'Countdown with Keith Olbermann' for Friday, October 30, 2009
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Guests: Howard Dean, Michael Beschloss, Edward Norton, Chris Kofinis, Barry Levinson, Rev. Barry Lynn

LAWRENCE O'DONNELL, Countdown ANCHOR (voice-over): Which of these stories will you be talking about tomorrow? History on the Hill.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), SPEAKER OF THE U.S. HOUSE OF REPRESENTATIVES:

Today, we are about to deliver on the promise of making affordable quality health care available for all Americans.

(END VIDEO CLIP)

O'DONNELL (voice-over): The public option lives, but it won't be the robust public option. Republicans still cry foul anyway.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Here we go again. The American people have spoken, and it's pretty clear our Democrat colleagues have not listened.

(END VIDEO CLIP)

O'DONNELL (voice-over): While the party of no objects, one liberal Democrat stands up and says we should be able to do better, much better.

(BEGIN VIDEO CLIP)

REP. DENNIS KUCINICH (D), OHIO: If this is the best we can do, then our best isn't good enough. Health care or insurance care? Government of the people or government by the corporations?

(END VIDEO CLIP)

O'DONNELL (voice-over): Reaction tonight from former governor Dr. Howard Dean. A solemn moment at Dover Air Force base in the dark of night as the long war in Afghanistan takes its largest toll of American lives this month. President Obama as Commander in Chief pays his respects as the fallen soldiers return home.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It was a sobering reminder of the extraordinary sacrifices that our young men and women in uniform are engaging in every single day.

(END VIDEO CLIP)

O'DONNELL (voice-over): A story of change. A year after the groundbreaking election of Barack Obama, HBO gives us a riveting behind-the-scenes look at the historic campaign. One of the film's producers, award-winning actor Edward Norton, joins us.

Take the money then run? A story surfaces that Sarah Palin will

speak in Iowa next month in exchange for 100 grand. Her peeps deny it, but

even the suggestion of cashing in has upset the very Republicans in Iowa

Sarah Palin will have to woo if she wants to be President. >

And Blago may be gone from the Illinois state house, but he's not forgotten.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: For far too long, Illinois has been ruled by the hair.

(END VIDEO CLIP)

O'DONNELL (voice-over): Tonight, an ad destined for the wacky political ad hall of fame. All that and more now on "Countdown."

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're unhappy with that guy. >

(END VIDEO CLIP)

O'DONNELL: Good evening from New York. I'm Lawrence O'Donnell in for Keith Olbermann. The House of Representatives today released its health care reform bill including a public option, a government-run health insurance alternative for people currently without health insurance. President Obama praised the bill, but criticism from both the right, for how much it will cost; and the left for how little it will do.

Our fifth story on "Countdown" tonight, what Nancy Pelosi thinks she can get and not get in health care reform. The Speaker of the House today celebrating on the Capitol steps, listing what the 1,990-page bill accomplishes or will accomplish if something like it passes both House and Senate, including ending anti-trust protections for insurance companies and eliminating their ability to reject people for coverage based on pre-existing conditions. Between now and 2013, when the public option would kick in, a fund for a temporary high-risk pool would provide a stopgap for those unable to get private insurance. Speaker Pelosi also touted the bill's fiscal responsibility.

(BEGIN VIDEO CLIP)

PELOSI: It reduces the deficit, meets President Obama's call to keep the cost under $900 billion over ten years, and it insures 36 million more Americans. 36 million more. That said, the bill is fiscally sound; will not add one dime to the deficit as it expands coverage, implements key insurance reforms and promotes prevention and wellness across the health system. The bill will expand coverage, including a public option to boost choice and competition in the health insurance reform.

(END VIDEO CLIP)

O'DONNELL: Congressional Budget Office Director Doug Elmendorf several hours later, released the CBO's estimate of the bill's financial impact. The bill would make health insurance mandatory for most people and fine companies with payrolls over $500,000 that do not offer health care plans. It adds an excise tax for makers of medical equipment and raises taxes on individuals making more than a half a million and couples making more than a million.

Most notably, the CBO said the bill will cost more, over $1 trillion, but also offset more in taxes and spending cuts than speaker Pelosi estimated. The bill, however, would still meet President Obama's requirement that it not add to the deficit. The CBO estimating it would actually reduce the deficit by $104 billion over ten years. President Obama said in a statement, quote, "The House bill clearly meets two of the fundamental criteria that I have set out. It is fully paid for and will reduce the deficit in the long term."

The most dedicated veteran of the health care fight, Michigan's John Dingell, who presided over House passage of Medicare in the 1960s, and whose father introduced the first universal health care bill in Congress in 1943, pushed back against GOP claims that the bill's Medicare cuts threaten seniors.

(BEGIN VIDEO CLIP)

REP. JOHN DINGELL (D), MICHIGAN: The only citizens who are going to have to worry about their participation in Medicare being cut are the insurance companies. Some of them are getting paid 150% of what they're entitled to. And that's being paid, curiously enough, by other American citizens who are retirees.

(END VIDEO CLIP)

O'DONNELL: In response, Republicans seemed dumbfounded that Democrats were not cowed by the tea party rabble-rousers sent by Washington lobbyists to disrupt town hall meetings on health care reform.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), MINORITY LEADER: Over the last several months, the American people have spoken, and it's pretty clear our democrat colleagues have not listened. Through the month of august, September, the American people let members of congress of both sides of the aisle know that they wanted no part of a government-run health care plan.

(END VIDEO CLIP)

O'DONNELL: In fact, moderate Democratic Senator Evan Bayh of Indiana today, faced with a new poll suggesting voters would punish him for helping Republicans block a vote on health care, as well as a request for clarification of his position on this program last night, seems to take a clarifying step in Harry Reid's direction. Despite previously saying allowing debate on the bill would be equivalent to supporting it, today he released a statement saying he will support moving forward to a health care debate on the Senate floor. Bayh, whose wife sits uncomfortably, no doubt, on the board of health insurance giant WellPoint, has still not said whether he would help Republicans block a vote on health care; and still has not provided an answer to our question of whether he has ever voted to allow a vote on something he has opposed, and then voted against the final passage of the bill.

The Service Employees international Union, however, told us they have researched this and turned up at least three such incidents in Bayh's voting record. Some intense and heart-felt opposition to the House bill came from the left today. Leaders of the progressive caucus meeting with President Obama today, urging stronger support from him for a stronger public option.

And Congressman Dennis Kucinich tore into the House bill, especially for forcing people to buy the health insurance industry's faulty product and fatten their profit margins, and for forcing the government to negotiate its rate of payments to providers rather than tie them to the lower Medicare rates, which would have saved taxpayers $85 billion.

(BEGIN VIDEO CLIP)

REP. DENNIS KUCINICH (D), OHIO: Is this the best we can do, mandating private insurance, forcing people to buy private insurance policies or pay a penalty, guaranteeing at least $50 billion in new business for the insurance companies? Is this the best we can do? Government negotiates rates, which would drive up insurance costs; but the government won't negotiate with the pharmaceutical companies, which will drive up pharmaceutical costs?

Is this the best we can do? Only 3 percent of Americans will go to a new public plan. Well, currently 33% of Americans are either uninsured or underinsured. Is this the best we can do? Eliminating the state's single-payer option will force most people to have to buy private insurance. If this is the best we can do, then our best isn't good enough. And we have to ask some hard questions about our political system, such as, health care or insurance care? Government of the people, or government by the corporations?

(END VIDEO CLIP)

O'DONNELL: Our guest tonight is the former governor of Vermont, former chairman of the Democratic National Committee, Dr. Howard Dean, currently a consultant to both Democracy for America and McKenna, Long and Aldrich, and less we forget, a contributor for CNBC. Thanks for your time tonight, Governor.

FORMER GOVERNOR HOWARD DEAN (D), VERMONT: Thanks for having me on.

O'DONNELL: Governor, let's go to Dennis Kucinich's question right off the bat. Do you disagree with any of the points he made in that speech? And ultimately, is this the best we can do?

DEAN: it's not the best we can do, but it's a very good start. Look, when they were fighting uphill against a very well organized opposition, which has a lot of trouble telling the truth; and against an incredibly well-organized health insurance industry, which has given millions and millions of dollars to some of the people who are going to have to vote on this stuff.

So, I don't disagree entirely with Dennis, but the fact is, this is real reform. People are going to have a chance to get into a different kind of a system that doesn't take huge profits out and put it in their own pockets. And we're only - 4 percent of all the money we put in is spent on things that don't have anything to do with health care. So, are there some things? Yeah.

The most important thing that probably needs to be changed in conference committee is more people need to get into this system before the 2010 elections. The only way to defeat all the things the opposition is saying that aren't so is to actually show them how the system works. It really is pretty good. It's going to be very good for a lot of people. I think this is going to work well. I think it's a great bill. I think the Speaker has a lot of courage. And I'm very, very pleased. I think Senator Reid did a terrific job last week on the same thing. I think we're in good shape. We're going to have some bad days still, I'm sure, but we are in very good shape now.

O'DONNELL: Governor, the biggest difference between the House bill and Senate bill is now on the tax side. The Senate wants to tax union health care plans. That is opposed by over 170 Democratic members of the House. The House wants to tax rich people, wants to tax people above - individuals above $500,000 of income, couples above a million dollars of income. These seem like irreconcilable differences. One of those taxes has to win. Which one do you think it will be?

DEAN: Fighting over money is never irreconcilable. There is a number, and there is always a number in the middle to get to. I'm not the least bit worried about that. What I'm worried about is making sure the public option does well, and as many people can get to sign up for it as possible. I'm worried about what's going to happen to the Democrats in 2010. The only reason - the only way we can show the country that the Republicans have just not been telling the truth for the last six or eight months about this bill is to actually have it put into effect. Once it goes into effect and people's - especially, people's kids start getting insurance, this debate is over. Instead of losing seats in 2010, we're going to pick up some seats in 2010.

O'DONNELL: When Barack Obama ran for President, he said that on the taxation side, you could pay for health care simply by allowing the Bush tax cut on the top tax bracket to expire. We now see that the House has gone far beyond that. The Senate has gone beyond that and invented a handful of taxes we have never seen before. How do Democrats answer next year's obvious attack ads against them in the campaign, saying they voted for huge tax increases that none of them mentioned during their last campaign?

DEAN: You have to make sure people actually have insurance. You can't wait until 2013 or 2012. If you want to say the Congressional majority that we've got, you've got to have - some of this go into effect. The whole bill can't go into effect by 2010. But you've got to get a significant number of people insured. That's why I think the best way to run the public option, I agree with having negotiated rates. That's a done deal. That was passed in the Senate - I mean, put out there by a leader of the Senate and by a leader of the House. So we're going to have negotiating rates. I don't think that is any big tragedy. I think some folks are concerned about it, but I think that's fine.

I think the expansion of Medicaid is great. You've got to hold the states harmless. But it's a very good thing to do. That's how we got universal insurance for all our kids in Vermont. But the one thing you've got to do is get as many people as you can, particularly kids, into the system. And I think that probably means using Medicare as your basis with negotiating rates.

O'DONNELL: Governor, you've been adamant about the public option all year. I want to make sure I understand. You're endorsing here tonight the House version of the public option? Am I clear on that?

DEAN: Yes. I don't think either one of them is perfect. But I think both of them; both the House and Senate versions are good bills. And I'd vote for either one of them if I were in Congress.

O'DONNELL: Do you think the House version or Senate version, one or the other, seems to be better at the possibility of containing costs?

DEAN: I think the bigger the public option is, the better costs will be contained. Massachusetts has shown that you can get to - pretty close to universal insurance without using public option. But you can't control costs without using a public option. So, you look at these bills very carefully.

One of the big things I was shocked at in the bill, in House bill, they actually resurrected co-ops. Co-ops were in the House bill. I was stunned. I would love to know why that is, because they aren't going to work. But that's in the bill. I couldn't quite figure that one out at all.

But in general, they are both very, very good bills. I think it's not the kind of reform that I would have loved. Dennis Kucinich has some points there, but this is pretty good stuff, and it really is going to make a difference.

O'DONNELL: Governor, I just want to take you back to the tax piece one more time. You have to indulge me. I used to be the chief of staff on the Senate Finance Committee where we do taxes, so it's one of the things I concentrate on here.

Which one of these tax approaches do you think is more politically viable and is the better one to defend in the campaign next year? The income tax on top earners, or the tax on health care plans?

DEAN: You know how this goes. What they're probably going to do is a little of each. And Rich Trunk, the head of the AFL-CIO the other day said that there was a possibility of taxing health care plans at a benefit level, but the benefit level had to be much higher than it was now because he didn't want the working people to get caught in that. They'll come up with a compromise and get money from both sources, but not as much as either source gives now in each bill. That's just a compromise. You know, you're experienced. You know very well that's an easy compromise. They might fight about it, but it's an easy compromise. There are some tougher things in there. The most important thing of all is moving that date of enrollment up to preserve the Democratic majority in 2010.

O'DONNELL: Governor Howard Dean, thank you for finding the Solomonic solution to the tax dilemma in these bills and thanks for joining us tonight.

DEAN: Thanks for having me on.

O'DONNELL: Coming up, the solemn scene at Dover Air Force Base last night, the striking images of Barack Obama, Commander in Chief, saluting fallen soldiers. Presidential historian Michael Beschloss joins us. And later, someone in Sarah Palin's camp is creating problems for her in Iowa. Somehow, local Republicans get the idea the former governor wants $100,000 to speak there next month. Some Iowa Republicans say, "Sorry, Sarah. You do not get a paycheck for the privilege of building relationships with guaranteed caucus-goers." Details ahead on "Countdown."

(COMMERCIAL BREAK)

O'DONNELL: Coming up, the significance of President Obama's late-night visit to pay tribute to our war dead from Afghanistan.

