'Countdown with Keith Olbermann' for Friday, July 18
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Guests: Richard Wolffe, Dr. Larry Hunter, Dr. Michio Kaku, E.J. Dionne

KEITH OLBERMANN, HOST: Breaking news tonight: The man who posited the "mental recession," the former senator who seemed to pose a new and controversial conundrum for his candidate each week - Phil Gramm has officially resigned tonight a national co-chair of the McCain campaign, apparently, has also left as McCain's chief economic adviser and apologized to the senator.

(voice over): Which of these stories will you be talking about tomorrow?

Obama's world tour. He's having a valuable time - somewhere as a bizarre international cone of silence descends over - just exactly where and just exactly when? Could be Baghdad, could be Chicago.

Wherever it is, old man yells at cloud.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: This trip that he's on would have been vastly different if we had done what Senator Obama wanted to do, and that is he wanted to withdraw.

(END VIDEO CLIP)

OLBERMANN: Except, the Bush administration just agreed to a general time line horizon to withdraw troops from Iraq on the heels of McCain parodying (ph) Obama's position on Afghanistan, never "John McSame," how can the Republican win if he is perceived also as "John McBarack"?

This matters. He helped write the GOP's contract with America, worked in the Reagan administration, worked on the Bob Dole campaign, and he is voting for and writing op-eds supporting Obama. Larry Hunter joins us.

And Senator Larry Craig just cannot stop giving us unplugs (ph).

He thinks he's only talking about increasing drilling for oil.

(BEGIN VIDEO CLIP)

SEN. LARRY CRAIG, (R) IDAHO: And we won't let the Venezuelas, or the Nigerias, or Saudi Arabias, or the Irans jerk us around by the gas nozzle the way they are doing it now.

(END VIDEO CLIP)

OLBERMANN: Check, please.

All that and more: Now on Countdown.

(BEGIN VIDEO CLIP)

CRAIG: You are a naughty boy.

(END VIDEO CLIP)

OLBERMANN (on camera): Good evening. This is Friday, July 18th, 109 days until the 2008 presidential election.

The presumptive Republican nominee has to get himself a new national campaign co-chair with the resignation of the endlessly compromised Phil Gramm, breaking news which we will cover in depth in a moment tonight.

The presumptive Democratic nominee magical mystery tour is under way with an unprecedented level of secrecy and of touchiness about the secrecy. In other words, in our fifth story on the Countdown

(MUSIC)

OLBERMANN: Thank you. Here's what we do know that the Obama campaign has announced an upcoming trip to Jordan, Israel, London, Paris and Berlin and that the Illinois Democrat himself said last month that he would go to both Iraq and Afghanistan soon. How soon might be soon?

At a lunchtime fundraiser in Detroit, his opponent, Senator McCain, saying today he thought it could be some time this weekend.

(BEGIN AUDIO CLIP)

MCCAIN: I believe that either today or tomorrow, I am not privee to his schedule, Senator Obama will be landing in Iraq with some other senators. There will be a congressional delegation and I am sure that Senator Obama is going to arrive in Baghdad in a much, muff safer and secure environment than the one that he would have encountered before we started the surge.

(END AUDIO CLIP)

OLBERMANN: McCain's spokesperson, Brooke Buchanan saying afterward, Senator McCain had no access to his opponent's schedule therefore his remarks about Obama's trip to Iraq and Afghanistan were, quote, "pure speculation" as opposed to McCain's remarks at a news conference this morning about the "chicken versus egg" nature of the trip which was appear to be pure conjecture.

(BEGIN VIDEO CLIP)

MCCAIN: It's the first time in my recollection that someone has issued a policy statement on an issue and then taken a trip, and for the first time, to sit down with commander in the field, the first time to visit Afghanistan.

(END VIDEO CLIP)

OLBERMANN: Well, there was the senator who advocated the invasion of Iraq, declared the war would be quick and easy, and during the earlier days of the occupation, announced that we accomplished the mission thing and then made his first trip to postwar Iraq in August 2003. That would have been Senator John McCain.

Finally on this point, Senator McCain's remarks about a hypothetical trip to Iraq that Senator Obama purportedly could have taken seemed to be pure dribble (ph).

(BEGIN VIDEO CLIP)

MCCAIN: This trip that he's on would have been vastly different if we had done what Senator Obama wanted to do, and that is he wanted to withdraw, he opposed the surge. So, he would be going to a very different Iraq if we had done what he wanted to do.

(END VIDEO CLIP)

OLBERMANN: Actually, if the U.S. had done what Senator Obama wanted and withdrew from Iraq by now, Senator Obama probably would not be going there at all whenever he goes there.

Time now to bring in our own Richard Wolffe, senior White House correspondent for "Newsweek" magazine, who appears to be in Washington, so we know it's not a trip to Washington for Senator Obama.

