'Countdown with Keith Olbermann' for Thursday, September 15th, 2011
video 'podcast'
screencaps
Guest host: David Shuster


Segments:
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#5 'Plan Slam', Brian Beutler
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#5 'Plan Slam', Daniel Gross
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#4 'With A Perry On Top', Nia-Malika Henderson
YouTube

# '24 Hours of Reality' promo
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#3 'Shady Trader?', Matt Taibbi
YouTube, Current.com (excerpt)

#2 'Muslim Malign'
YouTube, Current.com (excerpt)

#1 'Palintology', Katie Halper
YouTube, Current.com (excerpt)


printable PDF transcript

Guests: Brian Beutler, Dan Gross, David Shuster, Katie Halper, Matt Taibbi, Nia-Malika Henderson

DAVID SHUSTER: Which of these stories will you be talking about tomorrow? Bipartisan agreement - predictably, John Boehner comes out against the president's jobs bill.

(Excerpt from video clip) JOHN BOEHNER: The president's proposals are a poor substitute for the pro-growth policies that are needed to remove barriers to job creation in America.

SHUSTER: Not so predictable, a group of House and Senate Democrats also come out against Obama's jobs bill, but no need to worry, right?

(Excerpt from video clip) NANCY PELOSI: Our caucus is very unified in support of the American Jobs Act and the fact that it is paid for. It may differ with some provisions within it, or the pay-fors, but they do not differ in the fact that we must get behind it.

SHUSTER: Rick Perry's popularity soars despite a dozen new critical stories, or maybe it's because of them. Is Perry the new conservative mainstream?

Preying on the faithful. Leaked documents show that some FBI agents are taught that the more devout a Muslim, the more likely he is to be violent.

"24 Hours of Reality." The global event breaking down the science of climate change, we will give you a small taste.

And Sarah Palin's past exposed. Who would have thought that the gun-toting, snow-machine riding, hockey mom from Wasilla was allegedly once a cocaine-snorting groupie who had a one-night stand with this guy.

(Excerpt from video clip) MAN: Rice with the three.

SHUSTER: And could all of that actually work in Palin's favor? All of that and more, now on "Countdown."

(Excerpt from audio clip) WOMAN: Rice-a-roni!

(TITLE SEQUENCE)

SHUSTER: Good evening from New York. I am David Shuster sitting in for Keith Olbermann. This is Thursday, September the 15th, 418 days until the 2012 presidential election.

In our fifth story tonight, the Republican Congressional leadership has now taken aim at the president's jobs plan and the criticism is getting a boost, thanks to several members of the president's own party, Democrats. One high profile Democratic strategist is putting much of the blame on the Obama administration tonight and says it's time for the White House to panic and start firing people.

First up, though, putting people back to work. House Speaker John Boehner today called the president's proposals for reviving the economy a poor substitute for what's really needed - Republican proposals.

(Excerpt from video clip) BOEHNER: Let's be honest with ourselves. The president's proposals are a poor substitute for the pro-growth policies that are needed to remove barriers to job creation in America, the policies that are needed to put America back to work.

SHUSTER: As for the $447 billion the president has pledged towards programs that he says will put people back to work, Boehner dismissed the plan as a "short-term gimmick."

(Excerpt from video clip) BOEHNER: Private sector job creators of all sizes have been pummeled by decisions being made right here in Washington. They have been slammed by uncertainty from the constant threat of new taxes, out-of-control spending and unnecessary regulation from a government that's always micromanaging, meddling and manipulating. They have been hurt by government ideas that offer short-term gimmicks rather than fundamental reforms that will encourage long-term economic growth.

SHUSTER: After savaging the president's plan and pushing his own reforms, Boehner called for, what else? A bipartisan solution.

(Excerpt from video clip) BOEHNER: The responsibility for fixing this toxic environment for a job creation is a bipartisan one. The situation was created by Washington's inability to let our economy work.

SHUSTER: The White House responded that a bipartisan solution is exactly what the Obama administration is proposing if Republicans will only take a look and sign on. In a statement, the White House spokesman referred to "the kinds of proposals that have been supported in a bipartisan way in the past, is fully paid for, and prominent, independent economists say, it could create between 1.5 million and 2 million jobs."

There does seem to be bipartisan agreement on one thing, though, opposition to the president's plan. President Obama's now facing criticisms not just from Republicans, but also from members of his own party. Senator Jim Webb, Democrat of Virginia, told Politico that the president's ideas for paying for his job's bill are "terrible."

Senator Webb may be the most vocal, but he's not the only Democrat critical of the plan. The New York Times reported yesterday that many Democrats disagree with the plan, although not all for the same reason. "Democrats, as is their wont, are divided over their objections, which stem from Mr. Obama's sinking popularity in polls, parochial concerns and the party's chronic inability to unite around a legislative initiative, even in the face of Republican opposition."

Today, however, House Minority Leader Nancy Pelosi denied suggestions that her party is anything but united behind the president's plan. Watch.

(Excerpt from video clip) PELOSI: Let me just say that what you are suggesting is anecdotal, and - forged on the Probation's Committee in the Congress of the United States, we had a motto there, the plural of anecdote is not data. There may be somebody that's told you or spoken out about this, but our caucus is very unified in support of the American Jobs Act, and the fact that it is paid for.