Also, inside the election of Barack Obama. The HBO documentary "By the People" debuts next week. We'll talk to producer and award-winning actor Edward Norton. And later, Could Sarah Palin's second book be "How Not to Start a Presidential Campaign"? She's not even announced for 2012 yet, and she already has problems brewing in Iowa. That's next. This is "Countdown."

(COMMERCIAL BREAK)

O'DONNELL: If you've already caught a glimpse of it today, it may have stopped you in your tracks. The image of the American President attending the predawn solemn transfer of our nation's war dead from a military transport plane to the vehicle that would take those fallen soldiers on the final leg of their tragic journey home.

And in our fourth story on "Countdown," part of the President's intent may have been to remind us of what war really is as he prepares to make the most difficult decision of his life, on whether to commit even more troops to the war in Afghanistan.

President Obama left the White House shortly before midnight and boarded Marine One for Dover Air Force Base, the nation's entry point for U.S. military personnel killed in action. The President met with families of 18 Americans killed in Afghanistan over two different incidents Monday and Tuesday. Fifteen soldiers and three drug enforcement agents lost their lives, making October, with 54 deaths, the deadliest month in the 8-year-old war. The President met with all the families of the fallen this morning, and later boarded the military transport plane each time for the Air Force chaplain's prayer over the bodies. One family, that of Sergeant Dale Griffin, had agreed to allow cameras for what is known as the solemn transfer of the coffin to the awaiting vehicle.

(VIDEO CLIP)

O'DONNELL: It has been only six months since the Pentagon changed the policy imposed under President George H.W. Bush that banned media coverage of the arrival of fallen soldiers. The new policy allows each family to decide whether to allow cameras. In this instance, 11 of the 18 families had made a choice against coverage before they were notified that President Obama would be there. The President returned to the White House before 5:00 a.m. And he later acknowledged that the grim ceremony will inform his decision.

(BEGIN VIDEO CLIP)

OBAMA: Obviously, the burden of that, what our troops and our families bear in any wartime situation is going to bear on how I see these conflicts, and it is something that I think about each and every day.

(END VIDEO CLIP)

O'DONNELL: President George W. Bush often met privately with grieving military families, but he did not go to Dover for the transfer of bodies.

Let's bring in NBC News presidential historian Michael Beschloss.

Good evening, Michael.

MICHAEL BESCHLOSS, PRESIDENTIAL HISTORIAN: Hi, Lawrence. How are you doing?

O'DONNELL: Obviously, this was powerful imagery made available to us because of one family's choice to allow media there. What other recent precedents do we have in the modern media age for this kind of thing?

BESCHLOSS: Well, you know, one thing I think we have to say, Lawrence, is this really tells us a lot about a wartime commander in chief. For instance, Richard Nixon, when he was waging the war in Vietnam, he didn't want to go to ceremonies like this because he wanted it to be abstract. He didn't want to be swayed by the emotion of seeing what was the cost to American men and women he was sending off to die.

At the other end of the spectrum, you can go all the way back to Abraham Lincoln who went to a summerhouse during the summers of his presidency. Across the street from his house was a new cemetery. Every week there were 30 to 40 Union graves dug there. So when Lincoln got up in the morning, looked out the window and saw graves being dug of soldiers who had died at his order, he hated it. It pained him, but he felt he could make better decisions because he'd had that experience. And I wouldn't be surprised if when we read a Barack Obama memoir years from now, if what we saw at midnight last night didn't turn out to be a big moment in his life at a moment that he's making some pretty big decisions about Afghanistan.

Now, his predecessor, George W. Bush, who made the first big decisions about Afghanistan I know visited families with wounded in hospitals. Bob Woodward has accounts of that sort of thing in his books. What else did George W. Bush do that is comparable to this? We know he didn't do precisely this, but what else?

BESCHLOSS: He met with a lot of families, but tended to distance himself from ceremonies like this. Of course, Dover was off limits all the way back to 1989. His father, George Bush, '41, just after the invasion of Panama, was giving a press conference, was chuckling, and on the only cable news network at the time. They did a split screen. The other half of the screen showed coffins coming into Dover from Panama. People found that very strange. And so that led to a policy that prevailed for a long time, which was that these things were off limits. The government would say it was to preserve the privacy of the families. But of course, a lot of people in the Pentagon worried that if you had these kinds of images, it would reduce the support for various wars that we were fighting.

O'DONNELL: Now, obviously, the President did not do this in a political vacuum. What are the political risks for this kind of imagery?

BESCHLOSS: You might say one risk might be that he's identified with a war in Afghanistan that might be unpopular, but this war has gone on from the moment he came in, so he is identified. I think much more important than the risks are the way it enhances what we know Barack Obama, that while he's making these decisions about Afghanistan, he wants to confront the reality of what a decision to continue this war five or ten years with conceivably tens of thousands of American casualties, he wants to see the cost in person.

O'DONNELL: What about the possibility that some would argue this is exactly the image that maybe some of our enemies want to see? They want to see that they have delivered something that lands heavily and personally on the President?

BESCHLOSS: They might. But, I think what I would reply is that this is the strength of America. We're a democracy. We are proud of what we do. We don't cover it up. And you know, Lawrence, during World War II, for a while there were censorship rules waged by the Franklin Roosevelt administration saying that news reels and newspapers could not show the corpses of Americans who had been killed in World War II. FDR actually repealed that censorship. He felt if Americans saw the cost of war, these men and women who had been killed by the enemy, it would actually strengthen American support for what we were doing.

O'DONNELL: Presidential historian Michael Beschloss, thanks for joining us tonight and providing invaluable historic perspective on what we've seen today.

BESCHLOSS: It's my pleasure, Lawrence. >

O'DONNELL: Coming up, the groundbreaking election of Barack Obama. A year after Election Day, a new documentary takes us behind the scenes in the historic campaign. Award-winning Actor Edward Norton, a producer of the new documentary, joins me in studio next.

And later, Sarah Palin's Iowa problem. Her team denies ever asking for 100 grand to speak in Iowa next month, but even the thought of it has local Republicans upset. Howard Fineman on the obvious, why this is not a good way to start a possible presidential campaign ahead on "Countdown."

(COMMERCIAL BREAK)

O'DONNELL: Barack Obama's presidential campaign officially began February 10, 2007, and officially ended November 4, 2008. As you recall, a whole bunch of stuff happened in between. Our number three story on "The Countdown," we know the story of the Obama campaign looking from the outside in. On Tuesday, the world will get a look from the inside out.

The HBO documentary "By the People," the election of Barack Obama, is the story of the Obama campaign from before it was a campaign. Filmmakers had unprecedented access to everyone from Candidate Obama and his top campaign advisers to staffers knocking on doors in Des Moines. "By the People" provides insider accounts revealing how the campaign dealt with everything from victory in Iowa to the Reverend Wright controversy, to the McCain/Palin ticket.

In a moment, one of the movie's producers, Edward Norton. First, a clip from the documentary. The scene is backstage at Invesco Field in Denver, just before the candidate's speech accepting the nomination for President of the United States. The candidate is clearly feeling the pressure of the moment and the weight of history.

(BEGIN VIDEO CLIP)

OBAMA: When I was practicing the speech for the first time and I came to the end where I talked about King speaking in the Lincoln Memorial, and I choked up and had to stop. Dr. King's speech happened when I was 2 years old. So, you know, anybody who is 60 or over remembers it vividly. And the majority of African-Americans at that time couldn't vote, much less run for President.

(END VIDEO CLIP)

O'DONNELL: Edward Norton's HBO documentary, "By the People, The Election of Barack Obama" appears Election Day, next Tuesday, November 3rd. Edward Norton, welcome to the "The Countdown" set.

EDWARD NORTON, PRODUCER, ACTOR: Thanks.

O'DONNELL: The first obvious question, how did you get this kind of access in a political campaign that has every incentive in the world to keep you out when they're managing their secrets backstage?

NORTON: I think the simplest answer to that is get in early. And in our case, that actually meant proposing this project before he was a presidential candidate. We actually initially suggested to him that what we wanted to do was a long-term political diary of his first term in the Senate. We were interested in looking at politics and government through the experiences of a new, young, you know, Senator of the next generation in American politics.

And because we began that process with him and his staff almost nine months before they declared his candidacy, I think that we were able to have time with them to define what we were actually doing and earn a kind of a trust on their part.

O'DONNELL: Now, the first time I saw Barack Obama was in the hall, Boston Garden, 2004, John Kerry's convention, keynote speech. And I say after I see that speech, this is the first real black candidate for President, the first one with a shot at a nomination. This is also the best, most magnetic star the Democratic Party has. Were you looking at him that way? Even though you were going to track a Senator, were you looking at someone who.

NORTON: Definitely.

NORTON: Definitely. And a lot of credit goes to one of our directors, Amy Rice, who absolutely was the one who came in the door to me and my partners and said, "This is clearly a person who is going to run for President some day. Wouldn't it be fantastic to chronicle from a very early phase, his journey toward that kind of historic candidacy?"

And we all had been struck by him, just as you were. And clearly, whether you were a Democrat or Republican, clearly, this was a figure of potential historic importance. So Amy really pushed to me and my producing partners the idea that it would be worth starting now. But I don't think any of us, as excited as we were by the prospect of engaging with him, I don't think any of us thought it would actually kick off within that year.

O'DONNELL: Now, the movie captures the emotions of campaign life like nothing I've ever seen. You come from a world where very high-priced and talented directors do an awful lot of work with good screenwriters and brilliant actors like yourself to try to get that kind of emotion on screen. In this documentary, were you just lucky to be in the right place at the right time with these cameras, or did you go into this with a shooting strategy to find that?

NORTON: We did have strategy. There was no way to predict the roller coaster of this campaign, and certainly not the outcome. But we had what we called kind of an operating set of principles. I mean, we were very committed to a nonpartisan archivist's approach. We weren't trying to make a film celebrating Obama or his campaign or staff. We wanted to record, just as you said, what were the emotional experiences, what was the ethos? What did it feel like to be inside the people who were actually making that piece of history? And we tried to draw them out on the emotional experiences they were having, not just kind of the clinical strategy of it all.

O'DONNELL: And just quickly, was there any moment where they said, "Okay, that's it. Turn off the cameras. No more of this"?

NORTON: Actually, it was only when they declared his candidacy. Dave Axelrod, in particular, sage political guru that he is, he got wind of the fact that we had been doing this for nearly a year and immediately said to us, "This isn't going to continue as this turns into an actual campaign. And it took us a while, I think, to convince him that we were not the media. We were not the short news cycle press that was looking to exploit what we were getting, that we were - we were in it for the long haul and trying to make a document of how this history, how this took place for the long view.

O'DONNELL: And an amazing documentary that it is. Edward Norton, producer of "By the People." Thank you for joining us tonight.

NORTON: Thanks very much.

O'DONNELL: Debuts next week on HBO, "By the People."

Coming up, if Sarah Palin has aspirations of running for President, she needs to rethink the notion of trying to make money on her campaign appearances in Iowa. Even the suggestion of paying Palin to speak has some Iowa Republicans up in arms.

And if that's not weird enough for you, how about announcing in your candidacy for Governor of Illinois and then unveiling an ad in which you run against Blago's hair. We'll show it to you. Ahead on "Countdown."

(COMMERCIAL BREAK)

O'DONNELL: The battle between the Republican and Conservative Party candidates for Congress in New York's 23rd district is not just the epicenter of Republican party chaos. It has also become the latest litmus test for conservative bonafides. In our third story on Countdown, former Arkansas Governor and current TV host Mike Huckabee may be showing confidence or possibly even playing out a grudge by not endorsing either candidate.

But Huckabee's far right friends are not happy. A quick reminder that the Conservative Party candidate is supported by the likes of Alaska blogger Sarah Palin and rabid Congresswoman Michele Bachmann. Mr. Hoffman, unlike the Republican candidate for New York's 23rd district, is socially conservative.

But Mr. Huckabee has not formally endorsed Mr. Hoffman. Quote, "it's very disappointing," said the vice president of the Family Search Council. Quote, "you have names out there like Sarah Palin, Fred Thompson, Tim Pawlenty. You would think that would have pushed him to make a decision," end quote.

From New York's State Conservative Party, its president telling "Politico," quote, "when you are the leader of the conservative movement, as Mike Huckabee is, you should make a bold statement."

Mr. Huckabee has said this: quote, "well, I think Doug Hoffman - certainly his views represent more closely to mine. He represents not only what the conservative party stands for, but what most Republicans stand for."

But one conservative blog has mused that Huckabee holds a grudge against former presidential candidate Fred Thompson and did not endorse Hoffman because Mr. Thompson did. And a conservative magazine noted that Hoffman is the choice of the anti-tax Club for Growth, which criticized Huckabee sharply during his presidential run.

Let's bring in Democratic strategist Chris Kofinis, also the former communications director for the presidential campaign of Senator John Edwards. Thanks for joining us tonight, Chris.

CHRIS KOFINIS, DEMOCRATIC STRATEGIST: Good evening.

O'DONNELL: Chris, it doesn't get any more fun than this. New York's 23rd is the gift that keeps on giving. Here was Huckabee holding back, trying to play it safe. Does it look to you, Chris, like he was trying to, in effect, play it the way leaders play it? When you are out in front, the front-runner for the endorsement, the front-runner for the nomination, you start to play it safe. Is this the first evidence that Huckabee thinks he is the front-runner for the nomination and is trying to play it safe?

KOFINIS: Yes. I think he was clearly keeping his eye not on the special election in New York, but the eye on the presidential Republican primary that's coming up in a couple of years. So I think he had endorsed Rubio, who is kind of the conservative challenger in the Florida Senate race. So following in New York may have been a bridge too far for him.

