'Countdown with Keith Olbermann' for Monday, July 19th, 2010
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Guests: Bob Cavnar, Richard Clarke, Chris Hayes, Alex Wagner

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

Day 91 of the oil crisis. BP wins another extension from the federal government to keep the well cap closed.

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ADM. THAD ALLEN (USCG-RET.), NATIONAL INCIDENT COMMANDER: We have agreed that we will go forward with another 24-hour period from today to tomorrow.

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O'DONNELL: But Thad Allen warns: the cap is leaking and BP needs to do better testing. Tonight, Bob Cavnar on who's calling the shots and what could still go wrong.

Who's in charge of the top secrets? The answer: so many people that we could actually be putting Americans at greater risk.

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DANA PRIEST, THE WASHINGTON POST: The system has grown so large that many managers of it don't even know what all is out there.

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O'DONNELL: Tonight, Richard Clarke reacts to the shocking investigation from "The Washington Post" that shows an intelligence community that's grown out of control.

Democrats in the Senate are on the verge of helping the unemployed. President Obama takes aim at the GOP for getting in the way of unemployment benefits and forcing a fourth vote on something that used to be routine on Capitol Hill.

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It's time to stop holding workers laid off in this recession hostage to Washington politics. It's time to do what's right.

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O'DONNELL: Candidate Alvin Greene gives his first campaign speech and comes out swinging against Republican Senator Jim DeMint.

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ALVIN GREENE (D), SOUTH CAROLINA SENATE NOMINEE: We cannot let my opponent keep this country hostage.

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O'DONNELL: And the sayings of Sarah: The tweet parade from Palin on the planned mosque two blocks from ground zero gets stranger with each passing post. From offending Muslims to mangling the English language - tonight, now, Sarah Palin compares herself to William Shakespeare.

All that and more - now on Countdown.

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SARAH PALIN (R), FMR. ALASKA GOVERNOR: They could repudiate what it is.

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

The spill may be over, but on this day 91 of the crisis in the Gulf, leaking has begun.

Our number five story tonight: Admiral Thad Allen, the government's top official in the response effort said today that the cap is leaking and that anomalies have been found in the seabed floor closer than 100 meters from the wellhead.

Admiral Allen also addressed another leak, a government leak this weekend. An unnamed member of the Obama administration told the "Associated Press" that BP had found seepage less than two miles from the wellhead - seepage of what, they did not say.

Admiral Allen today backed up BP's claim that the seepage is natural, and unrelated to the well. And he reported that pressure within the new stacking cap is rising, a good sign for now. And the last reported at 6,811 pounds per square inch, increasing at a pound per square inch every hour.

Less clear, however, is why BP and Allen seemed to take divergent courses on the well's future this weekend. After Allen said Saturday that the pressure tests would be followed by collection of oil through the wellhead, BP chief operating officer, Doug Suttles, the next day, said the well would stay capped indefinitely - raising fears that the pressurized oil might escape elsewhere, such as through the Gulf floor.

Allen followed up with a statement saying the decision would be day by day and promptly extended the capping yet another day, which he did again today. He was asked why the surface collection cannot be done immediately and why BP is claiming that checking at the surface would first require several more days of oil flowing unchecked again into the Gulf.

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ALLEN: If we were to hook up the Q4000 and the Helix Producer, that would produce a number of problems right away. Number one, there would be extensive pressure in those lines over and above what they were used to handling when they were both in production. Secondarily, there are some issues about the make-up of the hydrocarbon stream at that point and the issue of sand in the column, and whether or not it would be forced up under that pressure once it was vented.

The original long-term goal with the new stacking cap in place, which we have right now, was to actually have four production vessels, two coming off the lower keel wide and choke line from the legacy blowout preventer and two coming from the keel and the choke line off the stacking cap. What we've got though is the stacking cap has actually been put in place before we finish building out the infrastructure to support the four platform production.

So, we're somewhat limited right now. But we have the cap in place and are finishing the infrastructure to take us to the 60,000 to 80,000 a day production capacity.

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O'DONNELL: Joining us tonight is Bob Cavnar, a former oil industry executive who now covers the industry at DailyHurricane.com.

Thanks for your time, Bob.

Bob, do you elaborate on what Admiral Allen said about how those lines

those hose lines in effect that would be going down to the cap, might not be able to carry this kind of load. Apparently, getting this to the surface isn't as easy as some people might think.