Richard, good evening.

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Good evening, Keith.

OLBERMANN: All right. There seems to be no scenario under which McCain would not attack Obama for his plans to go to Iraq and Afghanistan even though he suggested that Obama need to go to Iraq and Afghanistan. So, for Obama, this is damned if he does go and damned if he doesn't?

WOLFFE: Well, of course, you'd expect nothing less from two candidates who are competing for the biggest job in politics. But here's how the McCain campaign has really boxed itself in here. It's not just the sort of two-sided nature of the attack, it's that they opened the door to Obama taking this trip in the first place. Had McCain not done just one foreign trip but three foreign trips since locking up the nomination, it would have been much, much harder for Obama to do this extraordinary thing.

I have to say, again, that candidates do not normally campaign overseas. So, McCain opened this up. They baited him to some degree to go and take this trip and even cut a new ad saying, "How come he has not been to Afghanistan?" Well, by all accounts and expectations, that ad will be outdated almost as soon as it hits the airwaves.

OLBERMANN: When McCain went to London to raise money, that was serious business. But when Obama would go to Europe and Israel, McCain staff wants us to believe that will be a campaign trip. How does that work exactly and what during the presidential campaign is not to some degree a campaign trip?

WOLFFE: Yes, they are candidates and they are actually campaigning. So, everything they do has to be seen through the prism of that, and of course for Obama, that actually poses some serious risks here. If he does enter into explicitly political, if he's big outdoor speech that we all expect in Berlin is more of a rally, then he could face a lot of criticism for that. It doesn't look good.

On the other hand, Obama has this tendency to challenge people. I expect him to go out there in Germany and demand things. Challenge the Germans and Europeans, for instance, to pony up more troops for NATO and Afghanistan. So, Obama has to be careful about this whole campaign thing, but it didn't seem to stop McCain when he was out there.

OLBERMANN: All right. About this Obama trip, two questions about the mechanics. One, why the secrecy about it? And two, if there is a good reason for that secrecy, why would Senator McCain try to give away the secret today in Michigan?

WOLFFE: Well, the reason for secrecy is security, of course. And we, in the media, have been very careful about what we're putting out there. You know, security of these trips, and I went with President Bush to Iraq, security is tight for a reason. So, it is remarkable that a member of Congress would even speculate in that way. Why he did that, I can't really be sure but obviously they're trying to backtrack now.

OLBERMANN: Obviously, we are going to talk in depth in a moment about the resignation that was just announced before we came on the air of Phil Gramm as the national co-chair of the McCain campaign. That's a little bit off our intended topic, Richard, but obviously, this is your classic Friday night bad news dump from the McCain campaign.

How bad a liability, how much of a millstone had Phil Gramm become and was that tipping point all the stuff about "mental recessions" and it's all whiners and we really have it good in this country but we're complaining too much? And how much of it was all of the ties into Enron and the ties into the deregulation that set up the gas crisis?

WOLFFE: Well, it seems to be the tipping point is that he's a distraction from an economic message for next week, but what's curious is they reversed themselves after throwing himself under the bus, if that's not a mixed metaphor. So, you've got him being thrown out of the campaign, brought back in, and then thrown out again all in the space of a few days.

And, you know, when you think about the latest relaunch of the McCain campaign, it was to get consistent messaging. Doing this kind of thing, bringing him back and throwing him out again is just sort of head-twistingly confusing.

OLBERMANN: Well, maybe he'll return yet again.

Richard Wolffe of "Newsweek" and MSNBC, as always, Richard, great thanks. Have a good weekend.

WOLFFE: Thank you, Keith.

OLBERMANN: Just weeks after following what it had previously implied was a stance of appeasement toward Iran, just days after appearing to switch to Senator Obama's position on Afghanistan, the president and the Republican who would succeed him have fared (ph) with it again towards Barack Obama now on Iraq.

President Bush and Iraqi Prime Minister Nouri al-Maliki the conclusion, according to the White House, that, quote, "improving conditions should allow for the agreements now under negotiation to include a general time horizon for meeting aspirational goals." Sifting through the self-help lingo there, it sounds an awful lot like a time line for withdrawal, which is what Senator Obama has consistently advocated to say nothing of most of the Democratic Party.

The White House predictably denying that they have now switched to the Democratic position. Spokesman Scott Stansell telling the media that these are aspirational goals and not arbitrary time lines based on political expediency. Somebody got the thesaurus out.

Senator McCain echoing the White House position, releasing a statement that read in part, quote, "An artificial timetable based on political expediency would have led to disaster. And that progress between the United States and Iraq on a time horizon - a time horizon for American troop presence is further evidence that the surge has succeeded."

