updated 10/1/2008 4:50:42 PM ET 2008-10-01T20:50:42

Guest: John Culberson, Dennis Kucinich, Ana Marie Cox, Andre Jackson, Kent Jones

RACHEL MADDOW, HOST: Thank you, Senator Olbermann. I appreciate it.

And thank you for staying with us for the next hour.

So, the Senate is going to vote on the rescue bailout plan tomorrow. Still not sure what the Republicans in the House are planning. John McCain is trying to lead somebody somewhere on this subject. And Sarah Palin is back on TV being confusing.

Lots to get to on another big, weird day of news.

(voice over): With so much blame to go around for the failure of the rescue plan, guess which game nobody wants to play today?

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D) SENATE MAJORITY LEADER: The blame game needs to end. And we need to move forward.

SEN. MITCH MCCONNELL, ® KENTUCKY: This is not the time to fix the blame. This is the time to fix the problem.

(END VIDEO CLIP)

MADDOW: Blame game or no-who's fixing the problem? The Republicans don't seem to have a plan-or even much of a party as it turns out. The Democrats have a plan, and now, a new progressive backup plan as well. Two men who voted "no" on the bailout from either side of the aisle join us to tell us what happens next.

Meanwhile, back on the trail-McCain and Obama campaign against Washington.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE: This financial crisis is a direct result of the greed and irresponsibility that has dominated Washington and Wall Street.

SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE: The country and the world look to Washington for leadership. And Congress, once again, came up empty-handed.

(END VIDEO CLIP)

MADDOW: Show me a presidential candidate who hasn't campaigned against Washington, and I'll show you a caveman riding a dinosaur leading a unicorn.

But despite the similarity and rhetoric today, McCain's got one big problem today that Barack Obama does not have. Pat Buchanan and I will tell you what that is. And we'll probably disagree about it.

It's t-minus 48 hours before Sarah Palin's appointment with Joe Biden in St. Louis and the ground beneath her and to her right is getting mighty shaky as conservatives bail on the vice maverick nominee. Are they just setting the debate expectations bar so low that Palin can't fail? Anna Marie Cox joins us with her answer.

And, it's not Mad Max, it's Atlanta, Georgia, but it is beyond the Thunderdome. Two weeks after Hurricane Ike hit 1,000 miles away, there's no gas in the biggest city in the southeast. Is it the oil company's fault, the government? What in the name of Mel Gibson is going on around here?

THE RACHEL MADDOW SHOW starts right now.

(on camera): The current economic crisis has been bad, politically, for John McCain. And on September 14th, the day before Lehman Brothers died, McCain was up by two in the Gallup daily tracking poll. Tonight, he's down by six.

McCain had a year's worth of gaffes in about 10 days followed by a fake suspension of his campaign, followed by taking credit for a bailout that didn't pass-oops-plus, increasing embarrassment and worry over his choice of running mate, plus, plunging poll numbers. It's all amounted to something like a campaign implosion.

But, what if the implosion of the Republican nominee's presidential campaign is just the start? Could the economic crisis be taking down the whole Republican Party as well? I don't need to sound dramatic, but can you tell me what the Republican Party is right now? What they stand for? Who leads it? Even, who has influence?

Let's map it out TV-style. Somewhere over here, you have President Bush. He's somewhere vaguely left in the spectrum right now-believe it or not. For better or, lately, for much worse, he, technically, is the Republican Party's current leader.

This morning, the president delivered yet another speech to the nation, urging the swift passage of his bailout plan. So, the Republican president for the bailout. OK, fine. President Bush is on the way out. He's a lame duck, et cetera, and so forth.

Then there's John McCain. He's running for president by trying to put as much distance as possible between himself and President Bush. Let's put John McCain somewhere over-here. He's hard to place right or left, but he has to go somewhere near President Bush tonight because he's also in favor of the bailout plan.

Here's John McCain tonight talking to our own Kelly O'Donnell.

(BEGIN VIDEO CLIP)

MCCAIN: We haven't been able, obviously, yesterday, to convince some members of congress, 95 Democrats as well as a lot of Republicans, that this is not a, quote, "bailout" for Wall Street.

(END VIDEO CLIP)

MADDOW: So, if Senator McCain, along with 65 House Republicans support the bailout, what is the Republican National Committee doing running a new ad like this today?

(BEGIN VIDEO CLIP, RNC AD)

NARRATOR: Meltdown: Wall Street squanders our money. And Washington is forced to bail them out with-you guessed it-our money. Can it get any worse?

(END VIDEO CLIP)

MADDOW: So, Senator McCain supported the bailout? But the Republican National Committee is opposed to it? The RNC follow that ad up with this doozy.

(BEGIN VIDEO CLIP, RNC AD)

NARRATOR: John McCain fought to rein in Fannie and Freddie. The "Post" says McCain pushed for stronger regulation, while Mr. Obama was notably silent. But Democrats blocked the reforms, loans soared, and the bubble burst.

(END VIDEO CLIP)

MADDOW: Wait a minute-John McCain was for regulation and Barack

Obama and the Democrats were against it? But -

(BEGIN VIDEO CLIP)

CAROLYN DUNN, MCCAIN SUPPORTER: I'm concerned about the threat of excessive regulation.

