updated 9/16/2008 6:41:08 PM ET 2008-09-16T22:41:08

Guests: Keith Olbermann, Robert Reich, David Corn, Walt Monegan, Frank Rich, Kent Jones

RACHEL MADDOW, HOST:  Good evening, Keith.  Thank you.  I‘m going to ask you to comment on something that you said no comment on.  So, I hope it doesn‘t bug you.  But you‘re just talking with Howard Fineman about this new information that we‘ve got.  Sarah Palin is not going to cooperate with the trooper-gate investigation.  The McCain campaign is saying the whole thing is tainted by Democratic politics.

KEITH OLBERMANN, MSNBC ANCHOR:  Right.

MADDOW:  Do you think this is a smart move, an inevitable move by McCain and Palin or do you think this makes this a bigger scandal than it was before?

OLBERMANN:  It is like installing a giant neon sign over her head saying “I‘m hiding something,” because in the matter of factual accuracy, she‘s hiding something, isn‘t she?  I mean, if there‘s no subpoena, there‘s a subpoena against her husband, but there‘s no subpoena against her or no suggestion of one right now.  The investigator wants to talk to a dozen or 15 people, perhaps, and she‘s one of them.

They could do it and it becomes a one day distraction.  Not doing it, and it‘s a distraction every day, just put it on the bottom of the list.  And it was like we‘re talking about lies in the campaign before, the McCain campaign with Chris Kofinis.  If you only lie 10 times and one person notices each lie, it‘s not going to get any traction.  If you lie 300 times, suddenly there‘s 300 people wondering around going “that was a lie over there.”  This is the same thing.  Why—this seems to be politically stupid.

MADDOW:  It seemed like a much smaller story when she was saying “I welcome the investigation and I will cooperate with it.”

OLBERMANN:  Yes.

MADDOW:  This is just making it bigger.

OLBERMANN:  Yes.

MADDOW:  Thank you, Keith Olbermann.  I appreciate your sticking around.

OLBERMANN:  Have a good show.

MADDOW:  Thank you.

OLBERMANN:  I‘ll be watching.

MADDOW:  And thanks to you at home for sticking around as well.  We have much more to say about Sarah Palin and this new development in trooper-gate this hour, not to mention a boat-load of other big news on a particularly big news day.

(voice over):  It is the economy, stupid.  And it‘s in the deep stuff, no matter what John McCain‘s friends say.

(BEGIN VIDEO CLIP)

PHIL GRAMM, FORMER U.S. SENATOR:  You‘ve heard of mental depression, this is a mental recession.

(END VIDEO CLIP)

MADDOW:  No matter what John McCain says.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE:  The fundamentals of our economy are strong.

(END VIDEO CLIP)

MADDOW:  Sure, if by fundamentals you mean something other than the country (INAUDIBLE) just financial institutions and the general direction of all our economic indicators.

Tonight: What‘s wrong, how it got so wrong, and who can fix it? 

Former Clinton cabinet secretary, Robert Reich, gives us his analysis.

It might be an abusive power, stupid.  The McCain campaign truth squad weighs in from Alaska on trooper-gate and the tough cop fired by Sarah Palin.  What they say about him and what he says about her as the man in the middle, Walter Monegan, joins us live.

It‘s the one heart beat from the Oval Office, stupid.  As the McCain campaign gets “palinized,” they pause to consider a Sarah Palin presidency.  Is that what‘s really going on here?  Frank Rich of the “New York Times” joins us.

And: The truth matters, stupid.  Will Joe Biden fresh approach to McCain‘s truthiness problem work?

(BEGIN VIDEO CLIP)

SEN. JOE BIDEN, (D) VICE PRESIDENTIAL CANDIDATE:  It‘s not a state of mind, it‘s a loss of dignity.

(END VIDEO CLIP)

MADDOW:  Or does somebody have to point out that the McCain campaign is now even making stuff up about the size of their crowds at rallies?

All things serious, absurd, and otherwise notable, THE RACHEL MADDOW SHOW starts now.

(on camera):  Good evening.

As you have heard, there is breaking news tonight in the trooper-gate story involving Sarah Palin‘s firing of Alaska‘s top public safety officer.  The McCain campaign says that Governor Palin will now not meet with investigators in the case because the investigation, quote, “remains tainted.”  The campaign claims Democrats in Alaska have hijacked this case despite the fact that the panel issuing subpoenas in this case includes two Democrats and three Republicans.

So, Sarah Palin will not cooperate fully.  We will have more, just ahead, including an interview live from Alaska tonight, with the fired Alaska Public Safety commissioner, the man at the center of this metastasizing scandal.

But first, the “Wall Street Journal” this morning characterized this economic storm we are in as a, quote, “category five test of our financial levees.”

Almost overnight, Lehman Brothers, a 158-year old financial giant that withstood two world wars and a Great Depression, crumbled.  Its employees left to pack up their desks ASAP only weeks after being assured that their jobs were safe.

Another Wall Street institution, Merrill Lynch, was rescued and consumed by Bank of America after 48 hours of frantic negotiations.  And the future of yet another giant, AIG hangs in the balance.  The stock market drops 500 points.

As the financial crisis enters above-the-fold-giant-headline-stuff press territory, the partisan divide on the economy could hardly be clearer.

Here‘s what I mean.  Here‘s President Bush on the money meltdown today.

