updated 12/4/2007 11:33:14 AM ET 2007-12-04T16:33:14

Guests: Jonathan Alter, Rachel Maddow, A.B. Stoddard, Dana Milbank

DAVID SHUSTER, HOST (voice over):   Which of these stories will you be talking about tomorrow?  Test of wills.

(BEGIN VIDEO CLIP)

PRES. GEORGE W. BUSH, UNITED STATES:  The end of 2007 is approaching fast.  And the new Congress has little to show for it.

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SHUSTER:  The president blasts Congress for inaction, demanding to authorize more money for the Iraq and the Dems fire back.

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SEN. HARRY REID, (D) MAJORITY LEADER:  I think the president should really come up with a new speech on Rose Garden than what he did this morning.   That was pretty weak.

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SHUSTER:  A new war of words is fine with political theatre but what next for the battling branches and the troops?  And as the funding of one war contested another war from this weakens.  A new national intelligence estimate said that Iran halted its nuclear program four years ago.  But never mind that.  Wolfy is back - with that pesky World Bank out of his hair, Paul Wolfowitz might be heading to the State Department advising administration on disarmaments and WMD.  Revisionist history, as Bush insiders dispute Karl Rove‘s claims on the 2002 war authorization vote.  Rove asserts his position.

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KARL ROVE:  What I said was that the general (INAUDIBLE) was the president was the only one pushing the Congress to vote on the war resolution before the November election.  That‘s simply not true.

(END VIDEO CLIP)

SHUSTER:  One month and counting, all eyes on Iowa.  As Mike Huckabee scores a Hawkeye of people and takes the lead among the GOP.  All eyes on Rudy as more details emerging about his trysts fund and it‘s black eye for Hillary Clinton and Barack Obama as they take off the gloves on the campaign trail.

And return to the stalls of justice.  While Senator Larry Craig maintains that he‘s not gay and never has been gay.  More men come forward and say otherwise.

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UNIDENTIFIED HOST:  You‘re a naughty boy.

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SHUSTER:  Craig keeps his wide stance and denies it.  All that and more on, now on COUNTDOWN.

Good evening, everybody.  I‘m David Shuster in for Keith Olbermann.  Imagine if this newscast began the same way night after night.  It would be easy for us but probably not the best journalism on television.  Well, in our fifth story in the COUNTDOWN: Imagine that President Bush kept giving the same speech again and again, his regular attacks on Congress for failing to rubberstamp his agenda, strangely similar.  Yet another broad side, during this morning in the White House Rose Garden, Mr. Bush scolded lawmakers as they return for their holiday session, topping the president‘s list of complains—the Democrats refusal to pass his war funding request condition-free.

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BUSH:  Earlier this year congressional leaders were trying to impose conditions on funds because they said our strategy in Iraq was not working.  We changed our strategy and now even many of those who initially opposed the surge acknowledge that it is achieving results.

(END VIDEO CLIP)

SHUSTER:  Military results which are, however, only one part of the picture.  Without the political gains by the Iraqi government that those military results were supposed to make possible, the actual ultimate goal of the surge still has not been reached.  The president, though, had his own take this morning on what the military results have made possible.

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BUSH:  This much more of our troops will return home as a result of the success we‘re seeing in Iraq.  People are coming home.

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SHUSTER:  Except of course, for the inconvenient fact that the troops were scheduled to rotate out of Iraq anyway because the military is overstretched.  In that way, the president‘s remarks echoed those that General David Petraeus gave the Congress in September, Mr. Bush name-dropping again this morning.

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BUSH:  For Congress to insist on setting an arbitrary date for withdrawal would put the gains Mr. Petraeus and the troops have made in danger and that would threaten the security of our country.

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SHUSTER:  That it might put the security of this country in danger is an arguable point.  But what is unquestionable is that by bringing the troops home, they would finally be out of danger themselves.  Mr. Bush wrapped up his remarks against Congress with a big year-end finish.

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BUSH:  The end of 2007 is approaching fast.  And a new Congress has little to show for it.  I call on members to use the time left to support our troops and to protect our citizens, prevent harmful tax increases and responsibly fund our government.

(END VIDEO CLIP)

SHUSTER:  Like any good self-employee evaluation, the Democratic leader of the Senate refuted that this afternoon.  Majority leader, Harry Reid listed his accomplishments.

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REID:  The president says we haven‘t done anything.  Well, we passed a budget.  We‘ve passed a 9/11 Commission recommendations.  We‘ve provided money for Homeland Security.  We raised the pay of our troops.  We have equipped our troops.  We‘ve given health care for the wounded soldiers and the veterans.  We have taken care of our National Guard which has been ignored by this administration.  So, we feel comfortable that we‘ve done the right thing for the American people.  And, I think the president should really come up with a new speech in the Rose Garden than what he did this morning.  That was pretty weak.

(END VIDEO CLIP)

SHUSTER:  On now to call in our own Jonathan Alter, senior editor for “Newsweek” magazine.  Jonathan, good evening.

JONATHAN ALTER, NEWSWEEK:  Hi, David.

SHUSTER:  Even if Congress does have some accomplishments, whether it‘s Iraq, whether it‘s on children health care, if they don‘t pass exactly as the president wants, he‘s going to veto it.  So, is the Congress - are they simply stuck in this case?