SHUSTER: In any case, Democrats do seem supportive of one decision the president made today: He will not make changes to Social Security. A White House representative made the declaration saying, "as the president has consistently said, he does not believe that Social Security is a driver of our near and medium term deficits."

The president previously did offer changes to Social Security in the so-called "grand bargain" with Republicans just two months ago. But Boehner rejected those changes along with the deal, and while Social Security may be safe, Medicare and Medicaid might not be. The president is expected to lay out plans next week to cut several hundred billion dollars from those programs. The move likely will not please his increasingly restive base, and with Washington's angst now second only to Wall Street's, political heavyweights are weighing in on what the president can do to stabilize the situation.

Democratic strategist James Carville said, "Now is a time for the White House to panic and start firing people." Here's Carville on CNN today.

(Excerpt from video clip) JAMES CARVILLE: You look at how crazy the opposition party is, cheering death and everything else, and you say, "Hey, we got to change direction here. We got to do something different. This is not working."

SHUSTER: Joining us now, Brian Beutler, senior Congressional reporter for Talking Points Memo. Brian, thanks for being here tonight.

BRIAN BEUTLER: Thanks for having me, David.

SHUSTER: The James Carville quote, do you know whether firing top staff is something President Obama or anybody at the White House is considering?

BEUTLER: I don't really think it is. You know, I assume with James Carville that he's saying in the way only he can, that what he means is it's time for fresh tactics, to double down on what works and change what isn't. I don't think he really believes or anybody really believes the right thing to do for Obama right now is to flail and randomly fire people. I don't think that would really instill confidence in voters either.

SHUSTER: But having said that, was the White House taken by surprise today by the Republican response? I mean, the president spoke to the nation last week, offered proposals the White House thought would get some GOP support, and now you have this pretty dramatic rebuke today by John Boehner.

BEUTLER: You know, my understanding from the recent weeks is that the White House really never thought that anything like a big jobs bill would ever get any Republican support even if, as they did, they put previously bipartisan measures into it. And so the plan was sort of put something out there, a jobs bill with jobs policies in it that are popular like hiring people to fix schools and give Republicans a chance to reject it, and if they reject it, run against Republicans.

As it turns out now, they have to run against Republicans and Democrats because when all of the Republicans started saying they wouldn't support the plan, Democrats too started saying they couldn't support it. So, that's, I think, what the - the quandary that the White House finds itself in, is that they can't draw a distinction against the Republican Party alone anymore and Republicans will play that up from now until the election unless - unless Democrats coalesce.

SHUSTER: Several days ago the White House was suggesting this all had to be passed in one gigantic, sort of piece of legislation and a few days later they abandoned that and said, "No, no, no, it's okay to pass it piecemeal."

Is there a particular piece that the White House thinks would help both economically and politically.

BEUTLER: Well, I think, the most political popular and the most effective bang for the buck comes from the direct hiring stuff. Paying people to build bridges or repair bridges, or roads or hiring - the White House, or one of the White House's favorite proposals is hiring people to fix crumbling schools. That puts people to work immediately so there is a higher stimulus multiplier, economic multiplier to that stuff, and people get the job and they know where it came from. People see the improvements right away.

I think that what they expect to be able to get is more payroll tax cuts, which can provide some boost - economists sort of differ on how much. Not as much with direct hiring, but it's sort of an invisible benefit to people. Their paychecks get incrementally larger, you know, from when the payroll tax goes from what it is right now to when it goes 1 percent lower. So, people don't really connect that with, you know, new prosperity or higher employment, and so, it's not as politically popular and it also is just not as robust as far as stimulus goes.

BEUTLER: And we're going to look at some of those details in just a minute with Dan Gross from Yahoo! But as far as the politics, with so many Democrats essentially distancing themselves from the President, there was Nancy Pelosi today, trying to show that her lawmakers in the House, they will fall in line. What was Pelosi trying to do politically? Was she simply trying to signal to her members, look the criticism has gone too far in the Senate, don't go there in the House?

BEUTLER: I think that's right. You know, what I've noticed is that there are, you know, a predictable handful of Democratic senators who sort of pop off. There's no consequence for them to. In fact, they think it's in their interest to. Her members have done that in the past. But they haven't been nearly as outspoken as the senators on this bill. And I think that what she's trying to do and what she's hoping happens is that Democrats in both chambers rein in their criticisms, at least - at least tamp down on them, maybe say there's issues here and there, but broadly they support the objective. And, you know, she is right a way. In that like there are dozens of reporters on the hill and we all went scouring for Democrats to say they didn't like the bill. And we found a few. And the quotes were great, but they were really sort of unrepresentative of the party as a whole and if she and the White House and Harry Reid can rein that back in, then it will sort of nullify what Republicans hope is a brewing revolt.

SHUSTER: Brian Beutler, Talking Points Memo reporter - Brian, thanks you for being with us tonight.

BEUTLER: Thank you, David.

SHUSTER: You're welcome.

The jobs bill the president is pushing includes proposals to cut payroll taxes as you heard, eliminate oil subsidies and raise taxes on health benefits of high-income earners. Economists are trying to analyze the potential job creating impact if the package gets whittled down as it's likely to do or if it passes with individual pieces going one at a time.

