'Countdown with Keith Olbermann' for Wednesday, February 3rd, 2010
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Guests: Lawrence O'Donnell, Ed Schultz, Jack Rice, Margaret Carlson

(BEGIN VIDEOTAPE)

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

President's question time, again. Not as many face plants, but not a good day to be Senator Blanche Lincoln asking for bipartisan economic reform.

(BEGIN VIDEO CLIP)

SEN. BLANCHE LINCOLN (D), ARKANSAS: Are we willing, as Democrats, to also push back on our own party and look for that common ground that we need to work with Republicans and to get the answers?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If our response ends up being, you know, because we don't want to - we don't want to stir things up here, we're just going to do the same thing that was being done before, then I don't know what differentiates us from the other guys. And I don't know why people would say, "Boy, we really want to make sure that those Democrats are in Washington, fighting for us."

(END VIDEO CLIP)

OLBERMANN: See you. Blanche. And bye, Evan. Another unprecedented day in American political history.

The president also insists health care reform will still happen. What you insisted on: today's free health clinic at Hartford, Connecticut.

Abdulmutallab keeps on talking, implicating his co-conspirators. And oddly, so do the Republicans.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: There's no indication that this administration has learned anything from the Christmas Day bomber.

(END VIDEO CLIP)

OLBERMANN: Yes, actually, they've learned everything else about the plot.

And the steel cage death-match of the conservative movement. Rahm Emanuel says something stupid, Sarah Palin says he should be fired, and anybody of his stature using that word is "unacceptable and heartbreaking." Cue: Orly Taitz Limbaugh.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO HOST: Our politically correct society is acting like some giant insult's taking place, like calling a bunch of people who are retards, "retards."

(END VIDEO CLIP)

OLBERMANN: So, doesn't Governor Palin now have to demand that Rush Limbaugh be fired or herself be branded an utter hypocrite?

All the news and commentary - now on Countdown.

(BEGIN VIDEO CLIP)

LIMBAUGH: I'm not going to apologize for it.

(END VIDEO CLIP)

(END VIDEOTAPE)

OLBERMANN: Good evening from New York.

If you are among the many progressives patiently waiting for the White House to stop coddling that handful of conservative Democrats who have been holding up health care reform in the Senate - your wait having ended shortly before 11:00 this morning. Sorry, Congress did not, at that hour, deliver a reform bill. We're still going to have to wait for that.

But the president today called out at that hour many of his former colleagues for buying into Republican talking points, for forgetting that they are Democrats, for caring more about their own job security than that of their constituents. Senate Democrats are getting their own version of president's "Question Time" today, some of them even getting the same treatment.

Many of the lawmakers questioning President Obama are facing tough re-election fights this fall. Among them, Senator Evan Bayh of Indiana, who framed his question about bringing down the deficit only for the most conservative members of his own party.

(BEGIN VIDEO CLIP)

SEN. EVAN BAYH (D), INDIANA: Now, I think they realize that the other party doesn't have much credibility on this subject. They handed you, what, a $1.3 trillion deficit.

Vice President Cheney famously said that in his opinion, deficits didn't matter. He just flat-out said it. You know, that's wrong. It's bad economics, it's wrong.

And so we've got a job to do. But I think many people across the country candidly look at us and say, "Well, I don't know if the Democrats are willing to take this on." You know, they think we want to tax too much and spend too much, and do we have the backbone to really stand up and make some of these hard decisions.

So, my question to you, Mr. President, is speaking to independents, conservative Democrats, moderate Republicans, people who know we have to do this: why should the Democratic Party be trusted? And are we willing to make some of the tough decisions to actually head this country in a better direction?

OBAMA: Well, I'll tell you why the Democratic Party should be trusted, because the last time this budget was balanced, it was under a Democratic president who made some very tough decisions.

(APPLAUSE)

(END VIDEO CLIP)

OLBERMANN: A reminder, as if one is needed, that President Bush inherited a budget surplus of $120 billion when he took office, and by the time he left, the nation stood at the precipice of another Great Depression.

Despite that, Senator Lincoln of Arkansas - also up for re-election, and possibly for re-nomination first - wondering why the president has not relied more on Republicans for financial advice.

(BEGIN VIDEO CLIP)

LINCOLN: What can we tell the people in terms of predictability and certainty in getting this economy back on track? How are we going to do that? And are we willing, as Democrats, not only to reach out to Republicans, but to push back in our own party for people who want extremes, and look for the common ground that's going to get us the success that we need, not only for our constituents, but for our country in this global community and this global economy?

Are we willing, as Democrats, to also push back on our own party and look for that common ground that we need to work with Republicans and to get the answers? And it's really the results that are going to count to our constituents. And we appreciate the hard work that you put into it.