ALTER:  Well, you feel like it‘s groundhog day a little bit.  But I think a couple of interesting things happened today.  One is that the president gave us an indication what he‘s going to do to try to prevent the Republicans from losing even more ground in Congress next year, not to mention the White House and that is, he is going to start to pull some of those troops out and try to put the burden on the Democrats to explain why the surge isn‘t working.  A smarter attack maybe for the Democrats to say, OK, it is as you indicated, it‘s working militarily.  Let‘s not take that away from General Petraeus but it‘s not working politically.  So, we can‘t consider it to be a success there.  But, also, what‘s happening is the Democrats are teeing up a series of bills to reintroduce even when they are vetoed.  On something like children‘s health, for instance, they‘re going to bring that back up in the heat of the election season and say, all right, go ahead, veto this again.  And then see if you can defend your Republican candidates who voted against this.

SHUSTER:  It does sound, though, that the president‘s rhetoric is awfully tiring for anybody who‘s been paying attention.  Does he need to change this at certain point or does he just keep saying the same thing over and over?

ALTER:  Well, look, he really can‘t think that much lower.  It‘s not like people are paying that much attention to what his speech writers are saying.  I think we probably just gave his remarks today more attention than probably anybody else has.  He‘s close to be irrelevant in the back and forth with Capitol Hill except to the extent he still has that veto pen.  He doesn‘t use it every time.  Something important happened this past week where Congress finally got together and passed new mileage standards - - very, very significant piece of legislation.  And they did it in a way that it will apparently avoid a veto.

SHUSTER:  Before Thanksgiving, the Democrats had indicated they were willing to hold out on funding the war until February or March and that they were not going to essentially give the president another blank check.  Does it seem that they‘re still holding firm or are the Democrats already now starting to back away a little bit?

ALTER:  I think there‘s a lot of opposition to the blank check idea.  And even though they can‘t get control of a war policy, which is very, very frustrating not just for them but for the Democratic Party in general and for, you know, anybody who‘s against the war wonders why can‘t the Democrats do more?  They don‘t have the votes to do that.  But they do have the votes to prevent giving him a blank check.

SHUSTER:  But they could also simply say, look, we‘re going to pass things our way.  And if you don‘t sign it, then that‘s it - then the money runs out and then, it becomes a battle of, is it the president‘s fault or the Congress‘ fault?  And the Democrats would argue, look, the president has his opportunity to fund the war.  He just has to do with certain conditions.

ALTER:  But the political problem with that is the combination of limited military success by General Petraeus and the fact the Democrats are still afraid of getting thrown in the brighter patch next year, still afraid of being made to look like they‘re not supporting the troops will probably prevent that from happening.  And this day, you‘ll see some stop-gap measures by Democrats just try to show some limited progress and a lot of waiting for a new president.

SHUSTER:  There was way fascinating proposal put out by Lindsey Graham, the Republican senator from South Carolina which essentially said the Maliki government of Iraq has to start showing some political progress or else the Republicans would start pushing to take some of the money away.  How has that impacted the Senate and is there a possibility that to get kind of votes bipartisan support to put some pressure on the Iraqi government?

ALTER:  I think that could be a very significant initiative by Senator Graham.  Remember, he is closely associated with Senator McCain.  So, a lot of this depends on how things going on presidential campaign.  If McCain starts to gain some ground and he‘s recently been making up some ground in New Hampshire, you could then see people saying, in the Republican Party, look, McCain was right about the surge.  He put all of his chips on the surge.  Maybe he‘s right about this, too, and we do need to put more pressure on the Maliki government.

SHUSTER:  It also puts pressure on McCain because this causes McCain have to change position if he wants to go along with his friend, Lindsey Graham.

ALTER:  Well, he‘s - you know, people think of him as a total straight talker all the time.  He‘s perfectly capable of shading his positions as circumstances dictate.  But I think what‘s been helping him lately is on core issues, things like torture, he sees those as a matter of principle he‘s not going to bend on.

SHUSTER:  Jonathan Alter, a senior editor for “Newsweek” magazine.

Thanks for coming in, Jon.  (INAUDIBLE)

ALTER:  Thanks, David.

SHUSTER:  The president with a potential problem when it comes to what he has said and what his administration might be planning to do about the nuclear threat posed by Iran.  First a refresher on what Mr. Bush said about Iran‘s alleged nuclear ambitions just six weeks ago.

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BUSH:  I believe they want to have the capacity, the knowledge, if order to make a nuclear weapon and I know it‘s in the world‘s interest to prevent them from doing so.  I believe that the Iranian - if Iran had a nuclear weapon it would be a dangerous threat to world peace.  We‘ve got a leader in Iran who announced that he wants to destroy Israel.  So I told people that if you‘re interested in avoiding World War III, it seems you like you ought to be interested in preventing them to have the knowledge necessary to make a nuclear weapon.

(END VIDEO CLIP)

SHUSTER:  The problem, a new U.S. intelligence report says Iran halted its nuclear weapons program in 2003 and remains on hold.  Quoting from the National Intelligence estimate, “We judge with high confidence that in the fall of 2003, Tehran halted its nuclear weapons program.  We do not know whether Iran currently intends to develop nuclear weapons.”  That assessment wouldn‘t seem to jive with reports last month that the Bush administration had been holding up publication of NIA for more than a year, reportedly pressuring intelligence officials to rewrite the document to match Vice President Cheney‘s hard line views.  The White House spinning a new timeline today, National Security advisor Stephen Hadley claiming that the intelligence community only realized Iran halted its program in 2003 on Tuesday and only told President Bush last Wednesday.

