updated 12/12/2006 11:06:05 AM ET 2006-12-12T16:06:05

Guests: Lawrence O‘Donnell, Michael Crowley

JOE SCARBOROUGH, HOST:  Well, all the president‘s men worked furiously to undercut the Baker plan by coming up with a new plan of their own, as the president makes busy with meetings at the State Department, with generals at the White House and with White House officials who are not ready to admit that Iraq is a lost cause, even if Americans are.  “Newsweek‘s” latest polls delivers stunningly bad news for Mr. Bush, who‘s strapped with these numbers, dismal numbers: 32 percent of Americans approve of his job performance, only 31 percent think the country is headed in the right direction, and 68 percent of Americans say America is losing in Iraq.

But Bush critics point out that at least the White House has a new catchphrase, which is “a new way forward.”  What that means right now is anybody‘s guess, but no guesswork required when assessing how badly things are going at the White House.

To take us behind the “Newsweek” numbers and the walls of the White House, let‘s bring in right now Richard Wolffe, “Newsweek‘s” senior White House correspondent.  Richard, the “Newsweek” numbers are about as bad as it gets.  Have the president‘s aides and advisers taken on a Nixonian bunker mentality, or do they still really think they can turn things around in Iraq and turn the Bush presidency around?

RICHARD WOLFFE, “NEWSWEEK”:  Oh, they still think they can do it, although their confidence has taken a big knock not just because of these numbers, of course, but because of the elections.  What‘s extraordinary about the stagecraft we‘re seeing now is not just that they want to move beyond the Baker-Hamilton report here, but they‘re putting that president in listening mode.  And who‘s he listening to?  He‘s listening to his own government, his own bureaucracy.

What a contrast from the first Bush term, where basically, the run-up to the war was a closely-held decision and it was sort of sprung on the bureaucracy.  Here it‘s a very different position.  He‘s making a big show, I‘m listening to the commanders, I‘m listening to the State Department folks.  But that‘s what we‘re going to have for another week or so—Bush as listener, not so much Bush the “decider.”

SCARBOROUGH:  Well, but you know, today President Bush talked about a moderate Iraq.  And you know, he was also talking about promoting democracy there.  Is Mr. Bush, as a columnist suggested in the “LA Times,” a president in the bubble, the bubble boy of 1600 Pennsylvania Avenue?

WOLFFE:  Well, I think the bubble has been punctured a little bit, and it‘s been punctured really by his new chief of staff, Josh Bolten, who‘s been bringing in these outside folks for the last nine months since he took over, getting him different advice, firing Rumsfeld.  That was a big thing.

But you know, in terms of what the president actually believes, he still thinks this is winnable and he still thinks the mission is right, that is to say, to stand up a democratic government.  And you know, obviously, the American public feels kind of differently about it.

SCARBOROUGH:  Well, and 68 percent of the American public, Richard Wolffe, say that we‘re losing in Iraq, that our troops are losing ground, things are getting worse.  The question is, is the president really going to listen to anybody, or do we have a president who says what he‘s been saying, that, I really don‘t care if Barney and my wife are the only people in America supporting this war, I‘m going to stick with it?

WOLFFE:  He trusts his gut instinct to a huge degree.  And when he gets into a crisis mode, as I saw him, for instance, when Hezbollah and Israel were going at it over the summer, he really gets back to that gut judgment.  And his gut judgment tells him this is the thing he‘s going to stick with.  And it really doesn‘t matter what the party says, it doesn‘t matter even what public opinion says.  Yes, he feels the pressure and he wants American public opinion to turn around, but in his heart, he feels he‘s going to be vindicated by history, whether that‘s 10 years, 20 years, 30 years.  He thinks he‘s doing the right thing.

SCARBOROUGH:  We shall see.  “Newsweek‘s” Richard Wolffe, thank you so much for being with us.

WOLFFE:  Any time.

SCARBOROUGH:  And even while the president‘s piecing together an alternative to the Baker commission, this president‘s team has coined a new catchphrase to promote the war.  This month‘s phrase, “A new way forward,” which is the latest if not greatest slogan that this White House has trotted out through the years.  Take a look at these blasts from the past.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES:  There‘s an old poster out West, as I recall, that said “Wanted, dead or alive.”

The gathering threat of Iraq must be confronted fully and finally.

States like these and their terrorist allies constitute an “axis of evil.”

I assured him that—that we will stay the course.

Our strategy can be summed up this way.  As the Iraqis stand up, Americans will stand down.

That advice is an important part, an important component of putting together a new way forward in Iraq.

(END VIDEO CLIP)

SCARBOROUGH:  The Bush administration does have that new catchphrase, “a new way forward,” but it isn‘t the first time, of course, the Iraq war has got a slogan, and you just saw a lot of them.

Let‘s bring in right now with us Michael Crowley.  He‘s senior editor for “The New Republic.”  We have MSNBC political analyst and “Congressional Quarterly” columnist Craig Crawford, and political analyst Lawrence O‘Donnell.  Lawrence, I will start with you.  This president remains defiant.  Today he spoke of democracy in Iraq.  Is he, as “The LA Times” suggested, a man inside the White House bubble and dangerously isolated?

LAWRENCE O‘DONNELL, POLITICAL ANALYST:  He certainly gives that appearance.  And you know, I just listened to Richard telling us what he thinks that Bush thinks.  We don‘t know what he thinks.  All we know is what he says.  And we don‘t know if the White House is confident that they‘re going to have a new way forward, we just know that that‘s what they say and that‘s what they say to White House reporters.  He gives every appearance of being completely lost on this subject, just utterly lost.  He doesn‘t...

SCARBOROUGH:  Now, when you say lost, I mean, actually, the president knows exactly where he is.  He‘s either—let‘s put it this way, Lawrence.  Either he‘s lost, or 68 percent of Americans are lost and about 95 percent of the world‘s population is lost.