BOB CAVNAR, FMR. OIL INDUSTRY EXEC.: You know, Lawrence, it is getting curiouser and curiouser the more I listen to both sides, either Admiral Allen or BP talked about this particular issue. This cap was designed to add two more production lines to the two existing production lines out of the old blowout preventer.

If you recall, they used the old top kill lines to produce oil while that top hat was sitting on it. Now that they have the new stack on, they have access to two more valves to allow them to produce the entire flow from the well. Now, you'll recall that BP was actually compelled by Admiral Allen about two weeks ago, or about 10 days ago, to go ahead with the cap, even though they kept saying that they were not ready. He wanted to get the cap on to get the flow contained.

When they did that, they shifted gears. I think it caught everybody off guard by announcing this well integrity test, rather than hooking up the vessels to the well to produce.

Now, to be fair, they have two risers put in place and hooked up to these two producers. Another riser is ready to hook up to the other. So, I'm not sure I'm understanding why they have to flow oil into the - into the well. I think they have capacity and certainly the pressure handling capability to flow the well without having to open it up into the Gulf.

O'DONNELL: What was Admiral Allen saying there about, they don't seem to be ready with the four collection points - that they got this thing on there that had that capacity before on the surface they had the infrastructure in place to actually collect on the other end?

CAVNAR: Right. This has been painfully slow.

If you'll recall the plan that they described, it was to have four, what they call free-standing risers. And those risers are essentially large columns of pipe that float from the bottom. They're buoyant. And they hook up hoses to each of these vessels from those.

They really only have two, maybe three of these completed. They haven't completed the fourth - one, because of the storm that was in the Gulf several weeks ago. But also, they keep having to move these ships off the site to run all this seismic survey.

So, this capping stack well integrity test that they've been doing has really interfered with their ability to collect oil. And I think that's one of the issues here. BP is not wanting to produce the well, for obvious reasons of being able to measure the flow, and the government, as am I, am worried about the integrity of the wellhead and further leaks around the well and in the wellhead itself.

O'DONNELL: Now, Admiral Allen is representing us, representing the government in this project with BP.

CAVNAR: Right.

O'DONNELL: He is not an oil man. A hundred days ago, he probably knew absolutely - he probably knew as much about this as I did, which is to say absolutely nothing. And so, how do you imagine the dialogue going between experienced BP engineers and executives, using terminology, talking about technology they know about that they've worked with that Allen has never been around. What is his ability to sift through the truth, the risk factors in the various choices, the various options in front of him?

CAVNAR: You know, I've watched Admiral Allen develop over this last couple of months of him being in charge. If you'll notice - if you notice, early on, BP kind of led the admiral around by the nose, not to be disrespectful. And he was repeating a lot of the talking points and a lot of the statements that BP was making.

As BP has, I believe, withheld critical information from the public, and probably even the government, the admiral has become more and more assertive. And you saw that over the weekend with him issuing an order and then BP saying something that was completely different, then him coming back and clarifying and then agreeing, but then canceling press conferences and not being forthcoming with the information.

So, I think he's finally being advised by some experienced people that are calling BP to task about some of these issues.

O'DONNELL: And what about the incentives for BP at this stage of the process? Do they have incentives - corporate incentives that might differ from the community incentives and government incentives in term of the choices on some of these options that face us at this point? Or are we really at this stage of the game all in this together?

CAVNAR: Oh, they are completely juxtaposed to the interests of us. Now remember, these waters belong to the United States. And these leases belong to the United States. And all this information is the property of us, you and me and the rest of the citizens of the U.S., in terms of our ownership.

BP's interest is protecting its shareholders. The last thing they want is one, to measure the flow, the 100 percent of the flow, to help us back calculate how much has polluted the Gulf, and they don't want to have a video feed of that oil going back into the Gulf for their public relations and their stock price.

We as citizens and the government representing us want this thing killed. So, we should be focusing on lowering the risk as much as we can, and getting the well killed with these relief wells as quickly as we can.

O'DONNELL: So, Bob, just to clarify, are you saying if we were getting some flow measurements now, we could actually retro-calculate with some of that what the flow has been in the past.

CAVNAR: Absolutely.

O'DONNELL: And the flow in the past is the one that's the most expensive calculation for BP long term.