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STEPHEN HADLEY, NATIONAL SECURITY ADVISOR:  The intelligence community

finally came to the judgments that they came to on this issue Tuesday of

last week.  The president was briefed on Wednesday.  So, this is

challenging information.  The intelligence community had to decide what

they thought about it.  They were sufficiently uncertain about it, that

they delayed the publication of the NIE until they could come to the bottom

of it, reached their conclusions, present it to the president as they did

on Wednesday, and then at that point, obviously, we wanted to get that -

DAVID GREGORY, NBC NEWS:  Is part of the Iran threat today differently than the president would have even a month ago?

HADLEY:  Because our intelligence community has told us effective today that their assessment is somewhat different than it was before.  That‘s correct.

(END VIDEO CLIP)

SHUSTER:  Let‘s bring in Rachel Maddow, the host of the Rachel Maddow Show in Air America.  Rachel, thanks for joining us.

RACHEL MADDOW, AIR AMERICA RADIO:  Hi, David, thanks for having me.

SHUSTER:  Rachel, does it look as though that World War III might come back to haunt the president?  I mean, have his advisors painted him into I a corner when he steps up for tomorrow morning‘s news conference?

MADDOW:  I think that he‘s going to have two big questions he‘s going to need to answer.  Number one is—why they had Stephen Hadley go out and give the first official White House response to this document in which he says, this proves we were right.  That comment needed a laugh track.  I mean, this document essentially you know, brands the words “liar” or “fool” on everybody who has casually and falsely asserted that Iran is seeking nuclear weapons.  That includes the president and the vice president and every Republican presidential candidate other than Ron Paul.  And for him to come out and say this proves we were right, I think was a huge embarrassment to Steve Hadley and I think that requires an explanation.  The larger explanation is whether or not we really ought to believe that some magical thing happened on Tuesday that changed the intelligence community, all 16 agencies of the intelligence community, changed their consensus about Iran 180 degrees.  That doesn‘t seem probable.  It doesn‘t seem plausible.  But they‘ve got to stick to that if they want to maintain that the president hasn‘t been lying when he knew that this NIE was going to say they didn‘t have a weapons program.

SHUSTER:  And how effectively do you think President Bush can say as much tomorrow morning?

MADDOW:  Well, what‘s interesting David about this press conference is that you know a Washington man, you know that when Bush gives press conferences usually they give about 90 minutes notice.  They give a couple of hours notice.  Today, they announced a full day ahead of time that Bush was going to be there.  I think he can expect therefore some more aggressive, more compound questions from the Press Corps.  They apparently feel confident about his ability to address this stuff so I think we should expect some surprises.

SHUSTER:  Well, Rachel, on a related point today, Paul Wolfowitz is back.  He has a new job in the administration as chairman of the International Security Advisory Board, which is essentially a prestigious State Department panel from which he will be advising Secretary Rice on disarmament, nuclear proliferation, weapons of mass destruction and the like.  Is credibility and performance now irrelevant in the Bush administration?  I mean, does loyalty trump all?

MADDOW:  Well, I can‘t imagine how a person could look out at the field of talent available in the United States of America; need somebody to advice on intelligence regarding weapons of mass destruction, and pick Paul Wolfowitz.  I mean, if there‘s one person in the country who would seem to be disqualified on intelligence about weapons of mass destruction, it would be him.  He‘s the poster child for wrong intelligence about weapons of mass destruction in Iraq.  So, my sense is that it may be loyalty.  It may be that they want to rescue him from the obscurity into which he has fallen after his disgraceful exit from the World Bank.  It may also be that they have a very, very small universe that people they feel comfortable talking to.  And the fact  that he‘s worked on weapons on mass destruction makes him enough of an expert despite the fact he‘s been more discredited on that subject than anybody other than Kerr Bell (ph).

SHUSTER:  Well, maybe it‘s also that there are fewer, fewer neo-cons that are willing out to work for this administration at the end.  But in any case, adding up the NIE and the Wolfowitz employment, the big picture, do you think that the administration will any way pull back or slow down or rethink its push for some sort of military confrontation with Iran and is there such a thing as shame, doubt or embarrassment with this crowd?

MADDOW:  Shame and embarrassments I‘ve never seen.  Doubt, I can‘t imagine as a human they don‘t have.  But in terms of what‘s happening on Iran.  I do think we‘re seeing a few different trends coming together.  Number one, you will have noticed that they‘ve stopped asserting belligerently from Baghdad that Iran is killing U.S. troops in Iraq.  They have stopped those dog and phony shows with weapons saying those are all Iranian weapons killing U.S. troops.  They‘ve also now allowed this NIE to be released which says that Iran doesn‘t have a nuclear program after reports say a year of it being held up.  There does seem to be some dialing back on Iran.  What remains to be seen is whether that means that an attack on Iran is less likely or whether they would like it to be more of a surprise when they do it.

SHUSTER:  I also you wonder about the steam that must be coming out of the Vice President Cheney‘s ears right now.  But in any case, Rachel Maddow of Air America, Rachel, thanks for your time as always.

MADDOW:  Thank you, David.

