updated 9/30/2008 1:42:46 PM ET 2008-09-30T17:42:46

Guests: Paul Krugman, Chris Hayes, Emily Heil

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

John McCain takes credit for the bailout, which is kind of embarrassing when the bailout then turns into a washout.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE: How remarkably some people have criticized my decision to put my country first.

MITT ROMNEY, ® FORMER PRESIDENTIAL CANDIDATE: This bill would not have been agreed to, had it not been for John McCain.

MCCAIN: But I'll never be a president who sits on the sidelines when this country faces a crisis.

(END VIDEO CLIP)

OLBERMANN: The House scuttles the bailout, the stock market plummets what happens next? Should you be running to the bank in the morning? Move all your money into vintage comic books? Paul Krugman on what the next few days may look like, or a few years. And, who done it?

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER, (R-OH) MINORITY LEADER: We could have gotten there today had it not been for this partisan speech that the speaker gave on the floor of the House.

REP. BARNEY FRANK, (D-MA) HOUSE FINANCIAL SERVICES COMMITTEE: Because somebody hurt their feelings, they decided to punish the country.

SEN. BARACK OBAMA, (D-IL) PRESIDENTIAL CANDIDATE: It's important for the American public and for the markets to stay calm because things are never smooth in Congress, and to understand that it will get done.

(END VIDEO CLIP)

OLBERMANN: Worst: Senator Obama makes the list. And Karl Rove says Governor Palin was over-prepared for the Couric interview.Meanwhile, the governor flunks geography again, said, "If necessary, our troop should absolutely going to Pakistan"-exactly what Senator McCain scolded Senator Obama for saying. McCain has to disavow his running mate. And will Tina Fey render Sarah Palin utterly implausible?

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN, ® VICE PRESIDENTIAL CANDIDATE: Every American I'm

speaking with -

TINA FEY, ACTRESS (impersonating Gov. Sarah Palin): We are ill about this.

PALIN: Helping the -

FEY: It's got to be about -

PALIN: Job creation too -

FEY: Katie, I'd like to use one of my lifelines.

(LAUGHTER)

(END VIDEO CLIP)

OLBERMANN: All that and more: Now on COUNTDOWN.

(BEGIN VIDEO CLIP)

PALIN: I-you know -

(END VIDEO CLIP)

OLBERMANN (on camera): Good evening. This is Monday, September 29th, 36 days until the 2008 presidential election. Senator McCain and his advisors, who, last Wednesday, had warned that this nation would be in the midst of another Great Depression, by today-unless Congress passed the bailout legislation-this morning, claiming credit for building a winning coalition of votes in the House to pass that bailout bill, and thus, save the American economy. Only one problem. The bailout bill failed in the House when 67 percent of Republicans voted against it. The stock market promptly lost 7 percent of its value. Senator McCain-in our fifth story on the COUNTDOWN-having led his party and his country to congressional chaos, and an economy in crisis. Mission accomplished. This morning, in Columbus, Ohio, the senator counting his "McChickens" before they make hatch.

(BEGIN VIDEO CLIP)

MCCAIN: I know that many of you have noticed, it's not my style to simply phone it in.

(APPLAUSE AND CHEERS)

MCCAIN: I believe our leaders belong in the arena, in the arena when our country faces a challenge, not on the road in Afghanistan.

(APPLAUSE AND CHEERS)

MCCAIN: I've never been afraid of stepping in to solve problems for the American people and I'm not going to stop now.

(APPLAUSE AND CHEERS)

(END VIDEO CLIP)

OLBERMANN: In there, another disastrous metaphor for his campaign because phoning it in was all that Senator McCain had been doing over the weekend-staying in Washington, but not going to Capitol Hill. According to his senior advisor, Mark Salter, to CBS on Saturday, quote, "He can effectively do what he needs to do by phone. He's calling members on both sides, talking to people in the administration, helping out as he can," AKA: phoning it in. Back to Columbus, on our premature victory rally already in progress, Senator McCain mocking his opponent for the crime of monitoring the situation, yes, by telephone.

(BEGIN VIDEO CLIP)

MCCAIN: At first, he didn't want to get involved. And then he was monitoring the situation. That's not leadership, that's watching from the sidelines.