MITT ROMNEY, ® FORMER PRESIDENTIAL CANDIDATE: Take a weed whacker to excessive regulation and mandates.

MCCAIN: And we need less regulation.

Less regulation.

And less regulation.

(END VIDEO CLIP)

MADDOW: So, Republicans are for regulation or against it? It's confusing. It's hard to know where to put the Republican National Committee on our handy-dandy little map because they seem kind of all over the map. What they don't appear to be is with John McCain or President Bush, at least on the bailout plan.

Then we have the House Republicans. Their leader, John Boehner, explains the defeat of the bailout bill which he supported this way.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER, ® HOUSE MINORITY LEADER: We've put everything we had in to getting the votes to get there today, but the speaker had to give a partisan voice that poisoned our conference, caused a number of members that that we thought we could get to go south.

(END VIDEO CLIP)

MADDOW: Got that Democratic House Speaker Nancy Pelosi-your speech was the reason the bailout died, unless you ask Republican Congressman John Shadegg.

(BEGIN VIDEO CLIP, "MORNING JOE")

REP. JOHN SHADEGG, ® ARIZONA: It was embarrassing for leadership of both parties to lose the bill so they went out and made a stupid claim. But I don't know a single person who changed their vote on the basis of that or would have.

(END VIDEO CLIP)

MADDOW: Congressman Shadegg was one of many House Republicans who turned on their leader, John Boehner today. But if members disagreeing with their leader isn't enough to make your head hurt, how about a member of Congress disagreeing with himself? That's the situation House Republican Minority Whip Roy Blunt found himself in.

He said this yesterday after the bailout bill was defeated.

(BEGIN VIDEO CLIP)

REP. ROY BLUNT, ® HOUSE MINORITY WHIP: We thought we had a dozen more. I think, unfortunately, too many of our members were already on the floor when they heard that late speech by the speaker.

(END VIDEO CLIP)

MADDOW: But then just hours later, Roy Blunt told ABC News, quote, "I think you don't want to put too much blame to that speech."

So, where to put the House Republicans on the map? Not with Senator McCain, or the president, or their leader, or in some cases, even themselves. They're kind of bouncing around like a superball at this point. But for the sake of this pretty picture, let's randomly put House Republicans here.

The point is, the Republican Party is in disarray. And the problem with that in the middle of a crisis is that no one has any idea what the Republican strategy is to solve the crisis. The cynical among us might think the Republican strategy is just to let the Democrats vote for something and then run against that thing, whatever it is come November.

The U.S. Senate just announced tonight that it will vote on the financial-bailout-rescue insert-euphemism-here plan tomorrow evening. Senators McCain, Obama, and Biden will be there.

More on the effect of all of this on John McCain and Barack Obama in just a moment. But the urgent question is, what's happened to the Republican Party, what's the Republican plan? I mean, other than to try to make the Democrats look bad?

Time to get some answers. Joining us now is Republican Congressman John Culberson of Texas. He voted against the bailout bill yesterday.

Congressman, thank you so much for joining us tonight.

REP. JOHN CULBERSON, ® TEXAS: Rachel, it's good to be with you.

MADDOW: There's a little breaking news tonight. There's a little late report just in that Congressman Boehner, the House Republican leader, supports a revised rescue plan. He supported the original plan as well.

If this late-breaking report is true, what impact do you expect on House Republicans from John Boehner's endorsement of this deal?

CULBERSON: Well, Rachel, I can tell you that I, as a fiscal conservative, as a Republican, follow my core principles. I'm do my best, you know-when I analyze my job, I'm trying to do the right thing for the right reasons.

I am a father. I try to be a good father and a good husband, and then my job as a congressman falls in to place. So, I urge you, Rachel, and everyone in the media, not to analyze the most urgent economic problem the nation has faced since the Great Depression in terms of who's for or against it. This isn't a football game. We're talking about the safety and the security of the economic-safety of the entire nation.

I would urge us to look at the details of the plan that was in front of us. The reason I voted against it and so many other Republicans did, is that it was fundamentally a bad plan and not the best solution. And the Republican solution, Rachel, was one that is very straightforward and simple. For that (ph) -- nationalizing and socializing the investment banking system should be our last choice.

The first choice was to come in, for example, we want to get rid of the mark-to-market accounting rule which Chris Cox can do with a stroke of the pen tonight. The chairman of the Securities and Exchange Commission, Rachel, can restore trillions of dollars of value to investment banks all over the world, simply by changing that rule and going to market valuation.

And then, secondly, very quickly, let me say, we should change the FDIC insured limit from $100,000 to $250,000. And then take a breath.

Those two things can be done right away before we launch into nationalizing and socializing the banking system. The only way we're going to get to a better bill, Rachel, was for us to vote against this bad bill, give us time to catch our breath, and solve this problem, which has got to be solved promptly, but in a thoughtful way.

MADDOW: I appreciate the specificity of the proposal to change that one accounting rule.

CULBERSON: Right.