SHUSTER:  Karl Rove gets confronted on live TV about his false and outrageous remark about the buildup to the Iraq war.  He faces criticism from other Bush White House insiders that even that is not enough to prompt Bush‘s brain to acknowledge the truth.

And one month and counting until the Iowa caucuses.  A new poll shows Clinton and Obama still duking it out for the lead in Iowa and Senator Clinton is not taking any chances leveling her toughest criticism of Obama to date.  You‘re watching COUNTDOWN on MSNBC.

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SHUSTER:  Karl Rove won‘t give an inch despite facing a torrent of criticism from his own from the colleagues in the White House that he got his comments about the buildup of the war wrong.  And Giuliani sex on the city scandal grows, another day, another headline showing special treatment for Judith Nathan.  All that and more ahead on COUNTDOWN.

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SHUSTER:  Last week, we learned of a prominent former White House Republican who contradicted Karl Rove‘s astonishing claim that President Bush wanted Congress to wait until after the 2002 elections to vote on authorizing military force in Iraq.  In our fourth story tonight, other top Republicans are now disputing the account Mr. Rove gave on November 21st, including Karl Rove himself.  You may recall that two weeks ago, Mr. Rove said in an interview quote, “The administration was opposed to voting on Iraq in the fall of 2002.”  But in another interview, Rove was confronted with contradictory claims from one of his former colleagues.  And in the same interview, Rove contradicted his previous story acknowledging now that the president pushed the vote but claiming now that he only said the president was not pushing alone for it.

(BEGIN VIDEO CLIP)

CHRIS WALLACE, HOST:  We have tried to revise history and suggest that the Congress got ahead of the president on the Iraq war resolution.

KARL ROVE:  Wouldn‘t know, that‘s not what I said.  What I said was

that the general convention of wisdom is that the president was the only

person pushing the Congress to vote on the resolution before the November

election.  And that‘s simply not true.  Tom Daschle in June said there‘s

broad support for regime change in Iraq -

WALLACE:  That was June of 2002.

ROVE:  June of 2002.  The question is, how do we do and what do we do

it?  On July 31st, in a news conference by which time he‘d already signaled

he wanted a vote in the fall, he said I would also said that I think it

would be a mistake for the (INAUDIBLE) Congress and its involvement.  On

September 16th, he goes on CNN and says quote, “I think there will be a

vote well before the election and I think it‘s important that we work

together to achieve it”.  And he goes on -

WALLACE:  Gentlemen, do we really think we‘re talking about 2008 that

we need to back and rehearse -

ROVE:  I‘d love the chance to set the record straight.  Mr. Ron Halen

(ph) had adequate time to make his charge.  I‘d like to just to make a few

more seconds to make a point.  He then said, I‘m going to meet with the

president on Wednesday morning.  The next day he says, Tuesday he goes on

the air and says look, I called the White House and urged them to work with

us so we could have a clear understanding of what their strategy is.  The

administration made it clear they have made no distinction about it.  He

told Gwen Ifill.  He then went on -

(CROSSTALK)

WALLACE:  I—wait, wait.  Look.

Let me just read what Ari Fleischer said.  (INAUDIBLE) It was definitely the Bush administration that set it in motion to determine the time and not the Congress.  I think Karl in this instance just as the facts wrong.

ROVE:  I disagree with my colleague.  And the fact of the matter is, I suspect Ari is not aware of or was not privileged to this conversation.

(END VIDEO CLIP)

SHUSTER:  And except, of course, it was not just then press secretary Ari Fleischer.  Republican Senator Chuck Hagel on Rove‘s claims quote, “That is a complete fabrication.  Former counsel to the president, Dan Bartlett quote, “This is the first time I‘ve ever heard Karl say that.  Former White House chief of staff, Andrew Card quote, “Sometimes his brain gets ahead of his mouth and sometimes his mouth gets ahead of his brain.”  And there‘s Daschle himself, as you may have noticed none of Rove‘s quotation actually have Daschle for a vote on Iraq prior to the elections.  And while it is true that some Democrats wanted to vote before the election to get it behind them, this morning Daschle recalled that the president smiled when Daschle asked to delay the vote until after the election.  Daschle offering his own theory on why Rove would claim otherwise.

(BEGIN VIDEO CLIP)

TOM DASCHLE, FMR SENATE MAJORITY LEADER:  Well, I was called last week a couple of times and I literally thought it was a joke.  I thought somebody was trying to pull my leg.  I can‘t believe that anybody would make such an outrageous statement and I was interested of course in that several of the former Bush high-level people have now disputed it as well, saying, where does this guy get off, how could he possibly say something like that.  But he‘s saying it and he‘s trying to sell some books, I guess.

(END VIDEO CLIP)

SHUSTER:  In fact, according to the book, Cubrus (ph), an unnamed White House aide in 2002 said that the president‘s team specifically wanted to use the congressional election to pressure Democrats to drop their skepticism about the administration‘s claim in Iraq, a risk looking weak on national security.  The election was the anvil and the president was the hammer, the aide said.  The strategy worked.  Mr. Bush got his reauthorization.  Republicans won control of the Senate.  By the way, in that interview yesterday, Karl Rove predicted Republican gains in the presidential elections 11 months from now.  We should note Mr. Rove, also known as Turd Blossom, declared his party would retained control of Congress despite of the Democratic victories of last year.