(APPLAUSE)

(END VIDEO CLIP)

OLBERMANN: Senator McCain happening to watch from the sidelines in Columbus, Ohio when it all fell apart early this afternoon. Seventy percent of Democrats voted for that bailout package, 67 percent of Republicans voted against it. And stocks fell off a cliff. The Dow is down 777 points. The biggest point-drop in history, though, hardly the biggest percentage drop. The GOP is blaming the other guys for the implosion. On MSNBC, McCain economic advisor, Douglas "BlackBerry" Holtz-Eakin, claiming that Senator Obama and the Democrats stopped Senator McCain from saving America. On the Hill, Minority Whip Blunt blaming the Jewish holidays; Minority Leader Boehner blaming mean, old, Speaker Pelosi.

(BEGIN VIDEO CLIP)

BOEHNER: I do believe that we could have gotten there today had it not been for this partisan speech that the speaker gave on the floor of the House. I mean, we were, we've put everything we had into getting the votes to get there today, but the speaker had to give a partisan voice that poisoned our conference.

(END VIDEO CLIP)

OLBERMANN: What was that voice? What was Speaker Pelosi's crime? Citing Bush administration policies that brought about the crisis.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, (D) HOUSE SPEAKER: For too long, this government, in eight years, has followed a right-wing ideology of anything goes, no supervision, no discipline, no regulation. Again, all of us are believers in free markets, but we have to do it right.

(END VIDEO CLIP)

OLBERMANN: Meanwhile, Congressman Frank of the financial services committee, dissecting the Republican attack.

(BEGIN VIDEO CLIP)

FRANK: We have come together on a bill to alleviate the crisis. And because somebody hurt their feelings, they decide to punish the country.

(END VIDEO CLIP)

OLBERMANN: To recap-Senator McCain, his advisers, and surrogates, like former Governor Romney, all claiming credit for the passage of the bailout bill before it washed out in a vote, then blaming Democrats in Congress and the Democratic nominee for failing to gather enough Republican votes. Finally, the (INAUDIBLE), the icing on the cake walk, coming with Senator McCain denouncing partisan attacks moments after his people had launched some of them.

(BEGIN VIDEO CLIP)

MCCAIN: Senator Obama and his allies in Congress infused unnecessary partisanship into the process. Now is not the time to fix the blame. It's time to fix the problem.

(END VIDEO CLIP)

OLBERMANN: Senator Obama, meantime, aiming his message today, his one message today, to both parties.

(BEGIN VIDEO CLIP)

OBAMA: One of the messages I have to Congress is get this done.

Democrats, Republicans, step up to the plate, get it done.

(END VIDEO CLIP)

OLBERMANN: Time now to call in Mike Viqueira of MSNBC and NBC News, who spent the day, as he usually does, on Capitol Hill.

Mike, good evening.

MIKE VIQUEIRA, NBC NEWS: Good evening.

OLBERMANN: All right. Senator McCain supported the bailout bill and claimed credit for its passage. And the White House wanted it. And Republican leadership of the House wanted it. So, what happened when it came to a vote, and suddenly, 2/3 of the Republicans voted against it?

VIQUEIRA: Well, you know, a lot have been made of this Republican accusation about that the speech Nancy Pelosi made on the floor. I can tell you that I was hanging around the chamber all day long, around the cloakrooms and the speaker's lobby, buttonholing anybody I could, and I did see John Boehner as Nancy Pelosi had finished that speech come out of the cloakroom.

And I asked him, as many people were asking everybody that they could find how does it look out there. And he looked at me and he said the speech Nancy gave didn't give us any help at all. They were literally in the back of the room trying to push people over the side on this thing. And Nancy Pelosi gave that speech. Now, whether that's a justified reason to vote against the bill, other people can decide that. There were treasury officials around the chamber as well, contemporaneously before the vote happened, who expressed the same misgivings about the tone that the speaker took. I think what you saw today, beyond all of that, all the repercussions, and all the recriminations, and all the blame game that has gone on in the wake of this catastrophe on Capitol Hill today, if you were a supporter of that bill-if you saw opposition, normally, the American political spectrum, people on the right, people on the left, was bent in to a circle today. So, people from opposite ends of the political spectrum-conservatives and liberals joining together in sort of a populism against the avarice and greed that their constituency has taken over Wall Street and led to this mess, outrage over the fact that it was a $700 billion bill that was literally being given to the same people that led us into this catastrophe, Keith.

OLBERMANN: What does Congress and the White House and the Treasury Department do now, Mike, and can they possibly do it fast enough if nobody is going to meet again until Thursday?

VIQUEIRA: Well, that's right. The House comes back in Thursday. The Senate is going to be in. But, of course, it's never, it's always been fairly certain that the Senate is going to pass this legislation if it ever comes to them.