For a look at that part of the equation and the political realities, we are joined by Daniel Gross, columnist an economist editor for Yahoo! Finance. Dan, thanks for being with us tonight.

DANIEL GROSS: Hey, it's good to be here, David.

SHUSTER: So, Dan, what is the single piece of this that could have the greatest impact in terms of job creation?

GROSS: Well, I think there are a few things. One is aid to the states. And that is not so much job creation as job preservation. You know, states and cities that have to balance their budgets have laid off 500,000, 600,000 people. So, by shoveling money to the states it would, you know, forestall them doing further damage by laying off tens of thousands of people. That's one.

The second piece is, you know, the infrastructure spending, which is, as Brian was speaking about before, brings about direct hiring, but, you know, because we are a highly industrialized society, you know, when you build a road you have a bunch off guys and a lot of equipment, a lot of machinery, so the initial impact on employment isn't massive, but, you know, you see people out there working, they're buying supplies, they're hiring subcontractors.

Then the third piece is, you know, I guess a little more theoretical, which is, "Hey, if you cut taxes on payroll taxes for workers, that means they have more money in their pocket, more cash to spend. That means more demand in the economy. And, by the way, if you cut payroll taxes for employers, as they are proposing to do, that gives them more money in their pockets, more incentive to hire as well as some of this training. So, the - you know, I guess those - look at those three different pieces. One is job preservation. One is direct job creation, but in industries that, you know, are not that labor-intensive. And the third is, you are creating a new kind of conduit, through which you get money into people's pockets and hopefully into the economy.

SHUSTER: John Boehner in flat-out rejecting the president's proposals today floated the Republican proposals, which he said could be bipartisan, which essentially amount to - essentially changing the regulatory environments so that there's some predictability as far as of what tax rates are going to be. Is that really holding back job creation?

GROSS: You know, that proposal is a little like somebody coming into the emergency room with a heart attack and saying - and then looking up and say, "You know, what you really need a healthier lifestyle. How about some carrots?"

It's changing the conversation. The problem with the economy is the lack of employment and a lack of demand. People are not spending. Companies are not spending as they should. Companies are not investing because they fear that people will not be spending. And generally, Republican response is, "Hey, I have an idea, cut the capital gains tax," you know, which we did in 1997 and, by the way, we're poorer now than we were then and the stock market is exactly where we were then. Talking about big-picture tax reform, a big deal, in today's environment, it's just a way of deflecting it because these guys don't even do small deals.

SHUSTER: Do you see anything, though, that could reach a deal in these negotiations that would actually have a significant impact on job creation?

GROSS: Well, I think the one thing I could foresee happening is if Obama talks about this every day for the next 90 days and things continue to muddle along, and if the big business lobbies who will be huge beneficiaries of infrastructure spending, of payroll tax cuts - you know, the Walmarts of the world - they suffer when people don't have money in their pocket to spend. So, I could imagine a combination of continual pressure from the president, with some help from Congress, and business finally getting off of the sidelines saying, you know, maybe we don't want to wait another 15 months and see if there's a change in - you know, after the election to see anything get done.

SHUSTER: And as far as businesses getting off of the sidelines, the oil companies have already done that, to scream and whine about the idea that oil subsidies are going to be taken away.

GROSS: Well, you know, it's really hard to make a living with gas at $90 a barrel. It's just tough.

SHUSTER: Daniel Gross, senior finance editor for Yahoo! Dan, thanks as always for coming on. Great stuff. We appreciate it .

GROSS: Anytime, David.

SHUSTER: If American needs an act of divine intervention to solve unemployment, well, perhaps Rick Perry is on to something. The Republican presidential candidate just gave a 20-minute speech that was all about his Christianity and didn't mention the word "jobs" even once. And this is the guy leading the GOP polls? That's next. This is "Countdown."

(COMMERCIAL BREAK)

SHUSTER: In Europe, the chances of avoiding an economic disaster have now gotten worse. Thanks to a trader for banking giant UBS, a $2 billion swindle and a reminder of how much within the financial industry remains broken.

There's now more evidence that human beings are causing irreversible damage to our planet. One organization just completed an intense 24-hour effort to highlight that issue around the world.

In the world of politics, Rick Perry is talking a lot about faith and saying nothing about climate change, the economy or jobs. His focus on popularity now speak volumes about the mindset of GOP primary voters.

And could Sarah Palin's appeal get a boost from a new book alleging she had a one-night stand years ago with Michigan basketball star Glen Rice? What? Rumeal Robertson wasn't interested?

(COMMERCIAL BREAK)

SHUSTER: Texas governor Rick Perry is on a roll, leading the GOP in the polls, dining out with The Donald at one of New York's priciest French restaurants, spitting fire at Washington in a Time magazine interview.

The fourth story on the "Countdown," Perry should enjoy it while he's got it. He risks his front-runner status every time he opens his mouth, except perhaps for last night.

At Jeans Georges here with Donald Trump where the tasting menu starts at $148, Perry had compliments for his host.

(Excerpt from video clip) RICK PERRY: He knows his restaurants.