OBAMA: Well, look, there's no doubt that this past year has been an uncertain time for the American people, for businesses and for people employed by businesses. Some of that certainty just had to do with the objective reality of this economy entering into a free fall. And - so let's just be - let's remind ourselves that if you've got an economy suddenly contracting by 6 percent or a loss of trillions of dollars of wealth basically in the blink of an eye, or home values descending by 20 percent, that that's going to create a whole lot of uncertainty out there, in the business environment and among families.

And part of what we've done over the course of this year is to put a floor under people's feet. That's what the Recovery Act did. That's what the interventions in the financial markets did. It broke the back of the recession, stabilized the markets.

Nobody's talking about a market meltdown at this point. And people haven't recovered all that they had lost in their 401(k)s, but they're feeling a little better when they open that envelope now than they did six months ago.

State budgets were in free fall. That was stabilized. States are still going through incredible pain, but they did not have to lay off teachers and firefighters and cops at the levels that they would have to otherwise lay them off. That provided some stability and some certainty.

So, the steps you've taken as a Congress, the steps we've taken as an administration, have helped to stabilize things.

Now, moving forward, Blanche, what you're going to hear from some folks is that the way to achieve greater - even greater economic growth - and keep in mind, the economy is now growing at a 6 percent clip, so the question is, when do businesses actually start hiring, because they're now making a profit - what you're going to start hearing is: the only way to provide stability is to go back and do what we'd been doing before the crisis.

So, I noticed yesterday, when we were talking - there was some hearing about our proposal to provide additional financing to small businesses and tax credits to small businesses, some of our friends on the other side of the aisle said, "This won't help at all. What you have to do is to make sure that we continue to tax breaks for wealthiest Americans. That's really what's going to make a difference."

Well, if the agenda - if the price of "certainty" is essentially for us to adopt the exact same proposals that were in place for eight years leading up to the biggest economic crisis since the Great Depression, we don't tinker with health care, let the insurance companies do what they want, we don't put in place any insurance reforms; we don't mess with the banks, let them keep on doing what they're doing now, because we don't want to stir up Wall Street - the result is going to be the same. I don't know why we would expect a different outcome pursuing the exact same policies that got us into this fix in the first place.

(END VIDEO CLIP)

OLBERMANN: Senator Bennet of Colorado is not alone these days in thinking that the legislative branch of government looks broken.

(BEGIN VIDEO CLIP)

SEN. MICHAEL BENNET (D), COLORADO: This place looks broken to the American people. The ability of - our ability to make these decisions is open to enormous question in the wake of the health care discussion, in particular. I had a woman the other day in Glenwood Springs, Colorado, asked me where she could get her lobbyist in Washington, D.C.

What are we going to do differently? What are you going to do differently? What do we need to do differently as Democrats and Republicans to fix this institution so that our democracy can actually withstand the tests that we're facing right now?

OBAMA: Let me just make a couple observations. Having served in the Senate and now seeing it from the perspective of the White House. I think the Senate in particular - the challenge that I gave to Republicans, and I will continue to issue to Republicans, is: if you want to govern, then you can't just say no. It can't just be about scoring points.

(END VIDEO CLIP)

OLBERMANN: With word tonight that Republican Senator-elect Scott Brown could be seated as early as tomorrow, the president reminding his colleagues today, if anybody's searching for a lesson from Massachusetts, the answer is not to do nothing.

(BEGIN VIDEO CLIP)

OBAMA: Our party's gone from having the largest Senate majority in a generation to the second largest Senate majority in a generation. And we've got to remember that. There was apparently a headline after the Massachusetts election, "The Village Voice" announced that Republicans win a 41-59 majority.

(LAUGHTER)

OBAMA: It's worth thinking about. We still have to lead.

(END VIDEO CLIP)

OLBERMANN: Time now to call in our own political analyst, Lawrence O'Donnell, Democrat Senate Finance Committee staff director during the '93-'94 health care debate. Now a contributor to "The Huffington Post."

Lawrence, good evening.

LAWRENCE O'DONNELL, MSNBC POLITICAL ANALYST: Good to be here, Keith.

OLBERMANN: Did the president just do to Blanche Lincoln and to a lesser degree Evan Bayh what he did to the Republican congressmen last week?

O'DONNELL: I think it was a very different thing. I think what he was doing with the Republican congressmen was taking on challenges from them and trying to really win the point. With Lincoln and with Bayh, what they were really doing, this was a - this was a setup situation where Harry Reid made sure that all of the senators who were up for re-election this year got to ask questions.

And in effect, what their questions were, were "Mr. President, you're really good at debating, I'm going to have a debate in Indiana, I'm going to have a debate in Arkansas, what should I say?" You know - and he actually supplied them with very good lines for the local debate that they will have in Arkansas. And he supplied Evan Bayh with very good lines in talking to a Republican-leaning electorate in Indiana.

