updated 9/26/2008 2:01:16 PM ET 2008-09-26T18:01:16

THE RACHEL MADDOW SHOW

September 25, 2008

THIS IS A RUSH TRANSCRIPT.

THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED

Guests: Richard Shelby, Ed Rendell, Alex Gibney

RACHEL MADDOW, HOST: You love doing this to me.

KEITH OLBERMANN, MSNBC HOST OF "COUNTDOWN WITH KEITH OBERMANN": I do.

MADDOW: Thank you, Keith, for so many things.

And thank you for sticking with us this next hour.

Lawmakers are still working on Capitol Hill, as we speak. They are earning their pay. We'll let you know if anything comes to that. It's already been another exclamation point day in the news.

(voice over): One problem with having a president who doesn't command much authority even in his own party anymore-he can't get a whole lot done. A big meeting at the White House appears to end with a big setback for the big bailout.

(BEGIN VIDEO CLIP)

SEN. CHRIS DODD, (D) CONNECTICUT: And the Paulson plan, yes, it's dead.

SEN. RICHARD SHELBY, ® ALABAMA: I don't believe we have an agreement.

(END VIDEO CLIP)

MADDOW: John McCain and Barack Obama attend President Bush's bipartisan photo op then make the rounds with the TV networks.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE: Sometimes, if you inject presidential politics into some delicate negotiations, it's not necessarily constructive.

SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE: But I think that we've made progress and I'm confident we will have a deal. How much I had to do with that, I'll let you and the others, be the judge.

(END VIDEO CLIP)

MADDOW: Wasn't Senator McCain get to ride into the Capitol and get this thing settled? Isn't that why he suspended his campaign? No staffers bashing Obama until the economy is saved, no more TV ads until we all agree on the rescue plan? Wait, none of that stuff happened? Then, what exactly did he mean by suspend, anyway?

Will he or won't he debate Senator Obama tomorrow night? Maybe Governor Ed Rendell knows. We'll ask him.

And does anyone know who's officiating Sarah Palin's cram sessions on seeming vice presidential, the tutorial on "interview-ology" maybe she needs a redo.

Is the national platform for the woman who would be one heartbeat away from the big desk in the west wing a good thing or a bad thing for the McCain-Palin ticket? Is it time to talk about the witch-hunting preacher, and the tax returns, and Putin flying over her? Was it still a good idea to pick Sarah Palin?

Pat Buchanan and I probably disagree, but, actually, who knows at this point.

THE RACHEL MADDOW SHOW starts right now.

(on camera): If you are not bewildered, confused, and a little bit worried about the big rescue plan our elected leaders are supposedly trying to orchestrate on Capitol Hill right now, can I have some of what you're having? The trip to the bailout got longer and stranger.

Late this afternoon and evening, and tonight, uncertainty is all that is certain. ABC News reporting tonight that Treasury Secretary Paulson fears the deal maybe dead and he pleaded with Democrats not to blow it up. It's the Democrats? Wait a minute. Isn't it the House Republicans who have broken away to develop a competing plan?

Let's back off for a second. The original plan, the Paulson plan was broad, really, really light on the details and eye-poppingly expensive. But our Congress was instructed to pass it lest we return to October 1929, instantly. Pass it, pass it, no time, no questions.

Congress caught its breath, some through the 2 ½ page plan offered up by the White House, and surely, recalled what happened the last time. An expensive open-ended Bush White House authorization was rushed through Congress.

Here's a hint. You can still send mail to members of the United States military using addresses that include the word "Baghdad."

Over the course of the past week, the glaringly unacceptable elements of that 2 ½ page plan were reportedly fixed. There would be some oversight of the Treasury. The $700 billion would not be forked over in one lump sum. Limits on executive pay would be addressed.

Progress? Progress-even as truly head-scratching details remained. For instance, where the heck did this $700 billion figure come from in the first place? A Treasury Department spokeswoman told Forbes.com this week, quote, "It's not based on any particular data point, we just wanted to choose a really large number."

A really large number? That's the calculus among our nation's leading economic theorists and managers? We just need a ton of money; we don't know how much, just make the pile really tall? Isn't economics a science? Not reassuring.

Undaunted by the astronomical price tag, the wind out of Washington as late as this afternoon seemed to be blowing toward a resolution. Senator Dodd suggested that there was fundamental agreement on the key points of the deal. Then about 4:00 o'clock rolled around and it all appeared to fall apart. What changed you ask? How about two ginormous presidential campaign juggernauts uprooting themselves from the battleground states and relocating to Pennsylvania Avenue?

Senators Obama and McCain joined the bipartisan photo-op meeting at the White House today, at the invitation of President Bush, exit bipartisan cooperation-enter Republican revolt, Democratic back-pedaling, an election season posturing. With senators Obama and McCain now set squarely at the center of the bailout battle, the question is no longer when will the deal get done, but rather, will it get done at all and should it get done?

Democrats and Republicans alike today sounded the alarm, that the politics of the campaign may now be hurting their ability to proceed with this part of governing.

