'Countdown with Keith Olbermann' for Tuesday, Oct. 12th, 2010
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Guests: Kerry Sanders, Alexander Nicholson, Rep. Barney Frank, Sen. Claire McCaskill,

David Corn

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KEITH OLBERMANN, HOST (voice-over): Which of these stories will you be talking about tomorrow?

Don't ask, don't tell, don't appeal? A federal judge issues a worldwide injunction against the military enforcing rules against gays serving openly. She gives the Obama administration 60 days to appeal. Will it?

Our coverage with Congressman Barney Frank and the executive director of Service Members United, the only identified veteran among those who sued, Alexander Nicholson.

He's so guilty he can't even lie about it. Asked point-blank if he's taking foreign contributions to influence American elections, Karl Rove replies -

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KARL ROVE, FOX NEWS CONTRIBUTOR: We do not solicit for entities and we tell people that we will not accept foreign money and that it is illegal since 1907 for foreign money to be involved in American political campaigns.

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OLBERMANN: So, your answer is yes or no is legal boilerplate?

But desperate efforts of Rove, the Republicans, the U.S. Chamber of Congress to elude the snowballing, foreign money mega scandal.

More Carl Paladino. Just uncovered from March, what he would say to the attorney general if the attorney general chose to hold a terror trial in New York City.

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(EXPLETIVE DELETED)

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OLBERMANN: That was "F" him, "F" him. Since Paladino said that, four terror trials have been held in New York City without incident and with two convictions.

The Chilean miners - as the hope for miners nears, possibly even later tonight. The latest from Copiapo.

And double fun with Christine O'Donnell. First, she meets Apple Daily. And then how she appears to try to use this Internet sensation in her latest campaign ad?

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OLBERMANN: All the news and commentary - now on Countdown.

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OLBERMANN: Good evening from New York.

A landmark in American civil rights tonight, the U.S. government, as of this afternoon, prohibited from discriminating against gay soldiers in the U.S. military, a federal judge ordering an immediate and as in now, to any and all discharges of gay military personnel based on their sexuality. After forcing an estimated 14,000 Americans to stop serving their country because of who they love, the judge's order today said no more. That the 66,000 estimated gay Americans now on active duty need lie and deceive and fear expulsion, no more. Gay Americans who wish to serve their country in the future would have to hide their true selves, no more.

After 17 years, three presidents and a generation of soldiers - in our fifth story tonight: "don't ask, don't tell" has been struck down.

Alexander Nicholson, the gay veteran whose lawsuit killed it standing by to join us in an exclusive interview, as is the first openly gay member of Congress, Representative Barney Frank.

Today's injunction was handed down by U.S. district judge, Virginia Phillips, in Riverside, California. The lawsuit was filed by the Log Cabin Republicans, on behalf of members who are now serving or had served in the U.S. military. Alexander Nicholson, the only one not named as a Joe Doe in the suit.

Defense Secretary Gates opposes "don't ask, don't tell," and is awaiting report on how to end it internally. Pentagon officials telling NBC News tonight they are studying the order to halt enforcement of it, suggesting the Pentagon may comply, quoting, "It's important to point out that today's federal court order comes less than two months before the Pentagon is to provide Secretary of Defense Robert Gates with a plan on how, not if, but how to implement the repeal."

The lawsuit was fought by the Justice Department, defending the law, despite President Obama's public opposition to it. Mr. Obama has resisted pressure to do away with "don't ask, don't tell" using his power as president, referring to have Congress to do so through legislation, which it has failed to do.

Today, the White House had little reaction to the ruling.

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REPORTER: First of all, if you had any reaction that a federal judge has granted an injunction of "don't ask, don't tell"?

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY: I was told something about that as I walked out. I would point you to DOJ, as I assume they will analyze the briefing. Obviously, you know the president's view on changing the law on "don't ask, don't tell."

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OLBERMANN: The big question now: will the Justice Department appeal?

DOJ had no comment.

Here now most of the text of today's order, three short shattering paragraphs. To quote, "The court, one, declares that the act known as 'don't ask, don't tell,' infringes the fundamental rights of the United States service members and prospective service members and violates, (a), the substantive due process rights guaranteed under the Fifth Amendment to the United States Constitution, and (b), the rights to freedom of speech and to petition the government for redress of grievances guaranteed by the First Amendment to the United States Constitution.

Two, permanently enjoins defendants, United States of America and the secretary of defense, their agents, servants, officers, employees and attorneys and all persons acting in participation or concert with them, or under their direction or command, from enforcing or applying the 'don't ask, don't tell' act and implementing regulations against any person under their jurisdiction or command.