We don't know what they are going to do. Some of the leadership has left town for the holidays. Some are going on to political travel for fundraising in the campaign for House figures and supporters, and people running for the House in their respective parties and will come back. That's not to say that people won't be consulting, madly working to find a way out of this. I think everybody on the Hill is going to be holding their breath to see what the markets do tomorrow. And certainly, not only the stock market, because the problem, as they described it, it goes much deeper than that, to the credit market, to student loans, to credit cards, to the point where some people are questioning we're going to be able to get money out of our ATMs this time next week, Keith.

OLBERMANN: All right. Putting all the politics aside and all of the manipulation and the machination that we saw in every corner of the political spectrum today, is it possible that there was simply not enough support for this bill as a bill? I mean, I don't want to be caught relying on Congresswoman Bachmann of Minnesota to be the reasonable portent of a storm (ph) here, but she said this was about the fact that it was a bad bill. Could it have just been honestly voted down on the idea that it's a bad bill?

VIQUEIRA: Well, I think what you saw was this process that was-there were false step from the beginning. Beginning with Secretary Paulson's three-page, now infamous three-page bill that he had set up on Saturday morning a week ago last Saturday, that gave him unchecked power that explicit said that no one, this should be non-reviewable by any outside entity. I think that struck the wrong tone. And Secretary Paulson, during the negotiations over the week, here's a man who was working as hard as he possibly could, no one on the Hill is going to take that away from him. Positions had to be called during the marathon session on Saturday but he did not take the right tone with the political-he has sort of a political tin ear on that issue and on the executive compensation issue, which everyone says he fought hard against limiting executive compensation. And so, there were missteps from the beginning. We don't know where we go from here, Keith.

OLBERMANN: Mike Viqueira in Washington, thank you, Mike.

VIQUEIRA: Certainly.

OLBERMANN: For more on the impact on the presidential election, let's turn now to our own Richard Wolffe, also, of course, senior White House correspondent for "Newsweek" magazine.

Richard, good evening.

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Good evening, Keith.

OLBERMANN: All right. We know Senator McCain loves gambling. So, here's a gambling metaphor-the risk that he took was that if the bailout package tanked, after he promised that he could secure its passage, that he was harkening to Washington as Batman harkens to the bat message in the sky. If it didn't work out, he'd be left holding the mess. Did the Republican nominee just lose his bet?

WOLFFE: Well, let us count the ways he lost it. And first of all, he didn't lose it by the sort of finger-pointing and the blame game that goes on. Completely independent of everything that Mike has just explained so well, you have McCain failing to live up to his own standards, his own measures here.He said that he would suspend his campaign and get a deal, he didn't either. He said that he wouldn't debate until he got a deal. There was no deal but he debated anyway. He said that he wasn't going to the phone in; he was going to be fully involved. And he went to the phones. And lastly, his surrogates tried to claim credit for the deal that ultimately fell apart. So, by his own measure, McCain lost, at least, four different ways just in the last three or four days.

OLBERMANN: The poll numbers, the ones we're seeing already, have been, it's steadily going down, but they seemed to have gone another measure recently. Is this tied to the handling of the financial crisis? And if that's the case, are they going to drop even further?

WOLFFE: Well, it's hard to know where the polls are going to go here. But McCain had two gambits last week, to try to change the dynamic. First of all, there was the suspension, then, you have the debate. And they could credibly claim that the debate sort of reset the clock here, but the weekend, what happened today, has taken everything back to where we were before.

So, when it comes down to the sort of performance, as people are judging this, I don't believe they're really getting into weaves of who's bailout worked and Pelosi's speech and all the rest of it. As they measure up these leaders and their response to the crisis, I think McCain has continued a patent of stumbling which he set, actually, the week before. This has gone for two weeks now.

OLBERMANN: And obviously, he's taken every different position on the economic crisis, including denying that there was one on the calendar. At this point, what can he possibly do? I mean, he came out this afternoon, and decried-finger-pointing and insisted this is not a time to fix blame.Hour earlier, his aides had been on the air fixing blame on Obama. What's going on with this campaign? What he can possibly do to steer out of this skid?

WOLFFE: The problem he has here is the problem John Kerry ultimately faced, rightly or wrongly, and Al Gore, too, which is about credibility. Do your own words match up to what you said before? Do your actions match up to your words? Really, he's in such a deep hole on the economic side; that he's really going to turn the focus to Obama now. He has to relentlessly attack him, try to make him completely unacceptable, and just move beyond whatever is left of his position on this economic crisis, because in terms of his own performance, it has falling apart day by day.

