updated 5/28/2008 11:11:42 AM ET 2008-05-28T15:11:42

Guests: Howard Fineman, Rachel Maddow, Derrick Pitts, Richard Clarke

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

McCain‘s “McMortgage” crisis.  Senator McCain‘s foremost economic adviser, now his campaign‘s general co-chair, he‘s likeliest choice for treasury secretary, was still lobbying for the UBS Investment Bank, was still being paid to try to kill Senate bills to help people victimized by the mortgage crisis to save their own homes, was still fighting to help the banks and screw the homeowners while already fundraising for McCain, while already advising McCain on housing, on mortgages, on the economy.

The Phil Gramm scandal: John McCain mortgages himself—a COUNTDOWN exclusive.

As a new report says the surge in mortgage defaults is the highest in seven decades, and four times higher than that in towns where our soldiers live, Obama attacks “McCain-onomics.”

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE:  We‘ve had enough of the “can‘t do, won‘t do, and won‘t even try” approach from George Bush and John McCain.

(END VIDEO CLIP)

OLBERMANN:  Senator McCain heckled in Denver.  A fundraiser in Phoenix moved to a smaller venue because they couldn‘t sell enough tickets at the larger venue.  He tries to change the subject.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE:  And by the way, I will never surrender in Iraq.  My friend, I will never surrender in Iraq.

(END VIDEO CLIP)

OLBERMANN:  You‘re not the one fighting there, are you, fella?

The Scott McClellan book.  Breaking news tonight, he throws the president under the proverbial bus.  Mr. Bush was not, quote, “open and forthright on Iraq.”  He used, quote, “propaganda to sell the war.”

They are pushing Iran again.  Does the nukes scare tactic pass the smell test?  We‘ll ask the former presidential counterterrorism advisor on the NSC, author of the new book, “Your Government Failed You”—Richard Clark.

And as the Mars Lander sends back photos of, surprisingly enough, Mars, who in space?  The space station toilet is clogged—marooned.

All that and more: Now on COUNTDOWN.

(on camera):  Good evening.  This is Tuesday, May 27th, 161 days until the 2008 presidential election.

His presidential campaign already defined in part by his admission that the economy is hardly his area of expertise and by the acknowledgement that the four dozen lobbyists still in his campaign might be a bit of glaring hypocrisy for a man who purports to be a maverick.  John McCain saw the two stories merged today when federal disclosure forms proved that John McCain was being advised on the mortgage crisis by a lobbyist still being paid by the investment banks to help them in the mortgage crisis, a man identified by some economists as the principal enabler of the mortgage crisis.

Our fifth story, a COUNTDOWN exclusive tonight: John McCain‘s Phil Gramm scandal, in a moment.  First as preface, the Obama-McCain battle today, the presumptive nominee and the all but presumptive nominee, both spending their time this week in the battleground states of New Mexico, Nevada, and Colorado, those are worth the combine 19 electoral votes, only one less than Ohio.

Today in Denver, during the speech on nuclear proliferation, in which he attempted to frame himself as the “JFK” candidate, Senator McCain interrupted four different times by protesters.  Perhaps, they‘d just wanted to correct his pronunciation of Ahmadinejad.

(BEGIN VIDEO CLIP)

MCCAIN:  President Ahmadidinejad (ph) has threatened to wipe Israel off the face of the earth and represents a threat to every country in the region.  One we cannot ignore or minimize.

(APPLAUSE)

(CROWD SHOUTING)

MCCAIN:  You know, this is, this may turned it a longer speech than you had anticipated.

(APPLAUSE)

(END VIDEO CLIP)

OLBERMANN:  Ahmadididida (ph), that‘s all folks.  To a demonstrator shouting Iraq was not a threat, Senator McCain responding directly.

(BEGIN VIDEO CLIP)

MCCAIN:  And by the way, I will never surrender in Iraq, my friends. 

I will never surrender in Iraq.

(APPLAUSE)

MCCAIN:  Our American troops will come home with victory and with

honor.  And that‘s my message to my friend friends -

(APPLAUSE)

MCCAIN:  And we are winning.

(END VIDEO CLIP)

OLBERMANN:  If this is what winning in Iraq looks like, I hate to be losing.

Troubling new report from Bloomberg News, highlighting a surge of a different kind tonight—housing foreclosures in military towns now is surging at four times the national average.

Senator Obama today, visiting a Las Vegas homeowners struggling under the threat of foreclosure.  Later, when speaking to a crowd of about 75 homeowners, the Illinois Democrat slamming Senator McCain for having adopted the Bush administration‘s and the lobbyists‘, quote, “bad ideas for solving the housing crisis.”

(BEGIN VIDEO CLIP)

OBAMA:  For far too long, our policies have been measured by how much sense they make for Wall Street and K Street and not the difference that they‘re going to make on Main Street.  This election must be our time to stand up and say that those aren‘t the American values that we believe in.  We believe in an America where you can leave your children with a little more opportunity than you had, where you aren‘t turned out of your home because the mortgage lender went for the easy buck and didn‘t disclose all the information that you needed.

I do not accept an America where Washington‘s only message to working people is—you‘re on your own.  We are here, once again, to reaffirm the fundamental American belief that we are in it together as Americans.  Because the dreams of hard-working Americans, like Felicitas and Francisco, matter to us.  Their struggle is our struggle; their dreams are our dreams.  And that‘s why we call it the American dream.