Three, orders defendants, United States of America and secretary of defense, immediately to suspend and discontinue any investigation or discharge, separation, or other proceeding that may have been commenced under the 'don't ask, don't tell' act or pursuant to 10 U.S. Code Section 654 or its implementing regulations on or prior to the date of this judgment."

It is so ordered October 12, 2010.

With us tonight, as promised, the only name plaintiff in this historic suit, Alexander Nicholson, member of the Log Cabin Republicans, founder and executive director of Service Members United, the nation's largest organization of gay troops, veterans and supporters.

Great thanks for your time tonight, sir.

ALEXANDER NICHOLSON, LOG CABIN REPUBLICANS: Of course, thanks for having me.

OLBERMANN: How do you feel?

NICHOLSON: It's a euphoric date. This day has been a long time coming. Many of us have thought "don't ask, don't tell" to be unconstitutional for a long time. The judge agreed last month. And she followed through this month and actually had some teeth on her ruling, issued an injunction, and now, the Pentagon is barred from enforcement.

OLBERMANN: You joined the Army in 2000, in May. You spoke several languages, you were involved in collecting human intelligence and after 9/11, when rumors about your orientation surfaced, some of your fellow service members actually warned to, if I have the court correctly, be more careful about it. Is that correct? Was that because they wanted you to stay in the service with them?

NICHOLSON: That's pretty much correct. I was trained as a human intelligence collector. I went in multilingual. And when I happened to be outed by a colleague inadvertently. I did have a number of my other service members come up to me and say and warn me and say the information is starting to leak out, you need to be a little bit more careful. Of course, I was sort of an inadvertent fluke that I was outed to begin with. But they were pretty good about having my back and warning me of what was coming.

You know, unfortunately, the information continued to filter up, went to the command, and, you know, I was ultimately discharged to six months after 9/11.

OLBERMANN: And that would be March 22 of 2002. What did that mean with the honorable discharge? What did that mean when they forced you out?

NICHOLSON: You know, the day I was discharged was unfortunately, you know, such a relief because of the two months of turmoil and the emotional rollercoaster I had gone through. It was - it was a relief but it was extremely sad and disappointing because the Army is something I had grown up around. My father was career military and it was something I plan to do as a career.

I was a talented recruit. I was multilingual when I went in. I was being trained in human intelligence collection and it was right around the time of 9/11. I was something somebody they desperately need.

And, you know, it was sort of - it was a slap in the face that didn't make a lot of sense to me at the time when I was, you know, 20 years old, I believe - 20, 21 years old. It was just, you know, a mix of emotions. It took me years to recover.

But, you know, eventually I did and became one of the nation's leading "don't ask, don't tell" repeal advocates and I'm happy to be part of overturning and gutting the law now.

OLBERMANN: Was there a big jump in your mind to actually filing the suit?

NICHOLSON: I was approached by Log Cabin to be a part of it that. I was, you know, a member of Log Cabin Republicans. They've been a big supporter of our work, with Service Members United. I was approached to be a part of the lawsuit when it was about to be dismissed because it just had John Doe plaintiff.

And it was sort of a nonissue for me. I was more than happy to go in and help save the case and revive it by being the named public plaintiff, the named injured veteran. And, you know, it's something I've been happy to be a part of since. And, you know, fortunately for us, this is what looks like may gut "don't ask, don't tell" finally.

OLBERMANN: You've been very critical of President Obama on this issue. Explain that if you would.

NICHOLSON: I have. I've been critical of him on two fronts. Number one, with respect to this case and the legal challenges. The Justice Department didn't have to pursue the legal challenges as viciously as they have. They've taken some extraordinary measures in some cases in trying to quash these lawsuits, this one in particular.

I've also been critical on the legislative front. There's a lot more the president could have done to help ensure a legislative victory on "don't ask, don't tell." Just last month, when the National Defense Authorization Act result for a vote, I've been critical of both President Obama and the Democratic leadership on the Senate for not doing enough.

OLBERMANN: If the administration appeals, decides to appeal and somehow wins, and Republicans in the next Congress continue to block the repeal as they have this year, where does the assignment of blame go from there, do you think?

NICHOLSON: I think blame, there's enough to be spread around quite far. The Republicans certainly are due some blame. You know, they obviously blocked it and blocked NDAA. The president, you know, certainly continues to deserve some blame for not speaking out enough. We'll wait and see what he does in the lame duck and the Democratic leadership. If they bring the National Defense Authorization Act back up, you know, maybe they can mitigate some of that blame by trying to get it, you know, accomplished legislatively in the lame duck.

But, you know, if - if - when January comes around, if we're in the same place or still trudging along with "don't ask, don't tell," you know, I think a lot of the blame is going to lay with the president. He really has a lot f of authority here. I think he's trying to put on some others, the Department of Justice, the Congress. He really has a lot of authority to step in and do a lot on this issue that he's not doing right now.