(BEGIN VIDEO CLIP)

PRES. GEORGE W. BUSH, UNITED STATES:  In the short-run, adjustments in the financial markets can be painful, both for people concerned about their investments and for the employees of the affected firms.

One the long run, I‘m confident that our capital markets are flexible and resilient and can deal with these adjustments.

(END VIDEO CLIP)

MADDOW:  Flexible and resilient?  OK, after 7 ½ years at the helm, we should maybe expect a little self-confident delusion from the president about how well he‘s done economically.  But surely, neither of the men running to succeed Bush would look at today‘s news at the national debt, at wages, at income equality, at the dollar, at gas prices, at mortgages, at the 500-point plunge in the market today and say, “All in all, it looks good, would they?”

(BEGIN VIDEO CLIP)

MCCAIN:  You know that there‘s been tremendous turmoil in our financial markets and Wall Street.  People are frightened by these events.  Our economy, I think, still, the fundamentals of our economy are strong but these are very, very difficult times.

(END VIDEO CLIP)

MADDOW:  The fundamentals are what?

Few hours later, after his remarks were put through the McCain campaign re-interpreter machine, the senator clarified with the help of some trusty cue cards that everyone misunderstood him.  As it turns out, he did acknowledge that the banking system is in crisis but he went on to defend his interpretation of those fundamentals.

(BEGIN VIDEO CLIP)

MCCAIN:  Our workers are the most innovative, the hardest working, the best skilled, most productive, most competitive in the world.  That‘s the American worker.  And my opponents may disagree but those fundamentals, the American worker and their innovation, their entrepreneurship, the small business, those are the fundamentals of America and I think they‘re strong.

(END VIDEO CLIP)

MADDOW:  Oh, I see.  So, if you‘re against that the economy going down the toilet, you‘re against American workers.  And if you‘re against the war or you‘re against the troops and if you‘re against climate change, what - you‘re against sunlight or something?

On the other side of the divide was Senator Obama who sees the fundamentals as troubled at best.  Here‘s his response to McCain today.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE:  Senator McCain, what economy are you talking about?  What more fundamental than the ability to find a job that pays the bills and can raise a family?  What‘s more fundamental than knowing that your life savings are secured and that you can retire with dignity?  What‘s more fundamental than knowing that you‘ll have a roof over your head at the end of the day?  What‘s more fundamental than that?

(END VIDEO CLIP)

MADDOW:  So, the Republicans say publicly that it‘s uncomfortable but it‘s not that bad.  The Democrats say it‘s really bad.  What about the economic (ph) experts?  Well, they normally reserved unquestionably partisan, former Federal Reserve Chairman Alan Greenspan, who, by the way, has been around, forever, sort of, had this to say about that flexible, resilient, and strong economy.

(BEGIN VIDEO CLIP, “THIS WEEK”/ABC)

ALAN GREENSPAN, FMR. FEDERAL RESERVE CHAIRMAN:  This is a once-in-a-half-century, probably once-in-a-century type of event.

GEORGE STEPHANOPOULOS, ABC NEWS:  Is it summary worst you have seen in your career?

GREENSPAN:  Oh, by far.  There‘s no question that this is in the process of outstripping anything I have seen, and it still is not resolved and it still has a way to go.

(END VIDEO CLIP)

MADDOW:  OK.  It‘s not like Alan Greenspan is a disinterested party here, but your choice is set.  Do you want this economic crisis to be handled by the party that thinks this crisis is not so bad, or do you want this crisis to be handled by the party that thinks it is bad?  Do you trust Barack Obama and Joe Biden to handle this crisis wisely, or do you think this is a job for John McCain and Sarah Palin?

Joining us now is Robert Reich, secretary of labor under President Clinton, now a professor at the University of California at Berkeley.  He does serve as an economic to the Obama campaign.

Mr. Secretary, thank you for joining us.

ROBERT REICH, CLINTON SECRETARY OF LABOR:  Well, Rachel, thank you for having me.  You know, this is not a pretty picture.

MADDOW:  No.  And to hear I mean, Alan Greenspan, as he said, not a disinterested observer but to hear Alan Greenspan described this as the worst he has ever seen in his lifetime is jarring.  How bad is it?

REICH:  Well, it‘s very bad.  And Alan Greenspan has had a long lifetime so far.

MADDOW:  Yes.

REICH:  So, this is very, very bad.  I‘ll tell you, it‘s not just the meltdown on Wall Street that concerns me, it‘s also we‘ve had more than 600,000 jobs lost in the American economy.  We‘ve got a degree of job security we haven‘t seen in years and people cannot get any more money.  That is their purchasing power is very low.  If people can‘t afford to buy things, if their income is dropping, then obviously, there‘s not going to be more jobs because producers are not going to hire more people to make things.

MADDOW:  Why is Senator McCain is saying over and over again, in the light of all those things that you just described, why is he saying that the fundamentals of the economy are strong?  We‘ve heard it both from President Bush and repeatedly now from Senator McCain.  What‘s that about?

REICH:  Rachel, I think, it‘s basically because the Republicans had been in charge now.  I mean, the Democrats had been in charge, what—since, in Congress, since the January of ‘07, but before that it was Republicans in Congress and it certainly Republicans in the White House.

