despite his reservations that the tapes might just end up on TV. You think? We'll get to those first revelations in a moment.

But earlier in the day, Libby's lawyers tried to show the jury that anyone can make a mistake in testimony, pressing FBI agent Debra Bond on differences between her notes and her verbal accounts of Libby's statements to investigators. Covering the trial today, as he has since the start, is MSNBC's David Shuster.

David, we still don't know whether Libby will testify at trial, but in court today, what did you and the jury hear from those tapes?

DAVID SHUSTER, MSNBC CORRESPONDENT: Alison, it was very interesting. Among other things, we heard Scooter Libby testify about a conversation that he had with Vice President Cheney in June of 2003. This was a conversation where Scooter Libby wrote notes to himself about the phone conversation and then these notes were turned over to investigators.

And on the notes Libby indicates that Vice President Cheney told him that Valerie Wilson worked at the CIA in the counter proliferation division. Libby was asked by prosecutors then, during the Grand Jury, if this was the first time, June of 2003, that he learned about Valerie Wilson and Libby said, yes.

Libby was then asked about other government officials, where there are no Libby notes of his conversations. These are officials who have already testified in the case that they had a discussion with Scooter Libby about Valerie Wilson, also in June of 2003. When Libby was asked about those conversations, he kept repeating in a very soft voice, I do not recall.

The defense wants the jury to believe that Libby forgot about all of these June conversations so thoroughly that when he spoke with Tim Russert in July, and learned from Russert, according to Libby, about Valerie Wilson, even though Russert denies that, that somehow Libby was surprised to learn about Valerie Wilson.

The defense is also trying to show that Scooter Libby can't remember any previous discussions about Valerie Wilson except for the one involving Vice President Cheney, which is of course the only conversation where there is actual physical testimony from Scooter Libby and that is his own handwritten notes. That's how difficult the challenge is for the defense in this case.

There was one other very startling moment, referring to President Bush, in Scooter Libby's Grand Jury testimony on audiotape, Libby noted on a piece of paper, a notation, and prosecutors asked whether the notation shows that President Bush was interested in the Kristof article in the State of the Union. It was a Kristof article in May of 2003 which first got the White House thinking about Ambassador Wilson, because it talked about an ambassador's trip, which essentially undercut the State of the Union speech.

Libby was asked about the president's interest and he said, yes, that's what my notes signals, but Libby then went on to testify he never discussed the president's interest with the vice president, nor did Libby speak about it with President Bush. He went on to testify that he only heard about the president's interest from a senior staff meeting. Of course, we don't know if Libby was telling the truth, but it was certainly a tantalizing bit of testimony.

STEWART: This morning Libby's lawyers had FBI agent Debra Bond on the defensive, suggesting the differences between her notes and her testimony were analogous to the differences in Libby's situation. Can you flesh that out for us?

SHUSTER: Yes, Debra Bond was one of the first FBI agents who spoke to Libby when the criminal investigation and the CIA leak began. And she summarized in this trial Libby's statements to the FBI before Libby actually testified to the Grand Jury. And Bond testified last week, on direct, that Libby, quote, adamantly denied telling White House Press Secretary Ari Fleischer anything about Valerie Wilson before Valerie Wilson was outed.

But under cross-examination today, by the defense, Bond acknowledged that the words adamantly denied were her characterization, and that Libby never used those words, but rather that Libby actually said he couldn't recall discussing Valerie Wilson with Ari Fleischer. It is a difference, so give the defense some credit, but again these are differences over shades of gray. This is not a blockbuster contradiction perhaps that the defense had been hoping for, Alison.

STEWART: OK, that was today. Let's look forward to tomorrow. Tell us what we're looking to.

SHUSTER: Yes, tomorrow we'll be looking for six and a half hours of Grand Jury audiotapes, in which there are three criminal counts against Scooter Libby, which are related to these sections of his Grand Jury testimony.

The first, of course, is Libby's testimony under oath that he only first learned about Valerie Wilson from NBC's Tim Russert, even though Tim Russert denies that, and also, even though Scooter Libby had already learned about Valerie Wilson a month earlier from Vice President Cheney, according to his own testimony.

The second crucial chunk of Libby's Grand Jury testimony involves a conversation with "Time Magazine's" Matt Cooper. Libby denied that he provided confirmation to Cooper about Valerie Wilson, even though Matt Cooper testified that Libby did provide that confirmation.

And then the third thing that we're watching for, that could be really dramatic, Alison, and that is: there has been a lot of testimony about a conversation that Libby and Vice President Cheney had on June 12, 2003. Again this is just a couple days before Valerie Wilson was outed. We're looking to see what the testimony is from Scooter Libby about that conversation, what did the vice president say to him, because there has already been some evidence suggesting that Libby and Vice President Cheney may have actually talked about leaking Valerie Wilson's identity to reporters.

So we'll be watching for that as well.

STEWART: David Shuster, thanks for all the details.

SHUSTER: You're welcome.

STEWART: Not enough caffeine in your coffee to perk you up in the morning? Maybe the barista in the bikini will do the trick. Skin is in at a local Seattle coffee shop.