O‘DONNELL:  Well, that‘s a good way of putting it, Joe.  Look, the president has had plenty of opportunities to come out and say in an affirmative way what he wants to do differently from the Iraq Study Group.  He hasn‘t done it.  He‘s made a gigantic political mistake.  He should have embraced the Iraq Study Group because there‘s something in there for everyone, including a president who wants to keep troops in Iraq because the Iraq Study Group has certain proposals for trying to make the military, the Iraqi military, stand up and make the Iraqi police force work, and the president could use those things as justifications for staying there for years, if he wanted to.

SCARBOROUGH:  Well, it‘s like—Lawrence, it‘s like they‘re throwing him a lifeline and it‘s like he doesn‘t want to accept the lifeline.  And Michael Crowley, 68 percent of Americans now oppose this war in Iraq.  Does this president, at this point, listen to anybody anymore on Iraq?

MICHAEL CROWLEY, “THE NEW REPUBLIC”:  Well, it‘s hard to know.  I mean, there is something bizarre about the way he‘s so publicly going around and consulting people and holding all these meetings.  I mean, it‘s almost like—you get the feeling the White House wants credit for the fact that it‘s listening to people who know what‘s going on and making sure that we all know that Bush is doing it.  But...

SCARBOROUGH:  But Michael, you know, it‘s interesting, though, he brings in, though, General Barry McCaffrey, MSNBC analyst, military analyst, who was critical of the White House and Donald Rumsfeld in 2003 for not providing enough troops, but now he‘s bringing him, after we had Barry McCaffrey on this show, and he was critical of the Baker commission.  Isn‘t this all, Michael, the White House—and I‘m not knocking the White House for doing this, I‘m just throwing it out there, and I‘ll let you be the judge.  Isn‘t this just the president of the United States bringing in people so he can undercut the Baker commission, who criticized him, and he can come up with his own alternative?

CROWLEY:  No, I think that‘s right.  I mean, that‘s where I was going with this.  There‘s something bizarre about the fact that, you know, the president is finally talking and listening to people.  I mean, congratulations.  That‘s what you‘re supposed to be doing.  So there‘s something funny about the stagecraft.  But yes, he‘s laying the groundwork for his own version of an alternate plan because he‘s not going to do what the Baker commission wants.  But you know, it‘s just—there‘s just something odd about the fact that he‘s now—it took the Baker commission for him to get around to finding this new course, whatever it‘s going to be, and...

SCARBOROUGH:  And bringing people in.  And again, we don‘t know what the new course is going to be, and I would be stunned if anybody at the White House knows what that new course is.  But Craig Crawford...

CROWLEY:  Let‘s not discount there may not be a new course.  This White House has a way of saying they‘re doing one thing and just kind of doing another thing.  They may kind of dress it up as something new, but it might not be.

SCARBOROUGH:  Well, of course.  And Craig Crawford, that‘s what I was going to say.  It‘s a heck of a catchphrase, but again, no suggestion that they have any idea what direction they‘re going to go in.  And again, this is a president who doesn‘t really like listening to other people, if you talk to advisers who‘ve worked with him in the past.  And you had a “New York Times” piece suggesting that the reason why the president doesn‘t listen and why the president‘s gotten in trouble may have something to do with his ego.  What was your suggestion to the president in “The New York Times”?

CRAIG CRAWFORD, “CONGRESSIONAL QUARTERLY,” MSNBC POLITICAL ANALYST: 

Well, I think, you know, this isn‘t the first time we‘ve seen a listening

offensive from this White House.  What was it, a year or more ago, they

brought in several former secretaries of state.  I think the president is -

he is just genetically unable to take counsel of other people.  He just believes so much in his own way of doing things.  I mean, there‘s a difference between listening and comprehension.  And that difference is action, and that‘s going to be the telling difference as to whether this is just listening or whether he‘s actually going to take action.  They‘re talking about a speech coming up.  How many speeches have we heard from this White House?

SCARBOROUGH:  Well, and Craig, you‘re talking about comprehension.  Let‘s look at these poll numbers that I showed earlier.  Again, the president‘s approval rating is sitting at 32 percent, 60 percent of Americans against.  I mean, that‘s—that‘s—those are numbers approaching—I won‘t say Jimmy Carter.

(CROSSTALK)

CRAWFORD:  I‘ll tell you what it approaches, Joe, is that number, 32 percent is just about exactly where Richard Nixon was when he resigned in August of 1974.

SCARBOROUGH:  And we‘re getting Trumanesque also, and—if he keeps going down.  And then of course, 68 percent of Americans believe we are losing in Iraq?  I mean, come on, Craig!  I mean, if I‘m president of the United States, I mean, I‘ve got to look and see what 68 percent of Americans are thinking on this war.  You can‘t conduct a war—conservatives and generals will tell you, you can‘t conduct a war where more than two out of three Americans think you‘re losing!

CRAWFORD:  Well, that‘s what most people might think, Joe.  But we already heard what this White House‘s attitude is towards numbers like that.  Dick Cheney, the Sunday before the mid-term election, was presented with similar numbers and he said, yes, the war is unpopular, and quote—he said, direct quote here, “It doesn‘t matter because we‘re not running for office.”  And that is their attitude.

SCARBOROUGH:  You know, Lawrence O‘Donnell, I listened to what Dick Cheney says and what George Bush says and what he does and I‘m reminded of what we Republicans said.  When I was on the Armed Services Committee, we‘d always talk about not going into Kosovo or not going into Bosnia or these wars President Clinton wanted to get involved with unless we had overwhelming support from the American people because, of course, the lesson from Vietnam, Cap Weinberger and Ronald Reagan told us, was you can‘t conduct wars without the majority of Americans on your side.  And yet we‘ve got 68 percent of Americans against this war, saying we‘re losing this war.  And yet suddenly, that doesn‘t matter.  Explain that to me.  Give me a historical parallel.