Speaking of disagreements, Larry Craig told the world he is not gay, he‘s never been gay.  Now five men have come forward to tell the Idaho statesman that they‘ve had encounters with Craig and their graphic descriptions of those encounters directly contradict Craig‘s assertion.

And rumbling in the Far East.  Robot turning on robot.  And we‘re there for all the entertaining carnage.  Oddball‘s next on COUNTDOWN.

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SHUSTER:  On this day in history, today in fact, it was quite the competition in Mrs. Lange‘s third grade math class at Hillcrest Elementary School in Oakland, California.  The battles were fierce and the work was intense, but when the dust settled, I‘m proud to report that my nephew, Steven Shuster, was the very first in his class to master the multiplication tables to 12.  Some examples, four times five equals20, eight times nine equals 72, nine times 11 equals 99, three times 12 equals 36, 12 times 12 equals 144.  And a Shuster victory! On that note, let‘s play Oddball.

We begin where we do so often, in Tokyo with robots.  This time it‘s a butt throw down.  The first-ever robot fighting championship to determine which inventors are making the strongest two-legged robots in the world, you know, the ones who will eventually crush mankind and destroy the universe.  Some are very creative like this balloon-headed creature which transports his big balloon head to knock over his opponent.  Take that and don‘t ever call me fathead again! Some of the robots of the championship were less aggressive. Like this one the singing Christmas robot.  Speaking of which—

UNIDENTIFIED MALE:  The following COUNTDOWN stories contain graphic material of a revealing nature about a jolly old fat man in a red suit from the North Pole.  Small children and elves should leave the room immediately. 

SHUSTER:  To Sella (ph), Germany then for the town‘s annual Santa contest, you know, because the real ones needs his helpers.  Anyway, dozens of would-be Kris Kringles competed in the following categories, sleigh riding, gift wrapping, using a forge, singing and comforting children.  And also this—Santa riding a reindeer, an ornery reindeer.  Somehow we don‘t think this kind of thing is supposed to happen, not in a perfect Santa world, anyway. 

The winning Santa gets a vacation to Dubai, yes, Dubai, for two. 

Hello?  Mrs. Santa? 

Finally, it‘s some big-time Christmas trees like this one in Bucharest, the 249 feel tall.  It‘s Europe‘s tallest Christmas tree.  It weighs 290 tons, fireworks not included. 

More fireworks in Rio de Janeiro with the annual lighting of the tree at the Rodrigo de Fratus (ph) lagoon, one of Brazil‘s most famous tourist spots.  The tree is 280 feet tall and is made of stained glass windows, weighing in at 520 tons. 

But we at COUNTDOWN are still obligated to be partial to this one, here in our own backyard. 

Day two of tough talk on the campaign trail in Iowa; Hillary Clinton says Obama dodges tough political fights.  Obama responds by saying it doesn‘t need a lecture from someone who followed a president into the Iraq war. 

And sex on the city, more favors on the tax payers‘ bill for Rudy‘s then-mistress.  Meantime, Mike Huckabee is not only surging in Iowa, he‘s now leading the pack.  These stories ahead.  But first, time for COUNTDOWN‘s top three best persons in the world. 

Number three, best reason to get married, courtesy of Donnie Register in Jackson, Mississippi.  Register was manning the counter of his antique store on Saturday when two men asked to examine his rare coin collection.  One of them men produced a gun and fired at Register‘s head as he instinctively threw his hands in the air.  The bullet never reached the target.  It was deflected away when it struck Register‘s wedding band. 

Number two, best disappearing act, John Darwin of Seaton Carou (ph) in the U.K..  The married father of two vanished in a canoeing expedition nearly five and a half years ago and was presumed to have drowned.  On Saturday, Darwin walked into a central London police station and identified himself.  Darwin‘s family calls his return the best Christmas present ever.  Authorities still plan to question him to see exactly what happened. 

At number one, best reappearing act, maybe, (INAUDIBLE) Siegfried Fishbacker and Roy Horn—I think I blew that—hinting toward a possible comeback to the stage in an interview with the “Las Vegas Review Journal.”  You may recall the magical duo was forced into retirement in October of 2003 when one of the pair‘s white tigers sank his teeth into Horn‘s neck and dragged the illusionist off stage during a trick gone horribly awry.  Not willing to fully commit to the comeback, Horn was quoted as saying, a good magician never lets the cat out of the bag. 

Well, Roy, seems you‘ve learned your lesson the painful way. 

(COMMERCIAL BREAK)

SHUSTER:  We are now one month away from the day when the first voters in the country will get a chance to vote for whom they want to be president.  But if you thought each party‘s nominee was already inevitable, let alone each party‘s winner in the Iowa caucuses January 3rd, in our third story tonight, a new set of polls and the behavior of the candidates themselves is starting to suggest that everything is up for grabs. 

We start with presumed Democratic front-runner Senator Hillary Clinton.  A new poll yesterday showed her at 25 percent, having fallen behind Senator Barack Obama, now at 28 percent, with John Edwards steady at 23.  Clinton support eroding especially badly among women, where she dropped from 34 percent support in October to 26 percent now. 

Coincidence or not, on the same day Senator Clinton changed a fundamental strategy of her campaign and went directly after Obama saying, quote, now the fun part starts and essentially calling Obama all talk, a theme she continued today, again zeroing in on Obama. 