You know, he may have - you know, tried to come across maybe a little

bit more independent, a little bit more moderate. But neither event what -

· you know, what this has done is just expose this incredible civil war that's broken out over this, you know, pretty anomalous situation in New York. Why fight over a seat that you were going to win? But it has exposed, I think, a real division within the Republican party, between the conservatives and the even ultra-conservatives.

O'DONNELL: My sources in the district, Chris, which is the largest by square miles east of the Mississippi, are telling me that it now looks like Hoffman is pulling ahead. Now, if the conservative wins, is this a win for those who endorsed Hoffman? And what happens to those who didn't?

KOFINIS: Well, you know, they are going to believe it is a win. They are going to go out there and crow about how the Republican party came home to its true conservative roots. What the - the various grassroots groups that are backing this, like Club For Growth, as well as these various Republican activists, whether it is Sarah Palin or Rush Limbaugh - what they don't understand is this is a lose-lose-lose scenario. Even if they win this seat with Hoffman, they are going to lose, because what they will basically have done is declared war on every moderate Republican out there.

And the conservative factions within the Republican party are going to be emboldened. They're going to go out there and they're going to want to attack Republican candidates who don't fit their ideological view. Unfortunately, I think what the Republican party has to come to terms with is that they need an ideological vasectomy. It is that brutal. This notion that somehow you are going to define what a party is based on the extremes just ignores political calculations. It just ignores the fact you can't win elections that way.

O'DONNELL: Chris, just quickly now, going to election night. If the Democrat cannot pull this one out as a win, pull it out of the middle of the Republican civil war, what should people be rooting for? What will Democratic strategists like you be rooting for as the second best outcome in that district?

KOFINIS: Well, you know, if the Democrat - if Owens doesn't win, my preference is that Hoffman wins, because it will embolden the conservative right, like I said. And that will spill over across the board. Let alone what is going to happen in 2012 and what New York - the special election really is a preview of the 2012 civil war that is going to break out between the various factions like Huckabee and like Palin. It is going to be something to watch.

O'DONNELL: Democratic strategist Chris Kofinis, try to contain your glee. Many thanks for joining us tonight.

KOFINIS: Happy Halloween.

O'DONNELL: Coming up, the convergence of Hollywood and politics. How star power is impacting which candidates rise to prominence and how Hollywood star power plays into it. Our guest is Academy Award winning director Barry Levinson.

Is Pat Robertson trying to kill Halloween? One of his writers claims witches have prayed over the nation's candy supply in an effort to curse it. No joke. Have no fear; Countdown will explain why you don't have to cancel your trick-or-treating plans.

(COMMERCIAL BREAK)

O'DONNELL: He calls it "Pollywood." It's documentary from Academy Award winning director Barry Levinson. You are about to have a front row seat and a backstage pass to it. The film covers the most important and cinematic presidential campaign of our time. Profiling politically active actors, powerful political figures, and the media that cover it all. Our number two story on the Countdown, Is there a line between politics and celebrity or just a big circle around both of them?

My friend Barry Levinson will join us. But first, a glimpse into the world of "Pollywood."

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Politics and celebrities; some folks complain they don't belong; they shouldn't be intertwined. Why are you compelled to speak up and make your opinions known?

UNIDENTIFIED FEMALE: Why do you think it is important to lend your celebrity here, especially at the DNC?

UNIDENTIFIED MALE: All the way out from Hollywood? What drew you to come out here?

UNIDENTIFIED MALE: What will you be doing on the convention floor and during the convention?

UNIDENTIFIED MALE: It is a funny thing. I have been getting that question a lot. I think people have become kind of cynical about politicized celebrities.

UNIDENTIFIED MALE: I do have a skill or a credential. It is being able to communicate people. I want to learn what it is. And hopefully communicate it to, you know, regular folks.

(END VIDEO CLIP)

O'DONNELL: Joining me now is Oscar winning film maker and the director of "Pollywood," airing on Showtime next week. Barry Levinson, thank you very much for joining us tonight.

O'DONNELL: Barry, I watched you at a lot of these events, the Democratic convention, running around with the film crew to all of these different things. I couldn't figure out what you were shooting. I couldn't figure out what you were getting. Did you know what you were getting when you were shooting it? Or did you have to find it in the editing room?

LEVINSON: I think, as it progressed, you began to see this collision of things that I was than necessarily prepared for. So I think you see how powerful the media is and the concept of celebrity and politics, and how it becomes confusing and turns into the circus.

O'DONNELL: And you were not exactly thrilled with the circus. Having watched "Pollywood" now, myself, you have many complaints in every direction, including the media. I'm going to give you a very short time. This will be the shortest answer. OK? Take your best shot at us. Take your best shot at us, the cable news focus on the campaigns, and what our influence is or should be or -

LEVINSON: It is the good and the bad of it all. What happens is the

· the frivolous nature of it is what basically comes to the top. It is the - it is the circus atmosphere, as opposed to the substance. Both conventions, in many ways, are just kind of - you know, people writing and grabbing things. And all of this nonsense begins to bubble up, which is unfortunate.

In it, there is some great substance and there are quite a - some serious issues that have to be addressed. But there's way too much kind of, you know, three-rings going on.

O'DONNELL: Now, most of the movie stars in your film, many of whom I know, you know. We know that they would be there no matter what their occupation is. They are dedicated and interested citizens, who re very much interested in politics. But they are there as celebrities. Anne Hathaway cannot walk into a stadium without all eyes turning to her. What does that do to these kinds of events, to have people like Anne and others showing up there?

LEVINSON: Well, what happens is, you know, some of them - they point the finger about the - that it is all wrong, because they are actually concerned citizens that want to attend some of these events. And sometimes, you know, they are - they are really as a spectator. Some have specific kinds of cause that they care about, issues that they feel they want to spotlight.

But what happens in the times we are in a polarization, we keep pointing fingers and how dare you talk about this, and, you know, you shouldn't do this, et cetera, et cetera, which, in fact, is, I think, misleading. We are talking about responsible citizens, some of which want to be just spectators, and some of which feel strongly about certain issues.

O'DONNELL: When the credits are rolling on this documentary on Showtime next week, what are you hoping the audience is thinking?

LEVINSON: Well, I don't - I always - never really kind like to go down that road. I think you just get a little bit after look and you can draw your own conclusions from what you see. And what changes do we have to make? The irony is that television is still very new. And we begin to learn and adapt to what goes on. That's the good and the bad.

If you go back to the very beginning of film and the movie "The Great Train Robbery," the bad guy points a gun at the audience and fires it, and the audience actually ducked, because they were afraid of that. Now, of course, now we don't pay any attention to that. We understand it. We move on. And we begin to evolve and we understand some of - the way the games are played and how language is used and misused.

And it is an ongoing process begin to make sense out of, many cases , the nonsense of it all.

O'DONNELL: We don't let great artists come on Countdown, even to talk about just politics. You are going to have to tell us something about your art. What is the difference, Barry, between a documentary like this, working with no script, working without lighting crews and all of that stuff that creates the magic in real, big budget movie making? What's the difference between these two ways of approaching material?

LEVINSON: When you approach a written script, you are trying to basically get all the elements out of each particular scene, and the evolution of the characters throughout. In a documentary, it is a constant discovery. Rather than trying to do an agenda, you are trying to make sense out of what is going on. You are talking to people who will say things that will surprise you at times. That's part of it.

O'DONNELL: We were rolling some film, Barry, beside your image as you were talking. And I think I saw a shot of me in there somewhere. I want to warn the audience, we have no makeup in this thing, OK. So please. Barry Levinson, director of "Pollywood," which makes its television debut on Showtime next week. Thank you very much for joining us this night.

LEVINSON: Thank you.

O'DONNELL: Coming up, the great candy caper of 2009. Witches have cursed all of the Halloween candy. That's the actual message from Pat Robertson's website. Or at least it was the message for a short time today.

When Rachel joins you at the top of the hour, the latest outrage from Senator Joe Lieberman. Now that he's threatening to campaign for Republicans, is it time for the Democrats to play hardball with him finally?

(COMMERCIAL BREAK)

O'DONNELL: And now, if you think Dick Cheney isn't scary enough, something truly scary: a Halloween public service announcement from Pat Robertson. Not only is the devil in the details, he may be lurking inside your Kit Kat. Our number one story, beware of demonic candy.

Pat Robertson's Christian Broadcast Network website is alerting the masses on the dangers of goblin infused M&MS. In a posting titled "The Danger of Celebrating Halloween," guest writer Kimberly Daniels offers this timely advisory: "most of the candy sold during this season has been dedicated and prayed over by witches."

And what makes Ms. Daniels such an authority on the inherent evil of Reese's Peanut Butter Cups? She tours the country in a 30-foot Winnebago called the Demon Buster, and has been known to tell witches they serve sissy-punk gods. In the article, Ms. Daniels warns of a demonic trinity praying over unsuspecting Halloween revelers. "The truth is that these demons that have been presented as scary cartoons actually exist. I have prayed for witches who are addicted to drinking blood and howling at the moon."

Ms. Daniels elaborated on the possibility of vampire Gummy Bears on "Charisma Magazine's" prophetic Insight blog. Apparently too frightening for even Pat Robertson, it was not included in her Christian Broadcasting Network article. "I do not buy candy during the Halloween season. Curses are sent through the tricks and treats of the innocent, whether they get it by going door to door or by purchasing it from the local grocery store. The demons cannot tell the difference."

For those laughing off Ms. Daniels' sound advice, she has a warning for you, too. "While the lukewarm and ignorant think of these customs as just harmless fun, the vortexes of Hell are releasing new assignments against souls."

Not to mention teeth. Joining me now is the Reverend Barry Lynn, executive director of Americans United for Separation of Church and State. Good evening, Reverend Lynn.

REV. BARRY LYNN, AMERICANS UNITED FOR SEPARATION OF CHURCH AND STATE:

It's nice to be here.

O'DONNELL: Now, is this just a way of getting good Evangelical Christian children to not eat too much candy on Halloween?

LYNN: No, as far as I know. I only come on these shows when I have real evidence. There's no conspiracy between Ms. Daniel and the American Dental Association. This is just about a very strange view of Halloween held by some of these fundamentalists.

Lawrence, they're not just worried about candy. She also warns that tomorrow night you have to be concerned about having sex with demons, which I think is a warning to anybody who gets really bored during the third game of the World Series. Be real careful what you do afterwards. Make sure you know who you might be doing another physical activity with.

There's nothing that these folks will stop at. They don't like orange and brown colors, because they say that that is coded to demons. Most of us just think it's coded to the fact that the ground is brown and the leaves this time of year are orange.

But we live in one world and they live in another.

O'DONNELL: I just want to get the sex part of this clear. Is it only tomorrow night we have to be careful of sex with demons?

LYNN: No. In fact, I'm glad you brought that up. It's also not only tomorrow. If you follow her logic, then you have to worry about candy. Think about this, if you had really clever demons, wouldn't they be inside Candy Canes by now, so that they could really trick you and get into your body around Christmas-time? So all demons probably aren't that smart, but I think it is something to be concerned about.

O'DONNELL: Now, here you are, a thoughtful, religious man. And you get these kinds of stories thrown at you by us. And leaving you in the position of having to defend, I think, not just this kind of craziness, but just the world of religion in general starts to shake, doesn't it, when these kinds of things go out there?

LYNN: No, of course it does. I mean, the fact is - and the serious fact here - is that, in this case, Robertson and company are demonizing people who are Wiccans and pagans, who are very spiritual people, very decent people. I have represented them. I'm also a lawyer, as well as a minister. I've represented them in a number of cases. They're good people. A lot of them serve in the United States military.

But he wants to create this warped impression that they're in league with the devil, and they're poisoning your children and they're also involved tomorrow night, allegedly, in something called Released Time Curses, which sound to me a lot like perhaps a cold medicine in a capsule that has a really, really strong bite.

So they're worried about everything. They see the world as a dangerous place. They don't want any of us to have any fun. And this is just one more sad example of how they do it.

O'DONNELL: Now, it seems that someone at the Christian Broadcasting Network's website, on second thought, has had the good sense to remove this post. But just take us back. I remember something from my Catholic school education about Halloween being derived from both Christian and pagan harvest rituals or something.

LYNN: Sure.

LYNN: Well, we have commercialized this in the same way that we've

commercialized Christian events like Christmas. You know, it's more about

· less about Baby Jesus every year, and more about how many dolls that you can sell at the mall.

So the truth of the matter is, we've managed to merge Christian and pagan rituals together. Even the so-called Christmas Tree really has nothing to do with the Bible.

But what - these folks are really specific. They just don't like anybody that's different from them. And that means they don't like the pagans, the Wiccans, the witches. They want to connect them to the devil.

O'DONNELL: Reverend Barry Lynn of the Americans United for Separation of Church and State. Thank you very much for making the nation aware of no sex with demons tomorrow night.

LYNN: Thank you. I'm leaving you a Snickers bar here in Washington.

O'DONNELL: Thank you very much. That will have to do it for this night before Halloween edition of "Countdown." I'm Lawrence O'Donnell, in for Keith Olbermann. Have a good weekend. Our MSNBC coverage continues now with "The Rachel Maddow Show." Good evening, Rachel.

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

'Countdown with Keith Olbermann' for Thursday, October 29, 2009
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Guests: Michael Beschloss, Howard Dean, Edward Norton, Howard Fineman

(BEGIN VIDEOTAPE)

LAWRENCE O'DONNELL, GUEST HOST (voice-over): Which of these stories will you be talking about tomorrow?

History on the Hill.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), SPEAKER OF THE HOUSE: Today, we are about to deliver on the promise of making affordable quality health care available for all Americans.

(END VIDEO CLIP)

O'DONNELL: The public option lives, but it won't be the robust public option. Republicans still cry foul anyway.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), MINORITY LEADER: Here we go again. The American people have spoken and it's pretty clear that our Democrat colleagues have not listened.