O‘DONNELL:  Well, historically, I think we should recognize that we did not lose the Vietnam war because of public opinion.  We lost it tactically.  What we learned in Vietnam was the American military could lose a war and lose a war at what appeared to be certainly an ill-equipped comparable force.  And this is what‘s happening again.  We are losing a contest against a set of entities that don‘t have any—that don‘t need to play by the rules that we need them to play by in order for us to beat them.

So we are losing ground.  The American public is right.  There‘s no other way to look at it.  We‘re going to lose more ground.  I can make this very confident prediction that whatever rabbit the president wants to pull out of the hat next week or a week after that, whatever form of plan...

CROWLEY:  There is no rabbit.

O‘DONNELL:  ... he suggests he‘s going to do—whatever he suggests he‘s going to do in 2007 will not work.  It absolutely will not work, and the American public know it.

SCARBOROUGH:  Michael Crowley, there‘s not a plan, is there, I mean, any more than there was a secret plan that Richard Nixon claimed he had in 1972 to get us out of Vietnam?

CROWLEY:  Yes, well, I mean, Joe, you remember all the hype leading up to the Baker report, the Baker-Hamilton report.  And I think people thought, Well, they‘re going to find the secret answer and this is going to be the silver bullet.  And they came up with a muddle that really doesn‘t show much more promise than anything else because, really, there is no good answer.  And I think what we have here is just a fundamental—a fundamentally impossible situation.

I mean, the way that this thing works, people seem to agree, is that you get the Sunnis and the Shi‘ites and the Kurds to come together, form a government and run a state that resembles the sort of modern nation-state that we would recognize.  They don‘t want to do it.  They don‘t want to coexist.  So there‘s no way you secure this town or that neighborhood, you get some deal, you share the oil revenues—they just don‘t seem to actually want to be together, and so there is no way to make it work.

SCARBOROUGH:  And Craig Crawford, they don‘t want to do it in 2006, just like the Lebanese didn‘t want to do it in 1982, just like the people living in the Balkans, living in Bosnia didn‘t want to do it in 1993.  And do you think that when Democrats get into Congress and start taking control and funding this war, or de-funding this war, that they‘re going to deliver that message to the president and pop the bubble?

CRAWFORD:  I think it‘s going to depend a lot on how they‘re reading public opinion because if this president, after this big speech coming up, indicates after all this listening, he‘s not going to change anything—as a matter of fact, I wouldn‘t be surprised, Joe, if the announcement is they‘re going to send more troops, at least in the short term, because that‘s what you‘re hearing a lot from a lot of the experts around this White House, to try to shore up Baghdad.

If the Democrats see that this president is not listening, if they see the public responding very negatively to that, I think they will move forward on something—I don‘t want to say—I‘ll tell you what, I think they‘d impeach this president if it wasn‘t that Dick Cheney would then become president.  But I think—I think you might see a censure or something fairly serious...

(CROSSTALK)

CROWLEY:  If they get them both, it‘s President Pelosi, don‘t forget.

SCARBOROUGH:  Well, I‘ll tell you what—yes, whatever!

(LAUGHTER)

SCARBOROUGH:  Guys, thanks for being with us.

And again, at the end of this segment, I have to underline what I‘ve done all the time.  What I try to do is we talk about Iraq.  I supported this war from the beginning.  I thought it was the right thing to do.  I thought we had a chance to make a big difference in Iraq.  But when we lost the Shia, when we lost 60 percent of the country, and we did, we suddenly, instead of having 80 percent of the country with us over in Iraq, we now have 80 percent of the country against us.  And it‘s a nightmare.

Richard Wolffe, Michael Crowley, Craig Crawford, Lawrence O‘Donnell, thank you so much for being with us, talking about this critical issue.

Coming up: Bill O‘Reilly continues his war on NBC News.  What‘s behind the media jihad?  Can‘t we all just get along?  And does NBC really deserve the kick in the teeth that Bill‘s giving them?  And later, reports that the United States was taping Princess Diana‘s phone the night she died and that her driver was a spy for France.  What‘s the real story?

Well, has Rosie finally gone off the rails with a racist rant against Asians?  Her latest rant‘s sparking outrage, but is ABC afraid to do anything about the ratings magnet?  We‘ll have that next.

(COMMERCIAL BREAK)

SCARBOROUGH:  Well, Bill O‘Reilly refuses to relent in his jihad against NBC News.  The Fox News star has been attacking this network just about every chance he seems to get, most recently going after NBC chief White House correspondent David Gregory.  Now, last week, we showed you attacks from some other Fox News anchors on Gregory, but now O‘Reilly‘s gotten into the game, accusing Gregory of being biased.  Take a look.

(BEGIN VIDEO CLIP)

BILL O‘REILLY, “The O‘REILLY FACTOR”:  Mr. Gregory is a partisan.  He has come to the conclusion that Iraq is a loser and bases his questioning upon that belief.  While Gregory may be correct, using loaded questions to bolster his point of view is not what straight news reporting is about.

(END VIDEO CLIP)

SCARBOROUGH:  All that because David Gregory was doing his job and questioning Tony Snow.  So why has Bill O‘Reilly traded in his war on Christmas for this war on NBC?  Here now an MSNBC media analyst, Steve Adubato.  He‘s the author of the book “Make the Connection.”  And it just keeps going on and on, Steve.  In fact, I want to show you a montage of what Bill O‘Reilly‘s been saying.  He seems to have made it his mission to go after NBC.  Take a look at how he‘s drilled his point home.

(BEGIN VIDEO CLIP)

O‘REILLY:  NBC is the most aggressive anti-Bush network these days, as they have made a calculated effort to woo left-wing viewers.

NBC News, which has taken a dramatic turn to the left in pursuit of liberal viewers, epitomized this spin.

As I said, NBC News has taken a—moved to the left, and Gregory—I don‘t want to pick on him, but that‘s the best example.