MADDOW: I have to admit, though, that the source of my confusion, which you heard in my lead-up to this interview is that we're hearing John Boehner, the president, John McCain, other people who have a good claim based on their job titles, to be the leaders of the Republican Party saying that Republicans will support the Paulson plan, even as it has evolved over the last few days. But then House Republicans such as yourself voted two-to-one against it.

And, I guess, I don't know who's the leader of the Republican Party right now. Is it President Bush? Is it Senator McCain? I wondered last night if it was Congressman Eric Cantor. He voted for the bailout. Who's the leader?

CULBERSON: I think that each one of us as Republicans follow our core principles, to do our best, to do the right thing for the right reasons. To analyze, I read the 110-page bill very carefully. When I see in there that the secretary of the treasury would be given unprecedented power to buy-mark any financial instrument of any kind at any price, bailing out any financial institution anywhere in the world, we could use tax dollars, he could bail out a foreign investment bank with my tax dollars, and then not only that, he can go in and renegotiate any mortgage in the country.

Now let that settle in. This bill gives the federal property manager authority to renegotiate every mortgage under the control of the Treasury Department, an unprecedented sweeping power, socializing the entire mortgage industry, the entire investment banking system. That is an unbelievable grain of authority that's unlike anything in our history.

And there are other better solutions, Rachel. This is as simple as this. We were doing our best to do our job as representatives of our districts to use our best judgment to solve the most urgent financial problem this nation has faced since the Great Depression. I've done my homework. I've listened to my district.

And I'm going to approach this thoughtfully and carefully to do what not only is best to help solve the problem in Wall Street, I want a solution that's going to help the average American and help American businesses make sure that they can have access to credit, individual Americans have access to credit without nationalizing or socializing the banking system, and without giving the treasury secretary the ability to give away property, open up every mortgage in the company, rewrite those mortgages.

We need to look at the details of the bill, Rachel. And I urge you, all Americans, read the bill. It's online. It's 110 pages, read it carefully and realize what's at stake here.

Let's solve the problem not politicize it. Let's legislate for the next generation, and not the next election. And I'm confident we'll solve this problem in a thoughtful, mature way that preserves the very best of America and what made this country great. That's why we voted the way we did.

MADDOW: John Culberson, Republican from Texas. Thank you for your time tonight. I'm not sure that I understand better the divisions between the Republican Party, but I understand where you're coming from. I appreciate your time.

CULBERSON: Yes, ma'am. Thank you.

MADDOW: That's all right, it happens all time.

So, by now, it clear to you that, as far as I can tell, no one appears to be in charge of the Republican Party anymore. We heard from Congressman Culberson. We heard contrasting views of the leadership of the Republican Party.

No one being in charge is the thing you're going for in your neighborhood anarchist collective. But if you're a conservative major political party confronting a massive financial crisis, two wars, and a fast-approaching presidential election, that's not supposed to be what you're going for. Is it possible to be elected president if a candidate's party is fracturing beneath him? Does John McCain need to get the Republicans in line in behind him on some policy, any policy, if he wants to win.

Should Obama, for his part, stay above the fray or weigh in into congressional negotiations?

Joining us now is MSNBC political analyst, Pat Buchanan.

Pat, thanks for joining us.

PAT BUCHANAN, MNSBC POLITICAL ANALYST: Thank you, Rachel.

MADDOW: I put in that anarchist collective reference just to bug you. I have to ask you, do you think that the Republicans sort of fracturing into a lot of different factions who aren't really talking to each other on the economic issue? Do you think that's trouble for McCain?

BUCHANAN: Yes, I do think it's trouble for McCain. But we're not fracturing anymore than normal. This is the same basic division deep inside the Republican Party that you saw over NAFTA, and GATT, and the Mexican bailout, and also, over the immigration bill where you have a very populist, conservative party which is very patriotic, nationalist, America first on one side, and the establishment party which is running the government, and which tends to be "Wall Street Journal"-oriented on the other side, Rachel.

And this massive crisis has sharpened that division and we saw it expressed on Capitol Hill. I think both sides of this argument are, you know, voting their principles and convictions. But there is a deep divide inside the Republican Party, and something of a divide in the Democratic side.

MADDOW: Politically, though-I mean, Republicans in Congress are overtly, publicly ignoring both what President Bush is asking them to do, and what John McCain is asking them to do. McCain and Bush are asking for the same thing. And McCain and Bush are asking for the same thing.

Would this situation be different if the Republicans had nominated somebody who had more friends in his own party? Who was more persuasive as a Republican Party leader?

BUCHANAN: Now, this served (ph) -- and the congress you talked to, I thought he's very principled, constructive fellow. I agreed with both of his ideas. I agree with his entire criticism of this bill. I mean, I realize how important this legislation is. But I would have voted against this bill on grounds of my conservative principles and beliefs.

The country is in a horrible way. But we don't want to make it worse and destroy the system. Did we take a hit for it? Yes, I think they are very courageous in doing what they did and voting against it.