And so, it was as much as anything else helpful debate prep for these Democrats in the situations they're going to face. They asked, both of them, Bayh and Lincoln, asked exactly the kinds of questions that they are going to be asked when they're in their debates and when they're in their town halls in Arkansas and in Indiana, and Obama gave them great answers.

OLBERMANN: Well, you and I.

O'DONNELL: And by the way, Keith, this - he was there to help them. He wants both of those people re-elected. He wants Blanche Lincoln re-elected. He was there to help her. And that's the - and there were other parts of the tape that kind of indicate that.

OLBERMANN: Well, but was she there - because I mean, Senator Lincoln, afterwards, touted her performance and released a statement from her campaign.

O'DONNELL: Right.

OLBERMANN: . in which her voters were told that she had urged President Barack Obama to push back on ideological extremes at both ends of the political spectrum.

Did she think she won that thing? Or did she not see any kind of reproof in that?

O'DONNELL: Well, she - there are two different audiences here.

OLBERMANN: Yes.

O'DONNELL: There are two different experiences: the one in the room, as a senator talking to the president; the other is telling Arkansas what happened. And what she believes she needs to tell Arkansas, where Barack Obama lost by a huge margin, and where he is extremely unpopular.

What she needs to tell Arkansas is: "I'm pushing back against the Barney Franks, I'm pushing back against the Barack Obamas within this party that I'm working in here." And so, that's the message she needs to deliver.

You know, the senators used to say, the northeastern liberal senators used to say to Democrats from Georgia, Democrats from Texas, or Democrats from Arkansas: what do you want me to do? Do you want me to say something good about you or do you want me to say something terrible about you? Which will help you get re-elected in Arkansas?

And, you know, Teddy Kennedy would do that all the time. He would offer to say something terrible about these - the Democrat from Arkansas, so it would help her get re-elected in Arkansas.

OLBERMANN: Well, the president gave both, because there are two other clips there that "Blanche is exactly right." And then it was a later one that "Blanche is exactly right." So, she has what she - whatever she wants to play with.

But in terms of getting anything done, what did this - what did this have - did it, in fact, have any impact on things like health care or the upcoming financial reform issue?

O'DONNELL: I don't see any legislative impact around this yet. What I see is a very smart, tactical, political reaction to the election in Massachusetts. Barack Obama and the Democrats took a body blow. No one knew what to do next. And Obama immediately, in effect, after State of the Union, goes into the enemy camp and says, "Here I am."

You'll remember, after Bill Clinton lost the Senate in 1994, he gave a speech where he said, he desperately and pathetically said, "I am still relevant." And Barack Obama was never going to let this get that far out of control. He was never going to let the reaction to Massachusetts get that far out of control. He handled it brilliantly with the Republicans.

And then with the Democrats today, he's showing them, "Look, it isn't over for us. We got a warning shot. And now, this is the way we're going to fire back."

OLBERMANN: There's a large group, fairly diverse political observers, Democrats, Republicans, others launching an online campaign to make the concept of president's question time a regular thing, as it is in the British parliamentary system. And the White House suggesting today it will not be. "A," why not? And "B," are they being sincere, or do they just not want to look too anxious to give this president an opportunity to go undefeated against any debate team you could throw up against him?

O'DONNELL: Well, he's learned his lesson, as he so brilliantly lay laid out in New Hampshire the other day, of when he agreed to a Republican idea and then watch the Republicans immediately abandon it. I think he knows, if he immediately agrees to a question time thing being ritualized and regularized, then that will make it impossible to happen. So, he should drag his feet about it.

But there's also the possibility that David Axelrod mentioned, which is if you get this thing to be a regular event, you lose the spontaneity. It will become ritualized. It will start to look very similar to standardized Senate hearings where members of the cabinet go up there and get kind of grilled by senators in a way that is - that is very stiff and becomes an uninteresting thing to watch. And C-SPAN ratings prove that.

OLBERMANN: As even the British parliamentary "question time" proved, certainly, especially after those disastrous recastings, where they dropped that John Major guy. That character was really good.

Lawrence O'Donnell of MSNBC and "The Huffington Post" - thank you, Lawrence.

O'DONNELL: Thanks, Keith.

OLBERMANN: And still, the president's party was way beyond today - way beyond the Republicans in their version of this: Republican-on-Republican metaphorical violence. Sarah Palin says you can't say it or you should be fired. Rush Limbaugh says it and means it four times. Limbaugh versus Palin. Let the party begin.

(COMMERCIAL BREAK)

OLBERMANN: We're skipping tonight's first "Quick Comment." One later about the hilarious Frank Luntz small business blunder. But we're making extra time tonight for coverage from your free health clinic in Hartford. Next.