I believe that he believes that "don't ask, don't tell" is wrong, but I'd really like to see him step up and step up to the plate on this and actually put some of that presidential power behind that belief.

OLBERMANN: Alexander Nicholson, as we mentioned, the only name plaintiff in the Log Cabin Republicans' historic lawsuit, founder of Service Members United - thank you for your time tonight, thank you for your service to the country, and congratulations on - as you said - the euphoric day for you.

NICHOLSON: You're very welcome. Thank you, Keith.

OLBERMANN: Let's turn now to Congressman Barney Frank of Massachusetts.

Congressman, thanks for your time tonight.

REP. BARNEY FRANK (D), MASSACHUSETTS: Glad to. Can I just say one thing? I have to give credit where it's due. I was the second gay member. My colleague Gerry Studds was the first. I was the first to come out voluntarily, but my late colleague Gerry Studds was the first member of Congress to acknowledge being gay.

OLBERMANN: And thanks for correcting us on that.

Set aside for a moment your role as a congressman - as a person, as an American, as a gay man, how do you feel tonight in the light of this ruling?

FRANK: Well, as an American citizen, I feel better protected. It seems to me a grave error for us to have told that the country, thousands and thousands of qualified men and women you can't serve. You know, when this first came up, I asked Colin Powell 20 years ago, why - what was the justification for excluding gays in the military. This is when there was a tougher ban even than "don't ask, don't tell." I said, are you worried about espionage? And I was out by then, so he knew where this was coming from.

And Colin Powell, to his credit, although he opposed the change said, look, the gay men and lesbians in the military have been wonderful members of the military. There's no criticism to them. What he said was there was so much prejudice against them that it would be disruptive, blaming the victims.

So, I feel very pleased that my country is going to have the full pool of people to choose from. And yes, as a gay man, I am very pleased to see that we are making progress in this fight against prejudice.

OLBERMANN: Is there any question in your mind Pentagon has to stop enforcing this right now, or is there any ambiguity?

FRANK: Oh, no. No. There's no ambiguity.

But I - can I say, Keith, I was disappointed with Mr. Nicholson tonight. I admire his courage. But the partisanship of his remarks was appalling.

First, the president cannot simply abrogate this. It's a statute. The president could do a better job of enforcing it. And they have, in fact, done that. The Obama administration did scaled back the enforcement from where it was under both Clinton and Bush. And I give Obama credit for that.

But this is statutory. It has to be repealed. I believe it will be repealed in the lame duck. And for people who, by the way, incline to say judicial activism, understand - they have to understand, the president of the United States thinks it's a bad policy, a majority of the House of Representatives are going to repeal it, a majority of the Senate Committee of Armed Services has voted to repeal it, and a strong majority of the Senate but unfortunately not enough to filibuster is going to repeal it.

So, the repeal of it has the overwhelming support of the elected branches. But, Democrats, this was unfortunately part (INAUDIBLE) in Congress. When the vote came in the Senate to pas the bill to repeal it, every single Republican voted no. In the House, we've got five Republicans to vote with us to repeal it, and 170 against it. Well, 90 percent of the Democrats are for it.

Now, I wish things were different, but I was really disappointed that Mr. Nicholson would make this part of an issue, they're the Log Cabin Republicans. Unfortunately, they have fought virtually no Republican support.

Now, I want to push ahead and I hope we will have a vote on it in the lame duck session of the Senate, I believe we will. And if the Log Cabin Republicans can produce two or three Republicans, this thing will go away.

OLBERMANN: In the short term, is it your expectation that the administration will repeal this ruling or they're going to let this go and thus facilitate in many ways the repeal of which you speak?

FRANK: My advice, which I will now take advantage of your program, Keith, is they've got 60 days. We will have the lame duck session convene in less time than that. The lame duck session will convene on the 15th of November. Clearly, what they should do is wait and see. I hope they don't appeal it at all, but it would be really foolish to appeal it before we can repeal it.

So, it would (INAUDIBLE) by the way, the congressional vote. I am glad the judge did that. It's an unconstitutional policy.

But it would be better from the standpoint of American democracy to complete the process of the elected officials doing this. And so, what I would urge the administration to do is nothing until Congress has reconvened and the Senate has a chance to vote on it. And we have overwhelming support from the Democratic senators. And as I said, if my Log Cabin Republican friends can get us, I think, two Republicans, then this thing goes away in the best possible way, because certainly the president will sign it and the House has passed it and it would have been done in a small D democratic way possible.

OLBERMANN: Well, there is. Congressman Barney Frank of Massachusetts, as always, great thanks for your time tonight, sir.

FRANK: Than you.