MADDOW: But I think that when Culberson says what he sees about doing is changing-what he sees ought to be done is changing one accounting rule and upping the FDIC insurance limit which everybody agrees we're going to do. That's essentially saying we have no plan, but we're going to make sure that we're against anything that does pass. I think it's just an attempt to create a political trap for the Democrats.

BUCHANAN: I don't agree at all. I think-look, why don't you do that and see if that works and sends the market up and keep looking at this. We've got to stay focused on it because I do agree there's a real danger here of a great crash, a freeze up, banks going down left, right, center the way they did in 1929, 1930. But take these steps right away we can all agree on, that might do something and be prepared to do something.

I thought the congressman-I think a lot of the criticism I've heard from conservative Republicans, I thought it was conscientious and courageous.

Does it disagree with John McCain? McCain has also been with the establishment on NAFTA, on GATT, on the WTO, the Mexican bailout, the immigration amnesty. You name it. That is Bush one, Bush two wing of the party on those issues. And we're on the other side. But we do sometimes belong to the same household.

MADDOW: And what you have just seen, America, is the conservative base of the Republican Party sprinting in the other direction from John McCain a month before the election.

Pat Buchanan, MSNBC political analyst, thank you for coming on tonight. I appreciate it, Pat.

BUCHANAN: Thank you, Rachel.

MADDOW: House Republicans pulled the biggest rabbit out of the hat yesterday when they surprised everyone by voting two to one against their leadership and against the bailout. But a whole lot of Democrats said "no," too. One of the proud liberal Democrats who voted "no," Congressman Dennis Kucinich joins us in just a moment to explain why he's against it, and whether he and the no-voting Republicans might make some common cause here.

(COMMERCIAL BREAK)

MADDOW: Palin is slowly opening up to the media. And tonight we learn what media Palin herself likes, sort of. Last week, Palin said she could not travel abroad a lot but she had to work, as advice, but she said she did learn about the world through books. And, quote, "mediums."

Katie Couric has now followed up with a question about which newspapers and magazines Palin reads to stay inform.

(BEGIN VIDEO CLIP, "CBS NEWS WITH KATIE COURIC")

GOV. SARAH PALIN, ® VICE PRESIDENTIAL CANDIDATE: I've read most of

them, again for an appreciation for the press, for the media -

KATIE COURIC, CBS NEWS ANCHOR: But like what ones specifically? I'm

curious, that you -

PALIN: All of them, any of them, that have been in front of me over all of these years.

COURIC: Can you name any of them?

PALIN: I have a vast variety of sources where we get our news, too.

Alaska isn't a foreign country.

(END VIDEO CLIP)

MADDOW: As a sister subscriber to "vast variety" and "most of them," Governor Palin, I salute you.

More on the new interviews with Palin, coming up.

(COMMERCIAL BREAK)

MADDOW: In Washington this, is what a leaderless Republican Party looks like. It's a party with no willingness to pass their president's proposed bailout, but no comprehensive counterproposal of their own, either. There was that one thing last week about a blue ribbon commission and more deregulation. More deregulation? But even that petered out by this week.

On the other side, the Democrats in a playing against a tight reversal, akin to cats barking and dogs purring, appear to have their house in relative order. Even the Democratic no-voters on yesterday's bailout vote appeared to agree, in principle, with their leadership expressed desire for oversight CEO pay limits, deposit insurance, infrastructure investment, and on and on.

This is one of those times in politics when something is going to be passed and get signed into law. The president himself is crying crisis. Democrats control both houses of Congress and they've right now got more leverage than they ever have over Republicans and over this president.

So, should they bending over backwards to pass something that gets a majority of Republicans to vote for it, too, so no one gets the blame? Or should they go for purist progressive gold here, channeling that money to homeowners instead of Wall Street, re-regulating Wall Street, a new deal style economic stimulus plan that puts Americans to work rebuilding our own country?

Congressman Dennis Kucinich is one of the Democrats who voted against the bailout bill yesterday.

Congressman Kucinich, many thanks for joining us.

REP. DENNIS KUCINICH, (D) OHIO: Thank you. Kind of raises a question of what a Democrat is. I mean, think of the basic principle of this bailout that we would borrow money from banks, because that's the only way we're going to get to $700 billion. We borrow money from banks to give the banks so that they can give us $700 billion worth of toxic debt from all over the world.

I don't know, I couldn't vote for this. And unless they had some dramatic change in what they're doing that helps homeowners, depositors, pensioners, I'm not going to vote for it. And I think a lot of others will not, either.

MADDOW: Well, what kind of dramatic change will it have to be for you to-for them to earn your support? Are you against a rescue or a bailout, no matter what or are there elements of this that could be changed that would make it attractive enough to earn your vote?

KUCINICH: Let's look at fundamental premise. What has been proposed is top down, that we give the money to Wall Street and, somehow, it's going to trickle through the economy and help everyone. Well, what I propose and what others are interested in, is bottom up. The essential problem in our economy is the fact that millions of homeowners can't pay their mortgages. That's what's causing liquidity problems, to the extent one exist.