SHUSTER: And GOP voters and independents who lean Republican are complementing Perry, putting him ahead of Mitt Romney in the latest Bloomberg News poll, 26 percent to 22 percent with the rest of the Republican field back in single digits. But when voters of both parties where asked who they would vote for today, President Obama, with all of his problems, leads Perry 49 percent to 40 percent. And strong majorities told the pollsters they'd be less inclined to vote for a candidate who calls evolution an unproven theory and who doubts that people contribute to global warming, like Rick Perry.

And despite the overwhelming support for Social Security, Perry told Time, "If you want to call it a Ponzi scheme, if you want to say it's a criminal enterprise, if you just want to say it's broken, they all get to the same point."

And Perry's point about Washington: "When all of the answers emanate from Washington, D.C., that is, on its face, socialism."

No, governor, it's not. In a socialist system, the government owns and controls the means of production. By comparison, in Washington, the private owners of the means of production, they seem to own the government. You know, your friends.

And speaking of ownership, while Perry insisted at Monday's debate that he could not be bought for a lousy $5,000 contribution from Merck Pharmaceuticals, records show the company gave him $28,500 for his campaigns, plus another $377,500 to the Republican governors association which also benefited the governor's campaign. While Perry insists he's in favor of transparency in government, his campaign just settled a lawsuit where it admitted hiding details of $800,000 in spending for amenities like flowers, food and cable bills at the governor's mansion.

Washington Post national political reporter and "Countdown" contributor Nia-Malika Henderson has been on the road with the Perry campaign. She joins us now from Washington. Nia, what has it been like covering Perry? What kind of response is he been getting?

NIA-MALIKA HENDERSON: Well, he certainly gets a pretty good reception out there. He's a great retail politician, probably the best one running. You see when he's out there, you see people want to go up to him and talk to him, very different from somebody like Tim Pawlenty, of course, isn't in the race any more or even Mitt Romney or even Michele Bachmann. So, that's certainly his strong suit.

And you saw him, for instance, down in the debate, in Florida, again, he didn't do so well on the debate stage there, he had some trouble with his is answer around HPV and even immigration, but afterwards, he gave this really, sort of, you know, rallying cry to the base there. And, so I do think he has a situation where he's good in front of, you know, almost in front of the pulpit. I mean, you saw him at Liberty University sounding very much like a Baptist preacher in some ways. But he's tripping up in some ways, I think, when he's, you know, on a debate stage. We'll see what he does next week down in the Florida for this next debate.

SHUSTER: Speaking of Liberty University, that was the speech Perry spoke for 20 minutes about his Christianity and that he's on some sort of divine mission in politics, not a single word or phrase about jobs. Is that by design, is the campaign just trying to ignore that?

HENDERSON: Well, I think, you know, they're obviously playing to their base. It's almost like they're looking to this 2004 strategy that Karl Rove had, which was to really pump up the numbers with their base, with evangelicals, that's, you know, a race obviously that Bush won by about 3 million votes because he was able to swell those numbers among evangelicals. He's also - was able to chip in to the Latino vote there. And you almost think that Perry might hope he can do that, too, with his stands on the sort of dream-like act legislation down there where children of illegal immigrants can actually get in-state tuition.

SHUSTER: For all of President Obama's problems, he's doing better right now against Perry than against Mitt Romney, who leads - who Obama leads by five points in the Bloomberg poll. Does the Perry campaign, are they concerned at all about those polling numbers as far as the head-to-head matchup in a national election?

HENDERSON: Well, I think everybody now, whoever you ask - you ask the Perry campaign, you ask the Romney campaign, you ask the Democrats - they pretty much say it's early. Polls don't matter. I think one of the things that's interesting about those polls is that it really undermines Romney's core argument, which is that he's more electable than Perry. They only, you know, both of them obviously lose to Obama in those polls, but it's not by very much. I think, you know, Romney is like 5 percent and Perry is like 9 percent or 10 percent. So, it really undermines that core argument of his campaign. And, you know, I think probably Romney is a little worried that he seems to have capped at about 20 percent on a lot of these polls if you compare him in a matchup against Perry.

SHUSTER: After Perry made those comments a few weeks ago about the possible treason of Ben Bernanke, some of Perry's own advisors told me that Perry had gone too far, they were trying to bring him back, and yet there's the Time magazine interview where Perry calls Social Security a "criminal enterprise."

Obviously, that's great for the true believers, but it's pretty scary for a lot of other folks, especially independents who are so crucial in a general election. Has Perry reached the point where he won't be able to moderate his comments after the primaries?

HENDERSON: Yeah, it's this interesting thing with Perry. He sort of jumps the shark and then he tries to pull it back and then he jumps the shark again with these comments with the Ponzi scheme and then saying it was a criminal enterprise. Him saying that it was a criminal enterprise was actually sort of trying to bring Romney into the conversation, too. Because that's what he called it in his book. But, you know - I mean, it is in some ways - you sort of find Perry's spokespeople almost on a different campaign than Perry is. He goes out there, he sort of stirs up the base and then he walks it back. Most recently on Afghanistan, you sort of seem to agree with Jon Huntsman saying we got to pull these guys back - bring them back home and then his campaign comes out later and says, "No, you know, he wants the guys to see, you know, the troops to stay there, and figure this thing out over in Afghanistan." So, in some ways, you do have this situation where they're speaking out of both sides of their mouth, the campaign on one hand and Perry on another.