The Obama campaign pointing out that on both fronts of the war on terror, McCain and Bush are following Obama's lead just as Senator McCain has appropriated Obama's demand for more brigades in Afghanistan, so he and the president have finally acknowledged that getting out of Iraq needs some kind of time horizon.

Joining us now, "Washington Post" columnist and senior fellow at the Brookings Institution, E.J. Dionne.

Thanks for your time tonight, E.J.

E.J. DIONNE, WASHINGTON POST: Good to be with you. I'm feeling aspirational.

OLBERMANN: Yes, we all, we all are. Some or part of that word, anyway, listening to this, listen, time horizons, aspirational goals. When I hear time horizons, I think Ronald Coleman. But obviously, that was lost horizon. What do those two phrases mean?

DIONNE: It does depend on what the meaning of the term horizon is. I was thinking that you can walk toward the horizon and never actually get there. I think there are two things going on here - one, having to do with our politics, and one, having to do with Iraqi politics.

It's obvious that this war is unpopular and people - Americans have reached basic judgment that it wasn't worth it. Sixty-three percent in the new "Washington Post" Poll, 60 percent say we can win the war on terror without winning the war in Iraq.

So, the administration knows and John McCain knows that's the direction people want to go in and the horizon is better than nothing even if it's not a time line. But also the Maliki government is sending clear signals that they don't want Americans to stay there forever. It has to do with their politics which calls to question Senator McCain's idea of having long-term bases there. I don't think that's - that's a nonstarter right now.

OLBERMANN: But beyond the time horizon, the reaction from Scott Stansell, the definition from the White House that time horizons are aspirational goals and not arbitrary time lines based on political expediency. Would it not be closer to the fact that they are vague, non-promise promises based on public expediency?

DIONNE: Well, I think that they are non-promise promises. That's exactly right. But, again, I think what's really odd here is the Bush administration coming under pressure from Iraq. They started out trying to negotiate deals for long-term basis and now we're talking about time horizons. Clearly, sending a signal we're going to be out of there someday is politically helpful.

OLBERMANN: The bigger point here - first, Bush took Obama's position on Iran and then McCain took Obama's position on Afghanistan, and now both of them are clearly moving towards Obama's position on Iraq. Politically, what happened here? Did McCain say to Bush, "I got no chance" - I mean, at least, the domestic part of this, did he say, "I got no chance of getting elected here if we can't make it look like I'm going to do the same popular things that Obama said he's going to do"?

DIONNE: Yes, it sort of makes you want to ask, "Tell me, which one of these guys is the one with foreign policy experience?" I think McCain campaign wants to do two things at the same time. On the one hand, they want to say that what Obama is really for is irresponsible, but then either because things are changing in the world and so events are moving that way, or for political reasons, they want to embrace those parts of it.

It's sort of like that great Reagan line when he said, "You know, in my administration the right hand doesn't know what the far right hand is doing." It's kind of a mixed message.

OLBERMANN: Well, and to that - let me have you chime in on this breaking news that we got just as we started here that Phil Gramm is out after a week of intense controversy. Obviously, those have been studying this campaign and seen his connections to everything from Enron and that disaster and all the deregulation that led to that and the Enrons to follow right through the speculative end of the gas crisis know that this has been kind of a running story for two or three months now.

But now, here we go on a Friday night, he's out. The McCain position on Iraq is, you know, measurably miles closer to Obama than it was this morning. Necessarily, the McCain position on Iran would have to be closer if he's following the Bush administration, it's willing to go there and basically open up just this side of an actual diplomatic mission there. Is this all part of one big picture? Is this McCain campaign 2.0 or these just things that happening simultaneously?

DIONNE: Well, I was struck in that "National Journal" and the new issue that even Republican consultants of this group, they are consult on it (ph), they're giving the McCain campaign a "C." So, clearly, there's a lot of work to be done in that campaign.

What we're seeing also is this idea of deregulation that was supposed to have the answers to everything, is now really coming under question that we look at this banking crisis and you've got to say that some of this deregulation didn't work at all. And Phil Gramm not only said we're all whiners if we don't like how the economy is going, but he was very closely tied to that policy.

So, I have a hunch that there's a mixture of motives there. But whichever way you look at it, he wasn't an asset to that campaign anymore.

OLBERMANN: Certainly, not as of the mental recession which appears to turn out to have been his.

E.J. Dionne of the "Washington Post" and the Brookings Institution

Thank you, E.J. Have a good weekend.

DIONNE: Good to be with you.

OLBERMANN: So, Phil Gramm, the senator who helped bring us Enron and the gas crisis, to say nothing of that mental recession, then told us we were whiners and the recession was, indeed, all mental, has now himself receded whining all the way, resigning as national co-chair of the McCain campaign. Our full coverage of this breaking news next.