And so, we ought to be addressing helping the homeowners, creating a new homeowners loan corporation like they had in the post-depression era. Do something to make sure that the government can buy a controlling interest in these mortgage security polls so that we can work out the problems for millions of homeowners. That's the way you get money moving in the economy again, strengthen the Federal Deposit Insurance Corporation so that people can have broader area of their deposits protected, and also, strengthen the Pension Benefit Guaranty Corporation.

I mean, I'm a Democrat. You know, I believe in this idea of making sure that the great mass of people get some help. This plan-this plan is immoral, Rachel. This plan is a disgrace. It bails out people in Wall Street who have speculated and who would drive this economy in to the ground, unless we have some controls on them at both the Fed and the Securities and Exchange Commission.

MADDOW: Are you confident that if there was massive aid to homeowners, if, as you say, the liquidity problem could be solved by helping Americans who can't pay their mortgages, which, after all, is the house of cards on which all of these Wall Street castles have been built-are you confident that helping homeowners, doing a sort of bottom-up plan like you're describing, would ultimately save enough of the financial institutions that are at risk right now, that we would be left with anything looking like a private financial sector?

KUCINICH: Well, you have to understand that the private financial sector exists in synergy with the mass of Americans. I mean, Roosevelt understood that when he put forth the New Deal. I mean, what I'm proposing is really a page out of classic New Deal economics. You know, help the many, and then in that way, you also help the few.

But what's happening is this bailout proposal helps the few at the expense of the many. It drives us deeper in debt. It doesn't solve the problem and all it does is bail out some investors and help encourage speculation. If the government starts using the taxpayers' money to ensure against risk, well, then, all you're going to have is speculation.

MADDOW: Some progressive Democrats today, congressman, lined up behind a proposal by Pete DeFazio of Oregon and others, to take a whole different approach to this crisis than has been taken thus far, to do a lot of the things that you're talking about, to partially restore some government regulations on Wall Street right now, rather than putting off that issue until later. Are you supporting that idea?

KUCINICH: Oh, absolutely. I mean, Pete DeFazio is talking about a 0.25 percent tax on stock transactions that would raise about $100 billion a year. And that would be a way for Wall Street to bail out Wall Street. I think that's very sound. There are other economists who suggest that maybe you have companies that forego dividends, Wall Street bailing out Wall Street.

We cannot ask the American people, who are having trouble saving their homes, that they should bail out Wall Street. This bailout will cause every American with the use of compounded interest, using the $700 billion and what it will actually cost, it will cost every American about $6,900 -- each man, woman, and child. I mean this, is wrong. It is wrong.

Democrats should not be proposing a bailout of the stock market. And frankly, I salute the Republicans who understood that Wall Street ought to be able to fix its own problems and the bailout would constitute a violation of every free market principle that any Republican ever believed in.

MADDOW: One last very quick question on that point, specifically, congressman. Do you see that there could be any overlap between the Republicans who rejected the bailout plan and the Democrats who rejected the bailout plan in terms of coming up with a third way forward?

KUCINICH: Absolutely. That's what we have to do. I mean, we need a bipartisan approach to come up with a plan. But it can't be a bipartisan approach that's dictated by Wall Street. And for that matter, it's not going to be.

Again, I thank the Republicans for standing up on this because it wasn't easy to stand up to the White House and to their leadership. But you know what? Republicans and Democrats working together can come up with a plan that will protect the economy, protect the interests of the American people, and avoid Wall Street taking the American people for another ride.

MADDOW: Congressman Dennis Kucinich, Democrat of Ohio, reaching across the aisle here. Thank you so much for joining us.

KUCINICH: Thank you, Rachel.

MADDOW: It's just not going well for John McCain's pick for vice president. Sarah Palin is chasing conservatives away like a same-sex-married-light-rail-riding-unionized-tax hike? Who could have seen that coming? But, with the right-wing elite cringing and the rest of the country snickering, is Governor Palin getting set up perfectly for her debate with Joe Biden on Thursday?

Could she be to presidential politics what "Eddie the Eagle" was to ski jumping? Remember how everybody loved "Eddie the Eagle" for just not wiping out? Ana Marie Cox is here in just a moment.

(COMMERCIAL BREAK)

MADDOW: Is it really possible that the Republicans would follow the advice of some conservatives and replace Sarah Palin this late in the game? Or is Palin in the perfect position to exceed now-terrifically low expectations and thereby boost the campaign. Palin's cram session for Thursday's debate is under way.

And as for those expectations, this photo is not helping, or maybe it is, depending on the game plan. Ana Marie Cox is along shortly with her expectations.

First, though, it's time for a few underreported holy mackerel stories from today's news. From the great and humble pie of justice has been sliced teeny sliver for the former executive director of the CIA, who steered millions of dollars in contracts to a childhood friend, and who got his mistress a high-level job at the agency.

Dusty Foggo has pled guilty to one count of fraud. In return, prosecutors dropped 27 additional charges, including money laundering and conspiracy. Dusty admitted to giving phony classified contracts to his friend, defense contractor and lobbyist and contractor Brent Wilkes, who's serving a 12-year sentence for bribing former Republican Congressman Duke Cunningham who's also serving time behind bars.