OLBERMANN: And yet, exactly what you were saying, it was counter-indicated by the aftermath of Friday's debate. Was that the key takeaway, which is already, as if Friday's debate happened 18 years ago with all the news breaking in the interim, but the takeaway from Friday night was, in independent voters, Obama's-only Obama was perceived as the winner by most independent, in most polls, but more importantly, independents-their assessments of him and his viability as a president shot through the roof?

WOLFFE: Yes, on independent voters he had an edge. I think it was actually an evenly matched debate. McCain had some good moments there. But all of that is lost in what we've seen in the last few days now.

And if he tries to correct his performance, he does enter into Al Gore territory between the debates, too hot, too cold, which one is going to show up. So, McCain, really, does have a challenge here. Again, he can't really talk about the economy and this bailout in a way that helps himself. He can try and put forward new proposals, but he's going to do is focus on Obama.

OLBERMANN: Richard Wolffe of "Newsweek" and MSNBC, in the wake of the economic crisis, as ever, Richard, great thanks.

WOLFFE: Thank you, Keith.

OLBERMANN: So, what now? Should you take your money out of the banks, out of the market, out of your wallet? If so, should you then eat it, burn it, or wear it? Paul Krugman, next.

(COMMERCIAL BREAK)

OLBERMANN: While hands are wrong, and forecasters furrow brows, some straightforward talk next about what you should and should not do, and how long you should and should not do it, from Paul Krugman of the "New York Times" and Princeton. And there's more to America than Wall Street. There's Sarah Palin saying we should, on our own initiative, send troops into Pakistan if that's necessary, exactly what John McCain so condescendingly criticized Barack Obama at the debate from asserting. You don't say that, you don't say it in public. The schism between the Republican presidential and vice presidential candidates. And Senator Obama makes Worst Persons. This just in, NHL opens hockey season in hell. You're watching COUNTDOWN on MSNBC.

(COMMERCIAL BREAK)

OLBERMANN: Writing on his blog for the "New York Times" this afternoon, the columnist, Paul Krugman awarded the top headline to MarketWatch's Rex Nutting, "House to Wall Street: Drop Dead." He also resubmitted his own writing after the first bailout deal collapsed last Thursday, to quote, "We now have is a non-functional government in the face of a major crisis because Congress includes a quorum of crazies and nobody trusts the White House an inch. As a friend said last night, we'd become a banana republic with nukes." Our fourth story on COUNTDOWN: What the "quorum of crazies and the banana republic with nukes" means for you. The aforementioned Paul Krugman joins us now. Thank you, again, for your time tonight, sir

PAUL KRUGMAN, NEW YORK TIMES: Hi, there.

OLBERMANN: All right. For the average American, is this cataclysmic? Has this now spread beyond those who have investments or people who already could not pay their mortgage?

KRUGMAN: Well, to a large extent, we are protected by the spirit of Franklin Roosevelt. I mean, you know, your bank account is safe. Your deposits are safe. Everything that's thoroughly guaranteed is safe. Somebody said earlier on the program that-will you be able to get money out of your ATM, yes, you will. For most people, this is going to be, obviously, if you got stock investments, it will be a problem. What we are worried about for most people is the effect on the economy. This thing is shutting down a significant part of the whole system by which credit is funneled to the, you know, to businesses. And I'm hearing stories of businesses having credit lines not cut off, but reduced. You know, businesses that can't sell commercial paper. All this is-we're already heading into a recession territory. This is going to make it worse.

OLBERMANN: All right. So, those are some of the consequences we should expect.

KRUGMAN: Yes.

OLBERMANN: How should we react to them? I mean, to paraphrase the old joke about George Steinbrenner of the New York Yankees-is this the time when we should not sit around and act rationally when a situation calls for panic?

KRUGMAN: Well, the question is, you know, what do you do to panic? I mean, again, you know, if you are in anything that's thoroughly insured, and you don't have to panic. And in terms of, I mean, politically, there's an interesting question for the Democratic leadership now. What do they do? Because they accepted a pretty bad bill, better than nothing, I think, but a pretty bad bill because the Bush White House, Secretary Paulson, the House Republican leadership was supposed to bring Republicans on board for the bill. It didn't happen. So, now, you know, I guess they do a revote probably on Thursday. If that doesn't work, I guess, they go and write the bill they think ought to have been written and put it out there.