Senator Dodd called today's White House event a rescue plan for John McCain. Republican Congressman Bachus of Alabama said he did not want McCain's help in the Lower House, instead pointing, quote, "McCain away from the House and toward the Senate."

So, where did bipartisanship go? Were the candidates going to help with all that? I'm sure it doesn't help, that as of Tuesday, at least one of the candidates had not even read the proposed bailout plan.

(BEGIN VIDEO CLIP, TUESDAY)

UNIDENTIFIED REPORTER: Would you vote for it as it's presently constructed? Why or why not?

MCCAIN: I have not had a chance to see it in writing. So, I have to examine that.

(END VIDEO CLIP)

MADDOW: It's only 2 ½ pages long. Even at five minutes a page, that would take what? Twelve-have you read it on Tuesday?

Shortly after attending the White House meeting with President Bush and Barack Obama, Senator McCain sat down with NBC's Brian Williams defending his decision to return to Washington.

(BEGIN VIDEO CLIP, "NBC NIGHTLY NEWS WITH BRIAN WILLIAMS")

MCCAIN: In doing what I did, by coming back to Washington, beginning with my colleagues, talking, discussing, and coming up with a hope consensus, and sufficient bipartisan bicameral support is what I think I need to do for the country. And if that hurts me politically, I'll gladly take the penalty.

(END VIDEO CLIP)

MADDOW: But what if you coming back to Washington made the deal less likely?

For his part, Senator Obama warning tonight that politics may be preventing progress.

(BEGIN VIDEO CLIP)

OBAMA: Sometimes, if you inject presidential politics into some delicate negotiations, it's not necessarily constructive. And it's amazing how much people can get done when folks aren't worried about taking the credit or passing the blame.

(END VIDEO CLIP)

MADDOW: So, are we closer or further away from a deal now? And if we don't get a deal and it's because of McCain bigfooting presidential politics into the middle of this, would that politically be good for McCain?

Joining us now is Republican Senator Richard Shelby of Alabama. He is the ranking Republican on the Senate Banking Committee. He reportedly opposes the current bailout proposal.

Senator Shelby, thank you so much for joining us tonight.

SEN. RICHARD SHELBY, ® SENATE BANKING COMMITTEE: Thank you, Rachel.

MADDOW: Senator, you emerged from today's White House meeting, announcing there's, quote, "obviously, no agreement." Is that a good thing in your mind? Do you not want any bailout to pass or are you just not happy with this one?

SHELBY: Well, I'm not happy with this one. I think it's fundamentally flawed. I do not believe it's been well-considered. I think, any structure built around the Paulson plan is not going to settle our economic problems, our financial structure, that it's going to enrich a few people at the expense of the taxpayer in the long run.

Now, let me share with you something I got this afternoon that I've been talking about. I have in my hand, a letter with over 200 national economists, some of the smartest economists from MIT, Harvard, University of Chicago, Stanford, Yale, Harvard, Princeton, you name it. They tell us: do not adopt this Paulson plan or anything like it. That we need to consider other things, we should not rush to judgment on this. Too much is at stake.

MADDOW: When you say don't pass anything like it, does that mean you do not want a Treasury-funded bailout of the lousy assets that have driven Wall Street to this brink at all? Do you want a completely different approach or do you just wanted to have more strings attached?

SHELBY: That's a good question. Absolutely, you're right. I think that-and some of the economists have suggested that we ought to think of other alternatives. They know a lot about it. They can do it. If we rush to judgment, we've done this before in other areas and we paid for it.

Let's not put $1 trillion, and that's what it will be in the end, $1 trillion of more debt on our people, on our children and not even know if this work. And the Fed chairman and the treasury secretary, in the banking hearing the other day, couldn't tell us they knew it would work.

MADDOW: Senator Shelby, when Senator McCain talked about running out of time in order to come up with a plan when President Bush expressed such dire urgency on matters economic that I've never heard a president really express from lecturing during my lifetime, did you disagree with them that something needs to be done, soon? Do you believe that we have more time than they think we do?

SHELBY: Well, Rachel, I don't know how much time we have, because, let's be honest. I think our financial market is stressed. But I don't believe this plan by Paulson that has come forth will solve the problems, it might exacerbate them.

MADDOW: Are you, at all, worried that Republicans blocking this bill, with or without Senator McCain, will be blamed for any next bad thing that happens in the economy?

SHELBY: Oh, and let's be honest. I think there's a lot of Democrats that are concerned about the Paulson bill as it's written. We don't have any bipartisan support. You can't say all Republicans are against it. I'm against it, but I have been from the beginning.

But there are a lot of Democrats against this bill.

MADDOW: Honestly though, it does seem like Senator McCain is in the Capitol (ph) at this point, that if he decides to support it, it will likely pass. If he decides to oppose it, he likely will not pass. And so, there is a sort of Republican Party decision to be made with him as the standard bearer of the party.

SHELBY: Well, you can say the same thing about Senator Obama. He's the leader of the Democrats now. If he says he's going to be for it totally, you got Democratic control of the House and Senate, it ought to pass.