(COMMERCIAL BREAK)

OLBERMANN: Simply put, the intensity of health care reform may have diminished; the need for health care reform has not. As evidenced by yet another free health clinic funded by your generosity that today drew 1,000 people, exactly, in Hartford, Connecticut. More on that in a moment.

First, the president telling Senate Democrats today, "There is a direct link between the work that you guys did on that and the reason that you got into the public office in the first place. We've got to finish the job on health care."

As for actually salvaging the bill, House Speaker Nancy Pelosi said that both chambers would have to pass the so-called cleanup bill first. That would fix some of the issues the House has with the Senate version, then the House could pass the Senate version, knowing it had already been amended.

And though there appears to be some confusion over the logistics of this, Senate Majority Leader Harry Reid said that path might work. There are, however, Democrats in both houses who worry about fixing the Senate/House differences through such a reconciliation bill, which requires only the simple majority in the Senate.

You heard that right. There are Democrats who actually fear passing health care reform with a simple majority in the Senate because it would look like some kind of trick to the American people, they think, or because it will further taint attempts to work with Republicans on health care. As many as 10 Democratic senators have reportedly expressed such reservations - which brings us back to the reality of people who desperately need health care.

At today's free clinic in Hartford, put on by National Association of Free Clinics, 1,000 patients received care.

Our friend, Ed Schultz, the host of "The Ed Show" here on MSNBC, has been there all day and joins us now from there.

Ed, good evening.

ED SCHULTZ, "The Ed Show" HOST: Good evening, Keith. Good to be with you.

OLBERMANN: Tell me what you saw today.

SCHULTZ: I saw the best of America and the worst of America, Keith. I saw volunteers come out from actually all over the country, who came here, knew it was a free clinic and wanted to be a part of it, because they want to see some changes take place in this country.

And it's so ironic that it has taken place here in Connecticut, where both the House and the Senate on a state level have passed universal health care. The governor vetoed it. And no one at this clinic today could figure out, at all, where Joe Lieberman's coming from when he says he's against a public option.

The bad part of America is that these are working Americans who just can't afford health care. Some of the people here haven't been to a doctor in up to five years. Sixty-one percent of the people that came through the door were unemployed; 39 percent employed. Some people working two jobs.

I met a gentleman who works three jobs: Monday through Friday, two jobs, then on Tuesday and Thursday nights, he goes to his third job - just to make ends meet.

And the overriding feeling here, Keith, is that when you come to one of these, is that it just doesn't have to be this way. We have got legislation on the table that has passed the House and the Senate, gone through five committees and we just can't cross the goal line for some reason, because there's a few senators out there that just don't get the message of what is really happening out here in America, in Connecticut tonight.

OLBERMANN: You mentioned Senator Lieberman. I'm guessing you did not see him there today?

SCHULTZ: No, but his name was mentioned. A lot of people came up to me and said, "Is Lieberman going to be here?" Then they start laughing.

They know that this man is not with the people of Connecticut when it comes to health care reform. And they are absolutely dumbfounded on his position as to why he's so obstinate about giving the private sector some type of competition and offering up health care to all Americans. They just can't understand this.

Ned Lamont was here today, and he, obviously, is running for governor, and definitely wants to change the landscape for the folks here in Connecticut. But the stories here are just amazing.

I met a lady today in her 50s. She had an executive job for 16 years.

She lost that job two years ago.

She couldn't get a job. She was making over six figures at that time.

She's been unemployed for two years.

She had a lump in her throat. She lost 40 pounds over the last 30 days. She heard that this free clinic was going to be here on your show, the announcement was made. And she says, "I'm going to go that." She came here today.

The nurse told me earlier that this was a life-saving experience. This woman needs help now. And there's a lot of Americans out there that do.

I hope Washington gets the message.

OLBERMANN: Well, we are reminded often, and particularly on days when we visit these health clinics, and particularly when we hear and there's a story or two stories or 20 of them from each of these so far, of the moral imperative, let alone the health imperative, of getting reform passed.

From what you could sense of the president speaking to the Democrats, particularly today, what he said last week as well, have you gotten a sense that he has - to some degree - turned a corner on working to reignite the sense of moral imperative, at least within his own party?

SCHULTZ: I think the president showed today, it's a lot more than politics. It's about human beings. It's about Americans who need help. It's about a rising tide lifts all boats.

And I think, basically, the president's message today is that: we are better than this. We are in a position to get this done. Forget this talk about not, you know, having enough votes and being in the majority, we have got to lead as a party. We've got to lead as politicians, as people.

Because, right now, Keith, I think the feeling is, and it was here today at the Hartford Convention Center, is that they don't care if you're a Republican or a Democrat, they just don't believe in the process anymore. They can't understand why this isn't getting fixed. They love Obama. They believe that he is a fine and decent man that certainly wants to get something done.