OLBERMANN: This is how thrown the U.S. Chamber of Commerce and Karl Rove are by the expose of the untraceable foreign money they have siphoned into the Republican campaign ads. Asked point blank for a yes or no answer, Rove can't even just straight out lie. Senator Claire McCaskill and the Disclose Act, and a quick update from that Chilean mine - next.

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OLBERMANN: Karl Rove's desperate scramble as the walls close in on him over foreign money that he and the U.S. Chamber of Commerce are funneling into the midterms. His remarkable answer to a yes or no answer coming up in a moment.

First, this might be a night of significant rescue of miners trapped deep in the earth for 69 days. For the quick updates, our Kerry Sanders is live at the mine site in Copiapo in Chile.

Kerry, do we have a timeline yet for tonight?

KERRY SANDERS, NBC NEWS CORRESPONDENT: We believe that we may have the first rescue take place at 9:45 Eastern Time. The engineers are running their last tests. They have the escape capsule that they brought down and up once yesterday, they brought it down again today, and brought it up.

And now, they've had a little bit of delay. They've run some communication fiber optics down the shaft that goes down 2,040 feet to where the men are and they're actually doing some final adjustments not only to that fiber optic cable, but also up close and tight within that capsule. We can see them twisting some of the wires together.

The plan is to get that capsule down and up once with nobody in it. It won't go completely to the men. Then they'll send down a rescue engineer.

And when it goes down to the rescue engineer, the first man will exit. He's 31-year-old Florencio Avalos. He's a veteran miner. He's been at this mine for four years. And they hope that his cool, calm, collective ways will help if there's any problems on the way up. Then we'll see those rescues continue perhaps for the next 48 hours - Keith.

OLBERMANN: Kerry Sanders at Copiapo in Chile, that's your timeline - great thanks, Kerry.

SANDERS: Sure.

OLBERMANN: Asked for yes or no, he gives 100 percent pure legalese.

Senator Claire McCaskill joins us.

How the "Hide your kids, hide your wife" guy suddenly seems to be part of the senatorial campaign in Delaware. Ahead on Countdown.

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OLBERMANN: The midterm 2010 secret money machine keeps getting the attention it deserves in part because o two of its principal enablers are doing such a bad job of defending it.

In our fourth story: Karl Rove can't even give a straightforward lie to a simple question about whether American Crossroads GPS takes any foreign money.

And Ed Gillespie is pretending that secret donors crave anonymity because of bullying by Democratic lawmakers.

Senator Claire McCaskill, cosponsor of the Disclose Act and a non-bully, if you've ever met one, joins me in a moment.

The challenge to say were all of the money is coming from, reignited by the vice president yesterday at a fund-raiser at Scranton, Pennsylvania.

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JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: I challenge Karl Rove to tell me that this money isn't coming from billionaires, millionaires, insurance companies, oil companies, major executives who have about as much in common and concern with people in northeast Pennsylvania as I don't know what.

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OLBERMANN: Rove, of course, ignited the vice president's - or ignored the vice president's challenge, having ignited it of course. Far more telling, Rove's non-answer to a question about foreign money.

(BEGIN VIDEO CLIP)

GEORGE STEPHANOPOULOS, ABC NEWS: Can you guarantee that none of the money - none of the funding going to groups you support that you've raising money for comes from foreign entities?

ROVE: We do not solicit foreign entities and we tell people that we will not accept foreign money and that it is illegal since 1907 for foreign money to be involved in American political campaigns. We have it on our materials that no foreign money can or will be received. And let me just tell you, all the area codes I'm dealing are inside the United States.

(END VIDEO CLIP)

OLBERMANN: Yes, we can make that guarantee, might have been a better answer. Wonder why he didn't offer it.

Meantime, former RNC chair, Ed Gillespie, in a "Washington Post" op-ed says he finds it ironic, that, quote, "Powerful Democratic officeholders lament that many who support these groups wish to remain anonymous." He then catalogues legitimate calls for investigations. And like Mr. Rove, includes himself as one of the victims of Democratic bullying.

Of course, this is the same Ed Gillespie, who, as an adviser to then-President George W. Bush, attacked NBC News in a bullying, threatening, publicly released letter because he wasn't happy with the way it edited an interview with President Bush, nor how it covered the Iraq war.

As for whether the guarantee of secrecy increases a donor base, undoubtedly it does. "The New York Times" quoting a shopping mall magnet and former ambassador to Italy under President Bush, Mel Sembler, who's close to Rove, is saying, "I think most people are very comfortable giving anonymously. They want to be able to be helpful but not to be seen as taking sides."

An unnamed Republican operative telling "The Times" that the public donor list was used as, quote, "a way to energize others to give large amounts anonymously. It has worked like a charm."