SHUSTER: Does Perry have a pay-to-play problem with Merck. Despite the fact that, I think, Michele Bachmann may have helped him this week by making the controversy not about that, but about whether or not these vaccinations work, which every scientist will say they do and they don't cause mental retardation. But putting that aside, and putting what Michelle Bachman may have done to help Perry, is there a stench over Perry's sort of money that he's getting?

HENDERSON: I think this is going to be a big issue that doesn't really go away. You have Sarah Palin come out, for instance, and have this whole phrase of "crony capitalism." And I think people initially thought it might have been about Romney. But it really fits more with Perry, and some of the things you're hearing out of Texas about these sort of pay-for-play culture down there on - especially with this Merck thing because it cuts against everything that Perry supposedly believes in, smaller government. And now you have this situation where his former chief of staff was a lobbyist and, you know, something like $330,000 was donated by Merck and then, you know, shipped over to his campaign through the RGA.

So, I think he is going to have something to answer for over not only this HPV thing, but as the campaign goes on, folks are going to want to look into the books in Texas. You know, there's another issue down there, which is the matter of his scheduling. This was, you know, a real fight for him to keep those books private - where he goes, you know, how much the state actually spends on his travel. So, that was something where here's a guy who says, "Oh, you know, I'm open. I'm private. I shoot from the hip and I'm a straight shooter." And then you have another situation where some of these - there are a lot of secrets about where he goes, where he spends his time and how much Texas actually spends on it.

SHUSTER: Nia-Malika Henderson of The Washington Post. Nia, always great to have you on, thanks for your time tonight.

HENDERSON: Thank you, David.

SHUSTER: Ahead, we will get an update on Sarah Palin and a seemingly devastating book that could actually boost her likability. We will explain.

And the battle to save our planet. We will look at an intense 24-hour effort around the globe to remind all of us what is at stake with climate change.

(COMMERCIAL BREAK)

SHUSTER: Climate change deniers may have met their match. "24 Hours of Reality," a multimedia presentation created by Current TV co-founder and former Vice President Al Gore, broadcast over the Internet over the past 24 hours by 24 presenters in 24 time zones, all with one mission and one message - to connect the dots that demonstrate man-made pollution is changing our climate everywhere. Here is some of what was shown.

(Excerpt from video clip) AL GORE: Thank you every single person who is joining us. Over the next 24 hours, as Heidi said, we're going to be visiting all 24 time zones around the globe to explore the truth about the climate crisis and the solutions that are available.

(Excerpt from video clip) WOMAN #1: What do you say to the people that told you that your findings are a hoax?

(Excerpt from video clip) DR. MICHAEL OPPENHEIMER: Well, you know, the whole scientific community of the world didn't get together to perpetuate a hoax. It would take an amazingly paranoid disposition to think that that's the case.

WOMAN #1: Yes.

(Excerpt from video clip) MARK RUFFALO: When people are actually affected, that's where the rubber hits the road. And that's where the reality starts to set in. And in my area, in the past three years, we have had a 50-year flood, a 100-year flood, a 250-year flood and a 500-year flood in three years.

(Excerpt from video clip) WOMAN #2: Rain storms and snow storms get bigger and more intense, causing bigger and more frequent floods. Great Australian floods of 2011 occurred, covering an enormous area, an area the size of the countries of Germany and France combined. It displaced so many people and destroyed so many lives and properties. In South Korea just a few months ago, a mudslide reached up to the fourth story of a high-rise building. This isn't some theory about the future. We have crossed that threshold.

(Excerpt from video clip) WOMAN #3: Here is how it works, as heat-trapping C02 increases, so does the temperature. And as temperatures increases, more water is evaporated from the ocean into the sky. That's when the droughts become deeper and longer.

This summer, in China, we saw the highest temperature record since we ever start using the thermometer a century and a half ago.

(Excerpt from video clip) MAN #1: And even in North America, the Mississippi river, it overflowed.††Nobody's spared, even the largest forest in the world. In North Dakota, look at this, in 2011, June 26th, the largest flood in the recorded history of North Dakota.

(Excerpt from video clip) GORE: Climate change is really not a political problem. It is a human problem. And it is a problem that we can solve together.

You will frequently hear them say there is no scientific consensus. The scientists don't agree. Well, actually, every national academy of science of every major country in the entire world agrees on this - every one. The ones that disagree really do not exist, even though there may be an Earth somewhere out there where reality doesn't matter at all. It really is not this Earth. This Earth is the one we have to care about. It's the only Earth that we will ever have or love or tend and take care of for our children and for their children. That is the decision that we have to make and that simple truth is reality. Thank you very much for coming. (APPLAUSE)

SHUSTER: For more information on the "24 Hours of Reality" project, go to climaterealityproject.org or current.com.

Up next, the Swiss banking giant UBS is trying to figure out how a trader swindled out more than $2 billion. UBS may not have to look very far for the answers. Matt Taibbi joins us to explain.

And later, the remarkable new book about Sarah Palin. There're allegations of drug use and one-night sexual encounters. There's an interesting argument - the book might help her.