And I think that his conversations with the Republicans, then of course the Senate Democrats today, is really taking the high ground of him being an honest broker, trying to get the country to realize that we have to do this. If we can pass this legislation, it will save lives in this country. It will bring down the cost. It will give an opportunity for folks who came to this free health care clinic today to be affected dramatically.

And it's not only the person who's in the line, it's their spouse, it's their kids. It affects the entire family. And that's what's so gut wrenching when you hear the stories.

And one guy came in today. He's about 27 years old. And he says, "This is great."

And I said, "Well, you've got a smile on your face." He said, "Look, I don't have any money." He says, "I've got a chance at a job, but I've got to get a physical. I heard this free clinic was taking place. I'm at the right place at the right time."

He was excited because he knew he was going to pass the physical and he had a chance of getting a job. That was the highlight of the day.

OLBERMANN: Amen. Ed Schultz, the host of "The Ed Show" on MSNBC - we're glad you were there and great thanks for being with us tonight.

SCHULTZ: Thank you for your support, Keith. And you started the ball rolling. It takes money to do this. It is a heavy lift.

And the volunteer effort here has been absolutely outstanding. The medical professionals here emotionally touched, and this train is just going to keep on going for the American people who need help.

OLBERMANN: Well, thank you for that. And we'll pass that directly on to the viewer at home, who put up the dough. Thanks again, Ed.

SCHULTZ: You bet.

OLBERMANN: And again, thank you for that.

It is not enough to get an attempted suicide bomber to cooperate with authorities, it is not enough to learn from him the identities of his handlers and what he knows about the growing threat from Yemen, you have to do it the Republican way - because to listen to Senators McConnell and Collins, you would think vengeance is more important than intel. Next.

(COMMERCIAL BREAK)

OLBERMANN: As Abdulmutallab keeps talking, Republicans will not take yes for an answer.

First, on this date in 1900, Governor William Jay Goebel of Kentucky died. This was three days after he had been inaugurated, four days after he had been shot in an assassination plot planned by the friends of the man Goebel had just succeeded as governor, who then tried to stay on the job. How did they not make this into a movie?

Let's play Oddball.

Instead we go to Iran, where it's aerospace technology day, or at least that's what the guy on Iranian state TV tells us. On the heels of President Obama canceling trips to the Moon, a show of force from the Iranians; the country has spent turtles into space. If you think this will open up a diplomatic can of worms, you are correct, sir. There they are. The latest in Persian spacecraft technology, a ten-foot research rocket, carrying aboard some brave pioneers, a few worms, two turtles, and a rat.

President Ahmadinejad says he hopes human astronauts will follow, and that

the rat has no nuclear capability. To which the rodent community replied -

-

Szechuan Province, China, hello. It's bring your panda to preschool day. Ah! All right, enough of that. Sixteen not-so-giant pandas part of this semester's class. The little guys will learn how to play, socialize, become independent, while training for that post-school ritual of mating early and often. They grow up so fast, don't they?

To make the scene even more adorable, at recess, each panda was given a puppy and then got to hug a koala at recess.

Then they let them watch Rush Limbaugh and Sarah Palin box themselves into a corner in which one will have to apologize to the other. But both could wind up looking like traitors to the conservative fringe. Merry Christmas.

(COMMERCIAL BREAK)

OLBERMANN: In case anyone still gives the current Republicans credit for any kind of national security expertise, let alone integrity, today's news offers a corrective.

First, the background. The Bush administration released two men it had held without due process. They went on to lead al Qaeda in the Arabian Peninsula, sending Umar Farouk Abdulmutallab on to a US-Bound plane, wearing a bomb, carrying a visa the Bush administration gave him. Abdulmutallab became radicalized after protesting Bush policies. This is a poster of his from school, including unlawfully detaining the guilty and innocent alike.

Within an hour of his capture, he gave the Obama administration names and locations central to the plot, because his family trusted the US to treat him lawfully. They convinced him to provide actionable intelligence, reportedly already acted on in Yemen and Malaysia.

Republicans who cheered on Mr. Bush today say it's unbelievable how bad the Obama administration is at national security. And they're right, it's not believable. Senate Republican Leader Mitch McConnell today conveniently forgot the fact that the Bush administration tried more than 300 accused terrorists in criminal courts, forgot that the Bush administration read shoe bomber Richard Reid his Miranda warning five minutes after they caught him, reminding him of those rights at least three more times in the next 48 hours, because that reality thing interfered with McConnell's political delusion that Mr. Obama is doing anything differently.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MINORITY LEADER: Again and again, the administration's approach has been to announce a new apology or change an existing one, based not on a careful study of the facts, but as a way of conspicuously distancing itself from the policies of the past, even the ones that work. In short, it has too often put symbolism over security.