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE:  So you decide which makes more sense, to entrust a country to someone who is ready on day one to make the decisions and the changes we need, or to put America in the hands of someone with little national or international experience, who started running for president as soon as he arrived in the United States Senate.  How did running for president become a qualification to be president? 

(END VIDEO CLIP)

SHUSTER:  In various comments over the last 24 hours, Senator Clinton and her camp have challenged Obama‘s experience, his rhetoric and his integrity, even suggesting that his team has bent campaign financing laws.  Obama made the obvious assumption. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D), PRESIDENTIAL CANDIDATE:  Folks from some of the other campaigns are reading the polls and starting to get stressed and issuing a whole range of outlandish accusations.  Everything that we‘ve done is in exact accordance with the law. 

(END VIDEO CLIP)

SHUSTER:  Then there‘s the Republican party, where Rudy Giuliani retains clear but dwindling front-runner status, but where other shake-ups in the polls will lead to a potentially very interesting speech later this week.  And when you look at first-voting Iowa, where Giuliani has run a limited campaign, there is a new front-runner.  Former Arkansas Governor Mike Huckabee now supported by 29 percent of Iowa Republicans, surpassing the 24 percent, behind Mitt Romney and Giuliani‘s 13 percent. 

Coincidence or not, with Romney now dropping to second place in the first state voting, he is now planning a major speech this Thursday on the one subject about which some reporters and many born-again Republicans have been most curious, his religion, or, as he tends to put it, his faith.  Whether that speech will clarify what exactly he is, his Mormon faith has in it, remains unclear. 

But it is Giuliani dropping from 34 percent at a national “USA Today” survey one month ago to 25 percent today who is having the most consistent problems, as day after day of new revelations and question arise about his use of city finances when he was both the mayor and boyfriend of his current wife, Judith Nathan.  Channel Two in New York quoting an unnamed source from the Giuliani administration as saying that Nathan made city police chauffeur her friends and family around. 

Giuliani‘s former procurement policy chairman telling the “New York Post” he‘s sick that his agency‘s budget was used to conceal expenses related to Giuliani‘s romantic getaways. 

Let‘s bring in A.B. Stoddard, associate editor of “The Hill” newspaper, to weight in on both parties.  A.B., thanks for your time tonight.

A.B. STODDARD, “THE HILL”:  Thanks, David.

SHUSTER:  Let‘s start with an umbrella question.  Regarding Iowa and the switch of the front runners, what‘s going on with Huckabee and Romney, and has Romney, in fact, hit a ceiling? 

STODDARD:  I think that when you look at Iowa and you look at who was the front-runner—I mean, Hillary Clinton and Rudy Giuliani poll nationally very well because they have big name I.D.  Mitt Romney was able to be the front-runner in Iowa because he spent a lot of man power, a lot of time and a lot of money there, and was able to secure his place as the front-runner in Iowa. 

I think that you see on both sides, actually, an opening for different reasons.  In the Republican party, they‘re very disenchanted, almost bewildered.  And so the race remains very volatile for someone like Mitt Romney.  You see a surge with Mike Huckabee.  Anything really goes. 

On the Democratic side, I think you see the race opening up because Democrats are still smarting from losing in ‘04, and they see a real shot this time at winning the White House, and so they want a race. 

SHUSTER:  Romney told Bob Schieffer on CBS that his belief in the Mormon religion is literal, but then refused to answer whether he believes the Garden of Eden was in Missouri.  If not this Thursday, does there not come a point where voters either hear say exactly what his supernatural beliefs are or they ditch him? 

STODDARD:  Romney planned to give this speech as the Republican nominee in the general election campaign.  Making this decision is obviously clearly out of necessity.  He feels that because Mike Huckabee is surging mostly with evangelical Christians in Iowa and knocking Mitt Romney out of the front spot, that he‘s going to have to address this issue.  But he‘s not making this speech to galvanize and rally Mormons behind his candidacy.  He‘s doing it to assuage Christians who are uncomfortable with his religion. 

It‘s a very risky strategy.  But he clearly has decided that he must walk this tight rope. 

SHUSTER:  Giuliani‘s social views are clearly not working in Iowa, but have the scandals reached a critical mass, if not there, where he has run somewhat of a lackluster campaign, but at least nationally?  Is the stuff really starting to stick with Giuliani? 

STODDARD:  I think this could be a problem for Giuliani for this reason—when you look at, you know, the social Christian voters who decide the primary and you say, oh, is it going to be a moral compass question for him, because he cheated on his wife?  I think it goes beyond that.  I think you never want voters to know that—to be reminded that you cheated on your wife, least of all possibly on your expense account. 

But then it goes to Giuliani is presenting himself not as a likable candidate but as a super-cop.  That‘s what he‘s running as.  If you couple that with the stories about Bernie Kerik, that he promotes friends with ethical troubles, looks over them, and then the perception that rules are for over other people—and he can bill his travel with his girlfriends and do whatever he wants on the public dollar—it leads to a very bad perception for someone who‘s running as super-cop. 

SHUSTER:  A.B., turning to the Democrats now, Senator Clinton today attacked Obama for experience and for running for president as soon as he reached the Senate.  It was sort of striking because that does seem to invite some comparisons that don‘t necessarily cast Senator Clinton in the most favorable light, right? 