(COMMERCIAL)

SHUSTER: "Countdown" comes to you live each weeknight at 8 p.m. Eastern. The program is replayed at 11 p.m., 2 a.m., 7 a.m., noon and 3 p.m.

Three years, to the day, after the collapse of financial services giant Lehman Brothers, another scandal is rocking the banking world.

In our third story on the "Countdown", a trader for Swiss bank UBS is under arrest on suspicion of committing fraud, accused of losing some $2 billion of the bank's money in a series of unauthorized trades. Thirty-one-year-old Kweku Adoboli has been labeled a "rogue trader" in some reports.

In a moment, I'll talk with Rolling Stone reporter and "Countdown" contributor Matt Taibbi, who's got a big problem calling Adoboli a "rogue" given the realities of investment banking before and after the global financial crash. A big time player both here and abroad, UBS has major offices in both the United States and London. Adoboli worked in London where he was arrested early this morning.

(Excerpt from video clip) IAN DYSON: He was taken to a City of London police station for questioning, and he remains in custody while detectives continue to investigate the matter.

SHUSTER: According to London's Daily Mail, the trader liked to throw big parties which sometimes turned into all-night raves. According to Matt Taibbi, Adoboli is a rogue only because his trades lost money in a system that could have been designed in Las Vegas. "Federally-insured commercial bank deposits have been wedded at the end of a shotgun to career investment bankers. These marriages have been a disaster. The influx of the i-banking types has helped turn every part of the financial universe into a casino."

Let's bring in the author of those words, Matt Taibbi, a "Countdown" contributor and Rolling Stone contributing editor. Matt, thanks for being here.

MATT TAIBBI: Thanks, David.

SHUSTER: So Sarah Palin went rogue in the 2008 presidential campaign. That's a good word. What's wrong with it?

TAIBBI: Different kind of rogue. Yeah. No, I mean, I think my problem with this term is that whenever one of these things happens, everybody's like, "Oh, how could this possibly happen, you know, in a bank like this? How could nobody know that somebody is making these unauthorized trades?" And the reality is, none of these banks have any real quality control or any internal risk assessment. That's what caused the finical crisis in 2008, and that's all I've been doing for the last three years is interview people who tell me that they do not have internal risk controls at these companies.

SHUSTER: And by not having those internal risk controls, they essentially enable a lot of folks throughout the firm, if they want, to essentially go crazy.

TAIBBI: Exactly. The entire culture of all of these investment banks encourages exactly this sort of risky, crazy behavior. And that's what's so wrong about the situation where we have investment banks wedded to commercial banks. You know, before when we had the Glass-Steagall Act, we prevented commercial banks and investment banks from merging because we did not want professional gamblers being the stewards of our commercial bank accounts, these federally insured bank accounts. But now, we have these gigantic companies like JPMorgan Chase and Bank of America, which are essentially giant investment banks presiding over our bank accounts.

SHUSTER: I want to talk about the possible effects in a second, but what's the potential that this scandal, coming when it does, in the midst of Europe's financial crisis, essentially serves as a tipping point?

TAIBBI: Well, this is a good - it's coming at exactly the worst possible time. I mean, I've been hearing from people on Wall Street all for the last few weeks that this is really the crucial time for Europe. Everybody's wondering whether they're going to come up with a solution that bails out, you know, the Euro and keeps everything going. And in the middle of all of these negotiations, suddenly we have this extreme example of a complete failure of risk control at one of the major banking institutions in Europe. It's a terrible situation. It couldn't have possibly come at a worse time.

SHUSTER: The financial industry has its thumb on the necks of Washington in both parties. Is there anything out there that you see that is changing that dynamic?

TAIBBI: No, absolutely not. I mean, there's this very question of whether or not we should have situations like this, whether we should separate investment banks from commercial banks. That came up last year during the Dodd-Frank negotiations, and the idea was completely routed in Congress. And there was really no way to overcome the momentum that the financial-services industry has in Washington. They just - they contribute so heavily to both parties that it's almost impossible to overcome their will on questions like this.

SHUSTER: If there was, and this is a huge if, because I don't think it could possibly happen in this environment, but if there was a way to essentially cut off the money, the corporate influence, and separate Wall Street and Washington to some degree, what would the policy look like that might solve some of these problems?

TAIBBI: Well, I think that the first thing, absolutely, is that you would have to separate all of these institutions - insurance, commercial banking and investment banking. You know, after the Depression, we made the decision to separate all of those industries, and it worked pretty well for 50 or 60 years. I think we have to go back to that, first of all, and then I think we have to institute some kind of system that doesn't reward people right away for making risky decisions. We have to tie compensation to long-term performance, because otherwise, the incentives are all wrong for people on Wall Street. They make terrible decisions that blow up years later, but they're getting paid now, and that's really the problem on Wall Street. The incentives are all backwards. They do not reward people for conservative, you know, responsible behavior.

SHUSTER: Is there anything in the Dodd-Frank Bill, anything that Washington tried last year that is having a positive impact, in your view?