(END VIDEO CLIP)

OLBERMANN:  Senator McCain‘s dream of putting his lobbyist problem behind him quite possibly turning into his own nightmare.  Just two weeks ago, the senator having purged four staff members, including one of this general co-chairs from his campaign, based on their lobbying activities.

And breaking news tonight and the COUNTDOWN exclusive: We have now learned that the other general co-chair, Phil Gramm, was working as a lobbyist for a foreign bank here in the United States.  That is the former Texas senator was paid to lobby Congress specifically about the mortgage crisis, at the exact same time he was helping to craft Senator McCain‘s economic policies and home mortgage crisis policies as an unpaid McCain economic adviser.

(BEGIN VIDEOTAPE)

PHIL GRAMM, MCCAIN ECONOMIC ADVISER:  Well, I‘d just want to make a point that I think is being missed here.

OLBERMANN (voice over):  Gramm officially joined the McCain campaign on March 12th, 2007.  But as early as October 2006, Real Clear Politics reported that McCain was already relying on Gramm for fundraising help.  McCain‘s top political operative at that time saying, Gramm, quote, “obviously gives us advice on economic issues.”

At the same time he was giving that advice, federal disclosure forms reviewed by COUNTDOWN show that Gramm was simultaneously being paid by UBS to lobby the United States Senate about the mortgage crisis, opposing government regulation, helping to kill a 2006 anti-predatory lending bill that would have tighten consumer protections and might have mitigated the current crisis.

As recently as December 31st of last year, still working for Swiss bankers specifically to help kill the Emergency Home Ownership and Mortgage Equity Protection Act and the Helping Families Save their Homes in Bankruptcy Act, a bill that would have let bankruptcy judges adjust mortgage terms so American families facing foreclosure could repay their loans and keep their homes.

Three months later, McCain gave his broadest statement to date on the mortgage crisis.

(BEGIN VIDEO CLIP)

MCCAIN:  Our financial market approach should include encouraging increased capital and financial institutions by removing regulatory accounting and tax impediments.

(END VIDEO CLIP)

OLBERMANN:  Removing regulatory impediments—a Gramm mantra.

Politico.com writing, “Some housing experts and economists see Gramm‘s thinking in the recent housing proposal.”

The McCain campaign confirmed that Gramm had input on the speech and that McCain consulted Gramm specifically on the housing issue.

Some economists blame Gramm, in part, for the crisis itself as Senate Banking chairman, Gramm consistently weakened federal regulations.  His deregulation of energy commodities first helped his wife‘s employer, then, killed it.

In 1999, the Gramm-Leach-Bliley Act which McCain voted for, broke down the decades-old wall separating commercial banks heavily-regulated, from the wild and woolly world of investment banking—a wall erected in 1933 to prevent a repeat of the Great Depression.

One month after Gramm knocked that wall down, UBS bragged to investors that his bill would liberalize restrictions.  UBS bought Payne Webber the very next year, and hired Gramm before he even left the Senate.

Gramm‘s deregulation helped set the stage for an explosion of banks slicing up subprime mortgages, bundling them with other mortgage slices, to hide the credit risks and selling mortgage stew to other investment firms.  That gave lenders powerful incentives to make as many loans as possible, regardless of risk, because they could still turn around and sell those mortgages almost immediately.

Gramm himself said he was totally unaware just how many bad mortgages his own company bought.  At last count, UBS had lost $37 billion in the mortgage crisis and plans to lay off 5,500 people next year, primarily in the U.S.

McCain has hinted he might make Gramm his treasury secretary.  But Gramm‘s economic track record worries even McCain‘s own advisers.  One of them telling the “Washington Post” last month, “I, for one, have thought about it a lot.”

One economist said, “McCain is counting on people having very short memories and not connecting some pretty obvious dots here.”

Two weeks after that report, UBS removed Gramm from its list of registered lobbyists.  But federal lobbying forms show at least two other McCain staffers - congressional liaison, John Green, and, National Finance co-chair, Wayne Berman, were both still lobbying on behalf of the mortgage industry as recently as the first quarter of this year.

(END VIDEOTAPE)

OLBERMANN:  And the McCain campaign responding tonight in a statement, spokesman Brian Rogers saying, quote, “It is sort of nonsense when you consider that the reality is that places like UBS and Wall Street want a bailout from the federal government, and unlike Senators Obama and Clinton McCain, McCain is the only one who doesn‘t want to give a bailout but wants to focus on homeowners who are truly in need.”

“The reality,” the statement goes on, “is John McCain has proposed a common sense plan to help truly needy homeowners enact reforms to make sure this crisis never happens again.  Phil Gramm works for a big Wall Street bank.  He‘s not benefiting from John McCain‘s plan.  So, I don‘t see nexus.”

Nothing in our report, of course, referred to the bailout aspect and even if it had, the fed just changed its policies to start the unprecedented step of extending its bank rate overnight loans to investment firms, UBS included.

As for Roger‘s statement that McCain has a plan to help homeowners enact reforms, homeowners do not enact reforms, lawmakers enact reforms.  And as far as McCain‘s planned reforms go, he has said, as we mentioned, that he wants to remove regulatory impediment and not add them.

Finally, Senator Gramm got his current job after helping deregulate the banking industry in the first place.  There should be no stretch of the imagination to see that achieving further deregulation under a McCain administration might also accrue to Senator Gramm‘s benefit.

