updated 9/23/2008 11:55:55 AM ET 2008-09-23T15:55:55

Guest: Robert Reich, Steve Benen, Lyda Green, Thomas Frank

RACHEL MADDOW, HOST:  Hello, Keith.  That’s very kind of you.  Thank you.

And thank you at home for sticking with us this next hour.Are you still trying to understand the Wall Street bailout, trying to figure out who’s on what side of it?  Oddly, it reminds me of a Halloween gone horribly wrong.  We’ll have more in a second.We’re in to John McCain’s-the second week of John McCain’s deregulatory life and the week-old age of reregulation. Plus, we’ve got some fresh troopergate news and my fake uncle, Pat Buchanan.  Lots to get to.(voice over):  As Congress decides what to do with the proposed $700 billion Wall Street bailout, John McCain and Barack Obama jockey for political position.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE:  We’re in this mess because of a bankrupt philosophy.

SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE:  A time of crisis when leadership is needed, Senator Barack Obama has been MIA.

(END VIDEO CLIP)

Robert Reich tries to explain exactly what this bailout is.  Patrick J. Buchanan tries to explain how Senator McCain deregulating the Reagan revolutionary can run a campaign of reregulating Wall Street.  Now that the whole ball of wax is melted under the heat of good, old, unfiltered, untrammeled greed.

As Sarah Palin prepares to meet world leaders in the midst of crisis, in Russia, Pakistan, Venezuela-oh, and Iraq and Afghanistan, those pesky Alaskan politics keep bubbling up.  Why did she fire that Public Safety commissioner again-for going on an anti-sex crime lobbying trip that her office approved?  This scandal isn’t going away.  Maybe they should have quit contesting the whole troopergate thing while they were behind. And the collapse of the American market economy marks mega-crisis number four of the last eight years.  Any one of which would mark a presidency as deeply troubled at best.  Is the argument about the Bush legacy now officially over?  We’ll lay it out.  You be the judge.

THE RACHEL MADDOW SHOW starts now.

(on camera):  What is this Wall Street bailout and how is it being managed?

Still taking shape, still hard to understand, let’s try a metaphor.  Money is Halloween candy.  And those Wall Street bankers are metaphorically speaking, our six-year-old child who went out and got more candy than we’ve ever seen or imagined.  Trick or treat?

And with all that candies sitting there, we, parents, the taxpayers hired a baby sitter to supervise our child.  Only instead of hiring a grown up, who wisely fears what happens when six years old do what they like to do best, eat all the candy all at once, we instead hired a seven-year-old babysitter, the federal government.

So, what happened?  The six-year-old ate more candy than it should have on the seven-year-old’s watch and got sick all over the carpet.  And now that we’re paying and sending home the seven-year-old babysitter, we got her take on this disgusting, huge, mess of a crisis we’re now in, and our seven-year-old babysitter turns to us and says, “Well, the problem here is that you’re now out of candy.  You’re going to need more candy.”

And that’s, roughly, is my layman’s understanding of what just happened to our economy.  We left a kid with too much candy, Wall Street and its money, under the supervision of a babysitter who is not all incline to baby sit.  And we should have known better because the babysitter we’ve hired told us explicitly a generation ago, what it thought of supervision.

(BEGIN VIDEO CLIP, JANUARY 20, 1981)

RONALD REAGAN, FORMER UNITED STATES PRESIDENT:  In this present crisis, government is not the solution to our problem.  Government is the problem.

(END VIDEO CLIP)

MADDOW:  Neat.  But, if that’s what you think of government, you probably shouldn’t get to run one.  But do our overseers, the incumbent babysitters want now, they want so much more candy that it seems unlikely that that much candy exists -- $700 billion worth-with no questions asked.

(BEGIN VIDEO CLIP, FRIDAY)

PRES. GEORGE W. BUSH, UNITED STATES OF AMERICA:  This is no time for partisanship.  We must join to move urgently needed legislation as quickly as possible without adding controversial provisions that could delay action.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, “THIS WEEK”/ABC)

HENRY PAULSON, U.S. TREASURY SECRETARY:  We need this to be clean and quick, we need to get it in place.

SEN. JOHN BOEHNER, ® OHIO:  We need to keep it clean, simple, move it through the House and Senate, and get it on the president’s desk.

(END VIDEO CLIP)

MADDOW:  Bills moving quickly, and the Bush administration asking for blind faith, are each things that give us cause to worry about the details.  In this case, there’s a three-page plan laid out by Treasury Secretary Henry Paulson, that works out to about $233 billion per page.

The proposal says that Paulson’s personal decisions about how to spend that $700 billion, quote, “may not be reviewed by any court of law or administrative agency.”  There are signs of resistance from a Democratic Party that hopefully remembers being bulldozed by the administration on the Patriot Act, that was 342 pages and the 5 ½ year-long war in Iraq.

Among fledgling Democratic demands, it’s the helpful layers of government oversight; the provision that would help homeowners avoid foreclosures instead of just helping Wall Street; and proposed limits on Wall Street CEO compensation since we’ll be the ones paying their salaries.Some very conservative Republicans, including Congressman Steve Pence (ph) and Senator Jim DeMint of South Carolina, are resisting the whole idea of the bailout.  No more candy.  Even Barack Obama and John McCain appear to agree that there is something unhealthy going on here.