MADDOW: The House Republicans have spoken out about this bluntly; you are now speaking about this bluntly. Let me just ask about one strategic question from the other side.

SHELBY: Sure.

MADDOW: Democrats said that they did not want to pass something unless it had the majority of Republican support, presumably because they didn't want Republicans to hit them for having supported something with the Bush administration. Do you think that the best course for the country moving forward is that there's no plan anytime soon?

SHELBY: Well, I don't know what-how soon we could get a plan. I think this plan is not a good plan. I'd rather have no plan unless it's a good plan.

MADDOW: Senator Richard Shelby of Alabama. You can't say it anymore clearly than that. Thank you so much for joining us.

SHELBY: Thank you, Rachel.

MADDOW: Senator Shelby, the ranking Republican on the Senate Banking Committee.

Joining us now to respond is MSNBC political analyst, Pat Buchanan.

Pat, thank you so much for joining us tonight.

PAT BUCHANAN, MSNBC POLITICAL ANALYST: I'm delighted, Rachel.

MADDOW: He says-Senator Shelby says he'd rather there be no plan than a plan that he is dissatisfied with. Do you think there's going to be no plan?

BUCHANAN: In own analysis, if there's no plan, it will be the responsibility of the Democratic Party. They control both houses of Congress. The president, and Paulson, and Bernanke are behind it. And Democrats can't say, you know, we need 100 Republicans for cover. If they really believe in the plan, they believe it's best for the country, they will have a plan. They will pass the Paulson plan.

MADDOW: If you were John McCain right now, and you are facing the choice of whether to support it or oppose it. If you support it, you risk the wrath of the conservative wing of your party that is rising up against this plan right now. If -

BUCHANAN: You risk the wrath of Middle America. And telegrams, e-mails are coming in 200 to one against this, Rachel. The American people see $700 billion being sent out to Wall Street to bail out arrogant, stupid people, who were greedy, and who bought all this property, and now we're trying to unload it on the taxpayers. And neither Paulson nor Bernanke can tell the Congress or tell that committee this is going to work, this will get us out of this crisis.

MADDOW: But, Pat, there is a political concern here which is that John McCain has suspended his presidential campaign because he said he had to urgently go back to Washington and make arrangements for a bailout. If he leaves Washington without a bailout plan, why did he suspend his campaign and how was he going to explain having made such a dramatic step with nothing to show for it?

BUCHANAN: John McCain is in the box. I think, if he goes along with the Bernanke plan, and the Paulson plan, I think he will destroy his relations with Middle America. I think his chances of getting the populist vote in Pennsylvania, that will be down the tubes.

On the other hand, if he goes with the populist and the conservatives, he takes an enormous risk, suppose the market goes down 1,000 points and they sink the plan. So, he has bet his entire presidency on this. And when you do something like that or as a potential presidency, the best thing to do on that, Rachel, is search your own heart out, what is best for the country and what you really truly believe is best and do that.

MADDOW: But, Pat, just to be clear, you are saying what he has bet on is the most unlikely of circumstances which is that he doesn't support a plan and everything is fine anyway. That's really the only win that he could bet on here. And that might happen, but that seems like -

BUCHANAN: No, I think-no, you cannot just simply say we're killing that plan and we're going to let things go on as normal. As Senator Shelby says, you've got to come up with an alternative. You've got to come up with different ideas. And things that people believe will work. And then you've got to work for the Congress, you cut a deal there, too.

But I do agree with Senator Shelby. If you don't believe in this plan, why would you put $700 billion behind it? Senator Shelby and the Republicans apparently are going to come up with something.

But John McCain is really on the spot. I agree with that. But if I were him, I would not go with the Paulson plan because I don't believe in it.

MADDOW: Does he keep his presidential campaign on suspense-I say it's suspense because he's not really stop campaigning-does he keep putting off the baits? Does he stay in this in this sort of "never-neverland" of barely campaigning, or not admitting that his campaigning for (ph) indefinitely?

BUCHANAN: There's not going to be a deal tomorrow, I don't believe. And even though it were not a deal for me, I would say, OK, there's no deal today and we're not going to have it.

However, it's 5:00 o'clock; let's go to the international airport.

We're going to Dallas. It's the only place to fly out over those planes. And head straight out to Mississippi and go in there and tell the people why I'm doing what I'm doing, that this is unacceptable. That we will go with an acceptable deal. But we're not going to have it driven down our throat by somebody saying-if you don't, there's going to be a mushroom cloud over an American city.

MADDOW: If you have to bet where John McCain is going to be at 9:00 o'clock tomorrow, right now, 24 hours from now, you'd say it's going to be Mississippi?

BUCHANAN: I'd roll the dice. He'll be in Mississippi.

(LAUGHTER)

MADDOW: He's the one who's rolled the dice, that's what I'm worried about.

Pat Buchanan, thank you so much for staying with us. Nice to see you.

BUCHANAN: All right.

MADDOW: This is THE RACHEL MADDOW SHOW on MSNBC expressing deep concern for the yawning abscess opening up on Wall Street.

John McCain has, as we've been reporting, suspended his presidential campaign-suspended. Suspended.