CAVNAR: That's exactly right. They have pressure readings from this wellhead from the very beginning, Lawrence, that they have not disclosed to us - except for a few spot readings here and there. Now, we have this pressure build-up curve. If we were flowing oil into the Gulf, we could pretty much calculate how much oil and gas they flowed since April 20th.

O'DONNELL: So, let's look at where we are now - 6,800 pounds per square inch pressure, it's rising, that's a good sign. Everyone seems to agree.

Where do you think we are now? What are the possibilities in front of us? And are there still some doomsday scenarios in what you see coming?

CAVNAR: The build-up they're doing now has done a couple things for me. One is: it has shown that with this slight pressure build each hour, that there probably is some fairly good integrity within the well. Remember, there's a lot of damage in that well. But the pressure building gradually, that gives me a little more confidence there's some integrity.

However, as the pressure gets higher, the risk of something going wrong also goes up in terms of the wellhead itself. There's a connector between the old blowout preventer and the new blowout preventer that is not designed to hold this kind of pressure. And with the casing damage down hole, every bit we increase, it increases the chance of a leak down hole.

So, the lowest risk strategy here is to flow the well until the relief well intercepts the blowout well down below and kills it.

O'DONNELL: And in the - in these dangers around these options, is it possible that we face some sort of mini-earthquake down there in that surface that would rip open - in effect, rip open the well to even greater exposure than we have already seen?

CAVNAR: You know, these seeps that the admiral talked about within 100 meters of the well concern me some. Now, there's always seepage from the ocean floor and that's relatively natural. But to have it this close, the one that's two miles away, I think, is unrelated. But the ones close really concern me.

And there is a possibility, if you look at the well diagram which is complicated and I won't get into it, there is a path for oil and gas to get out into the sub strata. And I'm concerned about that.

I'm more concerned - I'm more concerned that the wellhead integrity itself. I think there's an issue there.

O'DONNELL: Bob Cavnar, oil and gas industry expert - thanks for your time tonight. Countdown could not have gotten through the last 90 days without you, Bob.

CAVNAR: I'm happy to help. Lawrence, good talking to you.

O'DONNELL: Coming up: The intelligence apparatus to protect us from al Qaeda. Is it intelligent? Richard Clarke, the man who sounded the alarm against al Qaeda before September 11th, joins me to assist the dangers of an intelligence community that's grown out of control.

And, President Obama hits the Republicans for turning their backs on the unemployed. Why the GOP has a different set of standards for emergency spending when a Democrat lives in the White House.

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O'DONNELL: Ahead on Countdown: Connecting the dots to keep America safe. Before 9/11, the problem was too few analysts. Now, the problem could be too many analysts and way too many reports. Former counterterrorism adviser Richard Clarke on the pit falls of a terrorism community that's grown so big, so fast.

And later, Democrat Alvin Greene finally makes the case why he's

better than Republican Senator Jim DeMint. Greene's first campaign speech

ahead on Countdown.

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O'DONNELL: What good does writing 50,000 intelligence reports a year really do if no one has the time to read all of them?

Our fourth story: A new investigation has revealed that the U.S. spy system has become so vast in the decade since the 9/11 attacks, those 50,000 reports summarize just one aspect of intelligence gathering.

"The Washington Post" has uncovered that the enemy is no longer merely al Qaeda. We can now add a bloated bureaucracy to the list. A system that has grown so big and bloated that its effectiveness is impossible to determine.

The numbers are staggering. More than 1,200 government organizations as well as 1,900 private companies work on programs related to counterterrorism, homeland security and intelligence. Two hundred sixty-three separate new entities have been created to root out violent extremism. Some 854,000 people across the country have been given top level security clearance - that's nearly 1 ½ times as many people as actually live in Washington, D.C.

The official intelligence budget is now $75 billion, almost three times what it was on 9/11. Much of the work is overlapping. Fifty-one federal and military units in 15 cities across the country are charged with tracking the financing of terror networks.

As for that mountain of paperwork we mentioned, including those 50,000 reports a year, top operatives say they are getting buried in bureaucracy. One of them telling "The Post," I'm not going to live long enough to be briefed on everything.

At his daily briefing, the White House press secretary said that some redundancy is a good thing.

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ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: We have to balance the necessity of the resources needed to fight our adversaries, and at the same time, balancing that against waste. The 9/11 Commission spoke fairly effectively to this. You want redundancy - you want some redundancy built into that system.