NBC News, as we mentioned, has turned sharply left.  Mr. Gregory epitomizes this.

And you don‘t think NBC News has turned to the left?

UNIDENTIFIED FEMALE:  I do not.

O‘REILLY:  Apparently, you‘re not watching the cable outlets at all.

If you don‘t believe it, I can‘t force you to.  I know what‘s going on over there.  I watch them.  I see their transcripts.  No question about it.

(END VIDEO CLIP)

SCARBOROUGH:  I don‘t know what to say, Steve.

STEVE ADUBATO, MSNBC MEDIA ANALYST:  I do.

SCARBOROUGH:  Go ahead.  What‘s going on here?  Is this—I mean, is it—does Bill O‘Reilly think he‘s going to get more rating points by attacking NBC News?

ADUBATO:  To ever try to figure out, Joe, what‘s going on in the mind of Bill O‘Reilly is a dangerous thing, but I will say this.  He has decided that NBC, he has decided that David Gregory is a target.  But the problem with O‘Reilly is that the facts very rarely back up his contentions.  And what he often says is, Isn‘t it obvious to you that David Gregory is a partisan?  Well, it‘s not obvious to me.  Neither, Joe, is it obviously to the very conservative organization, the Media Research Center, Brent Bozell, been on here many times.  He‘s been on O‘Reilly‘s show.  Well, a couple years ago, they called David Gregory the number one White House correspondent in the country.

SCARBOROUGH:  Well, and you know, that‘s the thing.  And I knew the Media Research Center did that.  I read Media Research Center‘s Web site all the time, and I have, gosh, going back to 1991, 1992.  I certainly know Bill O‘Reilly has to also because that‘s what we conservatives do to check and see who‘s liberal and who‘s biased.  And we—again, it‘s—it‘s a great resource...

ADUBATO:  Joe...

SCARBOROUGH:  ... but I mean, Bill O‘Reilly, obviously, wasn‘t paying attention when Media Research Center called Gregory the most fair and balanced, down-the-middle White House correspondent.

ADUBATO:  Joe, there‘s an assumption you‘re making and it‘s an incorrect assumption.  It‘s that Mr. O‘Reilly—and I‘ve done Bill‘s show in the past before I came here, and I‘ll tell you what, it‘s a lot more enjoyable doing it with you, and I‘ll tell you why.  You have a point of view, but you are open to other points of view.  And if someone says, Joe, Could you back up what you‘ve said, I don‘t agree with your premise, as Jane Hall (ph) said to him—he said Well, it‘s obvious.  Obviously, you don‘t watch the cable networks.  Obviously, you don‘t know what you‘re talking about.  That is a classic bully on the air.

He does what he does because he gets away with it.  But if you notice, when he was on David Letterman and Letterman said, Do you just make up this stuff, and the audience applauds, O‘Reilly the bully is confused because he no longer is in his venue, in his ring.  My point is this...

SCARBOROUGH:  Well...

ADUBATO:  He doesn‘t have the facts to back up what he‘s saying.

SCARBOROUGH:  ... let me say this about O‘Reilly.  I mean, again, I personally—just between you and me, I think Bill O‘Reilly got the better of David Letterman that night.

ADUBATO:  We disagree.

SCARBOROUGH:  We certainly do.  In fact, I think David Letterman would be very wise to keep his mouth shut the next time O‘Reilly‘s around because I think he comes off looking badly.  But at the same time, Bill O‘Reilly‘s a street fighter.  That‘s fine.  I mean, we—we‘re—you know, he‘s...

ADUBATO:  He doesn‘t back it up with facts, Joe.

SCARBOROUGH:  He‘s a Long Island guy, I‘m a Southerner.  I think we have a different approach toward things.  But at the same time, I just think he‘s way off the mark here going after NBC News.

ADUBATO:  It doesn‘t have any merit.  And he has to back it up, Joe.  He could be tough and—I‘m from New Jersey.  We fight, too.  My point is this, I‘m also an academic.  And there‘s something called content analysis of news, meaning there‘s a way systematically, scientifically to look at news content and come up with parameters as to how you would define someone as left or right or middle.  He has absolutely no academic support, no research, no research base, nothing that establishes this, but...

(CROSSTALK)

SCARBOROUGH:  Certainly not on NBC.

Now, “The Daily Show” had its own unique take on Tony Snow‘s confrontation with David Gregory.  Take a look.

(BEGIN VIDEO CLIP)

DAVID GREGORY, NBC CORRESPONDENT:  Are you suggesting that I‘m trying to frame this in a partisan way?

TONY SNOW, WHITE HOUSE PRESS SECRETARY:  Yes.

GREGORY:  You‘re suggesting that by quoting the report, I‘m trying to make a partisan argument?

JON STEWART, “THE DAILY SHOW”:  It‘s the way you quote it.  You‘re quoting with bipartisan—with a partisan inflection.  You know, like, The president‘s policies are not working!

SNOW:  ... can you read this as anything other than a repudiation of policy?  And the answer is, I can.

STEWART:  You absolutely can.  It could be read as a 19th century comedy of manners.  Pull out the majority of troops by 2008.  Saucy!

(END VIDEO CLIP)

SCARBOROUGH:  All right!  Steve Adubato, thanks a lot.  Stick around. 

We‘re going to be getting back to you in a little bit.

Still ahead: Was Princess Diana‘s phone bugged by the U.S. the night she died?  A new report says it was.  Why would she be the target of an international investigation?  And later, great moments in sistership.  Why Rudolph‘s under attack in a “Must See S.C.” favorite.

(COMMERCIAL BREAK)

SCARBOROUGH:  Hey, it‘s time for tonight‘s “Must See S.C.,” some video you got to see.  First up, if “An Inconvenient Truth” changed your mind on global warning, so will Al Gore‘s new Christmas special.  Jay Leno gives us a sneak peek at this not so classic holiday tale.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  This holiday season, experience the truth.