(COMMERCIAL BREAK)

OLBERMANN: The breaking news at this hour, that Phil Gramm is out as national co-chair of the McCain presidential campaign and apparently also out as John McCain's chief economic adviser and chief millstone among the many lobbyists serving their master McCain. He complains that this is the Democrats fault.

Just in, the Obama response. We'll have it for you in a moment.

Also tonight, Senator Larry Craig talking about getting jerked around by the gas nozzle and "Bill-O, The Clown" announcing that gas consumption is down because he ordained it.

You are watching Countdown on MSNBC.

(COMMERCIAL BREAK)

OLBERMANN: And again, the breaking news tonight, the twist on the classic Friday night news dump. This time, it was a person being dumped. The former Texas Senator Phil Gramm, himself, a one-time presidential candidate, is stepping down tonight from his role as national general co-chair of the presidential campaign of John McCain.

Gramm, who has been described by McCain himself as the McCain economic guru, a friend and ally for more than a decade of the candidate, team mates in the defeat of Hillary Clinton's health care plan in the 90s, as well as in Gramm's failed campaign. He came in for a firestorm of criticism after rejecting the reality of the nation's economic downturn and called "America a nation of whiners."

(BEGIN VIDEO CLIP)

PHIL GRAMM, THEN-MCCAIN CAMPAIGN CO-CHAIR: But no politicians can talk about, well, things not as bad as you think because that sounds like they don't care. And, yet, you just hear this constant whining, complaining about a loss of our competitiveness, America in decline. We've never been more dominant; we've never had more natural advantages that we have today. We've sort of become a nation of whiners.

(END VIDEO CLIP)

OLBERMANN: That was on July 9th. In a statement this evening, Gramm said as he resigned, quote, "It is clear to me that the Democrats want to attack me rather than debate Senator McCain on important economic issues facing the country. That kind of distraction hurts not only Senator McCain's ability to present concrete programs to deal with the country's problems, it hurts the country. To end this distraction and get on with the real debate, I hereby step down as co-chair of the McCain campaign and join the growing number of rank-and-file McCain supporters."

Gramm's departure comes exactly one month after we first reported Gramm's role in creating and defending the Enron loophole, legislation that helped to drive up gas prices by letting speculators manipulate that market, legislation that both Republicans and Democrats have now called for undoing. The month prior we have revealed that Gramm had been lobbying for a Swiss bank embroiled in the mortgage crisis against the interest of American homeowners, at the same time, he was writing McCain's policies on the mortgage crisis.

Now we have the response from the Obama campaign to this news, from spokesman Harry Sibugan (ph), "The question for John McCain isn't whether Phil Gramm will continue as chairman of his campaign but whether he will continue to keep the economic plan that Gramm authored and that represents a continuation of the policies that have failed American families for the last eight years."

Thus, lots to talk about with Chris Hayes, the Washington editor of "The Nation" magazine.

Good evening, Chris.

CHRIS HAYES, THE NATION: Good evening, Keith.

OLBERMANN: So, that Gramm was being paid by UBS to lobby Congress about the mortgage crisis at the same time he was helping to write McCain's policy about the mortgage crisis, that was not enough for them to push him off the boat that he created the loophole, the Enron loophole, which precipitated this series of events that brought us $4 gasoline - $4.50 gasoline, that was not enough for them to push him off the boat.

The final straw was that he wasn't sensitive about Americans who are suffering in this economy, not that he helped make this economy the crap (ph) that it is right now - what explains this being the tipping point for Phil Gramm and for John McCain?

HAYES: You know, there's that old line about how a gaffe is someone accidentally stating the truth, right? I mean, that wasn't the case with Phil Gramm. He was accidentally stating what Republicans really believe. I mean, Phil Gramm was a great character because he was raw economic id, right? I mean, he was the sort of unexpurgated id of the Republican Party. He was a huberite (ph).

I mean, basically, he thought that what was good for business is good for America, that deregulation is always good. And if wages are down, it's because you people are losers. And so, he was, and the thing is that he didn't have the political sense to mask what is an unbelievably unpopular set, you know, view of the economy when he talked to the press. That was his chief sin.

OLBERMANN: Right. That was Marie Antoinette quality and obviously, Marie Antoinette never said let them eat cake but the idea that, well, they have no bread, so let them eat cake was sort of personified by Phil Gramm.

HAYES: Right, exactly. And look, I mean, the fact of the matter is that this is what the Republican coalition sort of has been a premise they've been operating on. I mean, they tout the recovery that we've had under George W. Bush. If you look at it and you compare it to past recoveries, past periods of growth, every single metric, things are down - business investment, wages, savings, the only thing that is up from past recovers is corporate profits.