This is a very dangerous route. And it reflects a deeper problem, namely the return of the old idea that terrorism should be treated as a law enforcement matter. An administration that puts the attorney general in charge of interrogating, detaining, and trying foreign combatants has a pre-9/11 mind-set.

(END VIDEO CLIP)

OLBERMANN: "An administration that puts the attorney general in charge of interrogating detainees has a pre-9/11 mind-set?" President Bush, 2003, Homeland Security presidential directive five: quote, "the attorney general has lead responsibility for criminal investigations of terrorist acts inside the United States."

In his letter to McConnell today, referencing that directive, Attorney General Eric Holder also reminded Mr. McConnell just how many terrorists captured on US soil the Bush administration tried in civilian court - all of them. Which is not to say that Bush/Cheney never tried to circumvent the Constitution, even on American soil. And on this network today, Andrea Mitchell rattled off numerous fact inconvenient to the Republican criticisms, which Republican Senator Susan Collins refuted with jaw-dropping disingenuous. And her counter-example, Jose Padilla.

(BEGIN VIDEO CLIP)

SEN. SUSAN COLLINS (R), MAINE: Jose Padilla was held as an enemy combatant, despite being an American and on American soil, for a period of time. We - he then, ultimately, was charged in civilian court.

(END VIDEO CLIP)

OLBERMANN: "Ultimately was charged in civilian court." Why not tell the American people why that happened, senator? Why was Padilla ultimately charged in civilian court? Because of this man, Michael Mukasey, who as a judge, before he became Bush's attorney general, set the legal precedent with Padilla that the president could not deprive suspects captured in the US of their right to counsel.

At this point, let's bring in former CIA special agent Jack Rice, also a former field operations officer for that agency. Thanks for your time tonight, Jack.

JACK RICE, FMR. CIA SPECIAL AGENT: Great to be with you.

OLBERMANN: I never cease to be amazed how far Republicans will go to score political points about terrorism, including rewriting their own history that they authored in the first place. But what is it? Is it reflex? Is it stupidity? Is it post-traumatic stress disorder? What is it?

RICE: It's a great question. It makes me really sad, as a former CIA officer, but also as a former prosecutor. If a terrorist kills an American, they don't kill a Democrat. They don't kill a Republican. But to see the Republicans turn around and try to use this to gain political points is really repulsive. It should be repulsive even to conservatives at this point. I am hoping that they're going to re-gauge what it is that they're saying.

OLBERMANN: An argument that they're making is that we'll never know how many plots might have been stopped if Abdulmutallab had been interrogated by the military. Two parts, A, since no plots were executed here in the interim, is the answer not actually pretty clear. And is not the answer zero? And B, the flip side, is that not true that we'll never know how many plots in Iraq or Afghanistan might have been foiled if we'd done all our interrogations over there properly, without water-boarding or other illegal or unconstitutional tactics?

RICE: Yeah, without question. I think that's really the sad part. I guess what we see now is that the GOP has decided that they are the experts on national security. But then how do they reconcile with what we have seen at Abu Ghraib, what we saw at Guantanamo Bay, the idea of military tribunals that have been kicked back by the courts again and again. And I think most recently, what we are seeing from Abdulmutallab, and what he has provided to the intelligence community, through the FBI, because of a civilian courtroom - this truly blows them completely out of the water. I'm curious how they're going to respond to that.

OLBERMANN: The context here, the FBI succeeded within an hour of turning an al Qaeda terrorist into an informant. They got his family to coax him in to full cooperation that contributed - and this is from NPR - to the arrest of ten people in Malaysia last week. That is a stunning success by any measure. And again, why would Republicans be, for want of a better word, crapping on what is clearly terrific counter-intelligence work?

RICE: I think because it undercuts the fundamental concept they have been arguing about for decades, that they are the experts on national security. When we talk about what's going on with Abdulmutallab, what we see now is this has been an absolute success. Exactly what President Obama has decided to do with this case, what Eric Holder has done, is exactly what should be done with these cases.

Remember, it's not just about this case. It's the ability to take him and use what happens here throughout the Middle East. The entire 1.5 billion Muslims of the world will look at this case now and realize, this man really did what he said that he did, what we said that he did, and there's actionable intelligence on top of that. I mean, we have won in every sense of the word. To actually negate that, to dismiss that as nothing is laughable, if it weren't so sad.

OLBERMANN: Last point; the nation's top intel officers testified yesterday that al Qaeda is certain to make some sort of attempt in this country in the next three to six months. The morning news shows went into full panic mode over that. Is it - am I wrong? Am I missing something? Am I living in a different plane of existence in the last decade? Is it not always the case that al Qaeda is attempting to carry out an attack on this country at all times?