One of the contracts Dusty gave his friend would be to provide bottled water to CIA personnel in Iraq although Wilkes was never in the bottled water business, nor had he ever supplied personnel in the war zone.

Oh, and Mr. Wilkes was charging more than the other bidders for that contract - charming. Some of the favors Foggo got in return for those contracts included a high-paying job in his buddy's company after he retired, family vacations aboard a private jet to Scotland, a trip to a Hawaiian estate, free meals in D.C. and his cigar humidor.

As for those allegations about Wilkes hosting full-service poker parties for Foggo and lobbyists and members of Congress, full service in the sense that they included prostitutes, and limos, and hotel suites for all. Dusty says he went to those, quote, "just for the poker."

And almost seven years after the U.S. and its allies invaded Afghanistan to remove the Taliban, Afghan president Hamid Karzai says his government has been reaching out the Saudi royal family to help him negotiate peace with the Taliban.

He says he's been asking our great ally, the Saudis, for help with security for over two years, all to no avail. Karzai has also reached out the Taliban militants themselves and reportedly told them he would personally protect them from the U.S. and NATO if they agreed to talk with him saying, quote, "Don't be afraid of the foreigners. If they harm you, I will stand in front of them."

In return, the Taliban's leader called the Afghan security forces thieves, smugglers, and criminals. As in, "I'm rubber, you're glue. Whatever I say - " Never mind.

(COMMERCIAL BREAK)

MADDOW: Pop quiz time. Name a Supreme Court case other than Roe versus Wade. If you got through the fifth grade, Brown versus Board of Education springs to mind? Good answer? Bush versus Gore? The Dred Scott case? Marbury versus Madison? The People versus Larry Flint does not count, but thank you for playing.

In the latest unsettling Sarah Palin interview, memento on the growing list, the governor reportedly came up empty when the subject of Supreme Court cases came up during her marathon interview with Katie Couric.

CBS has not yet aired this moment of the interview, but "Politico's" Jonathan Martin, citing a McCain campaign aide writes this, quote, "It came in response to questions about Supreme Court decisions. After noting Roe versus Wade, Palin was apparently unable to discuss any major court cases."

In the portion of Palin's interview that did air tonight, Couric asked Palin whether global warming is caused by human activity. By the end of the exchange, it's not clear whether Palin blames man for global warming or vice versa?

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: You know, there are man's activities that can be contributed to the issues that we're dealing with now with these impacts. I'm not going to solely blame all of man's activities on changes in climate because the world's weather patterns are cyclical and over history, we have seen changes there. But kind of doesn't matter at this point as we debate what caused it. The point is, it's real. We need to do something about it.

(END VIDEO CLIP)

MADDOW: But if it's caused man-made activity, don't we need to know that to know what we should stop doing, if we wanted to do something about it?

As the uncomfortable interview moments pile up, so does dissatisfaction with Sarah Palin's place on the ticket. If you're keeping score at home, even if you're only counting conservative, the Palin pick has now been publicly questioned by former McCain advisor, Mike Murphy, conservative columnist, Kathleen Parker, George Will and David Brooks.

Former Bush speech writer David Frum, who solidified his criticism today, telling "The New York Times," quote, "I think she has pretty thoroughly and probably irretrievably proven that she's not up to the job of being president of the United States."

And beyond the right wing elite, you can toss two more hats into the Palin ought-to-get-out ring. "Salon's" Joan Walsh writing today, quote, "I believe Palin would be a menace as commander-in-chief, and she's got to get off of the GOP ticket."

Also "Newsweek's" Fareed Zakaria also weighed in yesterday, saying, quote, "Is it too much to ask that she come to realize that she wants in that wonderful phrase in American politics, 'to spend more time with her family'?"

The question now is, has Sarah Palin doomed the Republican ticket? Or is the Sarah Palin pile-on an unlikely advantage for John McCain, a way to lower expectations so much that everyone will call it a win for Palin on Thursday if she manages not to curse, throw up, or fall down at the vice presidential debate?

Joining us now is Ana Marie Cox, who's the Washington editor of "Radar" and a "Time" magazine contributor. Hi, Anna. Nice to see you.

ANA MARIE COX, WASHINGTON EDITOR, "RADAR": Hey, Rachel.

MADDOW: Does Sarah Palin maybe win here, or at least win on Thursday because expectations are going to be so low for that debate?

COX: I think it's a real possibility, although I have to say I'm holding out hope that she comes up for the debate and as she responded to a hard question from Katie Couric, she just remains silent the entire time. It can be like the John Cage memorial debate. And I think that actually that would be a sort of street theater that the American people might learn from.

MADDOW: Well, I wonder, though - I mean, she could do street theater. She could also jump - she could just fail really, really spectacularly. I think of this as - the Eddie the Eagle phenomenon. Like - or the Jamaican bobsled team, like you're so obviously failing that people sort of root for you because you're so bad at it? Is it possible that could happen?