When Phil Gramm looks that chart, he says, "Hey, everything is going well, right?" When most Americans look at the chart, when they look at their paycheck, when they go to the grocery store, right, when they look at their bank account, they say, "No, nothing is good, right? We're in bad shape right now." But Phil Gramm sort of wonderfully, from my perspective, just articulated exactly what a whole lot of the kind of people running the Republican Party believe.

OLBERMANN: Yes. Also, I had a crooked accountant that looked just like Phil Gramm and it's always rung in my head for that reason, but that's just personal.

Now, what about the timing of this? This broke at 7:30, or little later than that, Eastern Time Friday night. I'm just guessing, they're hoping we might not have noticed in the middle of a big trip at some point by McCain's opponent. I would ask you if the McCain campaign is, in fact, hoping no one will notice, but it seems pretty obvious that pretty much no one will notice. Is that a fair statement?

HAYES: Yes. No, clearly this is classic Friday afternoon news. And the fact that Phil Gramm really was his liability. I think that he was kept around as long as he was because John McCain really does, as he's admitted to the "Wall Street Journal" editorial board, not know very much about economics and, you know, here's this guy with a Ph.D. who's buddies with John McCain and John McCain can lean on him.

And so, you know, politically, it would have made sense to cut this guy loose a long time ago, right, but he kept him on because, you know, he actually did trust him and he actually was taking his advice. Finally, when it got too much, you know, they're trying to sort of sweep it under the carpet. But, you know, I wonder how much coverage it's going to get come Monday morning.

OLBERMANN: Well, all right. Now, assess this politically for both of these candidates. Did Obama lose because they don't have Phil Gramm to kick around anymore and did McCain win because not only is he gone but theoretically, at least, he has an opportunity to change his economic program into something a little less, you know, Louie XVI?

HAYES: Well, in the first question, yes. The Obama loses, right? I mean, Phil Gramm is sort of this perfect economic villain, right, because of what I've said, because he articulates exactly what the kind of business interest that run the Republican Party believe about the way the economy functions. So, yes, I mean, it would be great to have Phil Gramm to kick around a little more.

On the sense of whether John McCain now has an opportunity to change his economic policy, he cannot. He structurally cannot change his economic policy. And the reason is that the people that bankroll the Republican Party, the interest that make up the Republican donors are standing in deep opposition to an economy that works for working people, right? I mean, a recovery in which everything is sort of not doing well except for corporate profits, is not so bad for the people that run Exxon, right? Or the people that run the health, you know, the health insurance companies.

And so, it's going to be very hard for John McCain to turn around and actually give a kind of economic policy that would really work for working Americans when the people that bankroll his campaign and the coalition for which he is the head, don't really want to see that happen.

OLBERMANN: And it would seem to be incumbent on those who oppose Senator McCain to refer to his henceforth to his economics as the Phil Gramm memorial economic policy, I suppose.

Chris Hayes is the Washington editor of "The Nation," and joins us once again on this breaking news.

Thank you, Chris. Have a good weekend.

HAYES: You, too, Keith. Thanks a lot.

OLBERMANN: If you are Senator Larry Craig meantime, you would think someone would have told you - never to use the phrase, jerk us around by the gas nozzle. Sadly, no.

And in Bushed, I'm confused. Golly. I mean, if more oil drilling will lower gas prices why did the Republicans just kill a bill in the House that would have mandated more oil drilling?

(COMMERCIAL BREAK)

OLBERMANN: Bushed in a moment, and the torture may have started on March 29th, 2002, but the legal rationalization for the torture didn't happen until August 1st, 2002. Oops.

First, on this date 160 years ago, William Gilbert Grace was born. His life was so wrapped up in the sport of Cricket that by the age of six, he already attended a top match. By 12, his mother was recommending him to the head of the British national team. By 17, he was playing at the sport's highest echelon. By 30, he was considered the most famous man in England. He didn't retire until he was 60.

There are two top teenage Cricket prospects in England who are W.G. Grace's great, great, great grandsons. And his head was used to illustrate god in the movie "Monty Python and Holy Grail."

On that note, let's play Oddball.

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OLBERMANN: Conveniently, we begin in a convenience store in the hometown of John Cleese from Monty Python, Weston Super Mayor (ph), in England. Thursday, two hammer wielding dummies crashed into the store demanding money as they whacked the clerk behind the counter. Sounds like the perfect crime. They would have got away too, except a 55-year-old grandmother Anne Whithers, who was also on duty - there's Anne - grabbed a push broom and used it to beat the tarnation out of the crooks. The robbers scampered out empty handed. The male clerk was bruised but OK. Sadly, the broom suffered irreparable damage. So that is going to have to come out of grandma's paycheck.

To the nation's capital, where Senator Larry Craig has quietly resumed his career after the embarrassing run in at an airport men's room, during which police concluded the senator was soliciting sex from another man. Craig was embarrassed, but remained on the job, keeping a low profile until yesterday, when this a speech on America's dependence on foreign oil caught everyone's attention.