(BEGIN VIDEO CLIP)

MCCAIN:  I’m greatly concerned about the plan that gives a single individual the unprecedented power to spend $1 trillion -- $1 trillion.

OBAMA:  We cannot give a blank check to Washington with no oversight and no accountability, when no oversight and accountability is exactly what got us into this mess in the first place.

(END VIDEO CLIP)

MADDOW:  So, what’s to do about this sticky mess?  Did my candy-sick-Halloween metaphor work for you?

Joining us now Robert Reich, secretary of labor under President Clinton.  He’s now a professor of the University of California at Berkeley.  He serves as an economic advisor to Barack Obama.

Mr. Secretary, thank you for being here.

ROBERT REICH, FORMER CLINTON SECRETARY OF LABOR:  Thank you, Rachel. 

That was a pretty sticky sick metaphor.

(LAUGHTER)

REICH:  I mean, look at-I mean, Wall Street has been on a sugar high for years.  And, obviously, when you go, we know, when you go on a sugar high like that, you’re going to come down.  And it came down a crash.  Your metaphor was exactly right about six-year-olds, except these are very wealthy six-year-olds, the top people on Wall Street.  As you know, have been raking in tens if not hundreds of millions of dollars the past few years when that sugar high was very high.

MADDOW:  And, is the point of the metaphor right as well, though, is this giant bailout, essentially, the price we are now paying for a lack of supervision all these years?

REICH:  Yes, absolutely.  And it’s a kind of it’s an extortion of price because what Hank Paulson, our treasury secretary, and Ben Bernanke, the Fed chief, are saying to Congress and to the public is-you got to do this, provide $700 billion, $800 billion, maybe $1 trillion, $900 billion, and if you don’t, the whole financial system is in danger of melting down.And what Democrats are now saying is-wait a minute, this can’t be completely right.  We can’t give a completely blank check.  McCain is also saying that, although McCain never wanted regulation before.  People are saying now, well, there have to be some conditions attached to this unbelievable sugar high that we’re going to give these kids.

MADDOW:  Even though John McCain never wanted regulation before, and so this whole crisis represents a total political U-turn for him.  Even though we understand his history, as setting him up in sort of an awkward situation right now, now that he is a born again regulator, is he actually suggesting the same kind of strings attached, the same kind of regulations as Barack Obama is for this bailout?

REICH:  Well, look, he’s not being very specific.  In fact, neither candidate is being very specific right now.  They are waiting for Congress to make a move.  What McCain is saying is-look, we have to have some oversight and some regulation.  This, again, is very different from the John McCain we knew even a year and a half ago or even a year ago, or even six months ago.

And for all the time he was in charge of the Senate Commerce Committee, he was deregulation John McCain.  Also, there is some kind of hint that John McCain is going to say-we have executive salaries that are too large.  Now, that, again, is a John McCain who never met an executive salary he didn’t like, whose own tax plan is going to give the average executive about $700,000 worth of tax cuts, if it ever goes in to effect, whose economic advisor is Carly Fiorina, who got a $50 million golden parachute when she was fired from Hewlett Packard.

So, this is all very, very curious, very strange going on.

MADDOW:  It should be noted that when John McCain was asked about Carly Fiorina’s golden parachute, I think $42 million, I think it’s the number I got in my head, he said he’d never heard about it.  It was totally news to him.

Secretary Reich, does this need to be rushed?  I mean, Congress wants to do this within two weeks without the normal hearings, without the normal committee review process.  That is usually a recipe for a generation of regret.  Should they slow this thing down?

REICH:  Well, look, we got a lame duck president.  We have Congress who wants to get back to campaigning.  It only plans to stay in session this week.  It wants to get back to the folks back home because an election is coming up in six weeks.  Nobody wants a meltdown on Wall Street.

So, there is a rush to judgment.  There’s definitely pressure to do this thing quickly, but there are people who are speaking out, not only Obama, but also Barney Frank, others who are in Congress who are saying-wait a minute, we’ve got to protect homeowners, we have got to make sure that there is some control of executive compensation, we can’t let Wall Street off the hook entirely, we’ve got to have some protection for taxpayers.

MADDOW:  One last very quick question-there’s a troubling detail in this three-page plan put forth by Secretary Paulson on which it says, “Decisions by the secretary of the treasury are non-reviewable.  They may not be reviewed by any court of law or any administrative agency.”  What’s up with that?

REICH:  Rachel, that is not only is it disturbing because it really does creates a kind of a King Hank Paulson, King Henry XXII.

MADDOW:  Yes.

REICH:  But also, if you look at the fine printing, you see that what the Treasury Department would do if it gets all of these bad loans off the books of these investment banks and others, is to turn around and hire consultants, that is investment bankers, many from the same banks, to make decisions about how to dispose of this to save taxpayer money.

So, in some ways, Wall Street collects twice, they collected on the upside, and now, as consultants to decide how to dispose of all these bad loans, they may collect once again.