COX: I think that there is a certain percentage of the Republican

base that probably feels that way. They probably feel so protective of

her. But I wanted to say something about the columnist that you cited

saying that she should get off of the ticket. It's not like these people

suddenly woke up and discovered their moral conscience. These are pretty

hard right Republicans. And

It think that more than anything else, their coming out against Palin shows that McCain still doesn't have control over the party. And there's still like a deep division between McCain himself and the party faithful.

MADDOW: I wonder -

COX: At the top, at least.

MADDOW: Well, do you think that they are maybe trying to help McCain by telling him to kick her off of the ticket in a way? Is it a strategic advice?

COX: You know, I hear these kinds of theories about the McCain people, and I know the McCain strategists. This is like, that's chess. They're playing checkers, OK? I mean, I think that, well, it may turn out good for them and there's not any sense that I get that they gamed it out that way, that they actually planned it that far ahead in order to make it work.

I think for that for better or for worse in these last weeks of the campaign, we're seeing flashes of what, I guess, we have to call the old John McCain although I feel that should be trademarked or something. And It think we're seeing some just really - "shoot from the hip," I guess is the word - "Erratic" would be the other word, moves by the candidate.

MADDOW: We have seen transcripts to an interview that Sarah Palin did with the radio talk show host, Hugh Hewitt. And in this interview, Hewitt paints Palin as someone who's embattled, fighting with the media. And she responds by referring to herself as working class. She calls herself "Joe Six Pack."

I wonder if there's a class element here to try to say, "Yes, I may be failing, but I'm only failing because the upper class elitists are picking on me. And therefore I should be identified with by regular Americans."

COX: I think that's definitely a tactic that they're trying to use. I mean, it should be pointed out that her family has a combined income of, I think, $250,000 in several different properties and a plane, at least one plane. So maybe that's just how you get around in Alaska, though, I should say that. That and snow machine, I understand, very necessary.

I do think she's definitely playing that card. I also think that in some ways it probably rings true to people. I mean, the accent really only makes sense if you're "Joe Six Pack."

MADDOW: Well, I guess the last big picture question with all of this advice to the McCain campaign that they ought to drop Palin. That's only happened - it's only really happened once in modern history. They dropped Eagleson, right? And that didn't turn out so well for them.

Is there any way that they really do drop Palin and then McCain goes on to win? Could he replace her with somebody so impressive that it completely remade the race again?

COX: Like Hillary Clinton?

MADDOW: (UNINTELLIGIBLE). Or Bill?

COX: Or Bill. I actually - I do not think that's going to happen. I think in the same way that we're seeing through the old John McCain in some of these flashes of strategic or non-strategic brilliance, I think that he's a stubborn man. And I think that all of this ganging up on her or what they see as ganging up on her is really just making the results stronger. These are people that - he likes to go down in a fight. Let's put it that way.

MADDOW: Ana Marie Cox, Washington editor of "Radar," "Time" magazine contributor, thank you for joining us tonight.

COX: Thank you, Rachel.

MADDOW: here we are in the United States of America, presumably a first world super power. And yet, our southeastern states are grinding to a halt because of a gas shortage. People were told this would be fixed by tomorrow. But now, it turns out it could still be weeks. That sound you hear is our infrastructure crumbling. More on that chaos and who's the blame, next.

But first, one more thing. PBS' Gwen Ifill scheduled to moderate this week's vice presidential debate, but carrying some of the debate (UNINTELLIGIBLE) material while she was walking down the stairs yesterday, and she fell. She broke her ankle. Ifill will not be sidelined with an injury so close to the game, however. Broken bones or no, she still plans to head to St. Louis on Thursday. We, of course, wish Ms. Ifill a very, very speedy recovery.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED ACTOR: I'm greatly disappointed that you wish to take the gasoline out of the wasteland.

UNIDENTIFIED ACTOR: Defend the fuel.

MEL GIBSON, ACTOR: You want to get out of here? You talk to me.

UNIDENTIFIED ACTOR: Now, to do the job, I need some high octane gasoline.

GIBSON: You got yourself is a deal.

(END VIDEO CLIP)

MADDOW: Before he was "Lethal Weapony," world sexiest man guy getting pulled over for drinking and driving and ranting about Jewish people, Mel Gibson was "Mad Max," post-apocalyptic anti-hero caught in a middle of lawless after-world where gasoline and the need for it was really the only organizing principle. It was all futuristic and distant and nowhere close to real 30 years ago when that movie came out.

Doesn't feel quite as far away tonight. In the more than two weeks since Hurricane Ike crashed through the oil bearing gulf of Mexico and into the oil-refining region of southeast Texas, there is precious little gasoline in the American southeast.

Massive '70s-style lines ring gas stations which have gas, and no gas signs hang at the stations that are simply bone dry and have been forced to shut down. Some folks are rising before dawn just to be at a station when the gas delivery truck arrives and some are literally following the gas trucks around. The fix they're hoping for is also not coming cheap.

In Georgia, the average price for regular gas was $3.94 a gallon yesterday, 30 cents higher than the national average.

(BEGIN VIDEO CLIP)

SHAVON MUNFORD, FRUSTRATED DRIVER: I have been to different gas stations and couldn't get any. And I was trying to avoid some altercations that you see going on out there. And I had to go grocery shopping yesterday so I rode on fumes and just prayed that I'd get there.