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O'DONNELL: Let's turn now to Richard A. Clark, the counterterrorism adviser who tried to warn the Bush administration about the threat of al Qaeda before the 9/11 attacks. He is currently the chairman of Good Harbor Consulting and author of, "Your Government Failed You: Breaking the Cycle of National Security," which is now out in paper back.

Thank you very much for your time tonight, Richard Clarke.

RICHARD A. CLARKE, FMR. W.H. COUNTERTERROR ADVISOR : Thank you. I think "The Post" has done us an enormous service by pointing out what has been a well-known secret in Washington for the last couple of years. And that is, there is enormous bloat, enormous waste, and this system has gotten totally out of control.

We have now an intelligence homeland security complex that rivals anything that Eisenhower might have talk about when he talked about the military industrial complex.

O'DONNELL: And to go back to 9/11, or better, to 9/10, the problem seems to be not so much lack of resources or lack of personnel, but as I read your experience, the problem was the inability to get people to focus on what we did know, what we were already able to track, and to get a focus on that at the highest levels.

CLARKE: It was never clear to me after 9/11 that we needed more resources. Every time during the Clinton administration that we asked for more resources, we got them. We weren't really being denied resources.

There were a few programs that needed money and the CIA operations was probably one of them. But resources was not the problem. It was getting attention of senior leadership and getting them to decide things and authorize things - which they were reluctant to do.

O'DONNELL: And that brings us to the question of redundancy because, obviously, there needs to be some level of redundancy in this process. But redundancy comes up against what you're talking about, which is getting people's focus. How much redundancy do you think is the right level of redundancy in the system like this? And how - how can we even quantify it and describe it?

CLARKE: Well, I think you want always two intelligence organizations looking at key issues as a failsafe. But we have four, five, 16, 30, and they're backed up by Beltway contracting firms. We have thousands and thousands of people more than we need.

And this isn't just a matter of waste. It is a matter of getting in the way of getting things done. When there's this much going, you have to spend too much time managing it. And that's time taken away from getting the job done.

O'DONNELL: Now, the clues that would have led us to the Christmas Day underwear bomber, for example, were buried within what seemed to be 5,000 pieces of general data that need to be reviewed every single day. And how are the agents with the responsibility to review this material supposed to be able to get at the gold when they're being buried in all this information? And is there any practical alternative to it?

CLARKE: Well, one alternative is to - is to consolidate. One of the problems with the Christmas Day bombing was that there were about five different organizations that had a piece of this. And when that happens, you don't have accountability.

I always thought that having accountability and having small, highly qualified teams made a lot more sense than having enormous unqualified, untrained, inexperienced teams. When this sort of bloats occurs in the Pentagon, the Congress creates something called the BRAC, the Base Realignment and Closure Commission.

It's a bipartisan commission and it comes up with a review and says this should be closed. And the president can either say yes or no. It's an up-or-down vote. They don't get to take it apart.

We need a BRAC for homeland security and intelligence, because it's putting us at risk having all of these organizations tripping over each other.

O'DONNELL: Did you see this coming, knowing that there was going to be an expansion and the creation of a Homeland Security Department? Did you see - did you anticipate that it would - that it would expand this much over this period of time?

CLARKE: Lawrence, I don't think anybody could have imagined it would have expanded this much. I mean, Metropolitan Washington is being paved over with office complexes for top secret clearances.

I was amazed when I found out the new National Counterterrorism Center was not a consolidation of existing centers, but yet another center on top of what already existed. This is dangerous, it's wasteful, and right now, there's no oversight of it. Congress is not doing its job of oversight. The administration is too busy to do the job of oversight of the structure.

We need something like an independent commission to come in, straighten this out, and get rid of a lot of the bloat.

O'DONNELL: You've been - you've lived, or had to live inside the mind of al Qaeda and terrorist thinking on this kind of thing. What do you think their reaction to this is? I mean, certainly, the impression the government wanted to give them is - there's going to be this gigantic machine coming down out. But they can read "The Washington Post" online today and get the feeling that the gigantic machine is stumbling all over itself.

CLARKE: Well, I think a lot of people, not just al Qaeda, but a lot of people around the world, look at this ridiculous overreaction to 9/11 and this it's a typical American reaction. The United States, after every crisis, just throws money and bureaucracy at things, and it usually doesn't work.

O'DONNELL: Richard Clarke, former chief counter terrorism adviser to the NSC and author of "Your Government Failed You" - thank you so much for your unique insights on this tonight, Richard.