And if you are a Republican running for president you are not going to say, “Look, everything is terrible.  It is awful.”  Even if you‘re trying to distance yourself from George W. Bush, you can‘t distance yourself from every Republican.  And, indeed, you were there running Congress, you were part of the congressional Republican leadership.

MADDOW:  Well, how much of what‘s wrong is the result of bad policy in Washington and how much of it is economic stuff that would have happened regardless of what was happening in Washington?

REICH:  Rachel, economic stuff goes up and down.  I mean, it‘s like ice of Newton‘s law what goes down comes up, what goes up goes down.  There is a business cycle.  But here, with the meltdown on Wall Street, the subprime mess, it‘s very clear that there has been a relentless desire on the part of people in Washington, Republicans and the Bush administration to look at the other way, not to regulate and not to, even enforce current regulations.

And that has fed the problem because without regulations, without a belief that the market has to be regulated, you‘re going to have a lot of fraud, you‘re going to have a lot of funny business, you‘re going to have banks and investment banks they‘re issuing securities that are not really backed with real value, you‘re going to have a lot of hankie panky going on and that‘s exactly what‘s happened.

MADDOW:  Well, speaking of hankie panky, I look at Phil Gramm as John McCain‘s former national co-chair, and I see the words “my fault” metaphorically written on his forehead because he was the “kill the regulations” financial guy for the Republicans.  But you, guys, in the Clinton administration were not total bystanders to all of this?

REICH:  No.

MADDOW:  And it makes you wonder if this is a liberal-conservative split more than a Democrat-Republican split.  Were conservative Democrats part of the problem here?

REICH:  Well, Rachel, certainly, in the latter years of the Clinton administration, when I was not there any longer, I should add, there was an attempt by Alan Greenspan and Bob Rubin and a few others to deregulate financial markets.  And they did.  They split commercial banking off from investment banking and many people say, “Well, that was the beginning of the problem.”

And then, of course, in 2003, 2004, Alan Greenspan reduced short-term interest rates to the point where, you know, every single bank wanted to lend money.  I mean, if you could stand up straight, you could get a bank loan because there was much pressure to get back money out the door, money was so cheap.

So, yes, there is some responsibility on Democrats, some responsibility on Alan Greenspan and the Fed.  But I‘ll tell you, the Republicans have avoided any kind of a regulatory oversight of this entire mess, and not just housing and Fannie Mae and Freddie Mac, but all of these institutions have just gone haywire.

MADDOW:  Robert Reich, former secretary of labor, and current economic adviser to the Obama campaign—thank you for your time tonight.

REICH:  Thanks, Rachel.

MADDOW:  Now to the breaking news in the trooper-gate story today.  As we reported earlier, the McCain campaign has announced, as of tonight, that Governor Sarah Palin will not talk to investigators looking into her firing of Alaska Public Safety Commissioner Walt Monegan.  Palin had previously promised to cooperate fully.  She said she‘d welcome the investigation initially.

But tonight, the McCain campaign says that the investigation is tainted by politics.  They claim that Democrats in Alaska have taken control of the investigation for political purposes.  This, even though, last week, a bipartisan group of lawmakers, including two Democrats and three Republicans issued 13 subpoenas, including one for the first dude, Todd Palin.

In a few minutes, Walt Monegan will be joining us live from Alaska for his comment on this.

But first, joining us now is David Corn of “Mother Jones” magazine.

David, thanks for being here.

DAVID CORN, MOTHER JONES MAGAZINE:  Good to be with you, Rachel.

MADDOW:  So, Sarah Palin gave indications that she would cooperate with this investigation very earlier on.  Now, she‘s saying she will not meet with investigators.  What has changed?

CORN:  Well, she gave more than indication, she promised she would and it was part of her whole pitch that she was running an open and transparent government in Alaska, unlike this previous government that dealt with all the good old boys and the inside back, smoke-filled, or salmon (ph)-filled rooms, or if they have up there.

And so, you know, what happen was that on Friday, as you noted, a bipartisan committee of the Alaska state legislature voted 13 subpoenas.  Now, you noted that there were three Republican members of the panel and two Democrats.  I think the vote was a three-two split with one Republican senator, legislator, joining with two Democrats.  The interesting thing was that was the Republican legislator who comes from the Wasilla district where Sarah Palin comes from.  So, you know, if there‘s a problem here, maybe she has a problem with her old fellow Republicans down in Wasilla.

But, by and large, what I found striking today was Sarah Palin was out on the stump, not alongside John McCain but saying exactly the same things that he was saying about wanting to reform Wall Street and make it more open and accountable and transparent on the same day the McCain campaign is saying well, she‘s not going to cooperate with an attempt in Alaska to get some openness and transparency into the whole trooper-gate scandal.

MADDOW:  David, it is a tried and true political tactic, it‘s even a tried and true criminal defense tactic to try to discredit any investigation, discredit any prosecution as a means of trying to evade their clutches.  What do you make of the chances of the Palin campaign and the McCain-Palin campaign in discrediting this investigation?  Is there anything to these charges?

CORN:  Well, you know, I don‘t know what the charges are.  Walt Monegan, who you say will be on later, has told of others that Palin‘s account is wrong and there‘s new evidence and evidence from the eyewitness who talked to Todd and Sarah Palin that will back up his account of what happened here.