(END VIDEO CLIP)

MADDOW: In the United States of America in 2008, prayers are now officially a fuel additive. Experts are saying the shortages could persist into mid-October.

Joining us now is Andre Jackson, the business editor of the "Atlanta Journal-Constitution." Mr. Jackson, thank you very much for being here.

ANDRE JACKSON, BUSINESS EDITOR, "ATLANTA JOURNAL-CONSTITUTION": Thank you.

MADDOW: It's been more than two weeks since Hurricane Ike hit the gulf coast. Why are there still gas shortages and why do they appear to be centered in the southeast?

JACKSON: There are a number of reasons for it. There are still refineries that in large part on the Texas coast are shut down still. Gasoline moves pretty slowly through the pipeline as it heads through the southeast into the Atlanta area.

And there have been changes in demand in terms of how people buy it. People responded naturally to what they perceive as a crisis and that changes really the demand curve for gasoline. So all those things have combined to pretty much create the situation that has its epicenter, really, in the Atlanta area.

MADDOW: How disruptive has this been in and around Atlanta? Has your life been disrupted by this and are you seeing that people are very angry by these shortages?

JACKSON: It is safe to say that people, many people, thousands, are angry very much about what's going on here. Personally, you asked - I have had to drive around a few different gas stations beyond my normal routine to find gas, but I haven't had to wait in a line.

But thousands have in this city including as long as 45 minutes.

And I have seen lines. I've seen a lot of stations without gasoline.

Driving in tonight, two or three stations I passed did not have gasoline.

Now, there are a lot that do have it at various times.

MADDOW: Who are people mad at when they're mad? Are they mad at the state government? Are they mad at the oil companies? Are they mad at people who they perceive to be hoarding gas? Which direction is the anger being directed?

JACKSON: All of the above. It can also be directed at the person who's in front of you in the line, especially if they've cut in front of a line there. But people are angry at government. The governor of Georgia has faced a fair amount of criticism over this from both sides of the political aisle. But really, the anger is directed almost everywhere. I mean, you hear it from the national government, the state government, to the oil companies.

MADDOW: I wonder if you see - I guess at an individual level, or even at just an anecdotal level, I guess I'm asking about whether or not people are turning to alternatives they might not otherwise be turning to if they weren't sort of forced on the gas issue. I'm thinking about obviously cycling. I know that Atlanta is not a very cycle-friendly city. It's really designed for cars. I'm also thinking about things like grease cars where people convert their diesel engines into cars that can run on alternative fuels? Are you seeing that happening?

JACKSON: You are seeing that. Our newspaper did a story the other day on people who are fueling their cars on vegetable oil. That's looking pretty good these days in a lot of quarters to buy those conversion kits. Most people are using mass transit. More people are carpooling. You are seeing people react.

From an economic standpoint, what's the greatest inconvenience is that it's taking longer to ride mass transit to work or driving around looking for gas. So people are making those choices on an individual level and really determining what works for them.

MADDOW: It's the kind of changes that we probably in the back of our minds, collectively, we know that we need to make as a country. We just don't want to be forced into them on short notice because of a crisis like this.

Andre Jackson, business editor with the "Atlanta Journal-Constitution." Thank you for your time tonight, and sorry about costing you the gas to get to the studio.

JACKSON: Thank you. Have a good evening.

MADDOW: Coming up, I get my daily dose of pop culture from Kent Jones on "Just Enough." Apparently there's a new James Bond song. Cool.

(COMMERCIAL BREAK)

MADDOW: Now, it's time for "Just Enough" with Kent Jones. Hi, Kent.

What have you got?

KENT JONES, POP CULTURIST: Good evening, Rachel. You know, I think yesterday's stock market dive succeeded in freaking everyone out. Here's an interesting little tidbit though. During the meltdown, only one stock on the S & P 500 actually went up.

Any guesses? Campbell's soup. It's perfect, right? America gets a boo-boo. America needs chicken and stars. That's how it worked in my house, anyway.

Meanwhile one planet over, it snowed on Mars. A laser instrument aboard NASA's Phoenix Mars Lander detected snow from clouds about 2 ½ miles above the landing site. The snow vaporized before reaching the ground. You know, that's going to be such an amazing sight for humans to witness firsthand when astronauts finally travel to Mars. Of course, that astronaut will be China because, dude, America's broke. We're not going anywhere. We're buying soup.

And finally, Rachel, I know you're a James Bond fan.

MADDOW: Yes.

JONES: I've got the new theme song from the upcoming "007" movie "Quantum of Solace." Here's Jack White and Alicia Keys with "Another Way to Die."

(AUDIO CLIP OF "ANOTHER WAY TO DIE")

MADDOW: I like it. It doesn't seem Bondy, though.

JONES: Yes, it's not Goldfinger. It's not Shirley Bassey. But you know, it's better than the one by Aha, right? It's better than that.

MADDOW: Thank you, Kent. I appreciate it.

JONES: Sure.

MADDOW: Talk about low expectations. Thank you for watching tonight.

See you tomorrow night. "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.

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