(END VIDEO CLIP)

O'DONNELL: But while the "party of no" objects, one liberal Democrat stands up and says we should be able to do better, much better.

(BEGIN VIDEO CLIP)

REP. DENNIS KUCINICH (D), OHIO: If this is the best we can do, then our best isn't good enough. Health care or insurance care? Government of the people or government by the corporations?

(END VIDEO CLIP)

O'DONNELL: Reaction tonight by former governor, Dr. Howard Dean.

A solemn moment at Dover Air Force Base in the dark of night as the long war in Afghanistan takes its largest toll of American lives this month. President Obama as commander-in-chief pays his respects as the fallen soldiers return home.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It was a sobering reminder of the extraordinary sacrifices that our young men and women in uniform are engaging in every single day.

(END VIDEO CLIP)

O'DONNELL: A story of change: A year after the ground-breaking election of Barack Obama, HBO gives us a riveting behind-the-scenes look at the historic campaign. One of the film's producers, award-winning actor Edward Norton, joins us.

Take the money then run? A story surfaces that Sarah Palin will speak in Iowa next month in exchange for 100 grand. Her peeps deny it, but even the suggestion of cashing in has upset the very Republicans in Iowa Sarah Palin will have to woo if she wants to be president.

And Blago may be gone from the Illinois statehouse, but he's not forgotten.

(BEGIN VIDEO CLIP)

ANNOUNCER: For far too long, Illinois has been ruled by the hair.

(END VIDEO CLIP)

O'DONNELL: Tonight, an ad destined for the wacky political ad "Hall of Fame."

All that and more - now on Countdown.

(BEGIN AUDIO CLIP)

ROD BLAGOJEVICH, FMR. ILLINOIS GOVERNOR: . were very unhappy with that guy.

(END AUDIO CLIP)

(END VIDEOTAPE)

O'DONNELL: Good evening from New York. I'm Lawrence O'Donnell, in for Keith Olbermann.

The House of Representatives today released its health care reform bill, including a public option, a government-run health insurance alternative for people currently without health insurance. President Obama praised the bill but criticism from both the right for how much it will cost and the left for how little it will do.

Our fifth story on the Countdown tonight: What Nancy Pelosi thinks she can get and not get in health care reform.

The speaker of the House today celebrating on the Capitol steps, listing what the 1,990-page bill accomplishes or will accomplish if something like it passes both House and Senate, including ending antitrust protections for insurance companies and eliminating their ability to reject people for coverage based on pre-existing conditions. Between now and 2013, when the public option would kick in, a fund for a temporary high-risk pool would provide a stop-gap for those unable to get private insurance.

Speaker Pelosi also touted the bill's fiscal responsibility.

(BEGIN VIDEO CLIP)

PELOSI: It reduces the deficit, meets President Obama's call to keep the cost under $900 billion over 10 years, and it insures 36 million more Americans - 36 million more.

(APPLAUSE)

PELOSI: And that said, the bill is fiscally sound, will not add one dime to the deficit as it expands coverage, implements key insurance reforms, and promotes prevention and wellness across the health system. The bill will expand coverage, including a public option to boost choice and competition in the health insurance reform.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

O'DONNELL: Congressional Budget Office Director Doug Elmendorf, several hours later, released the CBO's estimate of the bill's financial impact. The bill would make health insurance mandatory for most people and fine companies with payrolls over $500,000 that do not offer health care plans. It adds an excise tax for makers of medical equipment and raises taxes on individuals making more than half a million and couples making more than a million.

Most notably, the CBO said the bill will both cost more, over $1 trillion, but also offset more in taxes and spending cuts than Speaker Pelosi estimated. The bill, however, would still meet President Obama's requirement that it not add to the deficit. The CBO estimating it would actually reduce the deficit by $104 billion over 10 years.

President Obama said in a statement, quote, "The House bill clearly meets two of the fundamental criteria I have set out. It is fully paid for and will reduce the deficit in the long term."

The most dedicated veteran of the health care fight, Michigan's John Dingell, who presided over House passage of Medicare in the 1960s and whose father introduced the first universal health care bill in Congress in 1943, pushed back against GOP claims that the bill's Medicare cuts threaten seniors.

(BEGIN VIDEO CLIP)

REP. JOHN DINGELL (D), MICHIGAN: The only citizens who are going to have to worry about their participation in Medicare being cut are the insurance companies. Some of them are getting paid 150 percent of what they're entitled to. And that's being paid, curiously enough, by other American citizens, retirees.

(END VIDEO CLIP)

O'DONNELL: In response, Republicans seemed dumbfounded that Democrats were not cowed by the tea party rabble-rousers sent by Washington lobbyists to disrupt town hall meetings on health care reform.

(BEGIN VIDEO CLIP)

BOEHNER: Over the last several months, the American people have spoken, and it's pretty clear that our Democrat colleagues have not listened. Through the month of August, September, the American people let members of Congress from both sides of the aisle know that they wanted no part of a government-run health care plan.

(END VIDEO CLIP)

O'DONNELL: In fact, moderate Democratic Senator Evan Bayh of Indiana today, faced with a new poll suggesting voters would punish him for helping Republicans block a vote on health care, as well as a request for clarification of his position on this program last night, seems to take a clarifying step in Harry Reid's direction. Despite previously saying, allowing debate on the bill would be equivalent to supporting it, today, he released a statement saying, quote, "He will support moving forward to a health care debate on the Senate floor."

Bayh, whose wife sits somewhat uncomfortably no doubt on the board of health insurance giant WellPoint, has still not said whether he would help Republicans block a vote on health care, and has still not provided an answer to our question of whether he has ever voted to allow a vote on something he has opposed and then voted against the final passage of the bill. The Service Employees International Union, however, told us they have researched this and turned up at least three such incidents in Bayh's voting record.

Some intense and heart-felt opposition to the House bill came from the left today, leaders of the Progressive Caucus meeting with President Obama today, urging stronger support from him for a stronger public option.

And Congressman Dennis Kucinich tore into the House bill, especially for forcing people to buy the health insurance industry's faulty product and fatten their profit margins, and for forcing the government to negotiate its rate of payments to providers rather than tie them to the lower Medicare rates, which would have saved taxpayers $85 billion.

(BEGIN VIDEO CLIP)

KUCINICH: Is this the best we can do? Mandating private insurance, forcing people to buy private insurance policies or pay a penalty, guaranteeing at least $50 billion in new business for the insurance companies?

Is this the best we can do? Government negotiates rates which would drive up insurance costs, but the government won't negotiate with the pharmaceutical companies which will drive up pharmaceutical costs?

Is this the best we can do? Only 3 percent of Americans will go to a new public plan. Well, currently, 33 percent of Americans are either uninsured or underinsured.

Is this the best we can do? Eliminating the state's single-payer option will force most people to have to buy private insurance.

If this is the best we can do, then our best isn't good enough. And we have to ask some hard questions about our political system such as: health care or insurance care? Government of the people or government by the corporations?

(END VIDEO CLIP)

O'DONNELL: Our guest tonight is the former governor of Vermont, former chairman of the Democratic National Committee, Dr. Howard Dean, currently a consultant to both Democracy for American and McKenna, Long and Aldrich, and less we forget, a contributor for CNBC.

Thanks for your time tonight, Governor.

HOWARD DEAN, FORMER DNC CHAIRMAN: Thanks for having me on.

O'DONNELL: Governor, let's go to Dennis Kucinich's question right off the bat. Do you disagree with any of the points he made in that speech? And ultimately, is this the best we can do?

DEAN: It's not the best we can do, but it's a very good start.

Look, when they were fighting uphill against a very well-organized opposition which has a lot of trouble telling the truth and against an incredibly well-organized health insurance industry which has given millions and millions of dollars to some of the people who are going to have to vote on this stuff.

So, I think, this is - look, I don't disagree entirely with Dennis, but the fact is, this is real reform. That's all I really care about, is real reform. People are going to have a chance to get into a different kind of a system that doesn't take huge profits out and put it in their pockets. And we're only 4 percent of all the money that we put in is spent on things that aren't - don't have anything to do with health care.

So, are there some things? Yes. The most important thing that probably needs to be change in conference committee is more people need to get into this system before the 2010 elections. And we need - the only way to defeat all the things that the opposition is saying that aren't so is to actually show 'em how the system works. It really is pretty good. It's going to be very good for a lot of people.

I think this is going to work well. I think it's a great bill. I think the speaker has a lot of courage and I'm very, very pleased. And I think Senator Reid did a terrific job last week in the same thing.

I think we're in good shape. We're going to have some bad days still, I'm sure. But we're in a very, very good shape now.

O'DONNELL: Now, Governor, the biggest difference between the House bill and Senate bill is now on the tax side. The Senate wants to tax union health care plans. That is opposed by over 170 Democratic members of the House. The House wants to tax rich people, wants to tax people above - individuals above $500,000 of income, couples above $1 million of income.

These seem like irreconcilable differences. One of those taxes has to win. Which one do you think it will be?

DEAN: Fighting over money is never irreconcilable. Is this the number and there's always a number in the middle to get to. So, I'm not less bit worried about. What I'm worried about is making sure the public option does well and as many people can get to sign up for it as possible. And I'm worried about what's going to happen to the Democrats in 2010.

Again, the only reason - the only way that we can show the country that the Republicans have just not been telling the truth the last six or eight months about this bill is to actually have it put in effect. And once it goes onto effect and people's - especially, people's kids start getting insurance, this debate is over. And we're going to - instead of losing seats in 2010, we're going to pick up some seats in 2010.

O'DONNELL: Now, when Barack Obama ran for president, he said that on the taxation side, you could pay for health care simply by allowing the Bush tax cut on the top tax bracket to expire. We now see that the House has gone far beyond that. The Senate has gone beyond that and invented a handful of taxes that we've never seen before.

How do Democrats answer next year's obvious attack ads against them in the campaigns saying that they voted for huge tax increases that none of them mentioned during their last campaign?

DEAN: You have to make sure that people actually have insurance. You can't wait until 2013 or 2012. If you want to say to the congressional majority that we've got, you've got to have this go - some of this go into effect. The whole bill can't go into effect by 2010. But you've got to get a significant number of people insured.

That's why I think the best way to run the public option, I agree with having negotiated rates. And that's a done deal. That was passed in the Senate - I mean, put out there by the leader in the Senate and by the leader in the House.

So, we're going to have negotiating rates. I don't think that's any big tragedy. I think some folks are concerned about it, but I think that's fine. I think the expansion of Medicaid is great. You got to hold the states harmless. But it's a very good thing to do. It's how we got to universal insurance for all our kids in Vermont.

But the one thing you've got to do is get as many people as you can, particularly kids, into the system. And I think that probably means using Medicare as your basis with negotiating rates.

O'DONNELL: Governor, you've been adamant about the public option all year and I just want to make sure I understand. You're endorsing here tonight the House version of the public option, am I clear on that?

DEAN: Yes. I don't think either one of them is perfect. Both I think both of them are - both the House and Senate versions are good bills, and I'd vote for either one of them if I were in Congress.

O'DONNELL: And do you think the House version or the Senate version, one or the other, is - seems to be better at the possibility of containing costs?

DEAN: I think the bigger the public option is, the better costs will be contained. Massachusetts has shown that you can get to pretty close to universal insurance without using public option. But you can't control costs without using the public option.

So, you know, you look at these bills very carefully. You know, one of the big things I was shocked at in the bill, in the House bill, they actually resurrected co-ops. Co-ops are in the House bill.

I was stunned. I'd love to know why that is because they aren't going to work. But that's in the bill. I couldn't quite figure that one out at all.

But, in general, they are both very, very good bills. And I think it's not the kind of reform that I would have loved. You know, Dennis Kucinich has some points there, but this is pretty good stuff and it really is going to make a difference.

O'DONNELL: Governor, I just want to take you back to the tax piece one more time. You have to indulge me. I used to be the chief-of-staff on the Senate Finance Committee where we do taxes. So, it's one of the things I concentrate on here.

Which one of these tax approaches do you think is more politically viable and is the better one to defend in the campaign next year? The income tax on top earners or the tax on health care plans?

DEAN: You know how this goes. What they're going to do is probably a little of each. And Rich Trumka, the head of the AFL-CIO, the other day said there was a possibility of taxing health care plans at a benefit level. But the benefit level had to be much higher than it was now because they didn't want working people to get caught on that.

They'll come up with a compromise and they'll get money from both sources, but not as much as either source gives now in each bill. That's just a compromise. You know, you're experienced. You know very well that's an easy compromise. They might fight about it, but it's an easy compromise.

There are some tougher things in there. And the most important thing of all is moving the date of enrollment up to preserve the Democratic majority in 2010.

O'DONNELL: Governor Howard Dean, thank you for finding the Solomonic solution to the tax dilemma in this bills and thanks for joining us tonight.

DEAN: Thanks for having me on.

O'DONNELL: Coming up: The solemn scene at Dover Air Force Base last night, the striking images of Barack Obama, commander-in-chief, saluting fallen soldiers. Presidential historian Michael Beschloss joins us.

And later: Someone in Sarah Palin's camp is creating problems for her in Iowa. Somehow, local Republicans get the idea the former governor wants $100,000 to speak there next month. Some Iowa Republicans say, "Sorry, Sarah, you do not get a paycheck for the privilege of building relationships with guaranteed caucus-goers." Details ahead on Countdown.

(COMMERCIAL BREAK)

O'DONNELL: Coming up: The significance of President Obama's late-night visit to pay tribute to our war dead from Afghanistan.

Also, inside the election of Barack Obama. The HBO documentary "By the People" debuts next week. We'll talk to the producer and award-winning actor, Edward Norton.