Senator McCain, you keep using that word, "suspended." I do not think it means what you think it means because McCain's staffs are still out there ripping Barack Obama and McCain ads are still running all over TV.

Up next, we will ask Pennsylvania Governor Ed Rendell how McCain's latest political Hail Mary is playing in the battleground states.

And alert the media, Sarah Palin talked again. To the media, she answered four, which is officially, a few questions from the press corps today. Of course, the campaign appears to be seriously trying to postpone the vice presidential debate, just what we need from Sarah Palin, less information.

(COMMERCIAL BREAK)

MADDOW: Allowing for a little campaigning on the "CBS Evening News" last night and an appearance at the Bill Clinton Global Initiative this morning, John McCain announced yesterday that he was suspending his presidential campaign. The pitch was that he would cease political hostilities for the good of the country, get all the power of the two branches of government together to save the economy and then soar triumphantly back into the campaign as the selfless savior.

Problems with the script, one, McCain hasn't voted on a Senate bill since April. So, it's strained credulity to think that the United States Congress was just waiting for him to show up before they could really get down to the work of passing legislation.

Problem two, his local presence in D.C. did not get a deal done. Maybe because he didn't say much at all at the big partisan meeting photo op at the White House.

And problem three, his suspended campaign wasn't really all that suspended. You could still donate money to McCain online today, if you wanted. Isn't that kind of a campaigny thing? McCain surrogates were also out in force on the cable networks, pushing their cause, and hitting Obama. That seems campaigny, too.

(BEGIN VIDEO CLIP)

TUCKER BOUNDS, MCCAIN CAMPAIGN SPOKESMAN: I think what the American voter depends on is someone to take the reins and decide that we need to put partisanship aside in favor of solutions.

MEGYN KELLY, FOX NEWS ANCHOR: So, there could be an empty podium standing there next to Barack Obama.

NANCY PFOTENHAUER, MCCAIN ADVISOR: Well, they could always have Joe Biden and it's on foreign policy, Obama and Biden debate each other.

This is classic Senator McCain. You know, he says, "I'm going to put politics on hold 40 days out from an election, withdraw some $12 million in paid media and advertising off the air in order to do what's right and put the country first.

(END VIDEO CLIP)

MADDOW: OK. Except there are reports from across the country that McCain TV ads are still on TV. And officials at McCain offices in battleground states, like Ohio, Missouri, Florida, Virginia, Minnesota, Nevada, all sounded like they were open for business today, campaigning away.

According to the "Huffington Post," one McCain official in Ohio asked, quote, "Suspension of the campaign?" Another in Missouri saying, "We are not shut down. Everything is still going on."

And then, there's the issue of the Friday night debate in Oxford, Mississippi. Senator McCain still has not decided whether or not to participate. But just everyone else, Senator Obama, the debate commission, the Republican governor of Mississippi, they all think the thing is still on.

So, how is that script working for the McCain campaign tonight?

Joining us now is Ed Rendell, the Democratic governor of Pennsylvania.

Governor, thank you for joining us.

GOV. ED RENDELL, (D) PENNSYLVANIA: Hi, Rachel. Let me add one thing, Governor Palin came in to Pennsylvania today. She's going to do some debate watching in place in Pennsylvania. But the campaign notified the press that she would be coming in and asked them to come out to the airport to meet her. That to me is a symptomatic of a campaign that keeps rolling, and keeps wanting publicity.

So, I think that vow to suspend the campaign in this had been a hollow one. It's interesting. I think, if you look at the sequence of events with Senator Obama's campaign calling the McCain campaign at 8:30 in the morning and saying, let's get together and do a joint principle statement, and the McCain not calling back until 2:30, and then, given some regular (INAUDIBLE).

I believe, if Senator McCain and Senator Obama got together, put together four or five principles that have in the bailout in their view, that would have carried the day overwhelmingly in Congress. We have a bailout plan; the debate could have gone on without any interruption. That would have been real bipartisanship.

Take a chance. It may not be popular back home, but everyone understands there has to be some form of bailout. The key is what protections you put in play for ordinary Americans and for the American taxpayers. That would have been real leadership to respond to the call from the Obama campaign.

So, people back here are wondering why that didn't happen. And two, they're wondering why Senator McCain can't multitask. God knows the president of the United States is going to have to multitask. As governor, I often juggle two or three balls at the same time.

You could certainly continue working on the bailout, leave Washington around 5:00 o'clock, get down to Oxford in time to debate, take a chartered plane back to Washington, and be up at 7:00 or 8:00 the next morning, continue to work on the bailout. That's what president's do. And that's what I think Senator McCain should be doing.

And most of my constituents are sort of clueless about why this debate may be off. They don't understand it.

MADDOW: I will take issue with one thing that just characterize, which is the idea that everybody agrees there has to be a bailout. I think I thought that too, until about 20 minutes ago, and I started talking to Pat Buchanan and to Richard Shelby, the ranking Republican on the Senate Banking Committee.

It seems like since John McCain arrived in Washington, the idea that there is going to be a bailout plan has fallen apart.