Time now to call on up our own Howard Fineman, senior Washington correspondent for “Newsweek” magazine.

Howard, good evening.

HOWARD FINEMAN, MSNBC POLITICAL ANALYST:  Hi, Keith.

OLBERMANN:  Senator McCain, now facing Senator Obama as the agent of change in this general election face-off, is being tied to some of the ultimate insiders of the lobbyist crowd, in this case having the hired hand of the UBS Bank, crafting his mortgage policy.  Is that really the posture that Senator McCain, the maverick, wants to project?

FINEMAN:  It‘s not the posture he wants to project at all.  And I‘d just talked a little while ago to Charlie Black, who‘s - probably the senior political adviser there along with Rick Davis, the campaign manager.  Of course, the irony is both Charlie and Rick are founding fathers of the modern K Street culture.  Charlie is now retired, he says, and I think, in fact, that‘s true, from the business.  But he helped create the modern business as did Rick Davis.

The great paradox here is that John McCain, maverick though he may be in spirit, has been tied, sometimes arguing with, but usually in step with the whole K Street culture that he now says he wants to get away from and reform.

When I talked to Charlie, I asked him about Phil Gramm.  He said, “Oh, Phil Gramm only was registered for two visits on the Hill.  He shouldn‘t have even been a registered lobbyist.  He rarely visited the Hill.”

But that‘s not the point.  In a sense, if there‘s a government in waiting, if there‘s a McCain government in waiting, Phil Gramm has been the sort of economic intellectual guru of it, highly respected not only by McCain but by people like Charlie Black who worked for Phil Gramm when Phil Gramm ran for president years ago.

OLBERMANN:  Senator Obama has his own share of unpaid advisers who also happen to be lobbyist.  But there would seem to be a difference between them that there is no evidence that the Obama advisers have been taking advantage of their access in the kind of way Senator Gramm has apparently taken advantage of his access.  Is that a fair statement?

FINEMAN:  Well, to call former Senator Gramm‘s role in this access is kind of an understatement.  I mean, he is the alternative economic theories of deregulation personified.  Sure, Obama has David Axelrod, his chief political guy, who has corporate clients out in Chicago.  Obama‘s polling firm has done tons of corporate business.

Now, I have yet to see the kind of direct relationship where registered lobbyists are essentially putting their corporate point of view that they‘re paid to represent straight into an Obama position paper.  It may be there.  I haven‘t found it yet.  If we find it I‘m sure we‘ll report it.

OLBERMANN:  The “drip, drip, drip” we have talked about previously as he‘s thrown out one lobbyist at a time from the campaign, with a zero tolerance lobbyist disclosure form for his campaign, for the staff that was supposed to solve all of this for Senator McCain, at the rate this is going, might the only solution for him to be - to have zero people working on his campaign?

FINEMAN:  It‘s McCain and Cindy against the world.  Well, no, listen, this is a problem.  I think Charlie Black and some of the other leadership is serious about wanting to try to wall this off.  But it‘s difficult because, as I said, Charlie has this background in history.  So did Rick Davis.  Wayne Berman and a lot of the other names you have mentioned.

This is a lot of where McCain has had to get his money over the years.  Unfortunately for John McCain, maverick though he may be, he didn‘t tap into the Internet the way, first, Howard Dean, and now, Barack Obama has to the tune of $75 million, $80 million, $90 million.  He doesn‘t have it.  He‘s to go the corporate route.  I‘m sure it pains him.  It bothers him but it‘s the reality of their campaign.

And even though they have a zero tolerance policy, practically, everybody they deal with here in town is up to their eye balls in K Street.  You know, Barack Obama‘s people are still on A, B, C, and D Street, you know.  McCain‘s all the way up to K.

OLBERMANN:  Last point.  Does Gramm have to go?  Is that the effect of the zero tolerance policy on him and even if he does, what about the economic platform that he leaves behind?

FINEMAN:  He‘s going to leave behind that platform.  And talking to Charlie Black, he didn‘t sound in any hurry to distance themselves from Gramm.  “Gramm‘s only one of many advisers,” he said.  And he said, “Really, our approach from here on out is not to talk about it anymore.”

I think that‘s probably unrealistic because these stories are going to keep coming.

OLBERMANN:  All right.  And they don‘t have to, we will.

Our own Howard Fineman, senior Washington correspondent for “Newsweek” magazine.  Next time, you talk to the guys, explain to them explain how the media thing works if they don‘t (INAUDIBLE).

FINEMAN:  I‘ll try.

OLBERMANN:  Thanks for joining us, Howard.

FINEMAN:  OK.

OLBERMANN:  And there‘s more breaking news tonight.  This quote, “The collapse of the administration‘s rationales for war became apparent months after invasion should never have come as a surprise.  In this case, the liberal media didn‘t live up to its reputation.  If it had, the country would have been better served.”

No surprise there except for who wrote that—Mr. Bush‘s former press secretary, Scott McClellan.  Excerpts of his book leak out tonight.  They are startling.  He accuses the president of using propaganda to start the war.

Next here.

(COMMERCIAL BREAK)

OLBERMANN:  Startling breaking news tonight from a book.  Former Press Secretary Scott McClellan‘s writings about the Bush White House turned out to have more honesty in them than all of his news conferences combined perhaps.  He accuses the administration of using propaganda to talk the country into war, of taking a permanent campaign approach to governing, and of having veered terribly off course.