And later: Could Sarah Palin's second book be "How not to start a presidential campaign"? She's not even announced for 2012 yet and she already has big problems brewing in Iowa. That's next.

This is Countdown.

(COMMERCIAL BREAK)

O'DONNELL: If you've already caught a glimpse of it today, it may have stopped you in your tracks - the image of the American president attending the pre-dawn solemn transfer of our nation's war dead from a military transport plane to the vehicle that would take those fallen soldiers on the final leg of their tragic journey home.

In our fourth story on the Countdown: Part of the president's intent may have been to remind us of what war really is, as he prepares to make the most difficult decision of his life, on whether to commit even more troops to the war in Afghanistan.

President Obama left the White House shortly before midnight and boarded Marine One for Dover Air Force Base, the nation's entry point for U.S. military personnel killed in action. The president met with families of 18 Americans killed in Afghanistan over two different incidents Monday and Tuesday. Fifteen soldiers and three Drug Enforcement Agents lost their lives, making October with 54 deaths - the deadliest month in the 8-year-old war.

The president met with all the families of the fallen this morning and later boarded the military transport plane each time for the air force chaplain's prayer over the bodies. One family, that of Sergeant Dale Griffin, had agreed to allow cameras for what is known as the solemn transfer of the coffin to the awaiting vehicle.

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O'DONNELL: It has been only six months since the Pentagon changed the policy imposed under President George H.W. Bush that had banned media coverage of the arrival of fallen soldiers. The new policy allows each family to decide whether to allow families. In this instance, 11 of the 18 families had made a choice against coverage before they were notified that President Obama would be there.

The president returned to the White House before 5:00 a.m. and he later acknowledged that the grim ceremony will inform his decision.

(BEGIN VIDEO CLIP)

OBAMA: Obviously, you know, the burden of that, what our troops and our families bear, in any war time situation is going to bear on how I see these conflicts, and, you know, it is something that I think about each and every day.

(END VIDEO CLIP)

O'DONNELL: President George W. Bush often met privately with grieving military families, but he did not go to Dover for the transfer of bodies.

Let's bring in NBC News presidential historian Michael Beschloss.

Good evening, Michael.

MICHAEL BESCHLOSS, NBC NEWS PRESIDENTIAL HISTORIAN: Hi, Lawrence.

How are you doing?

O'DONNELL: Obviously, this was powerful imagery made available to us because of this one family's choice to allow cameras there. What other recent precedence do we have in the modern media age for this kind of thing?

BESCHLOSS: Well, you know, one thing I think we have to say, Lawrence, is that this really tells us a lot about a wartime commander-in-chief. For instance, Richard Nixon, when he was waging the war in Vietnam, he didn't want to go to ceremonies like this because he wanted it to be abstract. He didn't want to be swayed by the emotion of seeing what was the cause of the men and women - American men and women he was sending off to die.

At the other end of the spectrum, you can go all the way back to Abraham Lincoln who, you know, went to a summer house during the summers of his presidency. And across the street from the house was a new cemetery. Every week, there were 30 to 40 Union graves dug there.

So, when Lincoln got up in the morning, he looked out the window and saw graves being dug of soldiers who died at his order, he hated it. It pained him, but he felt that he could make better decisions because he'd had that experience.

And I wouldn't be surprised if, when we read a Barack Obama memoir years from now, if what we saw at midnight last night didn't turn out to be a big moment in his life, at a moment that he's making some pretty big decisions about Afghanistan.

O'DONNELL: Now, his predecessor, George W. Bush, who made the first big decisions about Afghanistan, I know, visited families with wounded in hospitals, Bob Woodward has accounts of that sort of thing in his books.

What else did George W. Bush do that is comparable to this? We know he didn't do precisely this, but what else?

BESCHLOSS: He met with a lot of families, but tended to distance himself from ceremonies like this. And, of course, Dover was off-limits all the way back to 1989. His father, George Bush 41, just after the invasion of Panama, was giving a press conference, was chuckling on the only cable news network at the time. They did a split screen. The other half of the screen showed coffins coming into Dover from Panama.

People found that very strange. And so, that led to a policy that prevailed for a long time, which was that these things were off-limits.

The government would say it was to preserve the privacy of the families, but, of course, a lot of people in the Pentagon worried that if you had these kinds of images, it would reduce the support for various wars that we were fighting.

O'DONNELL: Now, obviously, the president did not do this in a political vacuum. What are the political risks for this kind of imagery?

BESCHLOSS: Well, you might say that one risk might be that he's identified with a war in Afghanistan that might be unpopular, but this war has gone on from the moment he came in. So, he is identified. I think much more important than the risks are the way it enhances what we know of Barack Obama - that while he's making these decisions about Afghanistan, he wants to confront the reality of what a decision to continue this war five or 10 years with conceivably tens of thousands of American casualties, he wants to see the cost in person.

O'DONNELL: And what about the possibility that some would argue this is exactly the image that maybe some of our enemies want to see - they want to see that they have delivered something that lands heavily and personally on the president?

BESCHLOSS: They might. But I think what I would reply is that this is the strength of America. We're a democracy. We are proud of what we do. We don't cover it up.

And, you know, Lawrence, during World War II, for a while, there were censorship rules waged by the Franklin Roosevelt administration, saying that news reels and newspapers could not show the corpses of Americans who have been killed in World War II. And FDR actually repealed that censorship. He thought that if Americans saw the cost of war, these men and women who had been killed by the enemy, it would actually strengthen American support for what we were doing.

O'DONNELL: Presidential historian Michael Beschloss, thanks for joining us tonight and providing invaluable historical perspective on what we've seen today.

BESCHLOSS: My pleasure, Lawrence.

O'DONNELL: Coming up: The ground-breaking election of Barack Obama. A year after election day, a new documentary takes us behind the scenes in an historic campaign. Award-winning actor Edward Norton, a producer of the new documentary, joins me in studio - next.

And later, Sarah Palin's Iowa problem. Her team denies ever asking for 100 grand to speak in Iowa next month, but even the thought of it has local Republicans upset. Howard Fineman on the obvious: why this is not a good way to start a possible presidential campaign.

Ahead on Countdown.

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O'DONNELL: Barack Obama's presidential campaign officially began February 10, 2007, and officially ended November four, 2008. As you recall, a whole bunch of stuff happened in between. Our number three story on the Countdown, we know the story of the Obama campaign looking from the outside in. On Tuesday, the world will get a look from the inside out.

The HBO documentary "By The People, The Election of Barack Obama," is the story of the Obama campaign from before it was a campaign. Film makers had unprecedented access to everyone, from candidate Obama and his top campaign advisers, to staffers knocking on doors in Des Moines. "By The People" provides insider accounts revealing how the campaign dealt with everything from victory in Iowa to the Reverend Wright controversy to the McCain/Palin ticket.

In a moment, one of the movie's producers, Edward Norton. First a clip from the documentary. The scene is backstage at Invesco Field in Denver, just before the candidate's speech accepting the Democratic nomination for president of the United States. The candidate is clearly feeling the pressure of the moment and the weight of history.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When I was practicing the speech for the first time and I came to the end, where I talked about King speaking in the Lincoln Memorial, and I choked up and had to stop.

Dr. King's speech happened when I was two years old. So, you know, anybody who is 60 or over remembers it vividly. And the majority of African Americans at that time couldn't vote, much less run for president.

(END VIDEO CLIP)

O'DONNELL: Edward Norton's HBO documentary, "By The People, The Election of Barack Obama" appears on election day, next Tuesday, November 3rd. Edward Norton, welcome to the Countdown set.

EDWARD NORTON, ACTOR AND DIRECTOR: Thanks.

O'DONNELL: The first obvious question. How did you get this kind of access in a political campaign that has every incentive in the world to keep you out when they're managing their secrets backstage?

NORTON: I think the simplest answer to that is get in early. In our case, that actually meant proposing this project before he was a presidential candidate. We actually initially suggested to him that what we wanted to do was a long-term political diary of his first term in the Senate. We were interested in looking at politics and government through the experiences of a new, young, you know, senator of the next generation in American politics.

And because we began that process with him and his staff almost nine months before they declared his candidacy, I think that we were able to have time with them to define what we were actually doing and earn a kind of a trust on their part.

O'DONNELL: Now, the first time I saw Barack Obama was in the hall, Boston Garden, 2004, John Kerry's convention, keynote speech. I say after I see that speech, this is the first real black candidate for president, the first one with a shot at a nomination. This is also the best, most magnetic star the Democratic party has. Were you looking at him that way? Even though you were going to track a senator, were you -

NORTON: Definitely.

O'DONNELL: - he will probably be headed to the White House?

NORTON: Definitely. A lot of credit goes to one of our directors, Amy Rice, who absolutely was the one who came in the door to me and my partners and said, this is clearly a person who is going to run for president some day. Wouldn't it be fantastic to chronicle, from a very early phase, his journey to that kind of historic candidacy?

We all had been struck by him, just as you were. And clearly, whether you were Democrat or Republican, clearly this was a figure of potential historic importance. So Amy really pushed to me and my producing partners the idea that it would be worth starting now. I don't think any of us - as excited as we were by the prospect of engaging with him, I don't think any of us thought it would actually kick off within that year.

O'DONNELL: Now, the movie captures the emotions of campaign life like nothing I've ever seen. You come from a world where very high priced and talented directors do an awful lot of work with good screen writers and brilliant actors like yourself, to try to get that emotion on screen. In this documentary, were you just lucky to be in the right place at the right time with these cameras? Or did you go into this with a shooting strategy to find that?

NORTON: We did have strategy. There was no way to predict the roller coaster of this campaign, and certainly not the outcome. We had what we called kind of an operating set of principles.

We were very committed to a nonpartisan archivists approach. We weren't trying to make a film celebrating Obama or his campaign or staff. We wanted to record, just as you said, what were the emotional experiences? What was the ethos? What did it feel like to be inside the people who were actually making that piece of history?

And we tried to draw them out on the emotional experiences they were having, not just kind of the clinical strategy of it all.

O'DONNELL: And just quickly, was there any moment where they said, OK, that's it, turn off the cameras. No more of this.

NORTON: Actually, it was only when they declared his candidacy -

David Axelrod, in particular, sage political guru that he is, he got wind of the fact that we had been doing this for nearly a year and immediately said to us, this isn't going to continue as this turns into an actual campaign.

It took us a while, I think, to convince him that we were not the media. We were not the short news cycle press that was looking to exploit what we were getting. That we were - we were in it for the long haul and trying to make a document of how this history - how this took place for the long view.

O'DONNELL: And an amazing document it is. Edward Norton, producer of "By The People," thank you for joining us tonight.

NORTON: Thanks very much.

O'DONNELL: It debuts next week on HBO, "By The People."

Coming up, if Sarah Palin has aspirations of running for president, she needs to rethink the notion of trying to make money on her campaign appearances in Iowa. Even the suggestion of paying Palin to speak has some Iowa Republicans up in arms.

And if that's not weird enough for you, how about announcing your candidacy for governor of Illinois and then unveiling an ad which you run against Blago's hair? We'll show it to you ahead on Countdown.

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O'DONNELL: It will be brilliant counter-programming if it all works out. Vice President Biden headlining at the Iowa Jefferson/Jackson Dinner. Across the street, Sarah Palin speaking to an arena full of conservatives.

In our number two story on the Countdown, there is one slight problem:

Palin's reported six-figure speaking fee. And some Iowa Republicans think that request is just a little too mavericky.

To the Hawkeye State and mixed messages from a conservative group organizing an event, and its desired headliner, the ex-governor of Alaska. At issue, whether or not Palin requested 100,000 dollar speaking fee. "Politico" reports that the Iowa Family Policy Center has enlisted Team Sarah, a pro-Palin organization not formally connected to the ex-governor, to begin raising money among its members in an effort to collect the 100,000.

The White House hopefuls wanting a speaker's fee is unheard of. White House hopefuls do not go to Iowa for money. They go to Iowa for votes, home of the first in the nation presidential caucus. With one prominent Iowa Republican calling the whole situation, quote, really, really odd, end quote.

Meanwhile, an Iowa Family Policy Center spokesman wouldn't confirm or deny if a speaker's fee had been requested or offered, adding, quote, "any details of arrangements between our speakers and our organization are between our speakers and our organization."

Enter Palin spokesman Meg Stapleton. She tells ""Newsweek" there is no fee and doubts that the ex-governor will even attend. Quote, "however, it appears that some enthusiastic members are willing to try anything to entice the governor as we look at her schedule."

Joining me now is MSNBC political analyst, the senior Washington correspondent and political columnist for "Newsweek," Howard Fineman. Good evening, Howard.

HOWARD FINEMAN, "NEWSWEEK": Hi, Lawrence.

O'DONNELL: This one is just for you, Howard. Who else can handle the comedy bits known as the Sarah Palin scheduling mix-ups? Is this just another one of those things that someone in the Palin camp says one thing; someone else says something else; and it's not Sarah's fault. But suddenly she is in the middle of a whole lot of confusion?

FINEMAN: Well, I don't think Sarah Palin initiated this one, Lawrence. I think the people at that council in Iowa want to try to get her there. I think they asked and nothing happened, and then maybe they said, well, maybe we can pay. What's the fee?

It wasn't initiated by the Palin camp out of Alaska. But somehow or another, a number was mentioned that, according to my reporting, is kind of consistent with what I hear Palin is asking for big commercial speeches out around the country.

So somehow it got on the table. I don't think it was Palin's idea initially. But the fact that they didn't totally shut off any possible discussion with the people in Iowa also says that they're willing to at least listen to the numbers.

O'DONNELL: Does it also say that Sarah Palin is not planning to run for president? Because if she is planning to run for president, she wouldn't have even responded in terms of the whole speaker fee thing.

FINEMAN: No. Sarah Palin does not think or act like any other politician I've -

O'DONNELL: You noticed that.