UNIDENTIFIED MALE:  If you look at the 10 hottest Christmases ever measured, they have all occurred within the last four years.  This is Frosty last year, and here he is today.  This is the abominable snowman‘s lair 20 years ago, and here it is today.

We have to do our part to fight global warming, and of course, the heat monster.

(END VIDEO CLIP)

SCARBOROUGH:  And finally, Jimmy Kimmel shows us what TV might look like if the censors went overboard.  Take a look.

(BEGIN VIDEO CLIP)

BUSH:  I love to talk to my dad about, you know, things between a father and a son, not (DELETED)  I get plenty of (DELETED) time.

ROBERT GATES, DEFENSE SECRETARY NOMINEE:  I would be remiss if I also did not (DELETED) my wife of 40 years, Becky, and our two children, Eleanor and Brad.

UNIDENTIFIED MALE:  (INAUDIBLE) shut your (DELETED) maybe with a sausage.

UNIDENTIFIED FEMALE:  Well, we‘ll simply have to overlook it.

UNIDENTIFIED MALE:  How can you overlook that?  His beak blinks like a (DELETED) beacon!

(END VIDEO CLIP)

SCARBOROUGH:  Still ahead, who says Danny DeVito may be the only one mumbling nonsense on “The View”?  Rosie O‘Donnell is at it again.  We‘ll show you what she‘s saying now that has a lot of Americans outraged.  And ABC coming to her defense over racist remarks.

And later, a new report says the CIA was bugging Princess Diana‘s phone the night she died and that the French had her driver on its spy payroll.  Why would she do that?  The latest on the two-year investigation, coming up.

(COMMERCIAL BREAK)

(NEWSBREAK)

SCARBOROUGH:  Coming up on SCARBOROUGH COUNTRY, Rosie O‘Donnell in hot water again, this time over controversial comments on “The View” that many think were racist, but does it matter to ABC as long as she brings in the ratings?  No.  That story just minutes ahead. 

But first, nine years after Princess Diana‘s death, conspiracy theories remain.  Now we‘re learning some surprising new details from a new report that‘s set to be released later this week, including claims that Diana was spied on by the U.S. government without the permission of British secret intelligence services. 

NBC‘s Keith Miller has more on that story. 

(BEGIN VIDEOTAPE)

KEITH MILLER, NBC NEWS CORRESPONDENT (voice-over):  She‘s back on the front pages here in Britain almost 10 years after her death, a story of mystery, fueled by her glamour.  Already, there‘s speculation and sensational accusations surrounding the official British report into her death. 

In London, the “Observer” newspaper claims the report will say America‘s spy network was bugging Princess Diana‘s phone at the Ritz Hotel the night she died, but U.S. intelligence sources tell NBC News Diana‘s phone was not tapped. 

DAVID WISE, INTELLIGENCE ANALYST:  They have various targets they‘re looking at, and it‘s possible that innocent people or even a member of the royal family could be picked up on a tap that is aimed at somebody else. 

MILLER:  In 1998, the National Security Agency admitted it had a classified Diana file, numbering more than a thousand pages.  But U.S.  officials say she was never the target for intelligence gathering. 

Buckingham Palace will receive an advance copy of the report, which took a team of detectives, led by the former head of Scotland Yard, two years to compile. 

The report is expected to conclude that the crash that killed Diana and her companion, Dodi Fayed, was an accident, a result of Henry Paul, the driver, being drunk, three times over the legal limit, and driving recklessly. 

Dodi Fayed‘s father, Mohamed, the owner of the Harrods Department Store, claims the couple were murdered. 

Diana lived her life in the headlines.  Now she‘s about to stir a new sensation with the details of her death. 

Keith Miller, NBC News, London. 

(END VIDEOTAPE)

SCARBOROUGH:  Thank you, Keith. 

Here now is Ruth Hilton, deputy editor at “OK” magazine, and also Nicholas Wapshott.  He‘s a national and foreign editor at the “New York Sun.”

Let me start with you, Ruth Hilton.  U.S. intelligence agencies have over 10,000 pages on Princess Diana.  We have reports that the French may have had her driver also spying on her.  Is this all about her hanging out with very rich and powerful undesirables? 

RUTH HILTON, “OK” MAGAZINE:  Well, I think the thing about any member of the royal family or any former member of the royal family is that the British security services at the very least always kept a very close eye on them.  To have their phones tapped is not unusual; to be under surveillance is not unusual, because of actually the threat to their persons. 

You‘re absolutely right.  She hung out with some pretty unsavory characters, partly through her landmines work, and I‘m sure there were certain gentlemen friends she had that, you know, the royal family were not that impressed by.  But I‘m not surprised at all that she was bugged.  I am surprised that the U.S. did it without the U.K.‘s knowledge, if that does prove to be the case.

SCARBOROUGH:  But, I mean, doesn‘t that actually give the U.K.—I mean, they‘re able to wash their hands of it, say, “Hey, you know what?  We‘ve got plausible deniability.  We had nothing to do with it,” when the U.S. could have been doing it as a favor for the British who could not spy on one of their royals? 

HILTON:  Well, to be fair, the British intelligence keeps a very, very close eye on the royals, especially if they are in areas where they feel them to be vulnerable, for instance, on a night out like this where they don‘t necessarily have large security team with them. 

I mean, who knows what the agreement was behind closed doors?  I‘m sure there will be some raised eyebrows in Washington this evening as this emerges and some raised eyebrows in Downing Street, as well.  But, of course, you know, what the security services do, there‘s usually an agreement, but who knows what really happened in this case? 

SCARBOROUGH:  Nicholas, it sounds like it‘s out of some strange British spy novel.  Can you believe a princess was actually bugged? 

NICHOLAS WAPSHOTT, “THE NEW YORK SUN”:  Yes, I can believe it.  It‘s the easiest thing in the world nowadays to be able to tap a cell phone, and I guess that‘s what happened in this case.  It doesn‘t surprise me.  I think you‘re onto something when you‘re saying that it allows the British secret service to have deniability. 