MADDOW:  Yes.  You wonder what happens when you put Goldman Sachs’ CEO in charge of the treasury at a time like this.

Robert Reich, former secretary of labor and current Obama economic advisor, thank you for your time tonight.

REICH:  Thanks, Rachel.

MADDOW:  While Washington fights about how to spend many, many billions of taxpayers dollars, and world markets and the world’s people worry about what’s next, the battle over the economic crisis is also now dominating life on the campaign trail.

Today, Barack Obama and John McCain traded charges about who’s better able to handle this rattled economy.

(BEGIN VIDEO CLIP)

MCCAIN:  Senator Obama has declined to put forth a plan of his own.  At a time of crisis when leadership is needed, Senator Obama has simply not provided it.

OBAMA:  Let’s be clear.  When it comes to regulatory reform, Senator McCain has fought time and time again against the common sense rules of the road that could have prevented this crisis.

(END VIDEO CLIP)

MADDOW:  Once again, I have to note, that we requested a representative from the McCain campaign to join us, to talk about this issue.  Unfortunately, all of our requested guests were unavailable, again, tonight.

Here’s our updated list of some of the guests we have hope to have on.  We truly hope one of them will agree to talk with us soon, anytime, or come at even a weird time of day if that’s more convenient to you.  Really, we are not kidding. Joining us now is a man who is not at all chopped liver, but who is also not with the McCain campaign, Steve Benen.  He writes for the “Washington Monthly.” Steve, thanks for joining us.

STEVE BENEN, WASHINGTON MONTHLY:  Good to be here, Rachel.  How are you?

MADDOW:  Very good, thanks.

Senator McCain has been struggling to find the coherent message in response to this overall economic crisis, made for a very bad week for him on the campaign trail last week.  Over the weekend and over the course of the day today on the campaign trail, did it seem to you like he was finding his footing and he was finding his voice?

BENEN:  No, not yet.  I think he’s still trying.  To use the Halloween metaphor that’s your using earlier, I got the sense that the mask has come off and we’ve seen a candidate who really doesn’t have much of an economic at all.

You know, looking back to Monday, we saw him talk-first message right off the bat was that the fundamentals of the economy are strong.  That was a disaster.  The next day, we hear a little about a commission, which I also think was a disaster because it made it seemed as if John McCain didn’t quite know what was going on.  He was hoping to have a committee tell him. From there, we heard him, he was against the AIG bailout, then he was for it.  He’s just been flailing around all over the place with an economic message.  It’s become something of a disaster for him.  And we’re starting to see some of that that’s reflected in the polls.

MADDOW:  On the other side of it, Senator Obama has certainly had an uptick in the polls over the course of this crisis.  But when you hear him on the stump talking about this, is he offering the kind of specific remedies that people can understand and relate to or is he scoring most of his political points right now off of attacking John McCain?

BENEN:  I think it’s probably a little of both.  I think Robert Reich was right that neither candidates necessarily presented a lot of details in terms of what they want to do.  I think, Chris Dodd’s proposal today offers something of a path going forward.  I think Barney Frank’s proposal, he’ll be working with Chris Dodd, also offers a bit of a way out. But Barack Obama has a very compelling message in as much as he gets to say, “I’m not John McCain, I have a policy going forward.  I have an economic message that I think resonates with people.”  And given that, I think, he’s going to probably trying to ride this wave out a little bit further.

MADDOW:  I wonder if this is in certain way sort of temperament test for these candidates and that we, voters and potential voters, are seeing how these two men respond to a crisis, how they make politics out of bad news.

BENEN:  Right.

MADDOW:  Is this sort of the 3:00 a.m. phone call we anticipated so much during the primaries?

BENEN:  Absolutely.  You know, I heard George Will, who’s not exactly a reflexive (ph) liberal, talked yesterday about how this is something of a presidential test.  And there’s one candidate who’s come across as being steady, unflappable, calm, the kind of person you would want in a crisis, and it’s not John McCain.  It’s Barack Obama. I think, to a certain instinct, we saw that with John McCain’s constant changing of messages.  It didn’t necessarily convey a sense of confidence, or for that matter, a sense of competence.  And in this week, I think we’re hearing more of the same.  Hopefully, John McCain say, he gets some kind of a message and gets back on track, because right now, he does not have a firm footing because (ph) the more he goes into this, it would something of a disadvantage. John McCain has always trailed (ph) with an economic message.  He said he’s conceded and acknowledged publicly many times that economics is not something he understands particularly well.  Polls have shown consistently that Democrats are preferred, against Republicans on economic messages.  And so, given that dynamic, he’s a high hurdle to clear and he has quite gone enough to it yet.

MADDOW:  Steve Benen from the “Washington Monthly,” thank you very much for joining us.

BENEN:  Thank you, Rachel.

MADDOW:  Here’s John McCain’s current challenge, as Steve said-in a country suddenly and justifiably all jazzed up (ph) about the government actually being competent about government having the “where with all to set rules to protect us,” in that country, which is the country we live in now, how does a devoted deregulator reinvents himself for this electorate?