FINEMAN: - with the possible exception of Ross Perot. OK? Now, Ross Perot had more money than he knew what to do with. Sarah Palin doesn't have enough, by her likes. Part of the problem here is the date they are talking about in Iowa does come smack in the middle of the kick-off of her book tour, her book, "Going Rogue." This is an example of it. It's out November 17th. This is the following week they are talking about in Iowa.

I know Sarah Palin has a big speech agency. I did a piece on the "Newsweek" blog about this the other week. She has a big speech agency back here. They are talking about charging 75,000 plus three first class airfare tickets just to speak at a college event. So now we know it's 100,000 for a political event. Who knows what it was when she went over to Hong Kong.

She wants to make money. Sarah Palin, quite frankly, wants to make a lot of money. The decision on running for president comes later. I don't think, by any means, in her mind, this has anything to do with it.

O'DONNELL: Howard, even if she is adamant about not running for president right now, she is never going to tell us that or the speaking fee market that, because that would deflate her price, wouldn't it?

FINEMAN: Absolutely. So she is thinking it's a no-lose situation for her. She rakes in a lot of money on the speaking tour. She already got more than a million dollar advance for the book. The book goes well for her, great. If it doesn't, she's got the advance. She's got the big speeches. And she'll look at the presidential thing next year. She is a hot commodity out there still, and will be for some time.

O'DONNELL: Howard Fineman of "Newsweek" and MSNBC, many thanks for helping us get to, if not the bottom, somewhere in the middle of this one.

FINEMAN: OK, thanks, Lawrence.

O'DONNELL: Next door to Iowa, in Illinois, Rod Blagojevich is no longer governor, but his hair is starring in a political ad, courtesy of the Republican candidate.

When Rachel joins you at the top of the hour, the effort to overturn gay marriage in Maine. Rachel will talk to that state's governor on why he is now pushing voters to keep gay marriage in place.

(COMMERCIAL BREAK)

O'DONNELL: To our number one story on the Countdown, and the race to become the next full term are governor of the state of Illinois. The election isn't until next year. Still, the fight to fill the big, dopey clown shoes of Rod Blagojevich is sure to get interesting, especially when the Republican dark horse comes out of the gate with a volley at Blago's hair helmet.

Businessman Andy McKenna announced his candidacy for Illinois governor this week. He also rolled out his first campaign ad, a six minute short film, the boring part of which highlighted McKenna's resume. The better part was McKenna's treatment of Rod Blagojevich. The ad never mentioned the disgraced former governor by name. Instead as you'll see in a moment, candidate McKenna put a Blago toupee on every citizen living in the Land of Lincoln.

Will it work? Who knows? If nothing else, McKenna should lock up the endorsement of Maury's Wigs. That's for you, Nick.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: For far too long, Illinois has been ruled by the hair. Sure, the most recent scoundrel to occupy our governor's hair had the most impeccable follicles. But Illinois has lived with that type of political embarrassment and shame for as long as many of us can remember.

Otto Kerner, Dan Walker, George Ryan, and the hair has proven contagious, spreading its tangles throughout Springfield to elected officials of both parties.

Since 1971, 1,000 people have been convicted of political corruption. Too many in Illinois have just become accustomed to the culture of the hair.

Scandal has become the norm. So many politicians have looked the other way, instead challenging what they knew to be wrong. We hardly raise an eyebrow while the rest of the world looks upon Illinois politics and sadly shakes their heads.

Where has the culture of the hair left us? High and dry, in horrific debt, spending more and more and more money we simply don't have, painful taxes, and threats of almost fatal taxes yet to come, no jobs, no opportunities, no hope for real change in sight.

UNIDENTIFIED FEMALE: Hair today, gone tomorrow.

(END VIDEO CLIP)

O'DONNELL: The election for Illinois governor is 369 days away. So we have plenty more crazy campaign ads from Illinois to look forward to between now and then.

That will have to do it for this Thursday edition of Countdown. I'm Lawrence O'Donnell, in for Keith Olbermann. Thanks for watching. Our MSNBC coverage continues now "THE RACHEL MADDOW SHOW." Good evening, Rachel.

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

'Countdown with Keith Olbermann' for Wednesday, October 28, 2009
video podcast

The toss: RMSNBC

Guests: Sen. Sherrod Brown, Rep. James Clyburn, Markos Moulitsas, Clarence Page, Shannyn Moore

(BEGIN VIDEOTAPE)

LAWRENCE O'DONNELL, GUEST HOST (voice-over): Which of these stories will you be talking about tomorrow?

The public option battle: We know Senator Lieberman will at least allow health care to make it to the Senate floor for debate, there are still a handful of Democrats who aren't sure they will go even that far.

Meantime, Republican Senator Jon Kyl says he could support a public option with an opt-in.

The state of the health care fight tonight on Capitol Hill-we have both chambers covered. Our special guests: from the Senate, Sherrod Brown of Ohio; from the House, James Clyburn of South Carolina.

More shots fired in the GOP civil war.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), MINORITY LEADER: There's no question that New York 23 is a bit of a mess.

(END VIDEO CLIP)

O'DONNELL: What's still more? National Republicans dividing their endorsements between the Republican and the conservative party candidates. Why is the GOP making what should have been a "slam-dunk" win into a political party's worst nightmare?

Speaking of nightmares.

(BEGIN VIDEO CLIP)

LEVI JOHNSTON, BRISTOL PALIN'S EX-FIANCE: There are some things that I have that are huge.

(END VIDEO CLIP)

O'DONNELL: Levi Johnston is not talking about his-feet. He's talking secrets-Sarah Palin's secrets.

(BEGIN VIDEO CLIP)

JOHNSTON: I have things that could-you know, that would get her in trouble and could hurt her, will hurt her.

(END VIDEO CLIP)

O'DONNELL: And the historical significance of today's Congressional Gold Medal winner-how a Republican senator helped pave Barack Obama's road to the White House.

All that and more-now on Countdown.

(END VIDEOTAPE)

O'DONNELL: Good evening from New York. I'm Lawrence O'Donnell.

Keith Olbermann has the night off.

With the House of Representatives expected to announce tomorrow that its bill will match the Senates in offering Americans the option of a government-run health care plan, the handful of moderate Democrats yet to say they will allow an up-or-down vote on the public option are under intense pressure tonight. Luckily for them, of course, they already have health insurance.

Our fifth story on the Countdown: The "filibuster five," dancing as fast as they can. The leader of the pack, Senator Joe Lieberman, the only senator to say so far that he will join Republicans to deny Americans an up-or-down vote on the public option, elaborating today on his defection, saying essentially that if the public option squeezes any savings out of the health care system, health care companies will just turn around and raise rates on other people.

And when asked about Senate Majority Leader Harry Reid's implication yesterday, that Lieberman will come around once the bill goes to the floor and senators have a chance to add amendments or strip provisions from the bill, Lieberman identified specifically what he wants: no public option.

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (I), CONNECTICUT: Just take this government-created, government-run health insurance company that will cost the taxpayers, premium payers and the dead a lot of money-take it off the table. We can come back in three or four years if the reforms-the other reforms we adopt are not working. But I think they will. And so-that's my position and I'm sticking to it because I think it's best for our country and my constituents.

(END VIDEO CLIP)

O'DONNELL: Lieberman is certainly the most definitive senator when it comes to breaking ranks. Four others, four Democrats say they may join him.

Senator Mary Landrieu of Louisiana refusing to tell "Politico" whether she would even vote for a routine motion to allow debate on health care reform to begin. Senator Blanche Lincoln, up for re-election in Arkansas, is saying she will, quote, "have tremendous troubles," end quote, supporting moving forward. Arkansas's junior senator, Mark Pryor, also not committing to his party, telling "Politico," he'll be, quote, "talking to Lincoln through this process," end quote.

And Nebraska Senator Ben Nelson also noncommittal, under pressure, not just from the left to support his party, but from multiple sources on the right, taking out ads in his home state as well as those of other senators, calling health care reform a tax increase, calling on him to block it and honor his pledge not to raise taxes.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Thank Ben Nelson. Tell him to keep fighting for Nebraska taxpayers. Tell him it's time to keep the pledge.

UNIDENTIFIED MALE: Call your senators. Tell them to say no to a government-run health care bill.

UNIDENTIFIED MALE: Call your senators and ask them.

UNIDENTIFIED FEMALE: Haven't America's seniors sacrificed enough?

UNIDENTIFIED MALE: Don't pay for health care reform on the backs of our seniors.

(END VIDEO CLIP)

O'DONNELL: "Politico" reports that Senator Evan Bayh's support for an up-or-down vote on a public option is now a possibility. Thanks to Reid's decision to reduce proposed new fees on makers of medical equipment. Bayh, who joined two Democrats and a Republican senator in opposing those excise taxes in the letter last month, represents Indiana-home of several makers of orthopedic implants and the cardiac device manufacturing, Boston Scientific.

Bayh also echoed the threat of Senate Republican Leader Mitch McConnell yesterday that even voting to let the Senate debate a health care plan with a public option in it is equivalent to supporting the entire bill, itself. Bayh said he will look at those two things, quote, "as one and the same."

We asked Bayh's office today whether he has voted to allow debate on any other bill he has opposed, a common Senate practice. As of this evening, his office said it was still researching that question.

Joining us tonight is Ohio Senator Sherrod Brown, who co-wrote the public option language for the Senate bill.

Thanks for joining us tonight, Senator.

SEN. SHERROD BROWN (D), OHIO: Lawrence, good to be back. Thank you.

O'DONNELL: Senator Lieberman is saying that the public option will cost taxpayers. How much will it cost?

BROWN: Well, it won't cost taxpayers. The public option saves money because it does several things. It's simply an option. It gives people a choice.

They can choose Aetna or CIGNA, one of the insurance companies from Senator Lieberman's state, or they can choose the public option. And that will mean the insurance companies will no more gaming the system. It will make them more honest and will save money because it injects competition.

There is a-there are two-in southwest Ohio, Lawrence, in the Cincinnati area, two insurance companies have 85 percent of the market. Good old-fashioned competition, a public option there will cause them to compete better; will be better quality and lower prices. That's why the Congressional Budget Office scored the public option as $25 billion saved, not costing money for taxpayers.

O'DONNELL: Senator Lieberman seems to be saying that the public option could be so successful in attracting new customers that insurance companies will have to raise premiums on everyone else to make up for their big lost profits. How are you going to answer that one on the Senate floor?

BROWN: Well, the first way you answer it is-the last six years, insurance company profits have gone up 480 percent. They've quintupled-if that's the right word-in the last half a decade or so.

Second, you know, Senator Lieberman might be right. The CEO of Aetna is not going to make $24 million again next year. The top 10 big insurance companies, the largest in the country, their CEOs aren't going to average eight-figure, $10 million, $11 million, $12 million a year income.

So, there are going to be some costs rung out of it but that's what we want. We want the insurance companies, because of competition from the public option-again, it's an option-we want them to bring their prices down. We want them to get more efficient. We don't want them having these bureaucrats in these insurance companies figuring out how to deny people coverage.

We don't want those in the insurance industry. We want a much more leaner insurance industry where the profits are, frankly, more in line with most of the rest of the economy. The public option will help prices come down, and everybody's better off except the insurance industry. And, frankly, I represent 11 million Ohioans; most of them don't work for big insurance industry.

O'DONNELL: Now, Senator Lieberman has at least made it clear what he needs to support going forward on the bill-to support cloture in the Senate, and that is getting rid of the public option. Does this mean, without 60 votes in the Senate, that the Democrats are going to have to back down on the public option? Give Lieberman what he wants to go forward?

BROWN: No, I don't think we're going to have two or three members of the Senate, the Democratic side, tell the other 55 of us, not to mention the country, which is overwhelmingly for the public option; doctors, 70 percent for the public option-we're not going to have a few-you know, one small tail wagging the dog here.

I think what happens is this bill starts on the Senate floor, we get 60 votes to bring it to the floor. We begin the debate. The people against the public option get an even shot at taking it out of the bill. They will fail because we're going to get-Chairman Harkin thinks 55 votes for the public option, something around that number. They had their chance.

I think in the end-I don't think that my Senate colleagues want to be on the wrong side of history. I don't think on a procedural vote they're going to vote to kill the top priority of the president of the United States. I don't think they're going to vote to kill the most important domestic initiative of their political careers on a procedural vote.

I don't think they want to be on the wrong-on the wrong side of history, Lawrence.

O'DONNELL: Now, we saw that Senator Nelson is under pressure on the tax side of the bill. Do you think that Democrats in the Senate can support the Baucus "tax on union" health care plans even over the objections of labor unions that have supported Democratic candidates so strongly in the past?

BROWN: I don't want to see us taxing working families-even working family plans that are-that are pretty-you know, that are-that are generous. These are-understand, in union households, they negotiated these health care plans. They gave up wages so they could have a better pension. They gave up wages to they could have decent health care. And taxing these plans is not really the fair deal here.

But there are other ways to do it. We're not going to follow the Baucus bill down the line. We're going to have more, frankly, of the bill that we wrote in the health, education, labor, pension committee on the public option, on the Class Act, on some more of the components of this bill that I think serve the middle-class much better, frankly, than the finance committee bill does.

O'DONNELL: Just quickly, Senator, how would you raise the $200 billion that the Baucus bill raises through that tax on health care plans?

BROWN: I think the best way is some kind of a-of a-you know, 1 percent or 2 percent tax on people making over $30,000 or $400,000. Still, their tax rate will still be lower than it was before George Bush did his tax cuts for the rich. So, we can-we can raise significant amount of money with the 1 percent or 2 percent or 3 percent add on tax for people making over $400 million, $500 million a year.

Produce the revenue, have a much fairer plan that really does work for the middle class. Get people in my state of Ohio and Congressman Clyburn's state of South Carolina-get them in a much better situation. Those who don't have insurance, helping them; and those who already have insurance, an insurance policy that works better for them.