RICE: Of course, without question. That's always been their intent. And the real question is their capability. But the only way to stop an attack, really, is to have really good, successful, actionable intelligence. The best way to get that is to do a proper interrogation, like you're doing with Abdulmutallab.

This is how we defend ourselves. And on top of that, we stand up on principle that we believe in, in the country. You get both of those things side by side, we win, for every sense of the word, and so do our allies in the Middle East. And every time we send another soldier to fight there, we actually make it safer and not less safe.

OLBERMANN: Jack Rice, former CIA special agent, thanks again for your time tonight, Jack.

RICE: Thank you, Keith.

OLBERMANN: So, nice corner you've painted yourself into. Sarah Palin slams Rahm Emanuel for using a word. Rush Limbaugh now says the same word four times, unapologetically, today. So does she castigate him, or does she just admit that she's a hypocrite?

And the transportation secretary make worsts tonight, not for

mistakenly saying don't drive that Toyota, something else. >

And when Rachel joins you at the top of the hour, her own deconstruction of the president's question time with the Democrat senators, and how few of the senators seem to be asking the same questions the public asked the president yesterday in New Hampshire.

(COMMERCIAL BREAK)

OLBERMANN: And now tonight's quick comment, and back to one of last night's topics here, Frank Luntz, super genius. "Politico" points out that in the message Yoda's master plan to defeat financial reforms by getting Republicans to lie about them and claim they're just more bailouts for business includes advising his Manchurian candidates to, quote, "personalize the impact of the legislation on poor, suffering, specific small business owners."

In his 17-page lying guide, Luntz include this grand opening photo, presumably to show Republicans what small businessmen actually look like. Luntz's caption for this photo, "the most popular images of small business owners. Both projected optimism with signs, saying grand opening or open."

The only thing open here is Luntz' mouth with his foot firmly in it again. Take another look at the couple. This is Christine and Mark Shower of Battle Creek, Michigan, in front of their clothing store, "My Style, Your Style." Christine is a small business owner. Mark is also a small business owner, and the Democratic congressman from Battle Creek.

To illustrate to Republicans how to lie, the Democrat's proposals to help small businesses would really hurt small businesses, Frank Luntz used a picture of a Democratic congressman happily standing in front of his small business. And by the way, Congressman Shower is a complete supporter of the Democrat's financial reform proposals.

If I'm the GOP, I'm asking for my refund, now.

(COMMERCIAL BREAK)

OLBERMANN: Before he even said what he said today, Sarah Palin had preemptively called for the firing of any other public figure who had used the same word, which she said was unacceptable and heartbreaking. Rush Limbaugh then used it four times, unapologetically. So Palin called for Limbaugh's firing?

That's next, but first tonight's worst persons in the world.

The bronze to Transportation Secretary Ray Lahood. No, not for panicking every Toyota owner by saying don't drive your call, when he meant don't ignore a recall or service notice. What he said after he corrected that. "NHTSA will continue to hold Toyota's feet to the fire, to make sure that they are doing everything they have promised to make the vehicles safe." "Hold Toyota's feet to the fire," when the problem is accelerators that stick to the floor when you put your feet on them, possibly ending up in a fire. He didn't mean this either.

The runners up, Congressman Duncan Hunter of California and crank Frank Gaffney of the "Washington Times." Mr. Hunter on NPR claiming that the repeal of Don't Ask Don't Tell, will, quote, "open up the military to transgenders, to hermaphrodites, to gays and lesbians." Mr. Gaffney writes, it confirms a nonexistent right to, quote, "homosexuals, lesbians, bisexuals, transgender individuals, and hermaphrodites."

Why is that the creepiest Republicans constantly bring up subjects like man on dog sex or bending over and grabbing the ankles or hermaphrodites?

But our winner, Roger Ailes of Fixed News, announcement tonight, his boy, Sean Hannity, will deliver the keynote address at the National Republican Congressional - excuse me, the National Republican Congressional Committee fund-raising dinner next month. This is not a job for anybody on a news channel. Last year's speaker was the governor of Louisiana. This comes on the heels of the news that Glenn Beck of Fox News will be the headline speaker at the conservative CPAC convention. And that comes on the heels of the news that Sarah Palin of Fox News will be the keynote speaker at the national Tea Party Convention on Saturday, and then will donate her fee to that party.

No actual news organization would permit its people, even its commentators, to assume such purely partisan political fund-raising roles. This organization, rightly, would not even let me address an ordinary non-fund-raising gathering of some Democratic senators. Those are the news rules. And if Mr. Ailes does no honor them nor obey them, as he never has, he should be relieved of any news responsibilities, or his employer should admit that he is purely a political operative. Roger Ailes of Fox, quote, "news," unquote, today's worst person in the world.