Joining me now as promised, a cosponsor of the Disclose Act, Senator Claire McCaskill of Missouri.

Senator, good evening.

SEN. CLAIRE MCCASKILL (D), MISSOURI: Good evening, Keith.

OLBERMANN: We've been talking about the proliferation of anonymous donations for some time here. The White House has obviously decided to focus on it recently. Just how large, how monstrous has this phenomenon become?

MCCASKILL: It's a monster and it's born of hall of fame hypocrisy on two fronts. First, the Republicans who say they don't like activist courts. The Supreme Court, in a classic activist move, went beyond precedent and created rights for corporations that are unprecedented in our country.

And then secondly, the hypocrisy that the Republicans have always said, well, let's take the limits off donations, but let's have full disclosure. Somebody is trying to buy our government this cycle and they don't want you to know who it is. That is not a good thing for democracy.

It's not politicians they're afraid of. It's the people of this country that make up their mind where they're going to shop and make up their mind where they're going to spend their money. They don't want to show who is supporting them. That is a bad thing for our democracy as we know it.

OLBERMANN: The foreign money part is obviously toxic and even Mr. Rove's answer acknowledges that, even if it didn't acknowledge whether or not he was going to say yes or know to Mr. Stephanopoulos' question.

But the anonymity, whether it's foreign or domestic, I gather you agree that's just as dangerous as the foreign nature of some of this, isn't it?

MCCASKILL: I think - this is the point: if you are for someone, you ought to be willing to say it out lout. And if you are afraid of saying it out loud, then that's a problem. And people need to think about that.

The independent voters out there really need to look at all a these ads, and they're out there spending multiples of what we're spending in our campaigns, all anonymously. The independent voters out there need to really think about that and say, why are they doing this? They're trying to buy your government, and we don't know where it's coming from and they won't tell us.

I honestly think if there's any ad that says it's paid for by Crossroads or apple pie or motherhood, if they can't produce a list of donors and what they've given, you shouldn't believe word they say.

OLBERMANN: Or Chamber of Commerce - would a law like the one you envision force that group, the U.S. Chamber of Commerce, to disclose its donors?

MCCASKILL: It would force everyone including its unions. This is not a law that was drafted to favor one side or the other. This is a law to favor good government, to favor transparency, to let people have a roadmap to know who's paying to influence them. That's all it does.

It does not single out, you know, Republican corporations versus Democratic labor unions. It applies to everyone. And that's why it's important we get it done.

Obviously, we were blocked in getting it done this cycle. I hope the people of this country rise up and say we want to know who's trying to buy our elections. I think the people of this country have that right.

OLBERMANN: You mentioned hall of fame hypocrisy. The quote from Mr. Gillespie about big brother Democrats after while serving as an adviser to Mr. Bush and in the RNC as he was, he came after a news organization. Is it - just politically speaking, shouldn't he be the last person raising this charge against Democrats?

MCCASKILL: Well, I think, you know, if you look at the tag team of Gillespie and Rove accusing anybody of being a bully, you know, hello, pot, meet kettle. This is a - this is really almost humorous. It's hypocritical and it's humorous, that they are out there telling these corporations you can give secretly and your customers will never know it - the customers that may believe that transparency is the best way forward in this country.

OLBERMANN: Senator Claire McCaskill, co-sponsor of the Disclose Act and, of course, senator of Missouri - great thanks as always, Senator.

MCCASKILL: Thanks, Keith.

OLBERMANN: A new Carl Paladino tape emerges. There are a lot "F" words on it. In fact, it's 50 percent "F" words. You can start popcorn now.

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OLBERMANN: Carl Paladino gives the attorney general of the United States two Fs. And we're not talking school grades here. First, the sanity break and the Tweet of the day, and an unanswerable question from Michelle Meadows, "why is it OK for Tea Partiers to dress up like Nazis, but Muslims in New York can't have a community center with a prayer room?"

Because the rules of society don't apply to the Tea Party, only the privileges. Duh. Let's play Oddball.

We begin in Tirojibali (ph), India. Wow, that's fun to say. This elephant never forgets to dance. Hundreds of people came to watch - let's call him Stampy - jump on three legs in its version of the Lindy Hop. This was all done to pay homage to the Hindu Temple's deity, lord Vishnu. The dancing elephant was rewarded with bread, sweets and a spot on the next edition of "Dancing With the Stars."

At the Netherlands, it's time for my favorite Dutch talk show, "Pauw and Vitterman." Their guests, of course, the famous adventurer Just Conjin (ph). Everything was going smoothly until a member of the audience had a more pressing question.