My old friend, Pat Buchanan, will be here in just a moment.  Maybe he can explain how this is going to go.  And Sarah Palin tries to beef up her foreign affairs cred tomorrow with a big visit to the United Nations.  Meanwhile, back in a state that you can see from Russia, there are yet new details on troopergate, believe it or not. But first, just one more thing from the campaign and the deregulations fronts, the “New York Times” reports today that John McCain’s campaign manager, Rick Davis, earns nearly $2 million heading a group set up by Fannie Mae and Freddie Mac, to stop stricter regulation.  Davis said he never had engaged in lobbying for that group, they just paid him $30,000 a month for, I don’t know, actually. The campaign, Steve Schmidt responded, not by debunking the story, but by flinging insults at the paper that published the story.

(BEGIN AUDIO CLIP)

STEVE SCHMIDT, MCCAIN STRATEGIST:  Whatever the “New York Times” once was, it is today not by any standard a journalistic organization.  It is a pro-Obama advocacy organization that every day attacks the McCain campaign.

(END VIDEO CLIP)

MADDOW:  OK, but, if what they said is true, when is the part will you tell us what Fannie Mae and Freddie Mac thought they were getting for their $30,000 month pay to John McCain’s campaign manager?

(COMMERCIAL BREAK)

MADDOW:  To hear from John McCain of the pass 10 days, one would think the Republican nominee has been possessed by the ghost of Franklin Roosevelt.Presenting himself as an economic (INAUDIBLE) man, distrustful of unfettered capitalism, kind of odd coming from the man who, in a fairly obscure actuarial journal called “Contingencies” recently wrote of deregulating healthcare industry, quote, “Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking would provide more choices of innovative products less burdened by the worst excesses of state-based regulation. Douglas Holtz-Eakin, the same advisor who implied that McCain invented the BlackBerry, he says that quote was being taken out of context, he says McCain was referring to cross state purchasing of health insurance.  But if you look at John McCain’s record and even comments he made to “60 Minutes” last night, it’s clear where he stands on deregulation.

(BEGIN VIDEO CLIP, CBS NEWS)

PELLEY:  In 1999, you were one of the senators who helped pass deregulation of Wall Street.  Do you regret that now?

MCCAIN:  No.  I think the deregulation was probably helpful to the growth of our economy.

(END VIDEO CLIP)

MADDOW:  Just three weeks ago, at the Republican National Convention, Mitt Romney promised McCain would take a weed whacker to regulation.  Today, McCain struck a much different tone.

(BEGIN VIDEO CLIP)

MCCAIN:  We won’t solve a problem caused by poor oversight with a plan that has no oversight.  As we determine what to do, we need to put our country first and what’s best for Main Street, not Washington, not Wall Street, but Main Street.

(END VIDEO CLIP)

MADDOW:  So, John McCain is surrounded by a political team that is very full of lobbyists, including Rick Davis of Fannie-Freddie infamy and he has long boasted of his dedication to deregulation, because there’s nothing government can do that unfettered Wall Street can’t do better. And now for the last week, he has a mad as heck regulating populist.  I feel like I missed something here.  I feel like John McCain may now try to win the election as an anti-Reagan candidate. Joining us now, no doubt to disagree with me, to put it on nice way, is MSNBC political analyst, and my friend, Pat Buchanan.

Hi, Pat.  Nice to see you.

PAT BUCHANAN, MSNBC POLITICAL ANALSYT:  Hi, Rachel.  How are you doing?  Are you having a good night?

MADDOW:  Very good.  Yes, indeed.

BUCHANAN:  Right.

MADDOW:  Pat, I thought of you when I heard John McCain suggest last night that Andrew Cuomo could be his SEC chair and then he said that he wants Warren Buffett to be on an oversight board.  Is he dropping Democratic names to concede that being a Republican is kind of a liability now?

BUCHANAN:  No, I think Warren Buffett is a name that everybody approves of.  He’s got a terrific record in investment, and everybody listens to him.  He’s a great oracle.  Cuomo is a regulator, I suppose and replaces the SEC fellow whom John McCain wants replaced.  I don’t see any problem with that.  McCain has always said he’s going to have sort of a bipartisan administration.  I would guess that Joe Lieberman would be secretary of state.

MADDOW:  That would make it tri-partisan because that would be the Connecticut for Lieberman Party represented as well.

BUCHANAN:  He’ll be the independent, the independent, right.

MADDOW:  The independent, that’s right.  Do you think that McCain can successfully act like a populist and be pro-regulation guy, given how strongly he’s spoken out against regulation in the past?

BUCHANAN:  I wouldn’t put it past him for this reason, Rachel.  We’ve had a 9/11 event in the markets.  I would not have favored a $700 billion bailout or any bailout two weeks.  We had a real disaster and almost seizing up of the banks, collapsing of banks everywhere with people destroyed who are utterly innocent.  I think Paulson probably did the right thing on Friday, I said so.

I do believe now, let’s take a second look at this, and we aren’t going to bailout every deadbeat in America as some of the Democrats want to do.  I think this is, as George Will said, something dramatic has happened and we see how people react and respond in crisis according to their principles.  And I don’t fault John McCain that much.  Clearly, he was wrong-footed last week.