CLARKE: Thank you, Lawrence.

O'DONNELL: Coming up: Why the GOP continues to insist they have to block the extension of unemployment benefits until they're paid for, even though they've voted the other way before.

And how Sarah Palin ends up turning a dispute over a mosque near

ground zero into literary proof that her tweets are equal to the writing of

yes, William Shakespeare.

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O'DONNELL: Ahead on Countdown: President Obama hammers the GOP for blocking the extension of benefits to out of work Americans. Republicans say unemployment checks only encourage more unemployment. The president says that doesn't show much faith in the American people.

Karl Rove plays politics with the stimulus. First, it's too big.

Now, Harry Reid didn't make it big enough.

And later, the unlikely Democratic candidate for Senate from South Carolina, Alvin Greene, hits the campaign trail for the first time, proving yet again why almost anyone is better than Republican Jim Demint.

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O'DONNELL: The Republican party has been blocking the extension of unemployment benefits, contending that those benefits must be paid for by a spending cut elsewhere in the budget. In our third story, today President Obama called them out. Meantime, a Republican backed group has attacked Senate Majority Leader Harry Reid on the grounds that he didn't bring enough stimulus money to the state of Nevada.

Today, President Obama made clear that he is prepared to elevate the stalled jobless bill to the Rose Garden level. With actual unemployed Americans standing behind him, the president hit directly at the party holding things up.

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OBAMA: For a long time, there has been a tradition, under both Democratic and Republican presidents, to offer relief to the unemployed. That was certainly the case under my predecessor, when Republican senators voted several times to extend emergency unemployment benefits. After years of championing policies that turned a record surplus into a massive deficit, the same people who did not have any problems spending hundreds of billions of dollars on tax breaks for the wealthiest Americans are now saying we shouldn't offer relief to middle class Americans like Jim or Leslie or Denise, who really need help.

(END VIDEO CLIP)

O'DONNELL: The timing of today's Rose Garden appearance by the president was made more interesting by the fact that tomorrow the jobs bill impasse may indeed come to an end. That's because the governor of West Virginia, Joe Manchin, has appointed a successor to the late Robert Byrd. Manchin's former legal adviser, Carte Goodwin, will be sworn in as the junior senator at 2:15 p.m. tomorrow. And that is expected to give the Democrats the votes they need to overcome a Republican filibuster on the extension of unemployment compensation through November, for millions of Americans whose benefits have expired.

But Republicans are not giving up without a fight. Senator Orin Hatch saying, quote, "what the president isn't telling the American people is that many of us in the senate are fighting to make sure our children and grandchildren aren't buried under a mountain of debt," which makes a new campaign ad against Senate Majority Leader Harry Reid particularly interesting.

The ad is paid for by a 527 group called American Cross Roads. The conservative group has been promoted by the likes of Karl Rove, former advisor to President George Bush, and Ed Gillespie, a veteran GOP operative.

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UNIDENTIFIED MALE: It is bad enough that Nevada has the highest unemployment in the nation. And Harry Reid claims to be helping the job situation? Really, Harry? Recent data show Nevada ranks 50th in the money received from Harry's stimulus bill. That's right. Senate Leader Harry Reid has gotten his own state less help than every other state but one.

And along with bailouts, deficits and Obama-care, that's what Harry Reid's done for Nevada. Really, Harry? That's not the kind of help Nevada needs.

(END VIDEO CLIP)

O'DONNELL: Big surprise, not true. There are actually 13 states that have received less stimulus money than Nevada, according to the administration data on the Recovery Act. That roughly corresponds to where Nevada ranks in population compared to the other states.

Let's bring in the Washington editor for "The Nation," and MSNBC contributor, Chris Hayes. Chris, thanks for joining us tonight.

CHRIS HAYES, "THE NATION" Thanks for having me.

O'DONNELL: Chris, today a good day for President Obama to stand up to the Republicans or was it just the last day that he could stand up to them on this unemployment thing, given that they may be getting the vote they need from the junior senator from West Virginia tomorrow?

HAYES: Yeah. I think if you look back over the last two years, the M.O. of the White House is, they always gear up and they're really ready to fight as soon as they know they're going to win. So when outcomes are indeterminate, when it looks like things are hanging in the balance, you get a lot of sort of very quiet, diplomatic, soft shoe approach from the White House. When they know they have the votes, when they know they're going to win, that's when you get this kind of hard hitting rhetoric.