STODDARD:  I wonder if there‘s anyone who knows that Hillary Clinton went to the Senate after the White House, after her husband‘s presidency and doesn‘t have the same plans since she got there in the year 2000.  That said, it‘s really an interesting strategy.  It‘s an interest tactic.  She has stayed really true to this and been very skilled at all year running as sort of holier than Barack.  She criticizes not her Democratic rivals but President Bush and the Republican playbook all the time. 

This accusation that, oh, he has wanted to be president since he was in Kindergarten really scrapes the bottom of the barrel.  She obviously feels she has to do it to move those numbers, but I don‘t know that it‘s going to play well in Iowa, where everyone wants you to play nice.  I know it‘s hard.  Barack Obama doesn‘t have a lot of negatives.  But I think it‘s very risky. 

SHUSTER:  Just to remind our viewers, you mentioned Senator Clinton‘s preference to Barack Obama wanting to be president since Kindergarten.  That was in a press release that Senator Clinton‘s campaign put out yesterday, after Obama was suggesting that there were others candidates  who had presidential ambitions longer than he did.  The Clinton campaign cited instances where he told his family, I want to run.  But then even used the stuff from when he was in third grade and then in kindergarten, when he wrote a paper saying, I want to be president. 

How strange is that for the vaunted Clinton campaign, which seems usually to sort of know where and when to back off, to be slugging the guy with Kindergarten material?  It doesn‘t make sense to me. 

STODDARD:  It seemed desperate. 

SHUSTER:  Desperate. 

STODDARD:  Yes. 

SHUSTER:  Well, looking forward, given that Clinton‘s looking up and seeing these numbers, where she‘s eroding, in terms of her support from women, what does she need to do over essentially the next week to staunch the bleeding? 

STODDARD:  I think she needs to get back on the high road.  I don‘t think she‘s going to stumble again like she did in the debate.  I think she can recover.  A month is a long time.  She has the Clinton machine, the Vilsack machine.  She has the support of the governor.  I really imagine that she‘s going to be able to recover.  But I think that trying to get the woman vote back, she‘s making a big error going after Senator Obama for wanting to be president. 

I think Hillary Clinton knows the country believes she‘s always had this plan. 

SHUSTER:  Maybe there‘s one certainty, A.B., that you and I can agree on, it‘s that the conventional wisdom throughout this campaign has been utterly wrong from start to finish.  We‘ll see. 

STODDARD:  Yes, underdogs are in finish. 

SHUSTER:  A.B. Stoddard, associate editor of “The Hill.”  A.B., nice to talk with you. 

STODDARD:  Thanks. 

SHUSTER:  Ms. Puerto Rico says she persevered through some sort of pepper spray attack to win her crown.  But the police are saying, pepper stray?  What pepper spray. 

And the trouble, you would think 12 million bucks would make a dog‘s life easy.  Think again.  That and more ahead on COUNTDOWN.

(COMMERCIAL BREAK)

SHUSTER:  Beauty and a beastly deed begin our number two story tonight.  We‘re Keeping Tabs on a who done it in last month‘s beauty pageant in Puerto Rico.  Police say they‘ve now tested the clothing of Ms.  Puerto Rico and can‘t find any evidence of her claim that somebody pepper sprayed her clothing and makeup trying to sabotage her.  Twenty four year-old Ingrid Marie Rivera (ph) won anyway, but claims she broke out in hives and had to ice-pack her face and body to get through the pageant. 

Puerto Rico‘s police superintendent says if someone falsely reported that for publicity, they‘ve got a lot of explaining to do.  The director of the pageant wants her clothing tested for substances other than pepper, insisting that somebody gave her a hot time in the old gown that night.  Stay tuned. 

What‘s a birthday for if not for celebrating with friends?  In the case of Paris Hilton and Britney Spears, it still appears to be best friends forever.  “OK! Magazine” reporting that Britney made a quite a splash at a promotional party on Saturday, her 26th birthday.  A handful of guests presented her with a cake and sang happy birthday, as she smiled and looked happy.  The center of attention until a stylishly late Paris Hilton arrived, posing for the paparazzi, becoming the newest center of attention. 

No hard feelings, apparently.  “OK” says Hilton joined up with Britney‘s group later that night at a Beverly Hills hot spot, both posing together for photographers and sipping champagne until dawn. 

Finally, you know it‘s a dog eat dog world when a canine is forced into the witness protection program, or something like that.  You remember last august when real estate billionaire heiress Leona Helmsley left millions in her will to Trouble, a Maltese pooch with a malicious reputation?  Now, the “New York Post” reports that Trouble wasn‘t tough enough to take the heat in New York. 

She was spirited to Florida aboard a private jet under an assumed name because of too many kidnap threats.  You know, give me the money or the dog gets it?  A Helmsley aide says it was just too alarming.  Helmsley had a reputation of the Queen of Mean, right to the bitter end, stiffing two of her four grand kids, but leaving a 12 million dollar trust fund for the dog, including a security team and 300,000 dollars a year living expenses.  That‘s one big load of liver snaps. 

Senator Larry Craig says he‘s not going anywhere, and rumors of his past sexual liaisons aren‘t going anywhere either.  In fact, they‘re growing.  Five men come forward to talk about their encounters with the senator.  That‘s ahead on COUNTDOWN.