MADDOW:  Well, on the big issues, though, I wonder if there is going to be an ideological split on this, because there weren’t many people who are saying don’t throw the life ring, don’t rescue the economy but the analysis of this is that the fact that there wasn’t regulation is a big reason why this all happened.  And so, if deregulation is the cornerstone of fiscal conservatism in the Republican Party, is that going to go away?

BUCHANAN:  No, no.  I mean, if you guarantee, for example, deposits up to $100,000, you got to have rules and regulations over the people who control those deposits.  But let me say this-the core of this, as you mentioned, the Fannie Mae-Freddie Mac corruption down there with, frankly, Franklin Raines and all these Democrats looting the place for scores of millions, putting Congress on the payroll, no oversight from Congress, no oversight from treasury, little oversight from the SEC, you clearly got a disaster on our hands.  It is a by partisan disaster in my judgment.

And again, we judge people by how they handle this.  As I said, McCain was wrong-footed last Monday.  Clearly, but he does seem to be moving in a correct direction as I see it right now, which is we may have to do this, but we certainly aren’t going to give away $700 billion to somebody to spend, taking care of his old friends on Wall Street.

MADDOW:  But, Pat, I mean, you can talk about Franklin Raines being a bad guy, you can find Democrats who have been deregulators, too.  But this isn’t a Democratic-Republican problem necessarily.  This is a conservative problem.  It is a contention of American conservatism that regulation is bad and that the markets ought to be left alone.  The reason that Fannie and Freddie had John McCain’s campaign manager on the payroll for $30,000 a month, it’s because they wanted no regulation, they wanted what conservatives want.  I want to know how conservatives show their faith in responding to this crisis without acknowledging that their basic philosophy is at the root of it.

BUCHANAN:  Well, my basic philosophy is-you don’t give mortgages to people who have no credit worthiness, who have income that shows they cannot handle a mortgage, who don’t put any money down.  This was liberalism gone wild in a lot of ways in there.  They would have-pushing all that money into subprime mortgages.  It’s not conservative banking in my judgment.  It never has been.  I’m a conservative.

MADDOW:  But, Pat, that’s because the conservatives changed the rules so that it made sense for Wall Street to make those loans because they sent them on.  This was Phil Gramm’s big idea.  (INAUDIBLE) rules are wrong.

(CROSSTALK)

BUCHANAN:  Wall Street bought the stupid loans put out there by Freddie Mac which were all put together, bundled together, turned into security thing-you’re right.  They failed in their job and they should lose-they should lose their shirts, the people that did that.  But the core of this is in government failure and Freddie Mae, and Fannie Mac, and all the rest or I got them backwards.

MADDOW:  In this case we do agree that the government is the problem.

(LAUGHTER)

BUCHANAN:  Right.

MADDOW:  Pat, thank you for joining us.

BUCHANAN:  Government is solving, trying to solve its own crisis.

MADDOW:  Well, government is the problem here when it’s run by people who don’t believe government should work well.  But we’ll have to leave it there until I can see sometime out for a drink, Pat.  Thanks for joining us.

BUCHANAN:  OK.

MADDOW:  All right.

Hundreds of years from now, when Americans are leaving on some distant space colony, someone may complain about the then president doing something bad.  But then, someone will speak up and say, “Yes, (INAUDIBLE), but he’s not as bad as George W. Bush.”  The Wall Street debacle makes four nation shaking crises on Bush’s watch.  Does that settle the argument for all time?  Unless somebody Talks Me Down, I say, yes it does.

(COMMERCIAL BREAK)

MADDOW:  Disgusted, embarrassed, ashamed - these are the words the Republican president of Alaska State Senate uses about what she views as the McCain campaign trying to shut down the “troopergate” investigation.  That State Senate president will be joining us here later. 

Now, it turns out the most recent excuse Gov. Palin has unveiled for why she fired Public Safety Commissioner Walt Monegan is actually not true.  Shocker. 

First though, it is time for a few underreported holy mackerel stories in today’s news.  The truck bomb that killed at least 53 people and injured more than 250 others on Saturday at the Marriott Hotel in Islamabad, Pakistan contained a lethal accelerant found in the world’s most powerful weapons - aluminum powder, and that’s very alarming. 