It is sort of a strange strategy. I understand it because it always preserves the political capital that's associated with victory. But it doesn't ever seem to be essentially linked to - linked causally to actually getting the victory itself.

O'DONNELL: The president referred to these emergency extensions of unemployment in the past as being fairly routine. That was certainly my experience on one of them. When I was working in the Senate in 1993, we passed an emergency extension that was so routine, President Clinton sent me one of those bill signing pens. By the time I got it, I had forgotten we had passed the bill. We did it with about ten Republicans, including, by the way, Judd Gregg who voted for it, without any funding, without any back-up funding, any offsets in spending, routinely just sent that thing through the Senate with 66 votes.

But what is going on now, and in the historical perspective, the other times we've done this, was '93 an exception? Is what they're doing now the exception?

HAYES: No, what they're doing now is the exception. I think it just that shows how radical the right has gotten and how sort of enveloped by this crazy ideological zealotry in the face of a crushing unemployment and a set of facts that would seem to cry out for some sort of government intervention. I think it demonstrates the degree to which the center of gravity, particularly among the Republican coalition, has shifted to the right.

Even before the '93 one, there was one - if I'm not mistaken, '91 under George H.W. Bush, which was paid for, but it was paid for with 5.6 billion dollars in new taxes. Now that's completely inconceivable with the modern GOP. And that was with a Republican president. I think it just shows that there is a single and solitary economic staple of the Republican party, and that is, cut taxes, cut taxes, cut taxes. Everything after that is essentially - they can take or leave.

O'DONNELL: And today, White House Press Secretary Robert Gibbs did not rule out a request for another extension of jobless benefits when this one runs out in November. How do you anticipate the politics playing on this down the road? Who is going to win this argument long term? The Republicans saying that's too much, not another one of these things? Or if we do get to this cross roads again, where we do need another one, will the Democrats still have the ammunition to pass one?

HAYES: Well, look, I think the actual politics of this issue specifically favor the Democrats. I mean, the polling certainly shows that. You have a very, very strong majorities, almost two-thirds in certain polls, supporting government spending for jobs generally and also extension of unemployment benefits. And people know - everybody knows people that are out of work and they know those people that are in their lives, brother-in-laws, and beloved aunts and kids who just graduated from college - they know they're not shiftless, indolent, lay-abouts who are just waiting for a handout. They know these people, and they know they're hard working people. And the reason they can't get jobs is the state of the economy.

So I think politically it hurts the Republicans. The irony, of course, is that unemployment, writ large, helps the Republicans. That's the weird disconnect we have now. You can have Sharron Angle simultaneously in Nevada saying, you know, I don't believe in unemployment. I think it just, essentially, incentivizes people not to work. At the same time, she's running ads attacking Harry Reid for high levels of unemployment.

That's the problem. Republicans, as long as they think they benefit from unemployment, don't have much political incentive to actually curtail it.

O'DONNELL: And back to Nevada with this new ad Karl Rove's team has put out on Harry Reid. It is hard to surprise me in politics. But I did not expect from that side of our politics there would be any argument that the stimulus was too small, which is the case that they're trying to make against Harry Reid in Nevada, that the Nevada stimulus was too small. Are they getting too cute for their own electorate out there?

HAYES: Look, I don't think that they - one thing it shows is this, right - is that the professionals have sort of come in to kind of layer, as they say in campaigns, right, the Sharron Angle operation. The professionals don't have any real care for ideological commitment or consistency. They want to hammer Harry Reid with whatever sort of cudgel is lying around. So I think that it shows that they understand that the contingencies of the - where things are in the economy, they have to hit people with whatever they have.

O'DONNELL: Chris Hayes of "The Nation," thanks for joining us tonight.

HAYES: Thanks, Lawrence.

O'DONNELL: Coming up, Democrat Alvin Greene turns up his campaign efforts to defeat Republican Jim Demint.

Sarah Palin turns to Twitter to try to stop the building of a mosque near Ground Zero. But each passing Tweet made a bigger PR problem for the former Alaska governor.

And when Rachel joins you at the top of the hour, the Tea Party versus the Tea Party. The battle inside the movement after one spokesman was expelled for racist comments.