RENDELL: Well, remember, Senator Shelby said, and so that I think Pat Buchanan, it's not a bailout plan or the bailout plan, or the Paulson, there has to be an alternative. Remember, we need credit. We need credit to float. Not for these Wall Street bankers and not for some people who may have committed crimes. But we need credit to flow for the guy who owns a machine shop and his revenue comes in in staggered lines, so he needs a line of credit. If he doesn't get that line of credit, he lays off all 17 of his workers.

We need credit to be available for someone who wants to get a college loan. Credit can't stop. It can't freeze in this country. So, there has to be some form of plan to get this going. I think the key is what protections we put in for the American people. And that's the key.

And that's where Senator McCain, if he really wanted to do something should have responded to Senator Obama's request, that they sit down (INAUDIBLE) joint principles by Obama and McCain would have made a plan that would have been passed overwhelmingly by the Congress.

MADDOW: Governor Rendell, we know that stylistically, John McCain likes big, flashy, Hail Mary type moves. He likes game-changers and he likes a lot of them. We've seen a lot of them in this campaign thus far.

Senator Obama, in contrast, has approached this problem by saying, "Let's not let presidential politics get in the way. Let this be a governing matter, not a campaign matter."

I though it was telling that he brought a Senate staffer with him to the meeting at the White House while Senator McCain brought a campaign staffer with him to that meeting. I understand the difference in the two men's approaches to problems and to politics, but I wonder if Senator Obama is essentially giving John McCain an opening here to do one of his moves that gets a lot of attention, that makes him look bold and that gets him the kind of political attention he might want.

RENDELL: Well, maybe so, Rachel.

But, I think, a lot of people have been turned off by the way Senator McCain has reacted to this crisis, starting with the famous "The fundamentals of the economy are still strong," then an hour later saying, "No, we are in crisis." Then, deciding we need a commission before we did anything. And then saying in a magazine interview that he's still for deregulation, let's deregulate the health insurance industry like we've done for banking over the last decade a great idea. So-and popping off and saying we should fire SEC Chairman Cox.

I think you contrast that sort of "all over the lot" hot response to Senator Obama's response which, I think, shows that he's in control, that he understands what has to be done, and that he's a serious person.

Look-the presidency of the United States is about serious responses to serious challenges. I think what Barack Obama has proved over this last week is that he's a serious person who puts the welfare of the country first. He doesn't get involved in political tricks or Hail Marys or whatever you want to call it.

MADDOW: Governor Ed Rendell, let me ask you just one last question.

How do you think that this issue is playing out in your state, Pennsylvania

obviously, such a crucial battleground for November-how do you think the issue is resonating and how upset do you think your constituents are?

RENDELL: Well, I think my constituents are more confused even than upset. First of all, we want details. To this day, I don't know exactly what's in the supposed bailout plan. And I'm not ready to sign off and not that what I think it's going to matter, but I'm not ready to support it until I'm sure that the requisite protections for the taxpayer and for the homeowner who's struggling, trying to pay off his mortgage, trying to keep his home, the most desperate of all efforts that an individual. I'm not going to sign off a plan until we know what's in it to address those problems.

And I think that's what most people are looking to hear. There's a visceral reaction saying, "We don't want to give $700 billion to these guys on Wall Street who may have raped us." With analysis (ph) and for a forethought (ph), but, I think people understand that we got to do something. It's the "what is the something," and they are waiting to hear.

And, I think, again, they are looking for a response that's collected, that seems to be directed towards finding the answers. And that's why, I think Barack Obama has done well since the beginning of this crisis and you see so much movement in the polls.

I don't know if you noted, Rachel, some of the polls in Pennsylvania are so close. But there's one that shows a gap widening to nine points. No, I'm not sure I believe that, but it's certainly shows significant movement on behalf of the Obama campaign, and I think because of the way Senator Obama has responded.

MADDOW: Governor Ed Rendell of Pennsylvania, we really appreciate your taking the time to join us. Thank you.

RENDELL: Thanks.

MADDOW: Who knew that in the election, which has the largest age group between candidates, I think ever, in American history-don't hold me to that-we've be talking about the adult being the young guy.

The common wisdom way back was that John McCain's big problem was party unity. The Republican base really didn't like him. Then Sarah Palin changed all that because she's really, really conservative, like Dick Cheney conservative. But then, she started being kind of less than reassuring as a candidate and some prominent conservatives turned against her, too. Then John McCain decided to work for a bailout plan that House conservatives hate now.

And, was Sarah Palin really worth it now? "COUNTDOWN's" Keith Olbermann has stuck around to talk it over with us, next.

(COMMERCIAL BREAK)

MADDOW: In a bit, Keith Olbermann joins us on John McCain, Sarah Palin, the witch-hunter pastor guy and whether or not the latest Hail Mary from the McCain campaign is really about shielding Sarah Palin from an increasingly uneasy country.

First, though, a sad, sad story from the great state of Washington where Republican Dino Rossi is eager for a rematch against Democratic Governor Chris Gregoire this November. He narrowly lost to Gregoire in 2004.