Rachel Maddow joins me for this unlikely discussion, Scott McClellan -

big time truth teller.

Big night for Worst: Michelle Malkin, (INAUDIBLE); and, Joe Lieberman standing by his man—Pastor John Hagee?

All ahead on COUNTDOWN.

(COMMERCIAL BREAK)

OLBERMANN:  The second of President Bush‘s four press secretaries has now thrown his old boss under the bus.

Breaking news tonight and our fourth story: Politico.com have, this evening, revealed excerpts from Scott McClellan‘s new book, in which Mr.  McClellan accuses Mr. Bush of not being open and forthright on Iraq, of having used propaganda to sell the war, in which he insists while he was depending Karl Rove and Scooter Libby against reports that they had a hand in the outing of Valerie Plame.  They were holding a secret west wing meeting to get their Plame story straight and that they had, at best, misled McClellan about their roles.

McClellan‘s book entitled, “What Happened: Inside the Bush White House and Washington‘s Culture of Deception,” is not to be officially published until Monday, was embargoed until then, except, as it‘s now far for the course, copies were apparently on sell in at least one Washington bookstore over the holiday weekend.

A few other highlights: The president took a, quote, “permanent campaign approach to governing instead to turning to candor or confidence”; that McClellan‘s own statement as press secretary, he said, “were badly misguided”; that after hurricane Katrina, the White House, quote, “Spent most of the first week in a state of denial”; and that Karl Rove drummed up of the disastrous flyover photo of Bush in midair above over New Orleans.  “Karl was convinced we needed to do it and the president agreed.”

“One of the worst disasters in our nation‘s history,” he writes, “became one of the biggest disasters in Bush‘s presidency. Katrina and the botched federal response would largely come to define Bush‘s second term and the perception of this catastrophe was made worse by previous decisions President Bush had made including first and foremost, the failure to be open and forthright on Iraq, and rushing to war with inadequate planning and preparation for its aftermath.”

Let‘s bring in MSNBC political analyst, Rachel Maddow, also host of her own show weeknights on Air America Radio.

Rachel, good evening.

RACHEL MADDOW, MSNBC POLITICAL ANALYST:  Hi, Keith.

OLBERMANN:  Well, that sounds like you or me, I‘m not sure which it sounds more like.

MADDOW:  This is a surprise, yes.

OLBERMANN:  But to say the least, let me read you a few more of these quotes and get your reaction.

“The collapse of the administration‘s rationales for war, which became apparent months after our invasion, should never have come as such a surprise.  In this case, the liberal media didn‘t live up to its reputation.  If it had, the country would have been better served.”

And the timing of this is as the White House has now taken on NBC and the “New York Times” on this phony bull-cry of liberal media.  And Scott McClellan is saying—if it‘s a choice between President Bush and the liberal media, believe the liberal media.

MADDOW:  Liberal media.  Exactly.  It is one thing to hear that argument from the liberals of America who have long lofted after the form of the caricature.  They see from the right, I am a liberal media.  I have long hoped for something like that.

It is totally another thing to hear it from the guy who was paid to not tell the American people the truth about the Iraq war when it was happening.  It is really surprising to hear this coming from a Bush loyalist, a former White House spokesman, and a person who was writing this book while Bush is still in office and not after.  This is - I did not see this coming.

OLBERMANN:  I don‘t - we‘ll, we heard hints about this, if you recall, a few months ago about what he would be saying and then it was sort of retracted.  It was just the publisher hyping it.

And yet, it comes out with things like this quote - “He and his advisers,” obviously, the president, “confused the propaganda campaign with the high level of candor and honesty fundamentally needed to build and then sustain public support in a time of war.  In this regard, he was terribly ill-served by his top advisers, especially those involved directly in national security.”

Again, I don‘t know if that sounds more like you or me.

MADDOW:  Right.  To hear the press secretary declaring the lack of candor and honesty.

OLBERMANN:  About national security.

MADDOW:  About national security, about the most serious issues that he would be called to discuss from that podium.

But also, you do see a little bit of what we expect - you do see a little of the old Scott McClellan in that conclusion and a little more in what he says about the Scooter Libby liability issue and that is that the president was ill-served by his advisers, that the president had advisers who didn‘t tell him to do the right thing.

As if no indication of how to do the right thing could ever come from the president himself, and is - as if his responsibility to do the right thing doesn‘t extend to choosing the right advisers.

OLBERAMM:  On the other hand, though, to assign any of this responsibility to George Bush from somebody who worked—and it sounds like 50 percent or more is being assigned to the president directly by McClellan—for somebody who worked for him.  There‘s been nothing like this since Paul O‘Neill went out and people were just sort of he was kind of crazy, you know.  They can‘t say this about Scott McClellan.  McClellan was the public voice and they were very sorry to see him go.

MADDOW:  Right.  We have seen a lot of self-exonerating books from former members of the Bush administration.  It has been since Paul O‘Neill.  I mean, there was David Kuo‘s book, Paul O‘Neill, Richard Clarke, Paul Bremer, Colin Powell, George Tenet.  The White House chef wrote a self-exonerating book about the Bush administration.

A lot of people who have left the administration and then written books about saving their own skins.  Very few of them have left the administration and turned around and say j‘accuse, but that really is what McClellan‘s doing.

OLBERMANN:  And to be fair to Clarke, who will on this program later on, he got out very early and not entirely at his own choosing.