After the six-wheeler rammed the hotel security barrier 60 feet from the hotel, shots were fired.  The truck went up in flames.  Then, eventually, an estimated 1300 pounds of military-grade explosives in the truck including TNT, aluminum powder, grenades and mortars exploded.  The force of the blast left a 27-foot crater and triggered a fire that engulfed the five-storey hotel.  The fire reached more than 750 degrees Fahrenheit which rendered the hotel sprinkler system was useless.  And this was all from 60 feet away.  In advanced weapons, the addition of aluminum powder can produced a subsonic or even supersonic shock wave.  It’s a thermo-baric blast.  That kind of blast could extend the radius of a truck bomb’s effectiveness dramatically.  When asked who was responsible for the attack in Pakistan, Pakistan’s interior ministry’s top official was quoted as saying, “All roads lead to Waziristan,” which is where intelligence officials say Pakistani troops are allies in the war on terror.  Yet again, shot at U.S. helicopters today as they attempted to cross the border from Afghanistan into North Waziristan.  The U.S. helicopters did not return fire, but reportedly, they did try to make another attempt 30 minutes later, whereupon they were greeted with another round of Pakistani warning shots.  Pentagon officials are denying that report.  Meanwhile, an envoy carrying Afghanistan’s newly appointed ambassador to Pakistan was ambushed today in the Pakistani city Peshawar.  The diplomat was on his way home when six armed men kidnapped him and killed his driver.  More signs of Pakistan’s deteriorating security situation after billions of dollars in U.S. aid since 9/11.  By the way, they’ve got nuclear weapons.  Here at home, the State of Georgia is scheduled to execute a convicted murderer tomorrow even though seven out of nine witness who testified against him have recanted their testimony.  And there’s no murder weapon, no fingerprints and no DNA tying him to the crime.  Thirty-nine-year-old Troy Davis was sentenced to death for the member of Savannah police officer that took place nearly 20 years ago.  A spokesperson for the State Parole Board said there would be no last minute clemency.  The U.S. Supreme Court is scheduled to decide whether to hear Davis’ appeal, but they’re scheduled to make that decision six days after tomorrow’s planned execution.  Attorneys for Davis have asked the state to postpone the execution.  Figures as varied as Libertarian presidential candidate Bob Barr and former Jimmy Carter and the pope have all requested clemency but the Georgia Supreme Court Davis’ request for a stay of execution this afternoon.  Finally, nine days after Hurricane Ike, nearly a million people in Texas are still without power.  But across the southeast, effects of Ike are still being felt in the form of a gas shortage.  For many residents in Georgia, Florida and Tennessee, shortages have made ordinary life nearly impossible.  AAA says residents in Nashville are being hit hardest by long lines, high prices and empty pumps.  Nine major refineries in the gulf are still offline.  Prices could rise even further following the biggest one-day spike in oil prices ever earlier today.  No power, no gasoline?  Heck of a job. 

You know, when infrastructure nerds like me talk about us being resilient as a country, being hard to hurt, able to take a punch and get right back up again, this is what we are talking about. 

(COMMERCIAL BREAK)

MADDOW:  In our ongoing study of Sarah Palin’s politics and public record, a scene is emerging that is not a good thing.  The more we find out about Palin, the more it seems we have to worry about.  For example, her advisors, a lot of familiar faces, it turns out, familiar from the Bush administration. 

“The Washington Post” noting the big names on the campaign roster said today, quote, “Far from being a group of outsiders to the Republican Party power structure, it is now run largely by skilled operatives who learned their crafts in successive Bush campaigns and various jobs across the Bush government over the past eight years.” 

Now, instead of worrying about a third Bush term, we have to worry about the second one just continuing without any real interruption in leadership.  And then there’s Alaska’s first dude, Todd Palin.  We already knew that for almost seven years, he belonged to a political party that advocates seceding from the United States.  But we’re just now learning the degree to which he is involved in his wife’s administration.  He’s not just your average snow-machine racer, oil worker, fisherman dad.  An Alaska Democrat tells “The Post” that the first dude is also Gov. Palin’s, quote, “de facto chief of staff.”  So in a Palin vice presidency, we could expect a lot of input from an unelected, former secessionist?  But nowhere is the principle of “the more we know, the worst it gets” more true than in the “troopergate” investigation.  Well, tonight, we have more evidence and more denials that make the evidence sound mild in comparison.  The question at hand is whether Sarah Palin fired Public Safety Commissioner Walt Monegan because he refused to fire state trooper Mike Wooten.  He was involved in a nasty divorce with Palin’s sister.  In her own defense, Palin has claimed to have fired Monegan because he went on an unauthorized lobbying trip to Washington to request federal funding for a program to fight sexual violence.  Now, even that bizarre denial seems to be falling apart.  ABC unearthed this travel authorization for Walt Monegan’s trip to D.C.  The authorization is signed by Gov. Palin’s chief of staff.  So much for the whole unauthorized thing.  The latest Palin explanation by way of McCain campaign spokesman Taylor Griffin is that the travel was approved as a matter of routine.  That’s your defense?

Joining us now, Lyda Green, the Alaska State Senate president who is a Republican.  She represents Wasilla.  She knows Gov. Palin well.  Sen.  Green, thank you so much for joining us tonight. 

LYDA GREEN, PRESIDENT, ALASKA STATE SENATE:  Good evening. 

MADDOW:  It seems as though the excuse of firing Walter Monegan as Public Safety Commissioner has gotten less and less credible as it has evolved.  The latest explanation was that she fired Chief Monegan for trying to get funding for a program to fight sex crimes.  Can you shed any light on what actually happened and what the explanation is?

GREEN:  Well, you know, the interesting thing about any governor firing an-at-will employee is that you can fire them for no reason.  You should need to be careful that the reason you used is credible, is the real reason and is what’s at hand.  And well, Monegan has been a good servant, good - great, great commissioner.  And all of our commissioners head to D.C. for trips without Congressional delegation. 