The fact is that the British and the American secret services have been absolutely in each other‘s pockets since the end of the Second World War.  And they wouldn‘t have to do anything.

The fact is that you could eavesdrop on Diana.  And I must say, it must have been one of the more amusing sorts of conversations they did.  On the other hand, there‘s no suggestion at all that she was a problem for national security of the United States or, indeed, for Britain, or that Dodi Fayed—he might have been a playboy.  He might have been up to sorts of tricks that polite people in the royal family might not have liked, but I don‘t think that means that he was a danger to anybody. 

SCARBOROUGH:  Well, could it have been this U.S. financier that she hung out with, other rich and powerful people that the federal government wanted to keep their eyes on?

WAPSHOTT:  Well, maybe.  But, you know, she was watched all the time, not only by the secret service, but by the press.  And I think it‘s miraculous that this latest American lover—so-called -- (INAUDIBLE) because there‘s been no mention of him at all in the past.  I can‘t quite work out exactly how that‘s likely to play. 

SCARBOROUGH:  Ruth, talk about how she was under constant surveillance. 

HILTON:  Well, I mean, it‘s standard for the royal family.  She was also, you know, before her death, also becoming quite a controversial figure in some parties, a great saint for her landmines work and, you know, in some people‘s eyes, you know, was a problematic person...

(CROSSTALK)

SCARBOROUGH:  But what about the royal family themselves?  Did they see Diana as a public relations boon or were they offended by her work?  Was she a threat to them? 

HILTON:  Well, I think there was no doubt that, you know, that very, very public divorce between Prince Charles and Princess Diana was a real smack on the royal family.  It didn‘t play out well.  They didn‘t come out well from it, but I guess neither did she. 

So, of course, you know, there was a lot of bad blood there, as there would be in any divorce.  But, you know, she really made him pay, especially with that “Panorama” interview, you know, that we all remember, where she said there were three people in the relationship. 

I mean, that really struck.  And, of course, there was a lot of pain and anger there, not surprisingly. 

SCARBOROUGH:  And so, by the end, Nicholas, she was more of an embarrassment to the royal family? 

WAPSHOTT:  She was a huge embarrassment.  And if you remember that very accurate and very telling movie, “The Queen,” starring Helen Mirren, shows why the queen was so reluctant really to celebrate her death in a mournful way.  I think they were quietly relieved that she‘d gone, but that‘s a great leap between that and what Mohamed al-Fayed says, which is that they had her put to death.  I think that‘s completely fanciful.

And Lord Stevens, he was, after all, the top metropolitan police officer.  He‘s spent two years tracking this down, and he‘s come to the conclusion that the sad truth is that she was killed by a French drunk. 

SCARBOROUGH:  All right.  Thank you so much.  Greatly appreciate it, Ruth.  Thank you, Nicholas Wapshott.

And coming up next, does Barbara Walters need to invest in a muzzle once and for all?  Rosie‘s latest ramblings are upsetting many Asian-Americans because of racist overtones, but ABC makes no apologies as “The View‘s” ratings soar. 

And later, things get complicated for the star of “The Simple Life.”  Nicole Richie busted for driving under the influence on the wrong side of a freeway.  And wait until you see this stunner from the police report.  That‘s up ahead in “Hollyweird.”

(COMMERCIAL BREAK)

SCARBOROUGH:  Hey, who have says Danny DeVito is the only one who‘s allowed to talk gibberish on “The View”?  Take a look at Rosie O‘Donnell doing what she does best:  putting her foot in her mouth yet again, while talking about that now-infamous DeVito appearance.

(BEGIN VIDEO CLIP)  

ROSIE O‘DONNELL, HOST, “THE VIEW”:  Ching chong, Danny DeVito, ching chong chong chong chong, drunk, “The View,” ching chong.

(END VIDEO CLIP)

SCARBOROUGH:  Those comments are causing a new headache for ABC.  One New York City councilman is demanding an apology from “View” den mother Barbara Walters, but tonight ABC is standing by its woman, who just happens to be sending “The View‘s” ratings sky high. 

Here now, “Star” magazine‘s deputy New York bureau chief David Caplan. 

And also with us still, Steve Adubato. 

David, really, I mean, this is a racist approach.  There‘s just no doubt about it.  I mean, remember when D‘Amato made fun of Judge Ito, and he spent the next month crying and apologizing?  Rosie is basically like, “Screw you.” 

DAVID CAPLAN, “STAR” MAGAZINE:  Yes, I know.  There‘s no crime. 

There‘s no apologies here.  It‘s shocking.

SCARBOROUGH:  And they‘re condescending.

CAPLAN:  Yes, I mean, that‘s the funny thing.

SCARBOROUGH:  She‘s like, “Hell no, I won‘t apologize,” right?

CAPLAN:  I mean, first of all, her publicist issued this statement that was so condescending saying, “You know what?  She‘s a comedian, and I hope one day people get her sense of humor.”  It‘s so condescending and it‘s so offensive to the people that she hurt. 

And second of all, Rosie herself put on her blog saying, “I‘m just a comedian, and I will continue to do accents.”  Shocking.  Absolutely shocking.

SCARBOROUGH:  Continue to do accents, and yet you see what Michael Richards and these other people do, and they get blasted out of the water.  But Rosie is—first of all, let‘s just ask, just the three of you, the three of us here right now, do you all think that it was, if not racist, extraordinary insensitive? 

STEVE ADUBATO, MEDIA ANALYST:  Unbelievably insensitive.  I‘m not going to get inside her head, but I do know this:  She picks her spots.  What I mean by that, Joe, is I kept thinking to myself, as insensitive as it is, if I were Asian-American, I would be totally offended, but you notice she didn‘t say, you know, in a tribe in Africa, and then she starts doing some sort of—what she perceives to be an African dialect.  Here‘s what I‘m saying...