MADDOW:  He got out sounding the alarm about what he had left behind.

OLBERMANN:  Exactly.  All right, but back to McClellan.  He did, as you said, exonerate Bush to some degree in the outing of Plame.  Let me read to this.  This is kind of long.

“I have allowed myself to be deceived into unknowingly passing along a falsehood,” McClellan writes.  “It would ultimately prove to fatal to my ability to serve the president effectively.  I didn‘t learn what I said was untrue until the media began to figure it out almost two years later.”  So far so good.

“Neither I believe, did President Bush, he too had been deceived and therefore become unwittingly involved in deceiving me.  But the top White House officials who knew the truth—including Rove, Libby and possibly Vice President Cheney—allowed me, even encouraged me to repeat a lie.”

We might have qualms about whether or not Bush was involved in that particularly lie and what nature his involvement existed but he personally fingers Rove, Libby, and Cheney.

MADDOW:  At the time that federal investigators were looking into this as a criminal matter.  I mean, Scooter Libby was done for lying to investigators and obstructing justice.  If you‘re talking about witnesses colluding to a lie there to line up their statements of one another, during the process of a federal criminal investigation, this is not just, I think, you‘re a bad guy.

This is, I think, you ought to be in the crowbar hotel.  This is, I mean, he is making allegations here that if they held up would have, presumably, would have criminal implications.

OLBERMANN:  I wonder if he could have provided more material information.  We will get to ask him that next week (INAUDIBLE) in a moment.

Our own Rachel Maddow, the host of the “Rachel Maddow Show” on Air America.  Thanks, as always, for coming in.

MADDOW:  Thanks, Keith.

OLBERMANN:  And we‘ll get to hear all of this straight from the source when former White House press secretary, Scott McClellan, joins us live on COUNTDOWN next Monday right here.

Ever wanted to watch the consumer reports rollover test?  This is about as close as you are going to get.  It rolls over right good.

And John McCain may have renounced him but fortunately, Joe Lieberman is standing by pastor John Hagee after the “holocaust” comments.

But first, the headlines breaking in the administration‘s 50 running scandals—Bushed.

Number three: McSame-gate.  Sometimes, the connection between the current Republican boss and the man who would succeed him are nefarious and dangerous.  Sometimes, they are just hilarious.  The Bush-McCain fundraiser in Phoenix today was supposed to be at the Phoenix Convention Center, but reports by the “Phoenix Business Journal,” the McCain campaign was unable to sell enough tickets to fill the Phoenix Convention Center and had to move to a smaller venue.

Number two: The phony war on terror-gate.  This will be no surprise after Mr. McClellan‘s remarks.  The Government Accountability Office‘s latest waking nightmare—a deal that Homeland Security made with 800 importers and sea carriers, has made the country more vulnerable to terrorism.

The idea was, to certify each company as safer rather than inspecting each shipment handled at each U.S. port by each company.  Companies were deemed safer on the premise that they submit a standard security plan that would meet the standards of U.S. Customs.  A fine and time saving idea except if Customs never checks to see whether or not the standard security plan indeed meets its standards.

And number one: Hypocrisy-gate.  As the president and Senator McCain continue to bash Senator Obama‘s willingness just to talk to nations we perceive as enemies rather than, say, blowing them up first, there is a curious note about Sudan.  It harbored Osama bin Laden, its president, Mr.  Bashir has been described in the worst possible terms and he accused by Mr.  Bush of participating in genocide in Darfur.  Mr. Bush is sending a special envoy to meet with the President Bashir of Sudan in the next few weeks.

Let me just add, as some seemed to believe that we should negotiate with the terrorists and radicals, as if some ingenious argument would persuade them, they have been wrong all along.  We have heard this foolish delusion before—“As Nazi tank crossed into Poland in 1939, and American senator declared,” and I won‘t mention that he was Republican, “Lord, if I could have only talked to Hitler, all of this might have been avoided.  We have an obligation to call this what it is.  The false comfort of appeasement which was been repeatedly discredited by history.”

You can applaud now.

(COMMERCIAL BREAK)

OLBERMANN:  Best persons in a moment, and she loves the Berlin Wall.  She really loves it.  She married it.  First on this date in 1922, the actor Christopher Lee was born in London, appearing in everything from Olivier‘s “Hamlet” to “Gremlins” and “Lord of the Rings,” to say nothing of almost every horror film in the ‘50s, ‘60s and ‘70s.  One of his finest moments came while hosting “Saturday Night Live” in 1978, deliberately pausing in the middle of the sweaty rock singer‘s name, he gravely intoned, ladies and gentlemen, Meat Loaf. 

On that note, let‘s play Oddball.

(BEGIN VIDEO CLIP)

OLBERMANN:  We begin in London for the an annual Oddball favorite, the ramp rollover championship.  The goal, get the ugliest, oldest beater you can find, notch it up to ramming speed and see how many times you can flip over.  You get extra points for distance, elevation, style, crowd reaction.  This year‘s winner managed an impressive quadruple roll for 200 points.  And like everyone else who trashed their cars, he still had to walk home due to the price of gas. 

To Kitchener, Oregon—is that right, Kitchener, Oregon?  The Spokane Chiefs beat the Kitchener Rangers four to one, and finally got their hands on the exalted Memorial Day Trophy, the 90-year-old cup of champions and they broke it.  That‘s the Western League equivalent of the grail, the unbreakable, untarnishable, eternal and they broke it.  It could have been worse, 80 years ago the winners of the Stanley Cup posed with it for a photograph on a Canadian street and they left it there. 