MADDOW:  The worry here is that - and this is a cliche, but the worry is that the cover up is worse than the crime.  She could have said that she fired him for any reason.  The reports of why she fired him do not seem to be credible, particularly this unauthorized trip allegation.  There have been generic allegations that Gov. Palin is secretive and that she values loyalty from people around her to a degree that may be detrimental to her ability to govern.  Can you shed light any light on that?

GREEN:  Well, my observation that she is very, very resolute in where she is headed.  And differences and any show of disagreement on policy dissolves into, for her, a disagreement on a personality.  And it becomes crucial very quickly.  That’s been my observation and the thing that really bothered me most of all. 

MADDOW:  You’re a very powerful Republican in Alaska State politics.  You are the president of the Alaska State Senate.  You represent Wasilla, which is Sarah Palin’s hometown.  What have been your areas of policy disagreements with Sarah Palin?  Are there big issues on which you two disagree that might explain why you have a relationship of the type that you have?  Is it a personal dispute.  What’s happened between the two of you?

GREEN:  Well, following 12-and-a-half years of a very amicable relationship, we were associates and allies in the political world.  And as her campaign was taking off in the primary, I chose to stay neutral and I did not get into the primary because I was working with a seated Republican governor. 

And I think, in retrospect, I’ve been told by some of her supporters that that was a mistake on my part.  On policy issues, I found that the continuing campaign rhetoric that was carried into the administration, having to do with people being ethically challenged and the corruption issues were vastly overstated. 

And when she went into - two things that I think are probably the hallmark of hers was one - was the Alaska Gas Line Inducement Act, which essentially awarded a $500-million assistance to TransCanada to build a pipeline.  However, nothing in the contract says the pipeline will be built.  And the other was the very, very gross increase in taxes on the industry that supports Alaska by about 85 percent. 

MADDOW:  Sen. Green, one other question about something that may be hard to get a grasp on from outside Alaska that you probably know well, and that’s the issue of Todd Palin.  We have heard scattershot reports of him doing essentially what seems like state business from the governor’s office while she is away, him being involved in policy discussions, him making very detailed consultative - having a very detailed consultative role in deciding items to veto, and things.  What is your experience with Todd Palin?  And if Gov. Palin is elected vice president, should we expect him to be a very powerful unelected member of the government?

GREEN:  You know, I was very surprised to see Todd in the governor’s office one time when I approached the office to have a meeting with the governor.  Once I walked in, I assumed he would leave.  He did not leave.  He did not enter the conversation but he was across the room and I felt it was different from any meeting I had ever been in.  I had other legislatures tell me that they had the same experience.  And I do think that the governor listens to her husband, Todd, and they probably discuss to a greater extent than some of us might, the goings-on in her office. 

MADDOW:  I don’t think people are worried about husband-and-wife consultation.  I think they’re worried that he might be making policy.  I mean, I have to worry about that on (UNINTELLIGIBLE).

GREEN:  That’s right.

MADDOW:  Alaska State Senate President Lyda Green, thank you so much for joining us.  I really appreciate it. 

GREEN:  Thank you. 

MADDOW:  9/11, Iraq, Katrina, and now the liquification of “Wall Street” into a puddle of goo on the taxpayers’ shoe.  What do all these things have in common?  George W. Bush was president for all of them.  I think just one of these things would have been enough to put 43 in the running for the worst president ever.  And maybe I need some talking down on this. 

(COMMERCIAL BREAK)

MADDOW:  1932 was the last year that we held a presidential election in the midst of a truly massive financial crisis.  That was the election in which the incumbent Republican president, Herbert Hoover, spent the campaign season dodging rotten fruit and thrown eggs on his way to losing all but six states to an upstart Democrat named FDR.  There’s been a long running argument about whether our current president ought to be considered among the worst presidents in U.S.  history, whether he belongs alongside Hoover and other presidential failures like Andrew Johnson and Warren G. Harding, maybe on a horrible little monument made out of - I don’t know - a teapot dome or something with bad presidents carved on the side. 

Anyway, that debate I think has now fundamentally changed as in it’s over.  Barring yet another disaster of unimaginable scale, we now know that the presidency of George W. Bush will be defined by four massive country-changing failures.  Disaster one, the attacks of September 11th, 2001, in which a government that had been warned failed to act on the warnings.  And a defense sector, larger than the whole rest of the world’s defense sectors combined, left us undefended.  Disaster two, the as-yet unexplained mendacious launch of the Iraq War, a country we were told had something to do with the yet un-avenged attacks of 9/11. 

Disaster three, the city of New Orleans left to drown, while the government’s once-vibrant disaster response and emergency response sector dithered.  And now, disaster four, economic meltdown.  We don’t really have investment banks anymore.  We’re borrowing $700 billion probably mostly from China to stem off utter collapse.  So that’s eight years, four crises, each one awful enough on its own to brand any presidency an abject failure and we got them all done with just one guy.  Bargain.  Here to talk me down is Thomas Frank, the author of the book “The Wrecking Crew: How Conservatives Rule.”  Thomas Frank, thanks for joining us. 