SEN. LARRY CRAIG (R), IDAHO: The American family will fear less, our national security will be more assured, and we won't let the Venezuelas or Nigerias or the Saudi Arabias or the Irans jerk us around by the gas nozzle the way they are doing it now.

OLBERMANN: Dr. Freud! You won't see the Countdown players reenacting that one any time soon.

(END VIDEO CLIP)

OLBERMANN: It may not be the most unlikely endorsement for Senator Obama, but it could be the most telling. It is from one of the authors of the Republican Contract With America. He joins us. And Bill-O the Clown explains how Americans started to use less gas because he asked them to. He also controls the tides. Worst persons ahead, but first the headlines breaking in the administration's 50 running scandals, Bushed.

Number three, gas-gate. The naked disingenuousness of the administration and the Republicans on this has never been more clear. While they demand that the Democrats stop blocking more drilling and pretend that this would lower the price of gas any time in the next decade, the Republicans are blocking more drilling. In the House yesterday, 162 Republicans managed to kill a bill that would have pressured the oil companies into drilling for oil on the federal lands they already leased from the government, the areas they are already permitted to drill in but have not yet. Republicans are blocking domestic drilling for more oil period.

Number two, torture-gate. Former Attorney General John Ashcroft testifying to the House Judiciary Committee that yes, one of the three detainees the government confirms it water-boarded was captured on March 28th, 2002. And yes, The first memo out of the Justice Department rationalizing torture wasn't written until August 1st, 2002. And that no, he and his Justice Department did not offer up any legal approval of torture between March 28th and August 1st, 2002. Oops. In other words, domestically, this means the water-boarding of Abu Zubaydah in 2002 was not even done before the White House got its own legal rubber stamp to torture people, so that torture and subsequent cover up could be prosecuted and internationally it would be pretty much clear cut, you know, war crimes.

Number one, Halliburton electrocution-gate. Almost impossible to believe, but this keeps getting worse and worse. The Pentagon had already admitted that 13 Americans had been electrocuted in Iraq by shoddy wiring, most of it done by the Halliburton spin off company KBR. Now internal Army documents indicate there have also been at least 283 electrical fires which have damaged or destroyed American military facilities in Iraq, and at least two more of our heroes there have been burned to death in them.

Given the destruction and death KBR and Halliburton have wreaked upon American troops at American bases, if they were assemblages of foreigners, this administration would have already branded them terrorists and insisted we have to fight KBR and Halliburton in Iraq, so we don't have to fight them here.

(COMMERCIAL BREAK)

OLBERMANN: He is a life-long Republican, a former adviser to Ronald Reagan and one of the authors of the Contract with America; and he's voting for Barack Obama. Our third story on the Countdown, one man who could make a dramatic difference in the campaign. It was Dr. Larry Hunter's unlikely and vocal support of a candidate with a domestic policy platform that was, quote, antithetical to everything he believes in which shocked colleagues, to say nothing of the op-ed he wrote in New York's "Daily News." He'll be my guest in a moment.

First parts of that op ed: "unjustified war and unconstitutional abridgment of individual rights, versus ill-conceived tax and economic policies, this is the difference between venial and mortal sins. John McCain would continue the Bush administration's commitment to interventionism and constitutional over-reach. Obama promises a humbler engagement with our allies, while promising retaliation against any enemy who dares attack us.

"Based on his embrace of centrist advisers and policies, it seems likely that Obama will turn out to be in the mold of John Kennedy, who was fond of noting that a rising tide lifts all boats."

A decision that does not come without reservation, quote, "even if my hopes on domestic policy are dashed and Obama reveals himself as an unreconstructed, died in the wool, big government liberal, I'm still voting for him."

As promised, Dr. Larry Hunter joins us now. Thank you for your time tonight, sir.

DR. LARRY HUNTER, PHD, FMR. REAGAN POLICY ADVISER: Thank you for having me.

OLBERMANN: It's one thing to personally reach the conclusion that you have. Lots of people have voted differently than their past voting records would indicate, in all directions politically. But why go public? Why write the op ed?

HUNTER: First of all, having listened to you read back to me the words that I've written, it is clear that my support of Barack Obama is based upon hope and change, my hope that he will change some of his domestic positions. But the reason I went public, quite simply, is, as I talked to my colleagues and friends and associates, I'm discovering that many of them think exactly the same thing I'm thinking, but for whatever reason do not go public, either fear - probably, in many cases, it's just that they can't bring themselves - they can't see how to vote for a Democrat.