(COMMERCIAL BREAK)

O'DONNELL: The Democratic Senate candidate who seemed to come from out of nowhere, and inspired theories that he was a Republican plant has now made his first official campaign speech. In our number two story, the Democratic nominee for the Senate in the state of South Carolina, Alvin Greene, speaks. Yesterday, Mr. Greene spoke at an NAACP event in Manning, South Carolina. The Associated Press noted that Mr. Greene avoided any major gaffes as he hit his three major themes of jobs, education and justice.

Indeed, Mr. Greene's campaign platform appears to be anything but radical. Here is part of his speech.

(BEGIN VIDEO CLIP)

ALVIN GREENE, DEMOCRATIC CANDIDATE FOR SENATE: South Carolina and America cannot afford six more years of my opponent. We cannot let my opponent keep this country hostage. We see record high cuts in education spending, even though South Carolina is ranked 49th in education. South Carolina ranks 49th in standardized test scores, and we have the highest high school drop-out rate in the country.

We spend more than two times of our tax paying dollars on inmates than students. Parents need to take a more active part in their child's education - especially parents of under performing students.

Let's pick up what some of the projects that were put on hold after 9/11, such as improving transportation and infrastructure in South Carolina and America. Now is the time to implement alternative forms of energy, such as solar, wind, and methane.

We need justice in the judicial system. The punishment should fit the crime. Fairness saves us money. First time nonviolent offenders should be granted such programs as pretrial intervention.

(END VIDEO CLIP)

O'DONNELL: Of course, Mr. Greene is running against the incumbent Republican Senator Jim Demint, who has never given a speech as thoughtful as Mr. Greene's. And Senator Demint seems to be most at home in front of a Tea Party crowd, just as he was in September of last area, when he still hoped that health care reform would be President Obama's Waterloo.

(BEGIN VIDEO CLIP)

SEN. JIM DEMINT (R), SOUTH CAROLINA: Well, I think you all know that the president has warned us that if we disagree with him, he is going to call us out. OK, Mr. President. We are out. Ladies and gentlemen, welcome to Waterloo!

(END VIDEO CLIP)

O'DONNELL: And here is Senator Demint selling his book and his political philosophy on the friendly terrain of Pat Robertson's "700 Club."

(BEGIN VIDEO CLIP)

DEMINT: At the very foundation of our freedoms are the Judeo-Christian values which have been translated into principles that make our economy work, our political system work, and our culture work. And unfortunately, the federal government over the last several decades has tried to purge those values from our system, and then we still expect freedom to work. Christians need to know that's not true.

(END VIDEO CLIP)

O'DONNELL: So South Carolinians will have a choice as to which candidate's set of priorities works best for them. Alvin Greene's campaign slogan need be nothing more than "Better Than Demint."

Coming up next, in our number one story, we've all likely done it ourselves at one time or another, misspoken by saying a word that might not actually be English. But unlike Sarah Palin, most of us probably didn't excuse the mistake by comparing ourselves to Shakespeare.

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O'DONNELL: It takes more than a bit of audacity to mangle the English language and then compare yourself to William Shakespeare. Our number one story, Sarah Palin has managed to do both. At issue, a plan to build an Islamic community center and mosque two blocks north from the World Trade Center site. The project called Cordoba House; its objective, as defined on the website, is to promote tolerance reflecting the rich diversity of New York City.

Sarah Palin taking up the Tea Party talking points via Twitter:

"Ground Zero mosque supporters, doesn't it stab you in the heart as it does ours throughout the heartland? Peaceful Muslims, please refudiate."

After perhaps consulting with a dictionary, Ms. Palin deleted that Tweet, but posting several more. Next up, "peaceful New Yorkers, please refute the Ground Zero mosque plan if you believe catastrophic pain caused at Twin Towers site is too raw, too real."

Refute, as I am reliably informed by Countdown staff, not the right word in this context either. But unlike refudiate, at least it can be found in the dictionary.

Ms. Palin tries again, "peace-seeking Muslims, please understand, Ground Zero mosque is unnecessary provocation. It stabs hearts. Please reject it in interests of healing."

Perhaps realizing her comedy of errors, Ms. Palin gives up on the mosque and instead provides historical context for her choice of words. "Refudiate, misunderestimate, wee wee'd up. English is a living language.

Shakespeare liked to coin new words, too. Got to celebrate it."