(END VIDEO CLIP)

OLBERMANN:  The Bush administration starts attempt number 17 to drum up support for an attack on Iran.  We will run it past the best smell-tester in the business, Mr. Bush‘s former terrorism adviser at the National Security Council, Richard Clarke. 

And do they have Drano on the space station?  A backed up toilet, Derrick Pitts with latest poop.  These stories ahead, but first time for COUNTDOWN‘s top three best persons in the world.

Number three, best welcoming gifts, unnamed arrival in Narita Airport in Tokyo.  Customs police were conducting an examine for their sniffer dogs by hiding a package of Cannabis in an actual suit case of a passenger who was embarking from a flight from Hong Kong.  The dogs never found it.  A spokeswoman said anyone who finds the package should contact Tokyo customs as soon as possible.  Yes, don‘t hold your breath on that. 

Number two, best baseball trade,  pitcher John Odom traded by Calgary of the Independent Golden Baseball League to Laredo for 10 maple baseball bats, value 655 dollars.  This, of course, is nothing compared to a trade in another minor league, the Northern, two years ago, in which pitcher Nigel Thatch was swapped from Shawburg to Fullerton for 60 cases of Budweiser. 

Number one, best ways to increase your chances of getting a date, Miss Eija-Ritta Berliner Mauer of Liden, Sweden.  At the age of 54 she has revealed that since 1979, she has been married to the Berlin Wall.  That is what Berliner-Mauer means.  The woman suffers from a syndrome called objective sexuality, which means she can only develop feelings for inanimate objects.  I find long slim things with horizontal lines very sexy, she says.  The Great Wall of China is attractive, but he‘s too thick.  My husband is sexier. 

I think she may have misunderstood that phrase erected in 1961. 

(COMMERCIAL BREAK)

OLBERMANN:  In the course of exercising unchallenged macho-ness to keep us safe, the Bush administration has failed to stop at least one rogue nation from acquiring nuclear weapons.  It has failed to stop whatever Iran is actually doing.  And now we learn, in our third story tonight, it failed to get Iran, through carrot or stick, to comply with the U.N. inspections trying to determine the extent of Iran‘s nuclear ambitions. 

The U.N.‘s International Atomic Energy Agency, the IAEA, yesterday reported that Iran may be withholding information that could help determine whether it ever tried to make nuclear arms and possibly whether it is now.  The State Department spokesman today called the report, quote, very troubling.  The National Security Council said Iran owes the world an explanation.  Sound familiar? 

For its part, Iran points out that the report says all of its declared nuclear material is accounted for and claims that international treaties permit the enrichment of uranium for peaceful use.  Either side, apparently, raising the possibility that Iran benefits from this suspicion by looking stronger to its neighbors, a scenario that by itself might sound familiar. 

Let‘s bring in a witness to past U.S. failures, a past counter-terrorism advisor to presidents of both parties, now the author of “Your Government Failed You, Breaking the Cycle of National Security Disasters,” chairman of GoodHarborReport.com, Richard Clarke.  Good to talk to you again, sir. 

RICHARD CLARKE, AUTHOR, “YOUR GOVERNMENT FAILED YOU”:  Good evening, Keith. 

OLBERMANN:  Either Iran is pursuing nuclear weapons and the world has failed to stop Iran, or they‘re not and the world is treating them as if they are.  Either way, does this count as one of those national security disasters you talk about in the book? 

CLARKE:  Well, it counts right now as an intelligence disaster.  The U.S. spends over 50 billion dollars a year.  We have doubled the number of CIA analysts and operatives since 9/11.  Yet, we are continuing this 60-year-long tradition of never having sources inside the most important country at the time, not having good sources inside the Soviet Union, North Korea, al Qaeda, Iraq, and now not having good sources inside Iran. 

The truth is, we don‘t really know.  If we did have good information, you can beat the CIA would have leaked it by now. 

OLBERMANN:  What are we supposed to believe about Iran, let alone what are we supposed to do about Iran? 

CLARKE:  Iran is not—the Iranian government is not a friendly government to the United States.  It is a threat to stability in the region.  It is a terror state sponsor.  That is all true.  And it is not a democracy, despite the fact it has elections.  They are all rigged.  That is all true.  What we do about it is not necessarily go to war.  The problem we had in Iraq was we never applied the Weinberger doctrine, the Powell doctrine, ask ten questions before you use force.  If you ask those questions now about Iran, such as what would be the end game?  Who would be better off when the shooting was over?  What could they do in retaliation to you?  What would be the effect on the economy, the global economy?  All those questions come back very, very negative. 

And so to even think about using a military option without knowing that there was a serious threat to the United States and/or its allies, such as Israel, is really repeating the mistakes of Iraq.  I mean, who could believe after Iraq happened only five years ago, and the mistakes are so obvious now, not obvious to a lot of people then, but obvious now, who could believe that we are going to do it again?  Well, there are people in this town who do want to do it again. 

OLBERMANN:  Indeed.  In terms of how obvious it is, I imagine you have not read Scott McClellan‘s new book.  But we talked about it earlier in the show.  And there was one quote that begged out to be read to you for your reaction: “he and his advisers confused the propaganda campaign with the high level of candor and honesty so fundamentally needed to build and then sustain public support during a time of war.  In this regard, he was terribly ill-served by his top advisers, especially those involved directly in national security.”