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OLBERMANN: In case you did not speak Dutch, or did not catch that word toilet in there, the young man asked where exactly is the toilet. Host Paul Vitterman calmly pointed him in the right direction. We assume the young man made it in time. Years ago on CNN, we had a woman burst in on Mary Alice Williams, and asked her how to get to the Eighth Avenue Subway. It's funny in any language.

Finally, to somewhere in Mexico for a little rodeo action. Yee-haw. After being disappointed by the rider's performance, a Peter Griffin look alike decides he can do better.

Come on out, Peter. Stumbles into the ring, challenges the bull, down goes Senior Griffin. And again, and do one more time. There's a lot of him to get run over. Eventually, the clowns are able to distract the bull and get the guy away. Not before the man loses a serious chunk of pants.

The man walked away surprisingly unharmed. Just remember kids, fat, drunk, and stupid is no way to ride into a bull rider ring.

Time marches on.

It turns out that when Boss Carl Paladino was apprised of the prospect of trials of terrorists in New York, he had a two word message for the attorney general of the United States. And the two words were not, howdy neighbor. Next.

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OLBERMANN: The mortal danger of terrorism trials in New York City; far right fear mongering works best when it wildly misses its mark, because afterwards, nobody notices the missed mark, nor the wildness. Since the orgasm of apocalyptic visions over the plan to try Khalid Sheikh Mohammad in New York, four separate terror cases have made their way to federal court houses in this city. There have already been two convictions and the trials have not even reduced lunch crowds at area restaurants.

Our third story, the would-be governor of New York now proves to have added his fouled mouth to the hysteria chorus. Guess what, he was wrong.

The political website the Hotline obtaining video of Mr. Paladino at a town hall in Tapan, New York back in March, explaining how he would handle due process and the Justice Department all in one shot.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: If you were chief executive of New York, what would you - what would your response be if the attorney general of the United States decided to hold terrorist trials in Manhattan?

CARL PALADINO (R), CANDIDATE FOR GOVERNOR OF NEW YORK: (EXPLETIVE

DELETED) him. I'm going a reopen Guantanamo. These are prisoners of war. You're not going to spend 250 million dollars to a show, a theatrical profession on the backs of the taxpayers.

(END VIDEO CLIP)

OLBERMANN: But Mr. Paladino's made-up Dooms Day scenario has, in fact, been going on, in full force, at the federal courthouse in Lower Manhattan. The failed Times Square bomber, Faisal Shahzad, sentenced to life in prison by a civilian court. Aafia Siddiqui attempted to kill Americans in Afghanistan, 86 years by a civilian court. Four men charged with conspiring to bomb synagogues in the Bronx, still on trial, as is alleged embassy bomber and bin Laden associate Ahmed Khalfan Ghailani.

When Ghailani was first transferred to the U.S. from Gitmo, Minority Leader John Boehner called it "the first step in the Democrat's plan to import terrorists into America." While former New York Mayor Rudy Giuliani insisted it would be safer to try Ghailani by military commission.

Of the 437 terrorism cases that have arisen since September 11th, 2001, the Center on Law and Security reporting that 257 of those were resolved in court, 218 of those ended in convictions or guilty police. Meanwhile, the military commission method has resulted in just four convictions.

And to Mr. Paladino's point about the theatrics, Clyde Haberman of the "New York Times," reporting on those brave enough to walk around the courthouse last week, people going about their daily lives, sitting on benches, ordering coffee and pastries from the food cart. Many had no idea anything out of the ordinary was going on, because nothing out of the ordinary was going on.

Time now to call in the Washington editor of "Mother Jones Magazine," David Corn. David, good evening.

DAVID CORN, "MOTHER JONES MAGAZINE": Good evening, Keith.

OLBERMANN: We'll get to Mr. Paladino and his abundant wisdom in a moment. But first, this broader aspect of the terror trials; does what has gone on in New York City over the last couple of weeks finally put an end to whatever claim of credibility the right had on this matter? I mean, they promised disaster, we got crickets. What's the next scare tactics?

CORN: You know, demagoguery never has to any rationality or logic or facts behind it. You know, we have super secure prisons in this country, which contain people who have been convicted of terrorism in those cases you mentioned and others. And no one has ever broken out of them. We've been able to try these cases rather well. And as you pointed, the Ahmed Ghailani case, this is a major case. This is a fellow who has been accused of killing hundreds of people in the embassy bombings in 1998, which were an al Qaeda operation.

And it's going on, as you noted, without nary a peep in lower Manhattan. And we haven't had to shut down New York City to make this trial work. So the system can work if people don't shout about it and make all the noise that they were making earlier for political points.