(COMMERCIAL BREAK)

SHUSTER:  Perhaps Senator Larry Craig thought he had made a modest recovery after the fallout from his arrest in an airport restroom sex.  He has, so far, held on to his Senate seat, and he has repeatedly denied all manner of gayness.  But his possible hypocrisy has now led five more men to come forward, in our number one story on the COUNTDOWN.  Those men detail encounters with Mr. Craig, two of the encounters leading to sex. 

So now, Senator Craig might be feeling kind of like Al Pacino in “God Father Three.”  Just when I thought I was in, they pull me back out.  The new allegations detailed in a weekend report from the “Idaho Statesman,” the bane of Senator Craig‘s existence.  They include D. Phillips (ph), a forty two year old consultant in Washington, D.C., who says he had sex with Craig after meeting in a gay club in 1986.  Mike Jones, former prostitute, who has allegedly had sex with the Reverend Ted Haggard says that his encounter with Larry Craig occurred in Denver in later 2004 or early 2005. 

He says Craig paid him for a massage and oral sex.  A man who wants to remain anonymous, who says Craig propositioned him in a Denver bathroom in September 2006.  Two other men said Craig proposed they spend time alone together.  The separate incidents both occurring in the early 1980s.  In a statement, Senator Craig calls the latest allegations completely false, and scorns the “Idaho Statesman” for its tabloid journalism. 

Meanwhile, this Larry Craig action figure is on sale just in time for Christmas.  As you can see, it‘s bendable so you can move it to different positions, wide stance, for example.  It‘s not every day we ask someone to follow an action figure, but joining us now, the national political reporter for the “Washington Post,” and MSNBC political analyst, Dana Milbank.  Dana, you have one of these for the holidays? 

DANA MILBANK, “THE WASHINGTON POST”:  My formal title is actually COUNTDOWN‘s Larry Craig. 

SHUSTER:  Dana, five more men essentially calling Larry Craig a liar and a hypocrite.  That brings the total to eight men saying they‘ve had encounters with Craig.  Senator Craig saying false.  Is this another batch of he id/he said/he said. 

MILBANK:  Yes.  He said/he said/he said/he said/he said/he said/he said.  We now have enough accusers to fill all of the stalls in the entire Minneapolis airport.  Not good news for Larry Craig, a man who has been sorely in need of some good news for a long time. 

SHUSTER:  Four of the five men were willing to have their names be printed in the report, as well as audiotape of their accounts to be posted online.  The anonymous source describes Craig propositioning him in that Denver airport in a way very similar to what Craig allegedly did in the Minneapolis airport.  All the men are openly gay and are offended by Craig‘s insistence that he is not gay, not to mention his official stance on gay rights issues. 

Given all of that, should Craig consider changing his I am not gay strategy? 

MILBANK:  He could go with I am not gray, perhaps the hairline is receding.  I don‘t think it‘s a strategy, this I am not gay.  I think it was more of a verbal tick he had going on.  Now, admittedly—and to be fair here—the “Idaho Statesman” said they have no conclusive proof in this case.  One of these accusers is the same guy who brought down the Reverend Ted Haggard.  Another says his meeting with Larry Craig took place at a place called Bogus Basin. 

So there may be some reasons for suspicion here.  But then again, Larry Craig does have this guilty plea on his record. 

SHUSTER:  Dana, Craig‘s statement also said that he won‘t let the “Idaho Statesman,” quote, stop me from continuing my work to serve the people of Idaho.  As it turns out, Craig is traveling to Bali this week for the United Nations Conference on Climate Change.  Mr. Craig is the Republican representative of the Senate Environment and Public Works Committee and he has a pretty solid record of denying the man-made component of global warming.  Is this, in a way, a perfect activity for him? 

MILBANK:  It is, but he does have an escort and a chaperone.  That is Barbara Boxer, who is the chairman of that committee.  She‘s not going to let any funny business go on here.  But I should point out that with Trent Lott leaving, the Senate Republicans are in need of a new number two leader.  It‘s expected that this kind of vote could be very close.  What kind of positions are the senators going to have to get into to get Larry Craig‘s vote in this race? 

SHUSTER:  On that, Dana, Craig still faces a Senate Ethics Committee investigation regarding the Minneapolis Airport sex sting, in which he says he was profiled.  But this action, which was not Senator Craig‘s idea, by the way—this action figure says it all.  It plays portions of Senator Craig‘s I‘m not gay news conference when you press a button.  So should Senator Craig just stay in Bali and send this doll to the Ethics Committee? 

MILBANK:  I think it‘s a fine idea for Larry Craig.  Not sure the Ethics Committee is going to accept it.  At the very least, they should have a life-sized doll. 

SHUSTER:  What do you think of the likeness?  Pretty good? 

MILBANK:  Pretty good.

SHUSTER:  Dana, I‘ll bring this back to Washington just for you, again, just to show—Oh, no!  Oh no, the head came off.  We can put the head back on or something like that. 

MILBANK:  As long as the hand moves with the palm upward, we‘re OK. 

SHUSTER:  Dana Milbank of MSNBC and the “Washington Post.”  Dana, thanks for playing. 

MILBANK:  Thanks. 

SHUSTER:  That will do it for this Monday edition of COUNTDOWN.  I‘m David Shuster, in for Keith Olbermann.  Thanks for watching.  Our coverage continues now with MSNBC live with Dan Abrams.  Good evening, Dan. 

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

END   

Copy: Content and programming copyright 2007 MSNBC.  ALL RIGHTS RESERVED.  Transcription Copyright 2007 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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