So I thought why not go public? Why not state what we've all been talking about behind the scenes in e-mails and telephone conversations? We used to be the movement, the party of ideas. We've become the movement, the party of orthodoxy. And the Republican party, unfortunately, in my opinion, has kept the flock on the reservation by a good dose of intimidation and by imposing orthodoxy. I wanted to see if we couldn't revive an old fashioned debate over ideas.

OLBERMANN: What a lovely thought that is. I don't mean to sound patronizing, but it's a lovely thought. You're an economist who writes that, quote, the bloody boon doggle in Iraq, avoiding war with Iran and preventing terrorism, while protecting the constitution all trump the economy as an issue."

Obviously those are strong words and they must be a strong sentiment inside of you. How is it the case that what your life's work has been is trumped by these other issues?

HUNTER: I thought the one contribution I might be able to make is speaking as an economist. Again, I'm speaking to a group of people. I'm not speaking to the Ron Paul constituency, whom, by the way, I agree with. But that's the choir. The group I'm speaking to are my associates, my colleagues and the average Republican in the country, or the average conservative, who finds it very difficult to break away from the orthodoxy.

So speaking as an economist, who is saying, look, this is my life's work. This is vitally important, in my opinion. And yet the issues of life and death not only to our soldiers in Iraq, but to our country in the long run, trumps all of this. We can always repeal an ill conceived tax increase. We can get rid of a spending program down the road. Make no mistake, in my opinion, if Senator Obama succeeds in enacting some of these what I consider ill conceived programs, they will backfire and the wrath of the American electorate will come down on him and the Democratic party.

That's the analogy I tried to draw between venial and mortal sins. These are forgivable and they're reversible. What we've been doing in foreign policy and certainly what we've seen with the executive overreach and the constitution, I have come to fear might be irreversible if they're allowed to continue any further.

OLBERMANN: So your opinions on that sound very much like many of us at this end the spectrum, who don't see the current administration as a bad Republican administration that we don't happen to like because we're maybe not Republicans, but as something that has genuinely threatened the nature of this country. You mentioned colleagues and associates and past colleagues who are similar opinions, but may not be able to shake themselves of the R following their name. Do you have any gauge on the size of that group? Are you a phone booth's worth? Are you a large movement? Are you somewhere in between?

HUNTER: It all depends on how you define that group. If you define them in terms of ideas, I think it's large group. I think there's a very large segment of the conservative movement, the conservative community, that is very, very concerned. Now, how large a share of that group will actually go to the polls and pull the lever for Obama, I don't know. Time will tell.

OLBERMANN: Dr. Larry Hunter, the former policy adviser to President Reagan, who is now the president of the Social Security Institution, it was a fascinating piece to read. This has been a pleasure to speak with you, sir. Have a good weekend.

HUNTER: Thank you very much.

OLBERMANN: Thank you. In another season of summer blockbusters, forget movies. What you really want is to have those super powers. There may be a way, unless of course the enemy defeats us. Who is the enemy? According to one of Senator McCain's surrogates, talking on the record on behalf of the GOP of Florida, it's not the terrorists, it's not the insurgents, it's not even the Iranians. You will not believe who he said the enemy is, next.

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OLBERMANN: As you go to see the latest superhero movie, we have what you are really going for, how you can obtain super powers, kind of. That's next, but first time for Countdown's number two story, tonight's worst persons in the world.

The bronze to Dominic Carmen (ph), one of 257 passengers aboard a First Choice Airways Boeing 767 from London to Havana. Drunk, having already gotten into a shouting match with another drunk, sailing along at about 40,000 feet, while the plane itself was only at 35,000, Mr. Carmen decided to get off the plane. He tried to open the emergency door. The crew over-powered Domnic Carmen. They made an emergency landing in Bermuda and they left him there.

Our runner-up tonight, Bill-O the clown. Remember when he invented an imaginary publication called the "Paris Business Review" to verify that he had personally cost France billions of dollars during a Bill-O boycott? The Frank Burns of news is off on another big league delusion of grandeur. "First of all," he begins a segment, "thank you. I asked Americans to cut back energy use, and you guys rose up big. According to the Energy Department, oil supplies have risen three billion barrels in the last month, while experts predicted a significant drop in supply because of the summer driving season."

Billy thinks people tune in every night for instructions. Now, the problem you created for yourself here, sir, is that now if the price of a gallon of gas stays more or less the same or it goes up, it's your ass.

But our winner, speaking of the dangerously deluded, Swift Boater Bud Day, John McCain's Fellow Vietnam POW, trotted out on a conference call with reporters by the Republican party of Florida. Says Mr. Day, quote, "the Muslims have said either we kneel or they're going to kill us. I don't intend to kneel and I don't advocate to anybody that we kneel. And John doesn't advocate to anyone that we kneel."