OLBERMANN: Of course, that rules out Mr. Paladino. I'd like to get about his shouting and his tone in a moment. But first his substance there. The declaration at the town hall, he'll reopen Guantanamo were it to be closed - this to me seems to reflect a certain lack of knowledge of who's in charge of, say, you know, the government of the United States or even parts of the government of the United States or parts of the military of the United States. That would embarrass a sixth grader in social studies class, does it not?

CORN: I don't think the governor of New York State gets much of a say whether Gitmo runs or not, last time I checked. That was just pure theatrics and chest thumping. But from Paladino, that rated maybe a three on a scale of one to ten, when he's using pegging the needle at 13 or 14.

OLBERMANN: But the tone, "F" him, "F" him, about the attorney general of the United States. Am I missing the boat here? Should I be voting for Paladino next month just for the prospect of coverage of the live news conferences?

CORN: He's good for business, our business at least. I mean, he kind of went "F"ing crazy on this. I think - it seems to me he's probably trying for a reality show, which would be called "Mad Men," rather than anything else. I mean, he would be better off in the maybe Linda McMahon's professional wresting arena than in public life.

I mean, if you have a real - this is the problem: when you - you talked about it earlier in this segment. If there's a real policy issue to be discussed about these trials, it's a serious matter. Let's be adults about it and let's have a serious discussion. If there are objections to it, let's talk about it without using the "f" bomb and saying - make a case. There are some very knotty issues still to be resolved about Gitmo.

What do you do with the people who the government doesn't believe can be brought to trial in civilian court or maybe even before military commissions? I mean, this is knotty stuff. And there's some people on both sides of the issues who spend time actually thinking about it. Carl Paladino doesn't seem to be in either of those camps. And yet he's asking the voters of New York to entrust him with powers in which he will have to use in what - he might consider judgment, which he doesn't seem to display too often.

OLBERMANN: Judgment is one thing. But to go and just say I'm going to do something that is totally impossible - he can't have his own Gitmo. I'm sorry. I know it may be something from his past that he might have enjoyed, but that's - or some guy in Ohio running a Tea Party candidate might want to reenact it at some point. But he can't do it as governor or anything else in the state of New York.

The other thing, of course, with Paladino that's still lingering from the weekend, the disparaging comments about gays and not being valid as a form of - really as a form of human existence. He now - in sort of semi-apology, he says he's in support of civil agreements, civil unions, equal rights for all citizens. But civil unions are not equal rights. Is the apology, such as it were, worse than the original?

CORN: I mean, it's compounding the error. He said - he equated gays and lesbians with perverts who try to destroy children. He talked about people being brainwashed, children being brainwashed to think of homosexuality as OK. I don't see how you go from that to saying I have nothing against gays; I'm in favor of civil unions. Actually no, you're not. You may say that now, but you don't say those type of things if you don't believe them. I mean, that's the whole point. It's not a gaffe. He actually said what he felt comfortable saying in front of that crowd on Sunday. That's the real story. Apologies and explanations don't cut it when you get that extreme.

OLBERMANN: Going one layer below, he thinks he's being tolerant.

That maybe the ultimate thing with all of this that's at issue.

CORN: I'm sure there are plenty of gay people that he has sent friendly racist e-mails to over the years, and so he considers them his pals.

OLBERMANN: Yes, he sent them the bestiality e-mail. David Corn, the Washington editor of "Mother Jones," as always, thank you for your time, David.

CORN: Thanks, Keith.

OLBERMANN: If you think this is weird, wait until you see Christine O'Donnell's new commercial and it's invoking of the hide your kids guy.

Worst persons, not the best way to get the president to review your book. The real story about what happened here is now out.

And when Rachel joins you at the top of the hour, a look at who Newt Gingrich is inviting and charging to join him on election night.

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OLBERMANN: Why did the animated newspaper even people bother to satirize Christine O'Donnell when she just put out her own commercial in which she did a great job of satirizing herself? That's next, but first get out your pitchforks and torches, time for tonight's Worst Persons in the World.

The bronze to the author whom we shall not name. Turns out the book thrown at the president Sunday was thrown not in anger, but in a very narrow form of marketing. The author, a self-admitted neurotic, decided the easiest way to get Mr. Obama to read his book was to nearly wing him in the head with it. He will not be charged. Which reminds me to tell you that my new book, "Pitchforks and Torches," will be in stores in two weeks. I will not be throwing it at anyone, though there is always the chance it may start flying off the shelves.

Our runner up, Alaska Senate Tea Party candidate Joe Miller, having been caught in the hypocrisy of claiming federal unemployment checks are unconstitutional when his own wife got unemployment after being laid off from a temp job he had gotten her. Having been caught in the hypocrisy of seeking to restrict Medicaid and Medicare when his own family got it, Mr. Miller held a news conference you can ask me about background, you can ask me about personal issues. I'm not going to answer. I'm not.