But in another sign of how bad the Republican brand is this year, Dino Rossi is due in court tomorrow to fight a lawsuit brought by the state Democratic Party. Democrats are attempting to forced Dino Rossi to actually put the word "Republican" next to his name, instead of what he wants to put next to his name, which is the mysterious phrase, "GOP Party," as in Grand Old Party, party. Double the party. Double the fun.

Recent polls in the state have suggested that many people do not know GOP is a nickname for the Republican Party. One recent poll even showed that Rossi polled slightly better against Chris Gregoire if he used the label GOP instead of the dreaded Republican.

What is sad for Washington State Republicans is that, apparently, at least 25 Republican candidates in the State of Washington are not putting that word next to their names and instead trying the Rossi "party, party" stunt. Come on, you guys, say it loud, say it proud. You're a Republican. Come on.

(COMMERCIAL BREAK)

MADDOW: John McCain began his run as the Republican nominee with the problem in his own party - disunity. He wasn't trusted by the conservatives in the Republican Party, well, with all that maverick which he used to be famous for.

Then, he plucked the super-duper extra ultraconservative Sarah Palin out of the wilderness, instead of choosing Joe Lieberman or Tom Ridge. And in one speech in St. Paul, there was Republican unity around the Palin-McCain ticket. Reversal intended. Bingo.

Since the zenith of that late-summer GOP unity, there has been a lot of erosion. It started when Sarah Palin began getting there once, twice and three times over from the media. Then there was the bridge to nowhere lying and then the troopergate quashing and covering up. And then the embarrassing sit-down with Charlie Gibson, and then the don't-to-the-media blackout. Most recently, there was her interview with Katie Couric which could have gone better.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL CANDIDATE: Our next door neighbors are foreign countries. They're in the state that I am the executive of.

KATIE COURIC, ANCHOR, "THE CBS EVENING NEWS": Have you ever been involved with any negotiations, for example, with the Russians?

PALIN: We have trade missions back and forth. It's very important when you consider even national security issues with Russia. As Putin rears his head and comes into the air space of the United States of America - where do they go? It's Alaska. It's just right over the border.

(END VIDEO CLIP)

MADDOW: Putin rears his head. And where do they go? There's the video tape of Gov. Palin in church with a preacher whose claim to fame include hunting witches in real life. He prayed over Palin to protect her from witches, then said this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE PREACHER: It is the high time that we have top Christian businessmen, businesswomen, bankers, you know, who are men and women of integrity running the economics of our nations. That's what we are waiting for. That's part and parcel of transformation. If you look at the - you know, if you look at the Israelites, that's how they work. And that's how they are even today."

(END VIDEO CLIP)

MADDOW: The Israelites with the banking? Boy, the latest NBC News-Wall Street Journal poll shows she is not faring all that well compared to Joe Biden. Well, 64 percent of people think Biden is ready to be president if the need arises. Only 40 percent say the same of Sarah Palin.

With the tempers of many voters shivered by Sarah Palin's increased exposure, John McCain has put all of his remaining eggs in a very shaky basket, the Wall Street bailout, suspending his campaign, sort of, kind of. And returning to Washington, McCain gambled it all on his ability to reach bipartisan consensus on a rescue package.

And the result? A revolt in McCain's own party from the same people folded neatly into his base when he named Sarah Palin - remember her - to be his running mate. So what is a maverick to do with his mavericky running mate, now that their party is split again? And does all that petered down in Washington today have anything to do with it?

I'm very happy to welcome Keith Olbermann, the host of "COUNTDOWN."

Keith, thanks for being here.

KEITH OLBERMANN, HOST, "COUNTDOWN": Congratulations on getting your own show. I hadn't heard.

MADDOW: Thank you very much. It's weird to be in these chairs for (UNINTELLIGIBLE), but it's nice to see you.

OLBERMANN: Thank you.

MADDOW: The Palin pick solidifies the base for John McCain in a way that, a year ago, nobody would have thought would have been possible. Palin then turned out to be a less-than-impressive campaigner, started to peel away some conservative support. Now, we've got more conservative trouble on the horizon for John McCain with this bailout plan. Was Sarah Palin worth it?

OLBERMANN: I had suggested, only half kiddingly, I (UNINTELLIGIBLE) odds on this, that she would be off the ticket by October 1st. Metaphorically, she may be, but of course, he may be, too. I mean, the way things are going, this is turning into the disaster that a lot of people suggested it might be.

If you take somebody whose public persona is essentially a game of mad-libs. It's like, "All right, we're riding along in blank's giant orange blank." You juts fill in the words randomly which is the way she sounds in interviews.

It necessarily has to become a problem. You cannot have a vice presidential candidate who does not speak to the media, ever. First off, she's got to go to the debate. My first response to this whole thing about the suspending the campaign yesterday, and postponing the debate was, with such a limited period of time, the thing that's going to go here is the vice presidential debate. That's what this is all about.