SCARBOROUGH:  It‘s OK to make fun of Asian-Americans? 

ADUBATO:  No, I‘m not.  What I‘m saying is...

SCARBOROUGH:  No, Rosie thinks they‘re safe.

ADUBATO:  Safe. 

SCARBOROUGH:  You can make fun of Asian-Americans?

ADUBATO:  Safe.  And if she had done the African thing, if you want to call it, this nutty thing, I believe Joy Behar and even, hopefully, Barbara Walters would say, “Time out, Rosie.”  She gets away with it. 

SCARBOROUGH:  Well, that‘s the question, David Caplan.  Can we run that clip again by any chance?  Cue it up.  Let‘s go ahead and run the clip again.  And I want to ask you why Barbara Walters, really one of the—no doubt about it.  Barbara Walters is one of the queens of TV news and broadcasting—why she allowed this to go on her show and didn‘t say a thing. 

Do we have the clip?  All right.  Go ahead. 

(BEGIN VIDEO CLIP)

ROSIE O‘DONNELL, HOST, “THE VIEW”:  Ching chong, Danny DeVito, ching chong chong chong chong, drunk, “The View,” ching chong.

(END VIDEO CLIP)

SCARBOROUGH:  And right next to her, Barbara Walters. 

CAPLAN:  Not doing anything.  I mean, this has really become “The Rosie Show.”  She‘s taken it over.  We‘ve seen so many episodes with, you know, Rosie acting inappropriately, and Barbara Walters just sits there.  Rosie‘s getting the ratings, and that‘s great for the show, and that‘s what they brought her in to do. 

But, after a while, you know, they‘re going to lose the luster, and then Barbara is going to have enough, and then Rosie‘s going to got to go. 

SCARBOROUGH:  And, of course, Barbara wasn‘t sitting with her there, but this is Barbara Walter‘s show.  I would guarantee you, if somebody came on my show, anybody, I don‘t care who it was, Brian Williams, who would never do it, anybody came on my show and did that, I would say they‘re never doing my show again. 

ADUBATO:  You would be responsible, too, just like the other people over there. 

SCARBOROUGH:  Well, what I‘m saying...

ADUBATO:  Right, you‘d stand up.

SCARBOROUGH:  ... is Barbara Walters is responsible, if this is happening on her show.  Steve, she doesn‘t need the ratings.  We ask this time and time again.  Why is she allowing her reputation to be sullied? 

ADUBATO:  I have no idea.  I think Barbara, on some level, has lost the sense of how she‘s being perceived, and a reputation took 30 years—anyone would die for that reputation.

SCARBOROUGH:  A great reputation.

ADUBATO:  And I‘ll tell you, finally, I call Rosie the Terrell Owens of talk shows.  It‘s great having her on your show for, you know, a couple of months, the ratings are good, the bump is great.  But long-term, Joe, she‘s not a team player.  You‘ve got to get rid of her.  I can‘t imagine her staying on this team.  She‘s going to drive them nuts.

SCARBOROUGH:  She‘s clubhouse poison.  And, David, let‘s look at a clip of Rosie‘s greatest hits. 

(BEGIN VIDEO CLIP)

ROSIE O‘DONNELL, HOST, “THE VIEW”:  And just one second.  Radical Christianity is just as threatening as radical Islam in a country like America, where we have a separation of church and state.  We‘re a democracy. 

Here‘s the most interesting thing about the “Deliver Us from Evil” documentary, that the person who was in charge of investigating all the allegations of pedophilia in the Catholic Church, from the ‘80s until just recently, was guess who?  The current pope. 

(END VIDEO CLIP)

SCARBOROUGH:  You know, we could go on, David, but she attacks Christians, she attacks Catholics, and, of course, she got into a rift with Kelly Ripa.  Now she‘s going after Asians.  It‘s just she‘s a runaway beer truck, but ABC is embracing her. 

Yes, I mean, no one is spared with her wrath.  And it‘s so shocking that ABC didn‘t issue an apology, and they‘re just letting her go on and on and on again. 

SCARBOROUGH:  Can you think of a precedent of this, where you have a star from a network making a racist comment and the network just gives her a free pass?  I mean, is this lady really making ABC so much money? 

ADUBATO:  They‘re afraid of her, Joe. 

SCARBOROUGH:  I mean, here‘s ABC‘s non-apology.  “Rosie‘s remarks”—and I would love to play it again.  Get it back up.  Rosie‘s remarks were intended to poke fun...

(BEGIN VIDEO CLIP)

ROSIE O‘DONNELL, HOST, “THE VIEW”:  Ching chong, Danny DeVito, ching chong chong chong chong, drunk, “The View,” ching chong.

(END VIDEO CLIP)

SCARBOROUGH:  OK, now, let‘s put up the ABC comment.  “Rosie‘s remarks were intended to poke fun at the global attention being given to Danny DeVito‘s appearance on “The View.”  She certainly didn‘t mean to offend anybody.”

CAPLAN:  I mean, that‘s nonsense. 

SCARBOROUGH:  It‘s total nonsense. 

CAPLAN:  It‘s crazy.  I mean, she was so offensive.  It was hurtful; it was hateful.  Politicians are writing to ABC about this from their constituents who are complaining in New York City, and yet ABC is turning a blind eye.

(CROSSTALK)  

SCARBOROUGH:  Well, they certainly seem racially insensitive.  Of course, maybe it doesn‘t offend them, but if I‘m an Asian, an Asian immigrant, I‘d be extraordinarily offended by this. 

ADUBATO:  It‘s not a question whether we are offended, because we‘re not Asian.  When Michael Richards did what he did, you did not have to be those two African-American men in that audience in the Laugh Factory in L.A. to say, “This is nuts.”  And everyone said it.

This, in many ways, is no different.  It‘s just not something she‘s taken a hit for.  And ABC is ultimately responsible for it, because they have her on the air. 