OLBERMANN: With the news from Australia that the stock market there is down 4 percent in the opening 15 minutes -

KRUGMAN: Yes.

OLBERMANN: Obviously, as you mentioned, you had written that this was not a great bill, but it was worth passing. Is there anything in particular that needs to be changed that will make it passable and maybe a little bit more plausible later on the week?

KRUGMAN: Well, you know, this bill was written-later in the week, I think nothing could be done.

OLBERMANN: Yes.

KRUGMAN: Because this bill-you know, basically, the Bush White House came up with a fundamentally-flawed approach. And then the Democrats had sort of have to work with this. And it was, you know, buying up toxic waste when they really should be doing is recapitalizing, they should be buying preferred shares. It's-you know, we can get in to technicalities. But they should be coming out from the other end. The fundamental approach was wrong and they should be doing more for homeowners. And one thing the Democrats can do is write a bill that will appeal to Democrats and pass a bill on party lines, which would include a lot more help for homeowners, would include bankruptcy, you know, the judge is able to rewrite mortgages and bankruptcy proceedings. A lot of things that the Democrats were objecting should have been in there. And, you know, just never mind the Republicans. But I don't think that can be done this week. And meanwhile, now it's going to be-I look at credit market indicators, and boy, we're in deep freeze right now. Things were starting to thaw a little bit at end of last week, gone now.

OLBERMANN: A question, to conclude, about Senator McCain. I'm going to have to read this because it's so much in the last two weeks with him. He started on by saying the fundamentals were sound, then he said he was suspending his campaign to broker this bailout as the original bailout promptly collapsed, almost as soon as he said that. Then he said if there were no deal by today, we'd be in another Great Depression, then he claimed credit for this revised bailout deal this morning, then the deal fell apart this afternoon. If anything is actually doing worse than Wall Street right now, it'd be John McCain on the subject of Wall Street.

KRUGMAN: He is swinging so wild. I wrote about that in the "Times" this morning. It's just, you know, at any given moment, he's got very, very firm views. The problem is, wait 48 hours and they've gone 180 degrees around.

So, no-I mean, it's bizarre. It's been-can I say this-it's pretty unpresidential, you know.

OLBERMANN: Yes.

KRUGMAN: And this is scary stuff. I mean, we're scared and he is not helping.

OLBERMANN: Perhaps, that earlier reference to Mr. Steinbrenner and not sitting around and acting rationally when the situation calls for panic applies to the gentleman aforementioned.

Paul Krugman of the "New York Times" and Princeton University, once again, thank you, sir.

KRUGMAN: Thank you.

OLBERMANN: You think Wall Street had a bad day? How about the Agatha Ruiz de la Prada show? Yes, that model does look surprisingly like Borat.

And, the big expansion. So much McCain in the Membrane, we have to increase the size of the segment. McCain criticizes Obama for not using the word "victory" about General Petraeus and Iraq even though General Petraeus says he won't use the word "victory" about Iraq. Next.

(COMMERCIAL BREAK)

OLBERMANN: Australian markets down 4 percent in the opening 15 minutes of trading. President Bush now announcing he will speak to the nation at 7:45 tomorrow morning Eastern Time; 7:45 a.m. tomorrow, President Bush to, again, address the economic crisis.Here, a big announcement tonight. The announcement is coming so frequently that we will, tonight, be expanding our newest feature from the most outrageous or untrue things said about or by McCain today to the three most outrageous or untrue such things. The expanded McCain in the Membrane in a moment. First, let's play Oddball. We begin in Victoria, B.C., where conservative Canadian Prime Minister Stephen Harper addressed the media using the dreaded human backdrop. And just guess what happens. Yes, it's time to play a little game we call, "Pick which junior (INAUDIBLE) passes out." Lock in your answers now, please.

(BEGIN VIDEO CLIP)

STEPHEN HARPER, PRIME MINISTER OF CANADA: He understands that, I think, everybody understands, that Canada is a sovereign country. And whether it's dealing with the United States or dealing with China, the fact that the country is a lot a bigger doesn't stop us from standing out for our interest and values.