Mr. Miller also claimed the media was guilty of, quote, "journalistic impropriety," which apparently means they deviated from his script.

But our winner, Kentucky Senate Tea Party candidate Rand Paul. He is getting a little pouty that some people seem to be opposed to his election. The latest to stump for Democrat Jack Conway, President Clinton. Paul's response ripped from today's headlines, if today is October 12, 1998. "I'm not sure I would trust a guy who had had sexual relations with an intern. I mean, do you think he's an honorable person? I think that's disgusting. It gets to the point where we discount what he says. They complain they want all these workplace rules. Think there ought to be a law against having - using the prerogatives of your position of power of your job to have relations with an intern. I think that's disgusting. You get to the point where you discount what he says. He showed himself less than honorable in office."

Here's Mr. Paul, who rather than getting actually board certified as an ophthalmologist, created his own board and certified himself. Here's Mr. Paul who said that part of the settled law of this country, the Civil Rights Acts of '60s, shouldn't apply to private businesses, and that you shouldn't have to sell a sandwich to a black man. Do you think he's an honorable person? I think that's disgusting. It gets to the point where we discount what he says.

Rand Paul, Republican Tea Party candidate for Senate from Kentucky, today's Worst Person in the World.

UNIDENTIFIED MALE: This is an MSNBC special, White House in crisis.

Here is Keith Olbermann.

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OLBERMANN: Getting web junk passed around the many Internets has never really been a problem for Christine O'Donnell, ever since her rise from has-been cable pundit to Tea Party Republican Senate candidate. Dabbling in witchcraft, mice with human brains, that (INAUDIBLE) -

Christine O'Donnell says it, and whether she likes it or not, it goes viral.

Now in our number one story, Ms. O'Donnell is trying to corral web traffic with her own video, intentionally. She has a new movie trailer style attack ad that creepily echoes the viral video warnings about an Alabama sexual predator. Don't worry, the new Christine O'Donnell Apple Daily animation, with gun-toting killer Chinese panda bears will make much more sense to you.

First, new polling from Monmouth University in the race for Delaware's Senate seat. Chris Coons is up by 19 points, 57 to 38. What's worse, only 35 percent believe Christine O'Donnell is even qualified to serve in the Senate, meaning three percent are voting for her anyway.

New Fox News polling puts O'Donnell behind by 16, 54 to 38. Fox also asking Delaware voters the hypothetical question, what if Mike Castle had been the Republican candidate. Karl Rove's candidate essentially flips the numbers. He would leave Coons 50 to 33.

So to cheer old Karl up, here's a cartoon. Last month, Apple Daily animated news debuted its first Christine O'Donnell animation, "Tea Party Express Derails GOP Candidates." Remember the young farm boy hurting a chicken in his lap, only to have animated O'Donnell bust in on him. The hairy palms, the blindness, it's for your own good, kid.

Today, the Apple Daily folks, based in Hong Kong, by way of Taiwan, are out with their latest effort. A couple of viewing tips first. Recall that O'Donnell says she has classified information about China planning to take over America. The panda has become a symbol for China. And she has claimed that she would never lie, not even to the Nazis about Anne Frank.

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OLBERMANN: Yep, she just turned a black lady into a white lady.

Magical. O'Donnell herself now fighting viral Internet fire with fire. Today, Friends of Christine O'Donnell releasing a new attack ad. None of them are witches either. This was is a fake movie trailer, trying to scare the hell out of the people about her opponent.

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UNIDNETIFIED MALE: One man who as county executive drove New Castle County on the brink of bankruptcy. Hide your will. Hide your lights, because he's taxing everything out here. Chris Coons is the tax man.

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OLBERMANN: That messaging again, hide your will, hide your lights, because he's taxing everything out here. Anybody seen anything like that on the web before?

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UNIDENTIFIED MALE: Well, obviously we have a rapist in Lincoln Park.

(SINGING)

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OLBERMANN: To the uninitiated, that was Antoine Dodson (ph), an Alabama man who whose own family was victimized. His testimony to a local news station has become the auto tuned web hit of the summer. "The Bed Intruder Song" seen by 31 million on Youtube. And now Christine O'Donnell is riding Dodson's coattails all the way to the United States Senate.

Along the way, she's associating her opponent with the Alabama bed intruder. All right, we couldn't help ourselves. Here it is.

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(SINGING)

O'DONNELL: I'm not a witch. I'm you.

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OLBERMANN: That's October 12th. It's the 2,721st day since President Bush declared mission accomplished in Iraq, the 2,310th day since he declared victory in Afghanistan, and 176th day of the Deepwater Horizon disaster in the Gulf. I'm Keith Olbermann. Rachel is next. Good night and good luck.

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