TAIBBI: Well, sure. There are a few things. You know, the most promising thing being, you know, these new provisions about whistle blowers that encourage people to come forward and report this kind of behavior. But the reality is the Dodd-Frank didn't do a lot to reform Wall Street. I mean, just looking at these banking institutions, even the market controls - you know, forget about regulation of Wall Street. The actual capitalist market controls haven't been fixed. The ratings agencies have not been fixed. You know, all of the risk assessment in all of these companies have not been cleaned up, and we missed the opportunity to really make those changes when the issue was hot a couple of years ago. And now, I think we're going to pay for it again.

SHUSTER: And seeing how corrupt the system is, as you've pointed out, just two and a half years later is so depressing.

TAIBBI: Right.

SHUSTER: Matt, thanks so much for being with us. We appreciate you joining us on "Countdown."

TAIBBI: Thank you.

SHUSTER: Next, the fallout has begun in that horrifying story about the FBI instructing agents to view all Muslim-American citizens as potential terrorists.

And later, the allegations in a new book about Sarah Palin - drugs and one-night stands, including a memorable night with then-Michigan basketball star, Glen Rice. Go blue!

(COMMERCIAL BREAK)

SHUSTER: In the late 1980s, I was a student at the University of Michigan. So was Glen Rice. I was a standout in political science. He was a star on the basketball court. I had an unremarkable social life. Rice, during a tournament in Alaska, allegedly had sex with Sarah Palin. The new book, and the potential boost to Palin's likability.

Coming up next, FBI Director Robert Mueller is getting an earful of how his agency recently viewed Muslim Americans. We will give Director Mueller our own thoughts on the controversy.

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SHUSTER: Imagine that federal agents infiltrated your house of worship by pretending to be somebody they were not. Now imagine they quietly made controversial jokes or statements, encouraged you to laugh or agree with them and then triggered a formal FBI investigation into your possible ties to extremists. Those FBI tactics towards Muslim-Americans were reported by The New York Times two years ago.

In our number two story in the "Countdown", the tensions between the FBI and the Muslim American community are now going to get a lot worse. According to an incredible story by Wired.com reporter Spencer Ackerman, "the FBI instructed counterterrorism agents as recently as six months ago that mainstream American Muslims are likely to be terrorist sympathizers, that the Prophet Mohammed was a cult leader, and that the Islamic practice of giving charity is no more than a funding mechanism for combat."

The documents come from the FBI training ground in Quantico, Virginia. One document contends that the more devout a Muslim, the more likely he is to be violent.

The story's disgusting and infuriating on many levels. First of all, we have this thing called the U.S. Constitution. The FBI tramples on the Constitution by portraying religiously observant Americans as terrorists in waiting.

Secondly, on a purely strategic level, this counterterrorism effort is breathtakingly stupid. Our government's own database has proved that the religious behavior of an American citizen is not an indicator of potential terrorism.

But this whole thing gets even worse. The FBI briefings were lead by an anti-Muslim author whose work has been discredited. And the reading materials included work by an anti-Muslim blogger who has also been discredited. That means the FBI didn't bother to conduct a background check or even Google who they picked to lead counterterrorism briefings. Or worse, perhaps somebody at the FBI did check and decided this was exactly what they wanted. Either way, this is a national shame.

FBI Director Mueller, I'm told that you are disgusted by what some of your agents did. If that's true, you should now assign an independent task force to determine who exactly in your agency promoted and encouraged these stupid, counterproductive and dangerous briefings. And yes, they are dangerous. Any time law enforcement agents needlessly promote tension within a community, they are creating the very chaos and confusion that terrorists rely on to launch successful and deadly attacks.

Mr. Mueller, whose side is the FBI on?

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SHUSTER: Former half-turned governor - half-term governor Sarah Palin has yet to announce whether she'll run for president, but there's every indication she has a campaign team in place and ready, and that Palin will make a formal decision in the next two weeks before the crucial filing deadlines.

Still, in our number one story tonight, a new book hitting stores next Tuesday includes allegations about Palin's life in Alaska that could affect both the way voters perceive her and her plans. From drug use to sex with a future NBA all-star, the stories leaking from Joe McGinniss' tell-all, "The Rogue," paint a very different story of tea party darling Sarah Palin than most Americans are used to. One source says Palin and husband Todd both used cocaine, claiming that before she was elected governor, Sarah was spotted snorting the stuff off an overturned 55 gallon oil drum while snowmobiling with friends. The book also claims Palin smoked pot with a professor who was the father of a Palin girlfriend.

Drug use aside, "The Rogue" features tales of Sarah Palin's alleged pre- and post-marital sexual encounters. From one long rumored affair with Todd's business partner after they tied the knot to another with former NBA all-star Glen Rice, before. According to "The Rouge," Palin hooked up with Rice, then a 6-foot-8 junior at the University of Michigan, during the 1987 Thanksgiving Great Alaska Shootout basketball tournament. Their encounter allegedly occurred in a dorm room used by Sarah's younger sister Molly at the University of Anchorage, Alaska. Rice seemingly confirms this story, calling Palin "gorgeous," and admits he had a crush on her at one time.

Let's delve deeper into the life of Sarah Palin with comedian Katie Halper, co-founder and performer of the national comedy tour "Laughing Liberally." Katie, thanks for being here.

KATIE HALPER: Thanks for having me.

SHUSTER: So there's a lot to digest here with Sarah Palin. What stands out?