O'DONNELL: Senator Sherrod Brown of Ohio-thank you very much for joining us tonight.

BROWN: Thank you, Lawrence.

O'DONNELL: And thank you for not dodging the tax question, which is a very common Senate practice. Thanks, Senator.

Of course, as I mentioned at the top of the hour, the House is about to bring forward at least the broad contours of its bills tomorrow. House Speaker Nancy Pelosi expected to announce that the House version of the public option will largely mirror the Senate's. Even more suspense, though, surrounds the issue of taxes in the House bill.

Let's bring in someone who knows what the speaker will unveil tomorrow. Congressman James Clyburn, whose job as House whip is to count and corral and cajole Democratic votes.

Good evening, Congressman.

REP. JAMES CLYBURN (D), SOUTH CAROLINA: Good evening. How are you, Lawrence?

O'DONNELL: Good to have you on tonight.

CLYBURN: Thank you.

O'DONNELL: Nancy Pelosi has repeatedly and confidently, throughout the year, promised a robust public option in the House bill. How robust will it be?

CLYBURN: It's going to be a very strong public option. We are going to cover with our version of the public option a little better than 10 million more people than the Senate bill will cover. It's going to be much better for children than the Senate bill, as currently proposed.

It's going to be-it is going to be a good bill, strong public option, and the coverage, I think, is going to be great. We are going to start to cover, to close that donut hole for seniors, and we'll do it faster-five years faster than anything that's been proposed thus far. This is going to be a very good bill.

O'DONNELL: Congressman, as you know, it is rare to bring a bill to the floor of the House without knowing that you already have the 218. But it does sometimes happen. Is this going to be one of those instances where you put the bill out there, you're close to 218, and on the floor, you have to whip up the rest of those votes to get to 218?

CLYBURN: I think we'll be at 218 long before we get to the House with it. We plan to roll it out tomorrow. We approached it for 72 hours. And I think that when people look in on this bill during that 72-hour period, there will be more and more people gravitating toward.

As you know, already, more than 60 percent of the American people say they want a health care reform with a public option. When they see this public option, see how strong it is, see how many people it will be covering, I think that we will pick up support. And by the time we get to the floor with this bill, we'll have much better than 218.

O'DONNELL: Congressman, let's get to what could be the more difficult side of the bill, the tax side of the bill. The ways and means committee in the House did what Sherrod Brown just said he would like to do, which was impose a higher income tax rates at the very high earners on the income scale. The Baucus tax is a tax on health care plans-a lot of them union health care plans, eventually covering maybe 40 percent of the union plans out there, which Sherrod Brown is now opposed to. The House has been opposed to it.

What is the tax side of this bill going to look like when Nancy Pelosi unveils it tomorrow?

CLYBURN: Very close to what Sherrod Brown just mentioned. We will be looking at couples who make more than $1 million a year and individuals that make more than $500,000 a year. About 1.5 percent-I forgot exactly what the percentage is. There will be a small increase in their income taxes, which will then take them back a ways, but not far-as far back as they were before Bush gave them the tax cut. They'll still be benefiting from part of the Bush tax cut, but not as much.

O'DONNELL: Now, in President Obama's speech to the Congress, he specifically endorsed the Baucus tax on those health insurance plans. Do you think the president is willing to move in the House's direction toward taxing high income instead of taxing union health care plans?

CLYBURN: I certainly hope so, because I do not want to see anything jeopardize the president's promise not to raise taxes on the middle-class. And that could very well get us there. So, I would hope that he would see his way clear to come toward us on this because we are way over-in fact, twice the $250,000 that he kept mentioning during his campaign.

O'DONNELL: Congressman Clyburn, you know CBO is overwhelmed by the amount of work it has to do on the different bills in the House and Senate.

CLYBURN: Yes.

O'DONNELL: It's going to take them a while to get the Pelosi bill scored. When do you expect to actually get this bill with a CBO score on the House floor?

CLYBURN: Well, I expect to get it, as I said, we'll start the first 72 hours tomorrow. Then after that, we will probably do a manager's amendment and then put that out there for another 72 hours. And so, I suspect that this will get to the floor maybe Thursday of next week, maybe Friday, and who knows. We plan to stay here over into the weekend to get it done if we don't do it next Thursday and Friday.

O'DONNELL: Congressman James Clyburn, the House majority whip-thanks very much for your time tonight.

CLYBURN: Well, thank you so much for having me.

O'DONNELL: Coming up: If all those headlines on health care weren't enough, today, Republican Senator Jon Kyl breaks ranks with his party and talks about under what conditions he could support the public option.

And speaking of Republican problems, there is an even bigger one in the House. No one should have ever heard of these obscure candidates for the 23rd congressional district in New York. But now, the GOP has taken what should have been an easy win and given the Democrats a shot at an upset-details ahead on Countdown.

(COMMERCIAL BREAK)

O'DONNELL: Coming up: Making sense of where the health care reform debate stands tonight. My guest, Markos Moulitsas of the Daily Kos.

Also, the GOP mess that is the race for New York's 23rd congressional district is even messier. The conservatives versus the Republicans continues.

And later: Levi Johnston versus Sarah Palin. We'll talk about the bombshell he dropped on TV this morning. That's next.This is Countdown.

(COMMERCIAL BREAK)