SCARBOROUGH:  All right, Steve, thank you.  David, thanks for being with us.  Greatly appreciate it.

And coming up in Hollyweird, was Nicole Richie partying all night long?  Maybe that could explain her early morning bust for driving under the influence on the wrong side of the road.  We‘ll sort it out next, in “Hollyweird.”

(COMMERCIAL BREAK)

SCARBOROUGH:  Hey, have your agent call my agent, or your assistant call my assistant, reschedule that lunch, because it‘s time for “Hollyweird.”  First up, Nicole Richie.  The reality TV star was arrested last night for suspicion of driving under the influence. 

Here now, editor-at-large for “Life and Style” magazine, Dawn Yanek. 

Still with us, “Star” magazine‘s David Caplan. 

David, not a lot of suspicion here.  They know.  She admitted it. 

What was she doing? 

CAPLAN:  Nicole Richie was unabashed about her use of drugs.  She told the police officer she was on vicodin, which is a painkiller, and marijuana.  She volunteered this information.  And, in fact, the initial reports say there was no alcohol in her system. 

SCARBOROUGH:  OK, wait a second, OK.  Are you telling me, in California, you can‘t smoke pot and eat vicodin and drive? 

CAPLAN:  You‘re more than welcome to.

SCARBOROUGH:  That‘s against the law now? 

CAPLAN:  Big shocker, the shocker of the night. 

SCARBOROUGH:  Yes.

CAPLAN:  But she was driving on the wrong side of the freeway.  And I think two or three motorists called 911 to let them know.  And then the police came, and they found Nicole talking on her cell phone by herself in the car, just unphased by the whole thing. 

SCARBOROUGH:  I‘ll tell you what—and, of course, a shock how little she weighed.  What did we learn? 

DAWN YANEK, “LIFE AND STYLE”:  Eight-five pounds.  Now, she‘s 5‘1”, weighs 85 pounds.  Who knew they took your...

SCARBOROUGH:  My arm is 80.  My left arm is 85 pounds.

YANEK:  But who knew they took your weight at a booking?

SCARBOROUGH:  I know.

YANEK:  I think that may be the biggest surprise.

SCARBOROUGH:  Your measurements now?

YANEK:  I don‘t know, but, I mean, on vicodin and pot, no calories, right?

SCARBOROUGH:  This is an a L.A. thing, right?  Exactly.  So very thin and fit.  Mariah Carey, also fit.  She wants to keep porn star Mary Carey from trademarking her name, because she thinks fans would be confused.  Dawn, talk about it.

YANEK:  It does seem a little bit silly on the surface, but, of course, her lawyers were like, “Wait a minute.  We can‘t have this.”  Now, don‘t forget. The porn industry has been known for latching onto celebrities‘ names, also spoofing different movies out there.  So it doesn‘t seem as farfetched as it sounds at first. 

SCARBOROUGH:  Yes, not a SCARBOROUGH COUNTRY porn site yet, but talk about Mariah Carey.  Does she really have any reason for people to be concerned about this?

CAPLAN:  I mean, you know, there is a bit of a similarity between their two appearances, so Mariah Carey feels there is.  They wear similar outfits, short miniskirts.  They‘re very voluptuous.  And there are people out there, when they start Googling...

(CROSSTALK)

SCARBOROUGH:  Are you saying they‘re both sluts?  Is that what you‘re trying to say?

CAPLAN:  I don‘t want to get into name-calling.  I don‘t know.

SCARBOROUGH:  I mean, come on, David, that is offensive.

CAPLAN:  No, I think Dawn said that. 

(CROSSTALK)

SCARBOROUGH:  Actually, didn‘t Bette Midler call—I think Bette Midler called Paris Hilton and Britney Spears two sluts or something like that?

YANEK:  The wild and wooly sluts. 

(CROSSTALK)

SCARBOROUGH:  Oh, really?

YANEK:  But coming from Bette, you just kind of have to laugh it off and say it‘s actually kind of funny.  It‘s not quite as offensive when it comes out quite like that, but she was basically referring to all—the fact that they were not wearing panties recently, and she said, by the way, that she was wearing panties, so we‘ll all be grateful for that. 

SCARBOROUGH:  Well, I‘m very glad that cleared that up.  What about Tori Spelling‘s yard sale? 

(CROSSTALK)

CAPLAN:  Tory Spelling, she always likes the press.  She had a huge yard sale a few days ago, and there were 300 people lined up on this street in Los Angeles.  And, you know, all the neighbors are really pissed off, and they had to call the police.  There were news choppers above the house. 

SCARBOROUGH:  Look at that.

CAPLAN:  And, you know, among the items there was a Starbucks mug with lipstick from Tori Spelling on the mug.  Now, the more shocking thing is: 

Who keeps those items?  I don‘t know why Tori wasn‘t washing them.  And these items fetched a lot of money, but she‘s all giving it to charity.  But, of course, it‘s going to be on her reality TV show. 

SCARBOROUGH:  Of course.  So Tori Spelling‘s still alive and well in L.A., right? 

(LAUGHTER)

YANEK:  Yes.  I mean, this is an act that one would expect maybe from Gary Coleman or one of the other former child stars. 

CAPLAN:  Screech.

YANEK:  Exactly, but not the daughter of a billionaire.  But, hey, I think it‘s—her motto is anything for TV, it seems. 

SCARBOROUGH:  He passed away.  Dawn, thank you so much for being with us. 

YANEK:  Thank you.

SCARBOROUGH:  Thank you, David.  Greatly appreciate it.  And we appreciate you all being with us.  That‘s all the time we have for tonight.  “Crime & Punishment” starts right now. 

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

END   

Copy: Content and programming copyright 2006 MSNBC.  ALL RIGHTS RESERVED.  Transcription Copyright 2006 Voxant, Inc. ALL RIGHTS  RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user‘s personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon MSNBC and Voxant, Inc.‘s copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

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