HALPER: I think the affair with Rice is amazing. Apparently, she had a fetish for black men, which is great news for the one black man in the tea party, I guess. But I can just imagine how the romance started. I imagine, like, she had him at "you betcha" - then, brought him back to her dorm room to look at the view of Russia from her window.

SHUSTER: Well, you know, I have to - I have to confess, I was a student at the University of Michigan, and even back then, Glen Rice was known as having an incredibly smooth jump shot.

HALPER: Interesting.

SHUSTER: And the other thing, though, that I have to point out is that Michigan finished third in this tournament. They lost in the semifinals, got blown out. Rice had a terrible game.

HALPER: He was distracted. He was worn out. Sarah wore him out.

SHUSTER: So even back then, Sarah Palin was distracting.

HALPER: Intellectually and politically, of course.

SHUSTER: How much of this do you think is actually believable? I mean, Joe McGinniss, he moved in next door, I mean, Glen Rice has at least confirmed -

HALPER: Right.

SHUSTER: - his aspect of this stuff. But as far as the snorting cocaine and all these other allegations -

HALPER: I mean, she loves the snow, I guess. She's surrounded by snow. I couldn't resist.

But I mean, I think that obviously the athlete's story is true, because if they were going to make it up, they probably would have made it some NASCAR driver. I think that it's interesting, because I don't know how much it matters that it's true. I'm kind of excited that it's come out, just because Sarah Palin herself plays with the truth so much, it's kind of exciting to see her at the receiving end of it.

SHUSTER: A group of us in the newsroom were having this discussion that, in some way, perhaps this makes Sarah Palin more likable, because she's done all these sort of things in the past that, I don't know, maybe middle America will say, "Okay, everybody's had some wild times in their life." And instead of being sort of holier than thou, okay, there's a glimpse of Sarah Palin as this sort of wild-eyed, young sports reporter in Alaska.

HALPER: Right. I think that Sarah Palin's fans are lifers. They're also birthers, but they're lifers in that they're Sarah Palin fans for life. I don't think it matters what she does, 'cause if they really cared about what she did and what she'd say, they would have all jumped ship by now, because she's so unintelligible, right?

So I think that they'll just be able to spin this - I think she'll spin it as being attacked by the liberal media, which you know, goes after her with gotcha questions like, "What newspapers do you read?" And I think that she'll also maybe try to turn this into a gender issue, which is so funny coming from a woman who literally charged women for their rape kits when she was the mayor of Wasilla and doesn't believe in equal pay for men and women.

SHUSTER: Do you believe that there's some benefit to Sarah Palin to sort of avoid the fray that is the Republican primary battle right now - to wait until the last possible moment, if she's going to run, and then suddenly, all this stuff is out there, she gets in, she meets the filing deadlines and it's a much shorter race. Does that help somebody like Sarah Palin, do you think?

HALPER: I guess if she wants to go rogue, which now I have, of course, a totally different understanding of the meaning of the book now that these allegations have come out. That and "drill here, drill now." It's hard to, you know, not go there.

SHUSTER: The book has not come out yet, so there may still be some even juicer details that have not leaked. What could come out in this book that would still surprise you?

HALPER: Well, Wyclef Jean - I don't know if you saw this, but - praised Sarah Palin the other day. And now that I know that she has this fetish for black men, I'm thinking that maybe there could be a romance coming out.

SHUSTER: With Wyclef?

HALPER: Yeah, why not?

SHUSTER: Well, I mean, the part about the Michigan story that makes me a little bit concerned that maybe it's not true was the guy who was the real, sort of, party animal on that team was Terry Mills, with a little bit of help from Rumeal Robinson. Glen Rice usually sort of had his sort of act together, but, I mean -

HALPER: I'll pretend I know what that means, because I'm terrible at sports.

SHUSTER: No, that's okay. I just mean it was a pretty wild bunch at Michigan, and anybody who was covering sports, as Sarah Palin would have been, would've known that the wildest group of players in that tournament was the University of Michigan. Maybe she saw that as an opportunity that, "Oh, I'm not going to go after those guys from Arizona or Miami University."

HALPER: Right, she's going rogue.

SHUSTER: She's going rogue, and she's going to go after the guys that she knows might be able to play along.

HALPER: Might be able to drill here, drill now.

SHUSTER: Now is there anything about her previous history of drilling here, drilling now that could portend any moral problems that the tea party might have for her today?

HALPER: I think the tea party's moral compass is pretty off. I mean, I think that if all else fails, she could pretend that she'd killed someone, and then they'll all cheer for her the way that they did for Rick Perry and the way that they did for Ron Paul when he was suggesting that we just let people die if they don't have health insurance. So that's always an option. But I do think that they're so morally off that they won't even care about this.

Of course, the irony is I don't care about this stuff. She's the family values quote, unquote "family values" activist. She's the one whose daughter somehow is the spokeswoman for abstinence only. I don't know if she realizes that she's actually unintentionally a spokeswoman for Planned Parenthood. But somehow, they're able to spin reality.

SHUSTER: Katie Halpert, co-founder and performer for the national comedy tour "Laughing Liberally." Katie, thank you very much.

HALPER: Thank you.

SHUSTER: That's it for this edition of "Countdown."

I'm David Schuster, you're watching Current TV.