Palin's comparison immediately prompted the creation of a Twitter feed called Shakes-Palin. One can invent their own Palin-esque quote inspired by the Bard, such as "to be or not to be, wait, I wrote the answer on my hand some place." And "get thee to a gunnery."

Meanwhile, New York City Mayor Michael Bloomberg saying he couldn't disagree more with Ms. Palin's mosque comments, calling the project "a great message for the world that unlike in other places where they might actually ban people from wearing burqas or building a building, that's not what America was founded on, nor is it what America should become."

Joining me now is the White House correspondent with "Politics Daily," Alex Wagner. Good evening, Alex.

ALEX WAGNER, "POLITICS DAILY": Good evening, Lawrence.

O'DONNELL: Alex, so this seems to be a distance issue. It seems to be that the mosque is not at Ground Zero. That's not what anyone is proposing. It is near Ground Zero. It's two blocks away, which in Manhattan can be a world away. What if it was ten blocks away? What if it was - does it have to be above 14th street? What about the mosque that is less than two miles from the White House in Washington, for example? Or the plans to build a mosque in Anchorage about 45 miles from Wasilla? Is that one too close to Wasilla?

Palin and the mosque opponents seem to be hinging their whole argument on a distance question. How close is too close? Do they understand that's where they've placed this whole issue on how far away does it have to be?

WAGNER: Well, you know, I think once you get into the religious real estate zoning game, it is a slippery slope. And I think the thing that's been forgotten here is religious freedom is a tenet upon which this country was built. And in previous statements, Mayor Bloomberg has even alluded to that. And I think Sarah Palin is very much back to the Constitution and our original rights. And sort of ignoring this one is a big misstep, in my opinion.

O'DONNELL: Does the Palin side of the world have any reaction to the Bloomberg point, that, in fact, this country was clearly founded on the right of free assembly and the right of being able to locate these kinds of buildings where people choose to locate them?

WAGNER: Well, you know, the whole Palin side of the equation is sort of a flummoxing side. Sometime their logic is not exactly as clear as one would hope it would be. Many think one of the things that the founders of this mosque have said over and over again is that this is not intended to be a radical Islamic gesture, and that they very much look at this mosque as a community center, in the way of the 92nd Street Y.

There is not just a mosque, but there is also an art center and a swimming pool and a restaurant. And they see this as bringing sort of the moderate Muslim voice to the general American , discourse. And I think you can argue about that, but I think that needs to be taken into consideration when we're talking about why the mosque is going to be placed where it is.

O'DONNELL: Has Palin become kind of a Pope-like figure to her followers, where they believe that she is infallible? And it is impossible for her to simply say, oops? This was clearly a mistake. That word choice was a mistake. Why couldn't she just say, oh, got it wrong. This is what I meant to say.

WAGNER: You know, I think the Bard of Bristol Bay, as she would maybe have herself - this is not the first time she's gone into the sort of language and theory lab to invent something. You have to keep in mind, this is the woman that talked about, you know, the view of Russia from her backyard, who invented the Department of Law at the White House, which doesn't actually exist, who talked about senatorial duties that the vice president does not actually have.

I don't think we should be too terribly surprised that she replaced the "t" with the "f," if it was supposed to be repudiate. In fact, I think, when all is said and done, this is probably one of the more benign mistakes or inventions she's made.

O'DONNELL: But if she was more confident about her background, about her training in governmental affairs, about her fluency in international affairs, it seems to me that admitting little mistakes here and there would be easier. What is it about her or about having grown up in politics in Alaska that simply makes it impossible for her to say, I got that wrong?

WAGNER: Well, she spent so much time -

O'DONNELL: a word is a word.

WAGNER: I think she spent so much time sort of vilifying those inside Washington that are sort of this Ivory Tower sort of white tower intellectual, that maybe it's somewhat endearing that she keeps getting the words wrong and that she apparently doesn't apparently a Merriam Webster's Dictionary. I'm not quite sure. But it is definitely not in her sort of M.O. to say I messed up. That has never been in her M.O.

O'DONNELL: Alex Wagner of "Politics Daily," who has never messed up, thanks for joining us tonight.

WAGNER: Never, never.

O'DONNELL: Thanks, Alex. That will do it for this Monday edition of Countdown. I'm Lawrence O'Donnell, in for the vacationing Keith Olbermann. Thanks for watching. I'll see you regularly this Fall at 10:00 on MSNBC. Well, I won't see you. You'll see me. I can't actually see you, but you all get it.

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