I mean, what I find kind of, you know, I don‘t know, I can‘t say the word “funny” here, is that we just had eight years of an administration in Washington where they routinely have ignored subpoenas.  You know, when the Congress, I guess, in the last few years, when it was in Democratic hands, has tried to question members of the Bush White House, Dick Cheney and others, they have said, “No, we don‘t recognize your subpoenas.”

And it seems like Sarah Palin is doing the same thing now in Alaska.  I don‘t know what type of showdown we are heading for because her husband was, indeed, subpoenaed.  So, if they are saying we‘re not going to cooperate, does that mean they‘re not going to respect the subpoena issued by her own legislature?

MADDOW:  David, I will say I spent a lot of time reading as much background as I could on this investigation this weekend because I feel like it‘s getting more and more interesting and it‘s getting worse as it goes forward.

And I felt like as I was learning more about what‘s happened, I feel like the investigators, the people who are pursuing this in Alaska, have been sort of cutting her a lot of slack.  They move it the deadline so it wasn‘t so close to the election in terms of when the report was going to come out.  They decided not to subpoena Governor Palin.  They said they would not ask for her testimony even as they subpoenaed her husband.

CORN:  Yes.

MADDOW:  Are they—have they been giving her a pass?  Have they been relatively lenient on her thus far?  And in retrospect now, does it look like that was a mistake?

CORN:  Well, that‘s what actually Congress did with Bush, too, here in a lot of issues.  You try to deal the aides first, and you show some degree of deference to the chief executive.  I don‘t think there‘s anything wrong with that.  You know, at the end of the day, you have to decide whether to call that person in and figure out what sort of interviewing process they have.

MADDOW:  David Corn, I appreciate your joining us tonight.  Thanks very much.

CORN:  My pleasure.

MADDOW:  David Corn of “Mother Jones” magazine.

Coming up: We‘re going to be talking live to the man at the center of the trooper-gate storm.  So, if the thought of a President McCain steering us through an economic meltdown doesn‘t inspire your confidence, how would you feel about President Palin at this financial wheel?  We got “New York Times” columnist, Frank Rich, joining us later on this hour, joining us momentarily.

(COMMERCIAL BREAK)

MADDOW:  Remember way back in the good old days like last month when the McCain accused Barack Obama of being a celebrity—how a celebrity status made him a lousy pick for president?

And so Governor Sarah Palin—she attracts big crowds like a celebrity.  She‘s been an instant gold mine for the celebrity focused tabloids.  She‘s got Hollywood celebrities like Matt Damon and Lindsay Lohan talking about her.

And now, it has come to light that there‘s a contingent from “Entertainment Tonight” on her campaign plane following her on the campaign trail.  And no disrespect to our same (ph) colleagues at “Entertainment Tonight,” but it takes nearly two weeks for the vice president nominee to do her first national interview, but “Entertainment Tonight” gets to be on the campaign plane?

I mean, I just think it was entertaining to see her try to get Charlie Gibson to tell her what the Bush doctrine was, but entertaining in kind of a reach-out-and-grab-you-from-under-the-bed-boom (ph) World War III kind of way, not in a “what was she wearing” kind of way.  I guess it suits me.

(COMMERCIAL BREAK)

MADDOW:  More now on the breaking news from Alaska tonight that Sarah Palin will not meet with investigators in the trooper-gate scandal.  This comes as Palin denied, again, in an interview that she made any personal effort to get trooper, Mike Wooten fired from his job.  Palin says Public Safety Commissioner Walt Monegan was fired for his job because of job performance issues, not for refusing to fire Wooten, Palin‘s ex-brother-in-law.

(BEGIN VIDEO CLIP, ABC NEWS EXCLUSIVE)

GOV. SARAH PALIN, ® VICE PRESIDENTIAL CANDIDATE:  The issue is the commissioner, who was his boss, was he pressured to fire that trooper?  That‘s the underlying issue here, right?  Mr. Monegan.  Mr. Monegan has said the governor never asked me to fire him.  The governor‘s husband never asked me to fire him.  And we never did.  I never pressured him to hire or fire anybody.

(END VIDEO CLIP)

MADDOW:  Joining us now on the phone from Chugiak, Alaska, is that commissioner, Walt Monegan, the Alaskan official whose dismissal by Sarah Palin is the focus of the trooper-gate investigation.

Chief Monegan, thanks very much for joining us.

WALT MONEGAN, COMMISSIONER DISMISSED BY SARAH PALIN (through phone): 

Oh, thank you.

MADDOW:  Governor Palin told Charlie Gibson, we just heard the clip there that neither she nor her husband ever pressured you to hire or fire anybody.  Is that the truth?

MONEGAN:  No, not entirely.  The part about did she or anybody of her staff say fire him, quote-unquote, that never occurred.  No one ever said “fire him.”  They said things like—this man should not be a trooper.  This man shouldn‘t represent the troopers.  Those kinds of things, which are inferring that, to fire him.

MADDOW:  Would you describe as being pressured to move him out of the office and was it—and how overt was that pressure if you did feel that pressure?

MONEGAN:  Well, the very first time I even heard trooper Wooten‘s name was by—through her husband Todd, who wanted to tell me what kind of character that was working for me, and how he had filed a complaint and had documents and pictures.  And primarily, he wanted to describe the character of trooper Wooten.  And that was in January of ‘07.