And Daniel Radcliffe, AKA Harry Potter, defending his skin, literally. Harry's take on being naked on the stage. That and much more ahead on Countdown.

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BUSH: And I saw kind of a strange expression when I referred to something as the Democrat party. Now, look, my diction isn't all that good. I've been accused of occasionally mangling the English language. So I appreciate you inviting the head of the Republic party.

UNIDENTIFIED MALE: This is the banana we brought out a few minutes ago, or actually earlier, but a few minutes out in the cold, and you can hear frozen solid, so this won't be a slushy anytime soon.

IVANKA TRUMP, DAUGHTER OF DONALD TRUMP: In a serious business context. I have no idea what is he doing behind me?

(CROSS TALK)

ANDY DICK, COMEDIAN: You don't play up the glitter on your legs.

JIMMY KIMMEL, "JIMMY KIMMEL LIVE": Andy, please, don't touch Ivanka.

Get him by his feet.

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STEWART: It's worked for beer. It's worked for cars. It's even worked for burgers. But in our second story on the Countdown, the hot burning question, can sex sell coffee. Our correspondent Michael Okwu reports on the latest ploy from one Seattle company, serving it hot and steamy.

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MICHAEL OKWU, NBC NEWS CORRESPONDENT (voice-over): They say, if you want great coffee on virtually every corner, go west to Seattle, but who knew what was brewing.

UNIDENTIFIED FEMALE: Hi guys.

UNIDENTIFIED FEMALE: Cappuccino, what size honey?

OKWU: Your morning Joe served hot, in boots, bikinis, skimpy police blues.

UNIDENTIFIED MALE: It's great coffee and you get a great view.

OKWU: At drive through espresso stands across the city, so-called baristas, professional coffee servers are spicing up the daily Java run.

UNIDENTIFIED FEMALE: How have you been?

OKWU: Eddie Smith (ph) works at the Sweet Spot.

UNIDENTIFIED FEMALE: It's like, who do I want to be today. And it's just fun playing with it, you know, the wigs and the costumes especially.

OKWU: Not to mention it's good for business. It all started when a statewide smoking ban went into effect a little more than a year ago. Casino and convenience store owners tried to stem projected losses by renting sections of their parking lots to espresso stands. Dozens sprung up, and with competition percolating almost everywhere, things got steamy.

STEVE MCDANIEL, MOCA GIRLS: Sex sells.

OKWU: Steve McDaniel owns Moca Girls.

MCDANIEL: The business model that we've created, I'm confident that we could probably move in to next door to any Starbucks and compete with them.

OKWU: But in a city where coffee, just good coffee is king, don't expect the establishment to change. I stopped in on the manager of the popular Zoka Coffee House, a regular cafe, where baristas are fully clothed, guessed they would probably stay that way. Skin with coffee not their cup of tea.

UNIDENTIFIED MALE: True.

OKWU: But back at the espresso stands, the baristas say for them it's a no-brainer.

ALISHA ERICKSON, MOCA GIRLS: You get to goof with the customers a lot more often. You get a lot more regulars.

OKWU: Regulars who tip.

UNIDENTIFIED FEMALE: I think sometimes I might even give out a bad cup of coffee, but nobody ever says anything.

OKWU: Did we mention you could get a little Cupid with your coffee, espresso, served with a smile, or the art of serving coffee gone for the dogs.

Michael Okwu, NBC News, Seattle.

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STEWART: If skimpy clothing is not your taste, how do you feel about no clothing. That's right. It's time for our nightly round of celebrity and entertainment news, Keeping Tabs. And Harry Potter star Daniel Radcliffe has made his first public comments since it was revealed that he is revealed in the upcoming London stage production of "Equus." Radcliffe tells the "Evening Standard," quote, we've done the scene a couple of times in rehearsal. I had no particular qualms. There is nothing that would stop me getting my (INAUDIBLE) if that is what the work demands, end quote.

And there you have, the mark of every fine actor, nothing will stop them getting their kid off. As for the scene where Radcliffe has to not have sexual relations with that horse, we say, whoa Nelly.

Breaking news out of California this hour. San Francisco Mayor Gavin Newsom is seeking counseling for alcohol abuse. It worked for Lindsay Lohan. Mayor Newsom informed his department heads of his treatment this afternoon. He will not be entering a residential rehab program, however, so will not be stepping down as mayor, even temporarily.

This follows last week's revelations that Newsom had an affair with an office employee who was also the wife of one of his political aides, now former political aide. A spokesman for the mayor says that he is not blaming alcohol for his bad behavior. The mayor simply understands that he has a problem or two.

In another sign that everything has changed in this post light bright world, Turner Broadcasting has reached a deal to put last week's terror threat in Boston behind us all. A variety of Boston city agencies will get two million dollars from the companies responsible for distributing dozens of blinking promotional signs for the upcoming Aqua Teen Hunger Force movie. I just like to say it.