(COMMERCIAL BREAK)

OLBERMANN: So who would you root for if Rush Limbaugh battled Sarah Palin? The day has come. You will recall that the half-governor of Alaska demanded that the White House fire Chief of Staff Rahm Emanuel because he used an unacceptable term, offensive to special needs kids and their families. Then today, while Emanuel apologized in person to a host of individuals connected to special needs kids, Mr. Limbaugh used the same term, repeatedly and unapologetically.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: Our politically correct society is acting like some giant insult has taken place by calling a bunch of people who are retards retards. I'm not going to apologize for it. I'm just quoting Emanuel. It's in the news. I think the big news is that he's out there calling Obama's number one supporters F'ing retards. So now there's going to be a meeting. There's going to be a retard summit at the White House.

(END VIDEO CLIP)

OLBERMANN: So when will Governor Palin demand that Rush Limbaugh be fired? I know, I know; one works in the White House, the other doesn't. Huge difference to you and me. But Sister Sarah was way smart for us on this point. Even before Limbaugh's remarks, she had already said, there was no difference. Quote, "just as we'd be appalled if any public figure of Rahm's stature ever used the "N" word or any such inappropriate language, Rahm's slur on all God's children with cognitive and developmental disabilities and the people who love them is unacceptable and it's heartbreaking."

She's already said it is unacceptable for any public figure of Rahm's stature to use the word and she is appalled, meaning she either is demanding Limbaugh be fired, or she has concluded Limbaugh is not a public figure, or she has concluded that Limbaugh is not of Rahm Emanuel's stature. And thus the end game here is Miss Palin permits Mr. Limbaugh to get away with this "slur on all God's children with cognitive and developmental disabilities," thus erasing any remaining personal credibility she might have on this issue, or he has to apologize to her, or she has to apologize to him.

As the old cliche goes, it's all good. I'm joined now by Margaret Carlson, Washington editor of "The Week Magazine" and political columnist for "Bloomberg News." Margaret, good evening.

MARGARET CARLSON, "THE WEEK MAGAZINE": Good evening, Keith.

OLBERMANN: Can Palin really get away with not calling Limbaugh out now?

CARLSON: She can't. And I don't think she will want to. I'm going to go out on a limb here. I think, because it is a matter of the heart for her - I don't think she wears this child on her sleeve, the way she kind of faked being offended about David Letterman's remark about Bristol. I think she'll be - I think she - I don't know how it will come about, but I bet Rush Limbaugh quickly apologizes himself, knowing that she will have to - she will have to treat him the same way.

Actually, his words were so offensive; the word "retard" is worse than the word "retarded." It is a real insult. And these feelings that family members have are so tender for the people in their family. And there are a thousand slights that these kids receive in a lifetime. And the parents never stop trying to make up for it.

OLBERMANN: If you're right, what happens to Limbaugh's power and the sense of the rankings in the Republican party and the conservative movement?

CARLSON: Well, you say stature. Stature is in the mind of the beholder. But certainly, Rush Limbaugh and some other talk show hosts literally run the Republican party now. They are the king-makers. They are - they have more followers than any other faction in the party. Doesn't Rush Limbaugh claim 100 million listeners? So, certainly, he is a public figure of the sort Sarah Palin had in mind when she called out Rahm Emanuel.

OLBERMANN: There is, however, one inconsistency and one thing that mitigates against your prediction. Last year, in a book, Ann Coulter referred to Scott McClellan, the Bush press secretary, using that "R" word, if you will. She's call Nancy Pelosi that. Tucker Carlson called Canada an "R" word cousin of the United States. No comment of any kind from Ms.

Palin, in any instance. Is it higher profile now? Is it a sense of time -

relative time to the Emanuel remarks that makes you make this prediction?

CARLSON: Ann Coulter is really beneath comment. She's -

OLBERMANN: For Sarah Palin, though?

CARLSON: She's said so many horrible things. But Rush is in a category - a different category. And it is getting a lot of attention. It will get a lot of attention. And it's in her political interest, I think, to be consistent here and to show that she is sincere about some things. And this is one of them. I can't imagine that a mother would go against one and not the other. I mean, I would just be - you know, I - all my - you know, call me a sap and gullible, but I cannot imagine that she will let this go.

OLBERMANN: I hope you're right. And we certainly will find out. It is a real test of who Sarah Palin is. I guess we'll find that out shortly. Margaret Carlson of "The Week" and "Bloomberg News." Thank you, Margaret.

CARLSON: Good night, Keith.

OLBERMANN: That's Countdown for this the 2,470th day since the previous president declared mission accomplished in Iraq. I'm Keith Olbermann, good night and good luck.

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