Maybe it is, maybe it isn't. But I wouldn't be at all surprised to see the rest of this campaign be a series - what was it he always liked to talk about going in his sailor days, the vices that the sailor indulged in. You know, the idea of a sailor careening from problem to problem on shore leave, just throwing up flairs, making noise, making diversions. This was what this seems to have become.

MADDOW: The thing that strikes me - and maybe this is conspiratorial, but it strikes me that a lot of the decisions that they are making right now that are very risky. The one thing they get, that is for sure, out of all these risky decisions, suspending the campaign, the decisions to pull Sarah Palin out of the fundraising circuit, the decision to send a lot of senior staffers to Alaska to the extent that they may be now effectively running the state government of Alaska.

Sending John McCain back to work on the bailout plan, as if that is anywhere near his real house, for policy issues. The one thing for sure they get with all of those decisions is attention away from Sarah Palin, even to the extent that maybe she will not be expected to be in a vice presidential debate. And I wonder if they are willing to take extreme risks in order to shield her because they see her as a big liability.

OLBERMANN: Well, this is what's genius about the McCain campaign is the idea they write their own headlines every day. They, so far, have been the best we have seen in a - I think in a presidential campaign at changing the topic, just moving it along.

Remember - I mean, Sarah Palin was in there, as you correctly pointed out, to cover up a host of sins, a host of problems - disunity, dullness of the campaign, dullness of the presidential candidate. Well, now, all right. That worked for a while. Let's get something else in.

It is like a guy. It is a juggling act. It is like a ball club that doesn't have enough pitching, then they call somebody up and they sign some other guy. They use him three times. His staff becoming effective, goes somewhere else. These are the series of decisions that they have made, and it is the one thing, I think, that has kept them in the race.

Because what's - I mean, just take anything at all that's gone on in this campaign. We have already forgotten about it.

MADDOW: Right.

OLBERMANN: John McCain invented the Blackberry. How long ago was that? Last week, and it's gone already. Go back even further to anything that was a dispute or debate six months ago in the campaign with him, or six weeks ago. It's all gone. It's all been moved off the table.

MADDOW: The reset button works.

OLBERMANN: Yes.

MADDOW: That's the big news here. Well, if they decide to hit the reset button again - I mean, nobody could have foreseen that John McCain would decide to be an economic savior and suspend his campaign and ride back into Washington to big foot very delicate negotiations that seem to be going fine before he got there.

In terms of what his next move is going to be, let's say he did decide to replace Sarah Palin. Would that be - is that the next biggest reset button he could hit?

OLBERMANN: I assume no. I can't think to even think for their campaign. My mind doesn't work that way. But you're probably on the right track. It could be, you know - who knows? He's going to suddenly adopt - Rudy Giuliani is coming in as campaign manager. I mean, something so bizarre that it would make no sense, but it would get them headlines and get them away from the topic.

But I have never thought seriously of the idea of throwing her off the bus at some point was the automatic killer negative that it was presumed to be. Maybe, if she turned out to be a losing proposition - she was the proverbial Hail Mary, with no offense to Catholics. She was that. If it doesn't work, and you still have the ball, you throw another one. Get rid of her. Bringing her in worked. Maybe, getting rid of her might work, too.

MADDOW: Pick somebody who's a big name to replace her so it becomes a positive story.

(CROSS TALK)

OLBERMANN: Find somebody else who is equally obscure. Make the media go through the whole vetting process all over again. Just run out the clock. If you can stay within four or five points, as they have, with - you know, in terms of policy, a disaster of a campaign, a flat-out idiotic campaign that has not made any sense. None of the facts back up anything that the candidate has said pretty much 100 percent of the time. His name is John McCain and he approved the message.

Beyond that, we don't know any of this to be true. But if you keep changing the topic, there is a form of genius to that, and it will get you maybe 42 percent of the vote. If you can just move the dial a little bit beyond that. All that matters is who is in front on November 4th.

MADDOW: Yes.

OLBERMANN: That's all that matters. As ridiculous as it might seem, as implausible as it might seem, it doesn't matter as long as it gets them there and in contention on that date. It's just the finals. It's not merit at that point. That's my thought.

MADDOW: Keith Olbermann, host of "COUNTDOWN" here on MSNBC, thank you very much for sticking around.

OLBERMANN: You're welcome, Rachel.

MADDOW: I appreciate it.

If the United States does not torture, as President Bush has told us on many occasions, why did Bush administration officials actually hold meetings in the White House to discuss, quote, "harsh interrogation techniques" on Al-Qaeda detainees. Filmmaker Alex Gibney won an Oscar for his documentary on the subject. He joins us next.

(COMMERCIAL BREAK)

MADDOW: While we have all been riveted by the bailout and the presidential campaign fire drill we're in right now, there happens to be a "soul of the nation" story unfolding at the same time out of the spotlight. Secretary of State Condoleezza Rice has just admitted for the first time that U.S. cabinet officials talked inside the White House about specific ways to torture people.

Rice and her legal adviser yesterday admitted that in writing to the Senate. We know the officials in the torture discussions included Rice and John Ashcroft. Other senior officials who routinely attended the types of meetings at which these discussions took place included Donald Rumsfeld, Alberto Gonzales and David Addington, at the time, Dick Cheney's top lawyer.