O'DONNELL: Despite President Obama's pledge of openness and transparency in the overhaul of the nation's health care system, the real work right now-the horse trading and bargaining-the real legislating is happening behind closed doors as it always does. The five bills debated in open committee meetings are unrecognizable now-cannibalized, added to and chopped up by the party's leaders in the consolidated versions that the House and Senate are expected to begin debating within the next week or so.And so, in our fourth story tonight, the question: where do we stand and what are the prospects for moving forward?Democrats are hardly united about where to go now-as we just told you, Senator Lieberman, who, remember, is technically an independent, remains committed to denying Democrats a straight up-or-down vote on a public option version of health care reform. At least four other Democrats in the Senate refused to say whether they will join him.Joining us tonight is Markos Moulitsas, creator of DailyKos.com and author of "Taking on the System: Rules for Radical Change in a Digital Era."Thanks for joining us tonight, Markos.MARKOS MOULITSAS, DAILYKOS.COM: My pleasure. Thank you very much.O'DONNELL: Markos, how surprised are you at the lack of transparency? When we get down to crunch time, they have closed the doors. They are writing the bills in the backroom. This is not what the president promised when he was running for office last year. But he didn't exactly have control of how they do things in the House and Senate now, did he?MOULITSAS: No. You can't put this on Obama. And, really, if you're going to have tough negotiations over what's going to go in his bill, including fairly controversial components, you're going to have to really do this behind closed doors. It doesn't make sense to have cameras in your face when you're trying to do some horse-trading to get votes.So, I don't expect transparency at this point in the game. I do like the fact that the House Democrats are giving 72 hours to look at the bill. There's going to be time for amendments. And that's all going to be open and transparent. And that I think is what's important in this process, not exactly what's happening behind closed doors at this moment.O'DONNELL: Now, we have yet to see either bill. We just got a very strong indication from Congressman Clyburn, for example, that they will not have the Baucus tax in the Pelosi bill. What else do you expect to be or not be in the Pelosi bill tomorrow? And what would be a deal breaker for you?MOULITSAS: Well, the deal breaker would be the lack of a robust public option. And I think there's a strong group of committed progressives in the House that have basically made that point. And I think they're the heroes in this fight. If it wasn't for them, we would not have a public option on the agenda at this point.So, their strength and unity on this issue has been critical. So, I think, moving forward, that's key.Now, do they have the votes for the most robust public option? Congressman Clyburn just said that he does. I've heard reports that maybe they don't. I'd love to see a list of which Democrats are holding out because I'd be happy to help with the whip efforts to get those people aboard.O'DONNELL: Now, the strangest development of the week, if not the month, if not the year, we have Senator Jon Kyl, Republican who's in charge of coordinating his party's cohesiveness on message and on votes in the Senate said today that he supports the opt-in version of the public option, in which states could just proactively say, "Yes, we want to be part of this."What is Kyl up to here? This cannot be a simple volunteering of "here's the public option I would like." There's some kind of trap here. I haven't figured it out.MOULITSAS: Well, his office has already walking his back, saying that he was taken completely out of context when he made those comments. Of course, unfortunately for Kyl, there was a recording of that-of that interview and some other reporters have listened to it and they said that it was accurate. What "The Hill" reported was actually accurate.Now, what's he doing? I don't know. Maybe he was being momentarily honest.I think there's a lot of Republicans in the Senate and in the House that would be happy to vote for effective health care reform, because they know America needs it and people need it. But once the caucus discipline comes down and they get swatted in the face and you get these hard-right activists that are demanding nothing but the status quo, then they come back in line.And I think that's maybe what happened here with Kyl, that maybe he was honest for a second, and then reality hit him. He's a Republican. He's not allowed to have his own opinions. He's not allowed to try to make this a better country.O'DONNELL: Now, after the public option battle is over in the Senate, it will either be stripped out of the bill by amendment or it won't. The bill will continue to progress on the Senate floor. What is the next battle line for liberals?MOULITSAS: I mean, it's a complicated bill. There's a lot of moving parts. I think a key one, though-moving forward to the 2010 elections -is moving up the date of execution.I mean, they're talking about having this begin in 2013, which is pretty ridiculous from an electoral standpoint, not to mention from a moral and policy standpoint. I mean, there's a problem in the country. The health care system needs to be fixed. So, you want to fix it as soon as possible.Move it up to 2010. There's no need to wait until 2013. People are hurting. And we need to get re-elected in 2010. So, run on this and show people the benefits of the public option and of health care reform.O'DONNELL: Markos Moulitsas of the Daily Kos-thanks for joining us tonight.MOULITSAS: My pleasure. Anytime.O'DONNELL: An extraordinary interview this morning on the CBS "Early Show." Levi Johnston says he's got dirt on Sarah Palin, stuff that will hurt her. Palin's response: Are you really going to believe the guy who's taking it off for "Playgirl?"And the very other end of the political spectrum-a moving ceremony on Capitol Hill today. Coming up: the significance of honoring Ed Brooke with the Congressional Gold Medal.(COMMERCIAL BREAK)O'DONNELL: On November 6th, 1962, Ted Kennedy won the Senate seat his brother, Jack, had held until he won the presidency. It was a big night for the Kennedy family. But President Kennedy was more interested in another candidate on that same Massachusetts ballot. When he saw that Republican Edward Brooke had won the race for attorney general, the president said, that's the biggest news in the country. Ed Brooke had just become the first African-American to win a statewide election in Massachusetts. He went on to be the first African-American elected by popular vote to the United States Senate. Today, in an all too rare bipartisan moment in the Capitol, he was awarded the Congressional Gold Medal, to the full approval of the leadership of both parties. When I was a kid growing up in Boston, I can't tell you how many times I heard people say, I'm not a racist; I voted for Brooke. They were still racists, but Ed Brooke was the first person who nudged them toward enlightenment. Barack Obama has acknowledged that he was able to win the presidency only because he was standing on the shoulders of many braver people who, years before him, had taken the first steps, the more difficult steps, toward racial progress in this country. He stood with Ed Brooke, today, because he knows there would be no President Obama if there had been no Senator Brooke. Coming up, the top Republican in the House admits that the race for New York's 23rd congressional district is a mess. So why is the GOP taking an obscure seat in upstate New York and turning it into an embarrassing front-page headline? Speaking of embarrassing, Sarah Palin forced to, yet again, take on a 19-year-old, who happens to be the father of her first and only grandchild. Levi Johnston threatens the former governor, and she responds with the equivalent of, I know you are, but what am I? (COMMERCIAL BREAK)O'DONNELL: The battle for party purity has succeeded in producing party chaos for the GOP. In our third story on the Countdown, the division grows deeper in the Republican party over whether to support the Republican candidate or the Conservative Party candidate, in what should have been an obscure special election easy win for Republicans. Even the Republican leader in the House calls the whole thing a mess. You may recall that Dede Scozzafava is the Republican candidate for New York's 23rd district. She is fiscally conservative, and has the endorsement of the NRA. Former House Speaker Newt Gingrich has, of course, already been quite vocal in his support. Today, RNC Chairman Michael Steele endorsed the Republican candidate, which would not normally be news. But the third-party entry into the race, conservative party candidate Doug Hoffman, continues to get endorsements from national Republican figures, because the Republican candidate just isn't conservative enough for them. The list of Hoffman backers now includes Alaska blogger Sarah Palin, Minnesota Governor Tim Pawlenty, former senator, sometimes actor and failed presidential candidate Fred Thompson, former NRCC chair Tom Cole, Senator Jim DeMint, Congressman Dana Rohrabacher of California, and Congressman Todd Tiahrt of Kansas, along with former Pennsylvania Senator Rick Santorum, and former House Majority Leader Dick Armey. Where does that leave the Republican leader in the House, John Boehner? (BEGIN VIDEO CLIP)REP. JOHN BOEHNER (R), HOUSE MINORITY LEADER: Well, there is no question that New York 23 is a bit of a mess. Listen, I'm the Republican leader in the House. The seven Republican county chairmen up in upstate New York decided that Dede Scozzafava ought to be the candidate. So they named her as the candidate. (END VIDEO CLIP)O'DONNELL: It should be noted that the 23rd district, in its current form, has never-repeat, never-been held by a Democrat. Its most recent representative, Republican John McHugh, resigned to accept the post of Army Secretary from President Barack Obama. Thus setting off a chain reaction that might well result in the Republican and conservative party candidates splitting just enough votes to elect the possibly otherwise unelectable Democrat, Bill Owens. Let's bring in "Chicago Tribune" editorial board member and a Pulitzer Prize winning syndicated columnist, Clarence Page. Thanks for joining us tonight, Clarence. CLARENCE PAGE, "THE CHICAGO TRIBUNE": Thank you for having me, Lawrence. Great to see you. O'DONNELL: Clarence, I doubt you've been to the 23rd, stretching all the way up to the Canadian border. I've been up there, especially when I used to work with Senator Moynihan, who had to campaign up there. What's going on there now? John Boehner has correctly called a mess. It does not seem to be an accident. Did Barack Obama or, more likely, Rahm Emanuel know that this was going to happen when they offered a Republican Congressman the job in the administration? PAGE: Well, Lawrence, if I was Rahm Emanuel, I would certainly claim credit for it, because it sure looks like it. You know? As you well know, this was Rahm Emanuel's strategy that he used to great effect in the '06 races, going around, finding vulnerable districts where Democrats might have a shot. This is one where you normally wouldn't say that, because I think it's 1871, I think, Republicans have held this district, or, you know, under some similar configuration. But here you have a case where Dede Scozzafava was the sort of Republican that Democrats have to love, because she has really ignited the conservative base up there so that Doug Hoffman, now-from what I hear from the Democrats here in Washington watching that race, it's a dead heat now between Hoffman and the Democratic candidate, and Scozzafava is in third place behind this tie. And this was something more than I think Obama or Rahm Emanuel could have expected. O'DONNELL: Now, how much does this civil war in the Republican party over, you know, one Congressional seat like this reflect what we might be seeing next year in the midterms? PAGE: Well, first of all, you're seeing what I call the Tea Party effect. I guess, I'm not the first person to call it that. Certainly, you're seeing an aroused base behind the Tea Party movement and folks who have gotten excited behind Glenn Beck and various other people whipping up the bushes in anger over the moderates, who have not been delivering for them as far, as they're concerned, and anger over Barack Obama's win. They see Dede Scozzafava as someone who's a half-stepper, that she-while she has the NRA endorsement, she also endorses Card Check. She has SEIU support. She supported of the stimulus package. These are things that-also gay rights-these are things that the values voters on the right and the Club For Growth, very good example, things they don't like. Club For Growth, according to "Politico," ran a phony ad on Scozzafava's behalf, ostensibly, talking about how progressive she is, mainly designed to stir up the right in anger at her for being so progressive. O'DONNELL: Now, Clarence, if the Democrats do grab this seat, what will be the lesson for the Republican party? To drop these ideological purity tests? Or to push further in the direction of ideological purity and conservatism, and they'll make the argument that we lost it because we didn't go conservative enough? PAGE: Well, this is the debate going on inside of the Republican and conservative circles right now. I said in my blog, somewhat facetiously, that conservatives would do just fine if Republicans wouldn't get in the way. That's the attitude of a lot of people on the conservative wing. When you have Tim Pawlenty up in Minnesota, a pragmatic Republican who is thinking about running for president, and he is on the side of Hoffman against Newt Gingrich, who is on the side of Scozzafava and party loyalty, then you can see something of a preview of what's going to happen next year. O'DONNELL: Clarence Page, Pulitzer Prize winning columnist for the "Chicago Tribune," thanks for joining us tonight. PAGE: Thank you Lawrence. O'DONNELL: As Sarah Palin gets ready for a trip to Iowa, she gets a very direct warning from her ex-future-son-in-law: if you talk about Levi, Levi will talk about you. NASA celebrates a success today with the launch of a new rocket. Will the celebrations be short lived? And when Rachel joins you at the top of the hour, the backlash against Senator Joe Lieberman. Glen Greenwald joins her to talk about why Lieberman should be stripped of his leadership positions. (COMMERCIAL BREAK)O'DONNELL: The first space shuttle launched into orbit more than 28 years ago. And the last will probably be sometime next year. After that, NASA plans to resume using rockets to take men and women into space, as it did before the space shuttle program. In our number two story on the Countdown, this morning, the first prototype for that brand new rocket made a successful launch. The Ares I rocket won't be ready any time soon, and its funding is still in question. But if mankind is ever to return to the Moon or make it to mars, today's launch may mark an important beginning. NBC's Kristen Dahlgren has the rest. (BEGIN VIDEOTAPE)UNIDENTIFIED MALE: Navigation system is activated. KRISTEN DAHLGREN, NBC NEWS CORRESPONDENT (voice-over): For America's newest rocket, it was down to the wire. UNIDENTIFIED MALE: Good weather availability is extremely narrow. DAHLGREN: The launch window just half an hour from closing, when finally-UNIDENTIFIED MALE: Four, three, two, one, ignition. Liftoff. DAHLGREN: A break in the clouds and a spectacular blastoff. The unmanned test flight sent the huge Ares I-X test rocket barreling away from the Kennedy Space Center at almost mock five. Just as engineers planned, the pieces of the rocket separated and dropped into the ocean; 725 censors capturing every move of the short two-minute flight to see just how well Ares would do. CHARLIE PRECOURT, RETIRED ASTRONAUT: This vehicle is proving, as of today, to be exactly what we wanted it to do in terms of performance. DAHLGREN: Even as the launch pad shrunk away in the distance, potential problems are looming large for the program. Last week, a presidential panel called Ares the wrong rocket and the Moon the wrong destination for NASA. UNIDENTIFIED MALE: We don't have decisions at this point. DAHLGREN: Until the president makes that decision, Ares is the rocket NASA is working with. After its successful launch, spirits were flying high. UNIDENTIFIED MALE: It was really special. Thanks for everything you do. I just couldn't be more pleased. DAHLGREN: Even if Ares' future does remain up in the air. Kristen Dahlgren, NBC News, Kennedy Space Center. (END VIDEOTAPE)O'DONNELL: Coming up, Sarah Palin wants to get Levi Johnston a one-way ticket to Mars and beyond. Today, he throws down the gauntlet before Palin goes on Oprah. Levi says he knows things about the former governor that will-not could - will hurt her and get her in trouble. Reaction from Alaska next on Countdown.(COMMERCIAL BREAK)O'DONNELL: First there was the ad selling nuts; then the "Playgirl" pledge to show off in a big way; and now this. Our number one story, Levi Johnston says he's holding back something huge. Palin's ex-future son-in-law embarking on yet another media blitz, this time-sharing his wisdom on CBS' "Early Show," and elaborating on his claim that Sarah Palin would repeatedly joke about her youngest child with Down Syndrome. (BEGIN VIDEO CLIP)LEVI JOHNSTON, EX-FUTURE-SON-IN-LAW OF SARAH PALIN: She'd be like, where's my retarded baby, all this. It just wasn't right. I mean, I didn't ever say anything to her. But at the same time, we were all just kind of like-UNIDENTIFIED FEMALE: Can you understand why that's really hard to believe, that a mother would say that? JOHNSTON: It is hard to believe, yes. I mean-But, yes, I can give you-I couldn't tell you-I have no proof of showing you it's true, but I know it is. I was just in shock for the first time I heard it. Then it kind of-she'd say it, you know, regularly. It was just like-you know, she was -I think she was joking, but it still doesn't make it right. (END VIDEO CLIP)O'DONNELL: Hard to believe indeed. This afternoon, the Palin camp responded to Levi's accusations, "Trig is our blessed little angel who knows it and is lovingly called that every day of his life. Even the thought that anyone would refer to Trig by any disparaging name is sickening and sad. Consider the source of the most recent attention getting lies. Those who sell their body for money reflect a desperate need for attention, and are likely to say and do anything for even more attention." But Levi didn't stop there. He says the Palins have back stabbed him and claims he knows things. (BEGIN VIDEO CLIP)UNIDENTIFIED FEMALE: Are you hurt by all of this? JOHNSTON: I was, yes. Now it's just gotten like, all right, well, now it's my turn. UNIDENTIFIED FEMALE: What do you mean by that? JOHNSTON: Well, like I-in "Vanity Fair," I'm going to go out-I told a little bit of stuff. I'm just not going to take it anymore. UNIDENTIFIED FEMALE: You really sound like somebody who is dead set on hurting these people the way they hurt you. JOHNSTON: No, I'm not really in it to hurt them, though. UNIDENTIFIED FEMALE: That's what it sounds like, like somebody bent on revenge and getting even; now it's my turn. JOHNSTON: Well, you know, that's part of it, I guess. But at the same time, you know, if she's going to go out there and say stuff to me-about me, I'm going to leak some things on her. I mean, that's just how it is. UNIDENTIFIED FEMALE: Are you going to continue saying things? Could you say more that you haven't said? JOHNSTON: There are some things that I have that are huge. And I haven't said them because I'm not going to hurt her that way. UNIDENTIFIED FEMALE: So you draw the line somewhere? JOHNSTON: Yes. I mean, I have things that can-you know, that would get her in trouble and could hurt her-will hurt her. But I'm not going to go that far. If I really wanted to hurt her, I could very easily. But there's-I'm not going to do it. I'm not going that far. UNIDENTIFIED FEMALE: Things that could get her in trouble as far as what? JOHNSTON: Just things she has done while she was governor. UNIDENTIFIED FEMALE: That are illegal? JOHNSTON: Yes. I'm just not even going to talk about them. UNIDENTIFIED FEMALE: But are they illegal or immoral? JOHNSTON: I'm not going to talk about them. UNIDENTIFIED FEMALE: Or unethical? So why do you draw the line? Why are some things OK and yet others not okay? JOHNSTON: You know, cause-a lot of things I said weren't that huge. I mean, those are just little things I put in "Vanity Fair." You know, all the big things I've got, I'm keeping it in-it's just something that probably will never come out. UNIDENTIFIED FEMALE: Has Bristol talked to you since you said all that stuff in "Vanity Fair?" JOHNSTON: Yes, we've talked. We don't talk like-it's like, hey, how is the kid-how is the baby doing? Can I come pick him up? That kind of thing. UNIDENTIFIED FEMALE: And she never brought up the "Vanity Fair?" JOHNSTON: No. UNIDENTIFIED FEMALE: That seems odd. It was such a public thing and you said such damning things about her family. JOHNSTON: I'm sure Sarah has got something planned. She said, don't say anything to him. I'm sure she has something coming for me. UNIDENTIFIED FEMALE: What do you think she has coming for you? JOHNSTON: I don't know. She might put a few things in the book. I'm not worried about her saying anything about me. I've never done anything bad. I don't have anything to hide. So, you know, she can go on and say what she wants. (END VIDEO CLIP)O'DONNELL: Joining me now from Anchorage is radio talk show host and contributor to the "Huffington Post," Shannyn Moore. Thanks for joining us tonight, Shannyn. SHANNYN MOORE, "THE HUFFINGTON POST": Good evening, Lawrence. O'DONNELL: How do we-or can we ever pick a side to believe in this kind of credibility contest? MOORE: Well, you know, it is difficult. It's the classic he said/she said. So we're looking at this. You know, I don't know that Levi is lying, but I know that Sarah Palin has definitely had her challenges with the truth. Where-on simple things, whether it be the Bridge to Nowhere, airplanes or the fact that she was found guilty of abuse of power. So, you know, it's really difficult to tell. This is sort of the Hatfield/McCoy Alaska style. O'DONNELL: Are there any ethics investigations in Alaska that are still open on Sarah Palin, where they might be interested in talking to Levi, after hearing what he had to say today? MOORE: I don't know that there are. I know that there's up to two years for people to file ethics complaints. But as far as investigations, I'm not sure. O'DONNELL: And when he says that he's not afraid of Sarah Palin, what does he expect? He clearly is expecting her to do something. I mean, say negative things about him in the book. But he definitely has the feeling -what can Sarah Palin do to Levi at this point? MOORE: Well, you know, I talked to Levi today, actually, on the phone, and asked him about this. You know, Sarah Palin, this isn't the first time one of her in-laws has been gauged as an outlaw to her. She did the same thing to her former brother-in-law. And so looking at that, you know, he was a trooper who can't even be protected enough in his own job. He now has a desk job. So I don't know what Sarah can do to Levi, and we'll see what information he has that he wants to put out, to see how much it's going to hurt her. O'DONNELL: And Sarah Palin is on her way to Iowa soon, to give a speech in Iowa. That's frequently regarded as a first step in a presidential race, get yourself booked for a speech in Iowa. With Levi's comments basically trailing her everywhere she goes, is this doing any damage, do you think, to her family values image in the national Republican party? MOORE: Well, you know, Levi is a 19-year-old kid who really got pulled out of the Alaska wilds and on to the public stage. I think Sarah Palin's failings come when she's reacting to him. Like today, she put out a press release basically saying, I'm ignoring you. Look how much I'm ignoring you, like a child saying-you know, with their hands over their eyes, you can't see me. I think she actually damages her own. And when it comes to Iowa, well, you know, Sarah Palin divided the party here in Alaska. She's now dividing it in, I think-what is it-district 24 in New York. And I think she could potentially do that for the country. O'DONNELL: Her memoir got a 1.25 million dollar advance, "Going Rogue," which compares terribly to Bill Clinton, who got 15 million. Hillary Clinton got eight million. George W. Bush got seven million. Laura Bush-Laura Bush got 1.6 million for her memoirs. Did publishers conclude that "Going Rogue" was going to be more boring than Laura Bush's memoirs? MOORE: Maybe they thought that they'd have 400 pages, and she'd quit halfway through, or maybe they figured it was a pop-up book for Republican men. I don't know. So-but it's already on sale, I think, for less than 10 dollars. O'DONNELL: Shannyn Moore, radio talk show host and contributor to the "Huffington Post." Thanks for joining us tonight from Alaska. MOORE: My pleasure. O'DONNELL: That will do it for this Wednesday edition of Countdown. I'm Lawrence O'Donnell, in for Keith Olbermann. Good night and good luck. Our MSNBC coverage continues now with "THE RACHEL MADDOW SHOW."THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED. END