Does that sound familiar to you? 

CLARKE:  That absolutely right.  The National Security Council process that is supposed the be an honest broker, a non-partisan activity, making sure the president has a real quality control operation going on, collapsed altogether, not just on Iraq but across the board in the first several years of this administration.  It‘s gotten a little better since, but it‘s still really not working. 

That is what I‘m trying to talk about in “Your Government Failed You.”  It is not about 9/11.  It‘s about the failures since and this continuing pattern of failure.  Why do we have it?  One of the reasons is the ideology and the politicization of things that used to be good government done by civil servants and experts. 

OLBERMANN:  Last one, and I‘m asking you if this qualifies as a national security disaster; President Bush signing off on that deal with Pakistan.  I will not go to his lengths and call him our Neville Chamberlain.  But the treaty gave al Qaeda room to maneuver in Waziristan.  Does that rank in this list of disasters that have happened since 9/11?

CLARKE:  You can bet that if a Democratic president had done that, they would be crying for impeachment.  What they acquiesced in was essentially the establishment of an al Qaeda base, or the continuance of an al Qaeda base in Pakistan, training terrorists to go around the world. 

OLBERMANN:  Extraordinary still.  Former presidential counter-terrorism advisor Richard Clarke.  His new book is called “Your Government Failed You.”  As always, it is a pleasure to speak to you. 

CLARKE:  Thank you, Keith. 

OLBERMANN:  Take care.  A great loss in Hollywood.  From role player on the “Twilight Zone” to one of the great directors of the era, remembering Sydney Pollack. 

And the lunatic fringe‘s dilemma, you boycott Starbucks to reward right wing Dunkin‘ Donuts, and Dunkin‘ Donuts puts out this evil ad, which is obviously a recruiting tool for al Qaeda.  Worst persons ahead on COUNTDOWN.

(COMMERCIAL BREAK)

OLBERMANN:  If an old episode of the “Twilight Zone” or Alfred Hitchcock flashes by and the off-lead is so familiar he makes you say, was that Sydney Pollack?  It was.  Our number two story tonight, the self-proclaimed average actor turned universally proclaimed great director is dead of cancer, and far too soon.  Pollack‘s abundant, versatile career brought him multiple Academy Award nominations and the Oscar in 1985 for directing “Out of Africa,” starring Meryl Streep and Robert Redford.  Mr.  Redford starred in some of Mr. Pollack‘s most successful work, including “Jeremiah Johnson,” “Three Days at The Condor” and, of course, “The Way We Were.”

While Pollack has a pension for dramas involving star-crossed lovers, his one comedy was a mega-hit, “Tootsie,” starring Dustin Hoffman, who famously fought with Pollack over the direction of the movie, but eventually convinced the director to play the agent to Hoffman‘s character, who was, of course, a difficult actor.  All told, Sydney Pollack acted in dozens of films and TV shows, including in “Michael Clayton” with George Clooney.  He produced more than four dozen films, including the recent “Recount.”  Sydney Pollack was 73. 

The Mars lander sending back pictures from Mars.  Who would have thought it?  Plus, do they have Roto Rooter in space?  Derrick Pitts joins us next. 

First, time for COUNTDOWN‘s worst persons in the world.  The bronze to Liz Trotta, once a highly respected TV reporter in New York and nationally and now something else altogether on Fixed News.  She finishes only third because she had the decency to apologize for first transposing the names Osama and Obama and then suggesting, quote, “hopefully both, unquote, would be assassinated. 

It‘s important to remember that this really isn‘t new, and Fox really doesn‘t have an excuse to keep her on television.  Trotta has been for more than 40 years a friend of Ed Kline, the notorious author of a 2005 book about Senator Clinton which sold like—which didn‘t sell.  Also, such a virulent lunatic fringer that she once went on with Bill-O and called a CBS news producer a, quote, psychopathic liar.

Runner-up, back from oblivion, blogger Michelle Malkin.  First she quite going to Starbucks, she said, so she could enforce the immigration enforcement policies of Dunkin‘ Donuts.  Now, she is more conflicted than her little brain can handle because of this: it may look like to you like a Rachel Ray ad for Dunkin‘ Donuts with her wearing a crappy scarf.  The far right says it‘s actually Middle Eastern style, Jihadi chic.  Is the blunder worth boycotting a DD over, she agonizes?  This is where paranoia gets you.  You can‘t go to Starbucks because it‘s too lefty, and now Dunkin‘ Donuts is sending secret pro-Arabic messages.  Michelle doesn‘t even understand a spokesperson like Rachel Ray does not even pick her own wardrobe for an advertisement like that. 

Here is the big point, so what if it is Middle Eastern style.  Because it is Middle Eastern style you don‘t like a nice Falafel? 

But our winner, Senator Joseph Lieberman of Connecticut.  You may have noticed that Pastor John Hagee went so over the top that even John McCain had to renounce his endorsement.  Not so to good Senator Lieberman.  July 22, Hagee‘s Christian‘s United for Israel summit in Washington, the key note speaker is John Hagee and Joe Lieberman.  Senator, the tape that gurgled up from the sewer last week explaining that god sent Hitler to be the hunter of the Jews to force them to move back to Israel, that the Holocaust, said Hagee, was heaven-ordered?  The Holocaust, senator?  What are you doing in the same city as John Hagee, let alone only same stage? 