It continued, right up until the last, I think, that popped up (ph) on this was in February of this year.  So, it was continual.  It was a kind of a reoccurring theme.  If it wasn‘t—initially, it was the governor and her husband, but then it became other commissioners and not only did they call me, but they called other members of my staff.

MADDOW:  In reaction to the scandal, Governor Palin has been claiming that you were dismissed not because of any resistance to this effort to get trooper Wooten fired, but because of job performance issues on your point.  She says that she was disappointed in your performance on budget issues, recruitment and retention of troopers.  They are pushing hard against you now on this.  What is your reaction to that?

MONEGAN:  Well, I‘m really disappointed because, obviously, I think, up here, in the local story, that was starting to emerge, I truly did not know why I was terminated.  I mean, the very first night it happened, I walked away scratching my head.  But since then, watching how she jumped from one topic to another, it narrowed it down in mind exactly why I was terminated.

MADDOW:  Chief Monegan, we‘ve had breaking news tonight that the spokespeople for the McCain-Palin campaign are now saying that Governor Palin will not cooperate with the investigation, she will not speak to investigators.  I know and you know and everybody knows that she had initially greeted the investigation with enthusiasm; she had said that she was planning on participating in it.  What do you make of tonight‘s breaking news?

MONEGAN:  Well, I‘m disappointed on two areas here.  First up because, initially she did say that she was going to cooperate like you mentioned.  But the other part, probably more fundamental is that she campaigned and she was all of, I think, of Alaska‘s hope for an open and transparent government.  And now, it‘s been thwarted.

MADDOW:  On the issue of her campaign for the vice presidency, the basis of this investigation is that she essentially abused her power.  This investigation has gone from that initial charge to an allegation that she covered up and lied about what she did in order to avoid getting in trouble for it.  Was it very clear and common knowledge, at the time that members of her administration and Governor Palin herself were pressuring you about firing this trooper, was it clear, common knowledge in state government that that sort of behavior was inappropriate, out of bounds, and an abuse of power by the governor‘s office?

MONEGAN:  Well, I would that it was probably very clear and known to the senior command of the Department of Public Safety and the Alaska State Troopers because we were all recipients of the phone calls or the messages or whatever.  I mean, it was a constant kind of thing.  But certainly, by the fact that they probably already knew that this was inappropriate because they never used the word “fire him, we want you to fire him.”  So, they merely inferred it, which tells me, as a former investigator, myself, that they knew it was wrong.

MADDOW:  Chief Monegan, can I ask why you have decided to speak publicly about this investigation, obviously, you are at the center of this storm, it‘s your decision whether or not you speak to people like me in the press, whether or not you put your story out through official channels or you do it yourself, can I ask you what‘s gone into your own decision to be publicly available on this?

MONEGAN:  Well, I‘m actually—I‘m holding myself a little back because I have reasons to trying to go on air.  There‘s plenty of news crews that trying to put me in front of a camera and I‘ve resisted that.  The idea though, everything that has happened, it harms, I think, the people in the state of Alaska in regards to some of their safety issues as well as the people themselves who are charged in carrying this out.

You know, Governor Palin, actually, we all had high hopes for in trying to bring the troopers and everybody else in government to where it needs to be.  And that, honestly, if you will be able to talk to the vast majority of the troopers that are stationed all across this big state, they started to see a light at the end of the tunnel.  They thought that for a change now, people were going to support her.  And what that does is they, in turn, support everybody else.  And I think, right now, at least what I was told the other day, is that that has come to a screeching halt.

MADDOW:  Yes.  High and dry is the term that comes to mind here.  Former Alaska commissioner of Public Safety, Walt Monegan, former chief of police in Anchorage, thank you very much for speaking with us tonight.  I appreciate you taking the time to do it.

MONEGAN:  All right.  Thank you, very much.

MADDOW:  If you are John McCain, how do you know when your campaign is stretching the truth beyond the breaking point?  One good measuring stick might be, Karl Rove.  If Karl Rove thinks the McCain campaign has crossed the line, what‘s the breaking (ph) point after which the rest of the country notices.  Well, is it the new Obama ad?  My guess is no.  But I do have another nomination, let‘s just say—crowd size matters.  We‘ll have more on that in just a minute.

(COMMERCIAL BREAK)

MADDOW:  According to what Gov. Sarah Palin had to say on the campaign trail today, if she is vice president, she will concentrate on energy, on government reform and helping families with special needs children. But if you are a Frank Rich fan, you might instead be worried that she‘s actually stealth Cheney clone: Cheney 2.0.  “New York Times” columnist Frank Rich is coming right up.

First though, it‘s time for a few underreported “holy mackerel” stories in today‘s news. We‘ve come a long way from Katrina, but there is apparently a long way to go, quote, “It‘s just outrageous.  I think it‘s inexcusable.  I was horrified to discover that our first responders needed our help.”  Those words today from Republican Congressman John Culberson of Houston, learning that the response to Hurricane Ike in his city was bungled so badly that even the staging grounds for the National Guard, state troopers and others were not supplied with enough food or water. 

Culberson actually made an appeal to Houston residents living near those staging grounds to please share their own food and water with the emergency crews. It may be weeks before 1.2 million residents who fled Ike can return home. But the distribution of immediate aid that people left in Ike‘s wake is marked thus far by FEMA blaming Texas state officials.  Texas state officials blaming local officials and the people of Texas in the evacuation zone, stuck in the no-food, no-water, no-sewage, blocked-roads, closed-stores, closed-gas-stations, spend-for-yourself, buy-a-generator-and-pray heck, a heck that looks a lot like America with a government that didn‘t get all that much more competent after Hurricane Katrina.