We don't yet know if the discussions also included the president or the vice president. Because torture is of course a violation of the Geneva Conventions and because we have a law in this country that criminalizes violations of the Geneva Conventions, I think, well - I think it means we can't get this issue behind us even though we're into a new election cycle now.

There's supposed to be prosecutions for things like this. I think of myself as kind of a national security voter, and I therefore really want to see a presidential debate tomorrow on foreign policy which is what it's supposed to be about. Because national security gone haywire, issues like this, like torture still define who we are as a country. It's still unfinished business.

(BEGIN VIDEO CLIP)

SCOTT HENNEN, WDAY, NORTH DAKOTA: Would you agree a dunk in water is a no-brainer if it can save lives?

THE VICE PRESIDENT: It's a no-brainer for me, but for a while there, I was criticized as being the Vice President "for torture."

GEORGE W. BUSH, UNITED STATES PRESIDENT: We do not condone torture.

SCOTT HORTON, ATTORNEY: We do not torture. Footnote - as we define torture, which means exactly what we wish it to mean and nothing else.

(END VIDEO CLIP)

MADDOW: That was a clip from the Oscar-winning documentary "Taxi to the Dark Side" with explores the Bush administration's abuse of power in the name of national security. "Taxi to the Dark Side" debuts September 29th on HBO.

Joining us now, the Oscar-winning director of "Taxi to the Dark Side," Alex Gibney. Hi, Alex. Thanks for joining us.

ALEX GIBNEY, DIRECTOR, "TAXI TO THE DARK SIDE": Hi, Rachel. Good to be here.

MADDOW: We maintain all these prisons around the world now, with thousands of people in them. Military prisons, even still some CIA prisons apparently. Is this issue over now that we're on to McCain-Obama and we don't really talk about the Bush administration anymore?

GIBNEY: No, I don't think it's over at all. Not only are there issues relating to how the CIA continues to conduct interrogations and number of prisons and I would argue illegal trials. But more fundamentally, what's not over is how we reckon with the past. We can't go forward and recapture our kind of moral reputation if we don't reckon with the past and what we've done.

MADDOW: The administration's take on this has been it's been a few bad apples who mistreated prisoners and that they've been prosecuted. Should policymakers be prosecuted? Could they be?

GIBNEY: That's a tough question. They could be if politicians had the will to do so. I think at the very least, the truth commission with subpoena power would be something valuable because I don't think there's any question now, particularly with the revelations of Secretary Rice coming out, that this is not a case of a few bad apples. This is a rotten barrel. And the rotten barrel is the civilian administration.

MADDOW: When you shot footage for your film in Bagram, when you talked to U.S. military personnel who had been guards of prisoners who are involved in these abuse cases, what was the toughest thing for you about shooting this film?

GIBNEY: The toughest thing was coming face to face with something so brutal. And also, you know, this is a murder mystery really about a taxi driver, a young man from Afghanistan, who was brutally tortured and murdered in detention in Bagram. And initially, I had to interview a number of the guards and interrogators who some of whom were responsible for killing this man.

I didn't come into it with much sympathy for them. I ended up having a great deal of sympathy for them. They were scapegoats for a policy that was coming on down from on high. And that was one of the toughest things for me to reckon with.

The other tough thing for was the whole issue of why. Why, when we have such a body of knowledge that torture does not deliver reliable information over time, did our policymakers so embrace it? And I fear that the answer is because they were always getting back the information that they wanted to hear and that's what torture delivers.

MADDOW: Alex Gibney, director of the Oscar-winning documentary "Taxi to the Dark Side." It debuts Monday, September 29th on HBO. Alex, congratulations on the success of the film, and thanks for joining us.

GIBNEY: Thank you so much, Rachel.

MADDOW: Coming up, Kent Jones gives me just enough pop culture to go out among other people in public.

(COMMERCIAL BREAK)

MADDOW: Now, it's time for "Just Enough" with my pal, Kent Jones. Kent, what have you got?

KENT JONES, POP CULTURIST: Thank you, Rachel. Last night, at a party in Hollywood, Hayden Panettiere, star of the NBC show "Heroes," turned out for Declare Yourself, a group that urges people to vote. Check out what Hayden had to say to young people about voting.

(BEGIN VIDEO CLIP)

HAYDEN PANETTIERE, ACTRESS: There's nothing, I think, that makes you feel quite as adult. You know, it's like, what, you can buy porn and cigarettes and, you know, call yourself a legal adult and be held legally responsible for things as an adult instead of a minor.

(END VIDEO CLIP)

JONES: Got that? Voting is better than porn and cigarettes put together.

America, you have your orders. Rachel?

MADDOW: we should put some sort of adult warning.

JONES: I think so, yes.

MADDOW: Thank you, Kent. Thank you for watching tonight. Until then, you can E-mail us at rachel@msnbc.com. You can hear me at 6:00 Eastern on Air America Radio. "COUNTDOWN WITH KEITH OLBERMANN" starts right now.

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

END

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