Senator Joe Lieberman of Connecticut, today‘s worst person in the world.

(COMMERCIAL BREAK)

OLBERMANN:  Before we get to our number one story, we owe an apology to John McCain‘s campaign spokesman Brian Rogers.  In a response to our report tonight about Mr. McCain‘s lead economic adviser Phil Gramm doing double duty as a lobbyist on mortgage reforms for a foreign bank, Mr.  Rogers read one of our producers a statement over the phone, which was evidently misheard as, quote, that reality is John McCain has prepared a common sense plan to help truly needy homeowners enact reforms to make sure this crisis never happens again.  He says, and we have no reason to doubt him, that he spoke, in fact, of McCain‘s plan to help truly needy homeowners and enact reforms to make sure this crisis never happens again. 

Our apologies to Mr. Rogers and the McCain campaign. 

From that story to our number one story, such is the uneven zig-zag of progress in space; NASA‘s Phoenix Mars Lander is a hit, while the Russian-built toilet on the space station is a piece of—well, let‘s say spare parts may be required. 

The Phoenix Mars Lander first, which made a near perfect landing yesterday on the northern hemisphere of Red Planet, unexplored until now.  Certain patterns in the terrain there suggesting to scientists the expansion and contraction of underground ice, which could imply melting and water and organic compounds, life.  The lander‘s robotic arm capable of digging trenches, will retrieve samples from the ice and possibly water underneath Mars‘ surface. 

Perhaps it will find life capable of plumbing repair, because on the International Space Station, the primary toilet in the Russian built service module has been repeatedly malfunctioning.  Specifically the fan-driven suction that transports human waste is broken.  The absence of gravity does present challenges, does it not?  So the Space Shuttle Discovery, set to launch this coming Saturday, may be transporting some vital spare parts for lavatory, in addition to its scheduled cargo of a massive laboratory. 

Let‘s turn once again to our Mr. Science, the chief astronomer of the Franklin Institute Science Museum in Philadelphia, Derrick Pitts.  Derrick, good evening. 

DERRICK PITTS, FRANKLIN INSTITUTE AND SCIENCE MUSEUM:  Good evening, Keith. 

OLBERMANN:  The Phoenix Mars Lander, first, obviously not the first space craft to land on Mars.  So why am I excited this time? 

PITTS:  You‘re excited this time because trying to get a spacecraft to land on the surface in a slow, comfortable fashion, excuse me, is a really difficult thing to do.  In this case, it made it successfully after a 420 million-mile trip. 

OLBERMANN:  The eureka moment in this, if it happens, would be finding these organic compounds on Mars.  Is that confirmation of life there or in the past? 

PITTS:  Yes, that would be the eureka moment.  In fact, what NASA has been doing, time after time, exploring Mars is chasing the water with the premise that where you find water you find life.  That would really be the great thing if they could find something.  It doesn‘t have to have four legs and antennas and be green, but any little microbe, that would really be a piece of worthy news. 

OLBERMANN:  Did they find any water for you in the studio there? 

Would you like to take a moment to have some? 

PITTS:  Not yet.  I‘ll be fine.  Thank you.

OLBERMANN:  We are talking about finding water.  That‘s when it goes.  If we are ever going to send the proverbial manned mission to Mars, we have to get the basics down pat, on a sort of multi-year voyage, which brings us to what is happening on the International Space Station.  Just how big of a problem is a stuffed up toilet in a space station? 

PITTS:  The real problem here, Keith, is that if they don‘t get this under control soon, they will two things.  First, they are going to need some netting to sweep through the space station, to possibly catch some floating debris, who knows.  Let‘s not hope that happens.  And they will also need a big supply of those sticky bags that were used during the Apollo missions. 

This can really screw things up.  It is said that the pluming in any ship is the most important part of the ship.  They need to square that away quickly. 

OLBERMANN:  Sometimes it comes down so heavy you have to wear space suits.  The new toilet is supposed to go on board a shuttle, of course, late this year. 

PITTS:  Yes. 

OLBERMANN:  What is the scoop on that one?  Is it a bidet?  Is it scented soap?  What does it have going for it? 

PITTS:  Well, this new one has a great advantage.  First of all, it is a 19 million dollar toilet, so it better work right.  Here is the real catch for that one: this one will reprocess urine into usable water.  That is a really good thing actually, Keith, because of price of taking water up to space is probably the most expensive.  Water is almost the heaviest thing you can carry.  And because of that weight, it costs more than almost any payload to take up.  So making it there is a good thing, just be careful about the taste. 

OLBERMANN:  I was going to say, do they have to have the astronauts on such a voyage have to go through additional psychological screening beforehand to make sure they‘re OK with that? 

PITTS:  I really think they do.  And the experience they have had shows that they can put up with it. 

OLBERMANN:  Well, I think maybe it‘s not worth it.  Signing off on the program.  You‘re not going to get me on board with that. 

PITTS:  You‘re right, not the most ideal circumstances. 

OLBERMANN:  Until they can come up with an International Space Station Roto Rooter delivery guy.  Derrick Pitts, chief astronomer of the Franklin Institute Science Museum in Philadelphia, playing hurt for us this evening. 

PITTS:  Thank you, Keith. 

OLBERMANN:  Take care.  That is COUNTDOWN for this the 1,852nd day since the declaration of mission accomplished in Iraq.  I‘m Keith Olbermann, good night and good luck.

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

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