The two million dollars about will go to reimburse the city for any costs incurred during last week's scare, as well as fund a range of homeland security defensive measures, such as Mr. Potato Head facial recognition software, a warrantless spirographing, to protect us from threats, such as weaponized play dough, which can be easily synthesized in any Easy Bake Even. It's really frightening.

What exactly was Prince reaching out for during his big halftime performance last night? We'll go behind the scary curtain with the one and only Michael Musto. That's ahead.

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STEWART: Ever since Janet Jackson's infamous wardrobe malfunction at the Super Bowl halftime show in 2004, the one where we got to see her boob, the performances at the big game have been deliberately G rated. In our number one story on the Countdown, does an optical illusion count as bad behavior?

On the musical front, during the halftime Prince performance, he turned in a spectacular show, that was utterly without controversy, unless, of course, you called a well endowed shadow, created by placing a certain light at a certain guitar net, at a certain angle. Suddenly, the artist formerly known as Prince became known for something entirely different. And if you thought it was different, consider this guitar lick, as it were. Maybe that's what the "New York Times" reviewer meant when he said, quote, He, Prince, looked like he was getting away with something.

Here's a portion of what was simply referred to as the sheet section, courtesy of our friends at the NFL and CBS.

Well, all righty then. Time to call in "Village Voice" columnist Michael Musto, author of "La Dolce Musto." Michael, good to see you.

MICHAEL MUSTO, "THE VILLAGE VOICE": Hi Alison.

STEWART: So did Prince get away with something here?

MUSTO: Absolutely; he pulled off the guitar formerly known as phallus and he did a Daniel Radcliffe. I mean, that was the biggest thing I've seen since Kevin showed his bacon in the movie "Wild Things" It almost poked my eyes out and I was sitting at home, watching on TV.

STEWART: I have to tell you, I was at a friend house, lots of kids in the room, me, about ten boys, ages nine to 13, right in that adolescent hormone time, couldn't stop laughing, every one of them.

MUSTO: It turned them all gay, I'm pretty sure.

STEWART: Let's break it down for people, the guitar is in the shape of Prince's male/female symbol, and he switched that guitar before he did the last song, by the way. So was he just trying to take the concept to this whole new level here?

MUSTO: Sort of, but nobody noticed the female symbol. It looked kind of like a giant can opener. And while you could argue that the male symbol looked like a huge shoehorn or curtain rod or a hot poker, there's no denying it basically looked like the world's most gigantic ding dong. I mean, Prince definitely went genital into that good night. This was a 12 inch remix. It was a crotch tiger in a not so hidden dragon.

STEWART: Does it surprise you he tried to slip this in?

MUSTO: No, we know Prince. I mean, he's a shady character. He's dirty and I love him for it. He doesn't only do suggestive songs, he does down right filthy ones, you know, Sexy MF, Dirty Mind, Controversy. And he also slips things in, Alison. I mean, you probably know that Little Red Corvette is not really a song about parallel parking.

STEWART: Oh tell me, no.

MUSTO: Raspberry Beret, he even slips in the fact that when it was warm, she didn't wear much else.

STEWART: You're ruining my entire teenage years, my ears, my ears.

MUSTO: Learn it, learn it. When Doves Cry, I think, they're crying because they had rough sex.

STEWART: The "Chicago Sun-Times" had a whole other take on this. They wrote, quote, during Purple Rain, a thin white balloon emerged near the stage and it appeared as if Prince was performing inside of a condom. Does it strike you that Prince was doing some sort of public service ad here, sending out a message?

MUSTO: Well, it did shield the audience from the Purple Rain. I don't mean the rain coming from the sky. And there is a reference to Trojans in Little Red Corvette - I've done my research - and Prince definitely seems to be advocating safe sex. And that condom that you see, that surrounded him, surrounded the whole weeny, I mean Prince himself.

STEWART: But, if you think about it, he was a little bit naughty here. It was sort of suggestive. He apparently did get away with it. I haven't heard about any complaints, ala Janet Jackson, so the results so far, a boob outweighs a phallus?

MUSTO: It's outrageous Alison. I mean, people are saying, well, at least his wasn't real. Neither was hers. Did you look at it? This is totally hypocritical. It's a double standard. A man can run around showing his stuff in public on purpose, and people say, bravo, but a woman accidentally shows a body part and it corrupts an entire generation. This going to lead to a whole generation of men playing air penis, I think.

STEWART: All right, 15 seconds left, what do you think is going to happen next year, given what we have seen.

MUSTO: Well, we had Janet Jackson, Mick Jagger, Prince, it's time for another female Jackson, so I will say, bring on Michael, or maybe Britney can play a guitar based on her cervix. But she would have to learn an instrument. I doubt that's going to happen.

STEWART: That's just not going to happen. We know that. Michael Musto, thank you so much.

MUSTO: Thank you Alison.

STEWART: And that does it for this Monday edition of Countdown. I'm Alison Stewart, pinch hitting for Keith Olbermann. Feel better Keith. Thank you so much for watching. Our MSNBC coverage continues now with "SCARBOROUGH COUNTRY." Hey there Joe.

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