The Muslims, not the terrorists, not even the Islamo-fascist, but the Muslims, the Muslims who are opposing terror with us, the Muslims who have given authorities the world over leads and tips about terrorists, the Muslims who live peacefully and contribute to our nation. You heard him, John agrees with him. As of tonight, John's campaign has refused to repudiate Day's racism and religious hatred. Maybe John needs to get rid of this clown but fast. Bud, the Muslims are going kill us, Day, today's Worst Person in the World.

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OLBERMANN: One does not need a degree in psychology to understand this equation. You and I go to super hero movies because we would like to have super powers. So, in our number one story on the Countdown, let's cut to the chase, can science give them to us and how soon, damn it? This weekend's ultra-blockbuster "The Dark Knight" expected to shatter box office records. The wind beneath Batman's wings, the Joker, portrayed with reportedly menacing perfection by the late Heath Ledger.

While Batman's flying prowess is man-made, as opposed to, say, Superman's, mankind is still a long way from either of these, though it is inching closer. The good old jet pack, around since the '50s, will soon boast a model with nine minutes of continuous flight time at 83 miles an hour. Wow.

As for super strength, AKA the Incredible Hulk, forget the steroids, think more along the lines of Iron Man, real life exo-skeletons, which can amplify strength 20 times. They're being developed for the military and Roger Clemens.

There's also the regenerative capability of some super heroes, enviable indeed, but few things fascinate us more than this: invisibility. Scientists have made a bit of progress with that. Though they are still a universe away from Harry Potter's cloak.

Let's bring in theoretical physicist and the author of "Physics of the Impossible," Dr. Michio Kaku. Thank you for your time tonight, sir. Pleasure to speak with you.

DR. MICHIO KAKU, THEORETICAL PHYSICIST: Glad to be on this show.

There's a bit of Clark Kent in all of us.

OLBERMANN: Presumably, invisibility, that last one, would be the most desired super power because, obviously, you could use it to sneak in and steal the secrets of any other super power. Where are we on invisibility?

KAKU: Two years ago, we physicists made an astonishing breakthrough at Duke university. Proof of principle was demonstrated in laboratory. We can take an object and shine microwave radiation at it, which then wraps around the object, reforms at the other end, making the object inside invisible to microwave radiation. And last year at Cal Tech and also in Germany, laser light was also shown to be bendable in this way.

So Harry Potter, watch out.

And look, the Pentagon is funding this research. They're not stupid. They see the enormous possibilities of a technology, still decades away, that can bend light around an object, making Harry Potter invisible inside.

OLBERMANN: Wow. All right, now flying, translated as the jet pack. I guess you would share this conclusion with me: that's the biggest disappointment of this whole last century. I saw a guy at a jet pack - with a jet pack at the 1964 World's Fair. And in that time since then, we're still only up to a nine-minute ride.

KAKU: That's right. The Nazis were the first ones to create a usable jet pack. It worked for about 30 seconds using hydrogen peroxide. And things have pretty much been the same for 50 years. Eventually, we hope to use super magnets. If we have room temperature super magnets, one day we may be able to float on magnetism, just like we can make trains float on air today using magnetism.

OLBERMANN: All right. Super strength, what's the premise - the premise of the exo-skeleton suit sounds extraordinarily intriguing. How does it roughly work?

KAKU: You put on a skeleton of metal. Every time you move your hands, it senses a motion, magnifies it. And NASA is interested in this. In outer space, our astronauts have to make repairs and, of course, they're limited by the strength of their muscles. NASA is very interested. The military is interested. You would put on, literally, a metal skeleton that senses all your motion and magnifies it by a factor of 20. At the University of California Berkeley, they have already developed a prototype Iron Man type exo-skeleton.

OLBERMANN: Wow. All right, X-ray vision. Obviously we have access to X-Ray vision, but unfortunately you have to go to work at the airport for the Transportation and Security Administration. Correct?

KAKU: We have X-Ray vision just like in Superman comics. We have a light bulb that emits X-Rays, not just ordinary light. It illuminates a room with X-Rays. They bounce off the ball. They bounce off things. And they go right into a camera which then photographs it, giving you pictures that are almost identical to the pictures that we're used to seeing in comic books. That's a technology that's here today.

OLBERMANN: Regeneration. Are we getting actually close to being able to do this now with stem cell and all the rest?

KAKU: Today, we can regenerate skin, bone, noses, cartilage, heart valves. And the bladder was grown just last year.

OLBERMANN: Wow. The physicist Dr. Michio Kaku, whose series "2057" I was just watching for like the fourth time the other night, great pleasure to have you on the program tonight, sir.

KAKU: Thank you.

OLBERMANN: That's Countdown for this the 1,906th day since the declaration of mission accomplished in Iraq. I'm Keith Olbermann. I'll now become invisible, briefly. Good night and good luck.

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