THOMAS FRANK, AUTHOR, “THE WRECKING CREW”:  How are you today, Rachel?

MADDOW:  I’m antsy, as usual.  Do you think I’m right to, you know -

FRANK:  Yes.  Yes.

MADDOW:  Do you think I’m right to put this financial disaster in the context of the other major disasters of the Bush legacy?

FRANK:  Yes, you are.  But I want to point out that you left out a really bad president on your list.  What about Buchanan - James Buchanan.  Come on. 

MADDOW:  James Buchanan - he was pretty bad. 

(CROSS TALK)

I left out Nixon, too.  I left out Nixon, too, but you’re right. 

That’s a good call. 

FRANK:  Yes.

MADDOW:  Where do you think this puts the legacy?  Sorry, go ahead. 

FRANK:  Look, these things are connected.  Well, with the exception of 9/11, which I would put somewhere else - but in that they’re all - these are - it’s judgment day for the conservative philosophy of governing. 

Look, Bush is not, you know, personally responsible or his policies aren’t responsible for the inflating of the housing bubble.  But conservatism is, with its idea of, “Let the markets do what they want.  The markets will always find equilibrium.  The markets can self regulate, you know.  Just leave it up to them.” 

And the other things that you mentioned like the Homeland Security which, you know, totally failed in the case of Katrina and reconstruction of Iraq which has been a complete disaster.  Both of these were cases where they were using Bush’s, you know, famous philosophy of privatize, outsource, you know, let the private sector handle the problem.  And in all these cases, it failed.  Can I keep going?

MADDOW:  Well, you could.  But let me ask you about where I think you’re going with this, which is that this is a problem of conservatism.  This is a problem letting people run government when they believe that government can’t work and ought not work.  And what I wonder is whether or not Democrats are going to get off the Reagan-esque conservative trip they’ve been on since Clinton and stop following Republicans’ lead on this. 

FRANK:  I certainly hope they are.  You know, and there’s another thing to add and that is their constant war on federal workers, on federal employees.  You know, while they’re outsourcing everything to the private sector because of course the private sector does everything better than public workers, they’re constantly bad mouthing public workers, doing pay freezes, treating them poorly, et cetera, et cetera, et cetera.  Give it all out there to private sector.  You know, they’ll do the job, Rachel. 

MADDOW:  Do you see this debate reflected in the presidential campaign?  Or is it policy to policy, sound bite to sound bite and we’re not getting at these philosophical issues?

FRANK:  They haven’t got at them yet but they’re being forced to by the collapse on Wall Street, by the complete breakdown.  This is due to the complete lack of oversight of, you know, a huge part of, you know, the financial industry.  I mean, if somebody can tell me what a credit-default swap is, you know, we can start talking about how to go about regulating it.  You know, they’re going to crucify mankind on a cross of credit-default swaps.  We don’t even know what they are. 

MADDOW:  Thomas Frank, author of the book “The Wrecking Crew.”  Thank you for trying utterly unsuccessfully to talk me down.  Appreciate it.

FRANK:  Sorry about that, Rachel. 

MADDOW:  Coming up, Kent Jones gives me just enough pop culture to go out among other people in public.  Tonight, Run DMC in the rock HOF. 

(COMMERCIAL BREAK)

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

KENT JONES, POP CULTURIST:  Good evening, Rachel.  Are you ready to rock, Cleveland?  Today the Rock and Roll Hall of Fame announced the nominees for next year’s class.  Leading the pack are, yes, Run DMC. 

MADDOW:  Right on. 

JONES:  yes.  And Metallica, yes.  Excellent.  Rock critics say both acts richly deserve to be in the Hall of Fame because - well, mostly because they’re terrified of them.  I mean, seriously, you tell Metallica they didn’t get in.  They will take your lunch money. 

Next, though it’s a little bit early on the calendar, Oktober Fest kicked off in Germany this weekend.  Yes.  The mayor Munich, Christian Ude, opened the 16-day beer fest with the traditional tapping of the first keg.  Now, that’s a mayor I would vote for.  Swill, baby, swill! And finally, in Brazil, “The New York Daily News” reports that the newspaper “O Globo” has tracked down a former model that who had a steamy eight-day affair with midshipman John McCain back in 1957.  Maria Gracinda Teixeira de Jesus who is now 77, had this to say about her long-ago fling with McMaverick.  Quote, “He was a lovely person and loved to go out with me.  I called him ‘John’ but he was my dear and my coconut dessert.”

MADDOW:  Really?

JONES:  Coconut.  Well, white, rich, flaky.  I think she nailed it.  “My coconut dessert.” 

MADDOW:  She seems very nice. 

JONES:  She was lovely. 

JONES:  She was lovely.  Has a lot of good memories. 

MADDOW:  There she is again.  I feel uncomfortable now.  OK.  Thanks, Kent.  And thank you for watching.  We’ll see you here tomorrow night.  Until then, you can E-mail us at rachel@msnbc.com < mailto:rachel@msnbc.com>.  You can also hear my radio show at 6:00 p.m. Eastern coast to coast on Air America Radio.  “COUNTDOWN” with Keith Olbermann starts right now.

END   

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