Finally, Google has filed a patent that hence it will consider moving its supercomputers to a fleet of barges anchored up to seven miles off shore.  Water based data centers, they say, could reduce their operating costs by saving millions in property taxes and electricity costs, with hopes of using wave energy to power the ship and cold seawater to cool the computers down.  Now, does this mean they would have to sail the Google somewhere safe in case of a hurricane?  Anybody else worried how the Google maybe would fare against pirates?  

(COMMERCIAL BREAK)

MADDOW:  It‘s easy and sometimes fun and sometimes scary to toss around the “one heart beat away from the presidency” line about a potential vice president. Sure, it‘s one thing to figure out how they help a presidential candidate get elected.  But imagining a candidate for vice as president means we‘ve got to think about their leadership styles, their governing styles, their record.  To that end, the “New York Times” reported on Sarah Palin‘s leadership style this weekend and between the options of easy, fun or scary, they found the prospect of Palin being one heart beat away from the presidency to lean hard toward the “scary” option in the George Bush-Dick Cheney vice presidency kind of way. 

The paper found that as Wasilla mayor, Sarah Palin ordered city employees not to talk to the press.  As governor, she and her top aides used personal E-mail addresses to discuss state business.  Why?  In order to make the administration hopefully immune to public records requests and subpoenas. 

And all along the way, Palin has left a trail of fired professionals in her wake replaced by friends from school and church.  As the “Times” put it, quote, “The Wasilla High School yearbook archive now doubles as a veritable directory of state government.”  Disturbing secrecy?  Seems like it.  Rampant cronyism?  Looks that way.  Hello, Liberty University.  The ability to mangle the truth with a straight face?

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE:  And the infamous bridge to nowhere, I did tell Congress, “Thanks but no thanks. If we wanted a bridge up there, we were going to build it ourselves.”

(END VIDEO CLIP)

MADDOW:  That‘s not true.  What‘s left?  Dangerous hawkishness and a clear lack of understanding of foreign policy.  Well, Palin did get the old, “perhaps so” to Charlie Gibson when asked about a possible war with oil-rich, nuclear-armed Russia. 

Like I said, scary.  I need to be talked down here, but I probably won‘t be my guest tonight, the New York Times columnist who calls the specter of the McCain-Palin administration “an urgent matter,” Frank Rich.  Hi, Mr. Rich.

FRANK RICH, “NEW YORK TIMES” COLUMNIST:  How are you?

MADDOW:  I‘m great.  Thank you for coming to the studio. 

RICH:  Thanks for having me. 

MADDOW:  Do you think that Sarah Palin‘s celebrity status is sort of outshining John McCain in the media and on the campaign trail right now was a surprise to John McCain?

RICH:  That‘s a great question.  I think probably he‘s not enough aware of what‘s going on to even be surprised or not surprised.  I think he rolled the dice.  I‘m sure he‘s happy with this.  He probably didn‘t anticipate it.  It probably went beyond their expectations, but there is, of course, a downside to it for him, which raises the question of who is really running the show and who is really going to be the stronger person should they get to the White House. 

MADDOW:  In your column this weekend, you essentially described a John McCain who was weak, hapless, unaware, raising the prospect that there are other people who are calling the shots.  Do you see overt evidence that McCain isn‘t making his own decisions, or is it circumstantial evidence because we don‘t believe he would make decisions like this?

RICH:  Well, I think that he probably made this decision in a fashion, but we know perfectly well he wanted Joe Lieberman to be his ticket mate. 

MADDOW:  Right.

RICH:  And Joe Lieberman - what everyone thinks of his politics is a plausible person to stand in should the president become incapacitated.  He didn‘t want to stand-up to the base.  He wanted to placate the case of his party, and that‘s why Sarah Palin happened.  So is that really his decision, the maverick really stand-up for what he believes in and fight his own party and fight Washington?  No, he crumbled, you know, like a $2 bill or whatever the appropriate cliche is.  And now, we have Sarah Palin. 

MADDOW:  Well, it seems to me like that is the most likely explanation of how we got Sarah Palin as the VP pick.  But it seems like there‘s one other option, too ... 

RICH:  Yes.

MADDOW:  ... which is that he did make a, “look into my eyes and see my soul” gut check sort of decision.  Maybe he wanted to pick Tom Ridge or he wanted to pick Joe Lieberman.  But then, he met her and they were soul mates, and it was just, you know, “I‘ve only met you once.  I don‘t know anything about you, but I want you to be in the east end of the White House.” 

RICH:  I think he spent more time with Larry Craig than he did with Sarah Palin.  I don‘t know how he could have made this decision.  But no, I think he likes Ridge.  Again, Ridge is pro-choice.  And what about Mike Bloomberg who really is a good friend of McCain who actually might know something about the economic meltdown we‘re in?  But he‘s also pro-choice and pro-gay rights which neither of which play with the base of that party. 

So he certainly - look, even Karl Rove said he put a pop political choice ahead of a governing choice.  And now, we‘ve got believe we‘ve got it with a guy who is 72 years old, a cancer survivor and seemed to have lost a step. 

MADDOW:  In terms of what we know of Sarah Palin, and you‘re raising a specter that it really would be a Palin presidency either in name or just in fact, what do you see in terms of what we know about her, her record, her positions, her style, her political trajectory?  How do you think that we could describe her in terms of other politicians that we know better?  Who would you use as reference points?

RICH:  Maybe Mayberry, Andy Griffith.  You know, she‘s a hard-right, card-carrying member of the social conservatives of that party.  She has a modest record which we can‘t fully get at, witness the news you‘ve been talking about tonight, governing Alaska for a very short period of time.  And to me, she just represents - you know, she‘s really like a less-talented Mike Huckabee with less accomplishments than Mike Huckabee, but that‘s part of the party she‘s representing. 

One thing I find amazing, particularly given the financial news today, the Republican Party is still supported financially by a lot of people on Wall Street and a lot of people who are big in American business.  And you‘d think they look at a presidential candidate who admits he doesn‘t know anything about the economy and someone with no experience as a vice presidential candidate except managing a town of several thousand people.  And I think that‘s what our investors are going to - that‘s the future is going into?

MADDOW:  No, but maybe that‘s the point, though.  Maybe they look at - maybe those sort of interests look at John McCain and says, “I don‘t know anything about the economy.  I‘ve got Greenspan‘s book with me if Sarah Palin who didn‘t seem to understand what an entitlement program was which was asked on economic issues by Charlie Gibson.  And they think, “Perfect.  Empty vessel.  They know nothing and they know they know nothing, so let‘s use them to advance a special interest agenda, the kind of agenda that we can push through with strong-minded advisors who talk well.”  And these people won‘t resist in any way because they don‘t have any ideas of their own. 

FRANK:  Well, you made me wry, but I would add that the social conservative movement, which has very strong people in that party, may have other ideas.  Indeed, this is true of Huckabee, but we‘re in a war with Republican establishment ideas in terms of the economy.  So it‘s going to be complicated.  They should be careful what they wish for.  I‘m not sure if it necessarily turned out according to plan.

MADDOW:  One last question for you today, just in terms of today‘s and yesterday‘s news in the financial markets and this incredibly awful day on Wall Street, the worst one day plunge since right after 9/11 - Lehman Brothers, AIG on the horizon, all of these other things going on.  In terms of today‘s news cycle and the presidential campaign, who came off looking better in the mainstream media in the big picture on the campaign trail between the two candidates?

RICH:  I would slightly give the edge to Obama because he had one really good line finally on what economy is he talking about. 

MADDOW:  Yes.

RICH:  And McCain had to somehow have this Rube Goldberg explanation of why the fundamentals are still strong and turned into an attack on American workers.  But I would say both are lacking.  McCain is still seen as out of touch and Obama, to me, is not taking charge of this issue.  And really, the news cycle was dominated by, in some ways, your sister network, CNBC, and what was going on there, not by any politician. 

MADDOW:  I see.  The opportunity is there for Obama to dominate on this issue ... 

RICH:  But I‘m not sure he‘s -

MADDOW:  ... but he‘s not doing it yet. 

RICH:  Yes.  I don‘t think so. 

MADDOW:  Frank Rich, columnist for the “New York Times,” it‘s so nice to have you in the studio.  Thanks for coming in. 

RICH:  Thanks for having me.

MADDOW:  Say you are running for president and only 35,000 people show up at your supposedly giant rally.  Do you tell everyone that 10,000 people were there?  You‘d do it if you‘re John McCain and you don‘t have celebrity running mate Sarah Palin to supersize your crowd with you.  More on that in just a moment. 

(COMMERCIAL BREAK)

MADDOW:  So the political common wisdom about lying in political campaigns is this - a candidate for office can get into trouble if the press decides to start calling him or her a liar.  In 2000, for example, the Bush-Rove forces decided to brand Al Gore a liar, an exaggerator.  That‘s how we got the “Al Gore says he invented the Internet” thing.  That wasn‘t true but the press ran with it and ran with the “Al Gore is an exaggerator” storyline as far as it would carry them.  If you can get the press to press your idea that the other guy is a liar, great.  If you can‘t, though, there‘s a risk.  You might look like you‘re whining about the other guy like Bob Dole back in the New Hampshire primary back in 1998. 

(BEGIN VIDEO CLIP)

FMR. SEN. BOB DOLE (R-KS), FORMER PRESIDENTIAL CANDIDATE:  Stop lying about my record. 

(END VIDEO CLIP)

MADDOW:  Stop lying about my record.  A righteous complaint from Bob Dole, but Bob Dole did lose that primary to the guy who was lying about his record.  That would be Poppy Bush.  See, saying, “It‘s not fair the way I‘m losing,” translates to the American people roughly as, “I‘m a loser.”  That‘s the dilemma confronting Barack Obama‘s campaign right now.  As the McCain campaign keeps lying over and over and over again. 

Sarah Palin did not say, “Thanks but no thanks,” to that bridge to nowhere.  People making $42,000 a year will be way better off under Obama‘s tax plan than under McCain‘s.  Obama supported legislation to help keep kindergartners safe from sexual predators, and turning that into some creepy, anti-sex ed ad, it‘s not just a McCain lie, it is a prevarication miracle, totally unknowable through rational means.  That jet did not get sold on eBay.  No one called Sarah Palin a pig.  All this stuff is all just made up.  Even Karl Rove believes it‘s made up. 

(BEGIN VIDEO CLIP)

KARL ROVE, FORMER POLITICAL ADVISOR TO GEORGE W. BUSH:  McCain has gone - in some of his ads similarly gone one step too far in sort of attributing to Obama things that are beyond the 100 percent truth test. 

(END VIDEO CLIP)

MADDOW:  Beyond the 100 percent truth test.  I love hearing Karl Rove explain that.  The question, though, is what‘s the tipping point here?  At what point does the overall story of this campaign shift from John McCain, known honorable guy, with some inaccurate ads - when does it shift to John McCain is a prevaricator.  John McCain is not telling the truth.  John McCain is a - John McCain is an exaggerator, at least. 

Maybe it shifts when the country starts to realize that McCain is not just lying about Obama‘s record or Palin‘s record or even McCain‘s own record.  Maybe this overall story shifts when we realize that McCain is apparently willing to lie even about sad, small, petty, embarrassing things, such as crowd size. 

Bloomberg news first reported this weekend that the McCain campaign has been overstating the size of their crowds - the crowds that show up to their rallies inflating the crowd estimates.  Why didn‘t he just sheepishly say to his undersized audience, “I swear, this never happens to me.” 

Last Wednesday, in Fairfax City, Virginia, McCain‘s campaign said there were 23,000 people on hand for the campaign‘s largest event ever.  They cited that local fire marshal as the source.  The local fire marshal, however, says he provided no such number to the campaign and a reporter on hand from “The Washington Post” said actually looked to him like 8,000 people, not 23,000 people.  Again on Saturday, a local Nevada politician supporting McCain gave a shout-out to the 10,000 people who he said had turned out to see Sarah Palin. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Is this what 10,000 people look like?

(CHEERS)

(END VIDEO CLIP)

MADDOW:  Actually, no.  The problem here is that that venue only holds 3,500 people.  Maybe folks were sitting on each other‘s laps or hiding in each other‘s purses or something.  I don‘t know.  I can understand why John McCain would want his campaign to seem bigger than it is.  But this is humiliating.  It‘s like lying how much you weigh.  It‘s like saying, “This never happens to me, I swear.”

Today, John McCain spoke in Jacksonville at the Veterans Memorial Arena.  McCain was able to fill less than a quarter of the venue as this video shows.  But according to the McCain campaign, there were 500 million people there.  And, also, John McCain invented the Internet. 

(COMMERCIAL BREAK)

MADDOW:  Now it‘s time for “Just Enough” with my friend, Kent Jones, who force feeds just enough pop culture that I can be allowed out in public.  Hi, Mr. Jones, what have you got for me?

KENT JONES, POP CULTURIST:  Hello, Rachel.  So how good were Amy Poehler and Tina Fey on “SNL” this weekend?  Really?

MADDOW:  Spectacular. 

(BEGIN VIDEO CLIP)

AMY POEHLER, ACTRESS:  I believe that diplomacy should be the cornerstone of any foreign policy. 

TINA FEY, ACTRESS:  And I can see Russia from my house. 

(END VIDEO CLIP)

JONES:  Not everyone was psyched about Fey‘s Sarah Palin bit.  Clearly

un-amused, John McCain adviser Carly Fiorina told Andrea Mitchell on MSNBC

just this afternoon -

(BEGIN VIDEO CLIP)

CARLY FIORINA, JOHN MCCAIN ADVISER:  I think that continues the line of argument that is disrespectful in the extreme and, yes, I would say sexist in the sense that just because Sarah Palin has different views than Hillary Clinton does not mean that she lacks substance. 

(END VIDEO CLIP)

JONES:  Maybe I can help.  You see, “Saturday Night Live” is a satirical program in which members of the cast will frequently impersonate political figures in order to provoke what are called “laughs.”  In these sketches, certain aspects of someone‘s personality are often exaggerated for comic effect.  Young people just love it. 

MADDOW:  I think it works.

JONES:  And what was the response from a certain Alaskan governor?  She thought it was quite funny, said Gov. Palin‘s spokesperson Tracy Schmidt, particularly because she once dressed up as Tina Fey for Halloween.  You know, people kept asking her, who are you supposed to be?  That‘s a good question. 

And finally, the not-entirely-unattractive Jessica Alba has shot a new photo ad promoting Declare Yourself, a nonprofit group that aims to encourage young people to register to vote.  Their slogan, “Only you can silence yourself.”  Let‘s have a look.  Ah, you‘ve been a bad unregistered voter, haven‘t you?  Say it, say it!  Rachel. 

MADDOW:  Terrifying but also somehow positive. 

JONES:  Oh, yes.

MADDOW:  Kent, thank you very much. 

JONES:  Thank you. 

MADDOW:  Thank you for watching tonight.  We will see you here tomorrow night.  Until then, you can E-mail us at rachel@msnbc.com.  You can also catch me coast to coast at 6:30 Eastern on Air America Radio.  “COUNTDOWN WITH KEITH OLBERMANN” starts right now.

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

END   

Transcription Copyright 2008 ASC LLC 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 ASC LLC‘s copyright or other proprietary rights or

interests in the material. This is not a legal transcript for purposes of

litigation.>

Discuss:

Discussion comments

,