(END VIDEO CLIP)

OLBERMANN: He said standing up. If you did not pick the kid in the upper right, pay up. The youth was escorted out, ended up being fine. The prime minister did not see what all the fuss was about and finished his speech. Let's go head back to Milan. Last week, we brought you the video of the Prada model who did it on the runway. That was only the second most interesting disaster for the designer outfit. We should preface this with a spoiler alert. This is Sasha Baron Cohen, posing as his Austrian fashionista character Bruno, crashing the runway at last week's Agatha Ruiz de la Prada show. After a little confusion and some fierce cat-walking, the lights went out. And Bruno was apprehended. This will presumably be used in Cohen's upcoming Bruno movie. Again, we apologize for the spoiler, but in this economy, with the news today, you may need that $12 you were going to spend to see the film. McCain blasts Obama for being willing to send our troops, if necessary, into Pakistan. Palin then says we should be willing to send our troops, if necessary, into Pakistan. You betcha. This puts McCain in something of a spot tonight. The governor is in something of a spot too when Tina Fey can simply repeat her words verbatim and get laughs, the Gov is in trouble. These stories ahead, but first our newest and newly expanded feature, the most outrageous or untrue thing said by or on behalf of Republican presidential nominee John McCain, McCain in the membrane. Number three, V for victory. Senator McCain today asked the crowd in Columbus, quote, "by the way, on Friday night, did you ever hear the word victory from Senator Obama?" Then he went into one of those jingoistic rants of his. " If we continue this surge under this great general," neglecting to mention that you never heard the word victory from that great general either. "This is not the sort of struggle," said General David Petraeus, "where you take a hill, plant the flag, and go home to a victory parade. It's not war with a simple slogan." He added he didn't think he would ever use the word victory. Also, Senator McCain where was your flag pin? Why weren't you wearing a flag pin? Number two, job opening in the McCain Hispanic liaison office. Dee Dee Lima, co-chair of Nevada's Hispanic Leadership Team and spokeswoman for the Republican party in Clarke County, Nevada, told the Associated Press, while working in a McCain campaign voting booth, quote, "we don't want Hispanics to become the new African American community. That's what the Democratic party is going to do to them, create more programs and give them hand outs, food stamps and checks for this, and checks for that." Miss Lima added, "I'm very much afraid that the Democratic party is going to do the same thing that they did with the African American culture and make them all dependent on the government. We don't want that." She has been removed from both the McCain Nevada Hispanic Leadership team and the Clarke County GOP. What follows is mostly a baseball joke, but it's no longer game time. Number one, McCain exploits the memory of the late Sergeant Ryan Jopek (ph). After Senator McCain trotted out his bracelet from the mother of a dead soldier in Iraq at the debate, Senator Obama famously said, I have a bracelet too, and told the story of Sergeant Jopek and his mother. The McCain campaign spent the weekend and this morning claiming Obama had told Sergeant Jopek's story against the wishes of his family. In fact, Traci Jopek of Merrill, Wisconsin, told the Associated Press that while she had e-mailed the Obama campaign in February asking that he accept the bracelet but not tell the story publicly, she was, quote, ecstatic when Obama mentioned her son at the debate, because she said it showed there were many different views of the war. When Robert Gibbs of the Obama campaign tried to explain this to Fox Noise this morning, they cut him off. Then they read only the part of the February part of the AP story about Mrs. Jopek, not the part about her now being ecstatic at the mention. That's how Mr. McCain runs a campaign while he is in league with a television channel.

(COMMERCIAL BREAK)

OLBERMANN: Just one day after John McCain scolded Barack Obama in the debate Friday for the naivete of his foreign policy, McCain's running mate Sarah Palin came out in favor of Obama's foreign policy. Just one reason our third story should come as no surprise, a clear lead for Obama gelling in two national polls. Hotline putting Obama up by 47-42. It's a daily tracking poll. Gallup shows a widening spread, Obama with 50 to McCain's 42. The Intrade gambling site spread has gone from 51/48 Obama over McCain last week to Obama 63/37 tonight. Most of the polling came before today's failure of the bailout deal McCain had already taken credit for, before word came of Palin's foreign policy defection. On Friday, McCain scolded Obama at the debate for saying he would take action against al Qaeda now holed up in the Waziristan region of Pakistan if Pakistan was unable or unwilling to do so. On Saturday, Palin got the same question.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: How about the Pakistan situation? What's your thoughts about that?

PALIN: In Pakistan? It's working with Zardari to make sure that we're all together to stop the guns from coming in over the border. And we'll go from there.

UNIDENTIFIED MALE: Waziristan is blowing.

PALIN: Yes, it is. And the economy there is blowing up too.

UNIDENTIFIED MALE: So we do cross the border, like from Afghanistan to Pakistan, you think?

PALIN: If that's what we have to do to stop the terrorists from coming any further, absolutely, we should.

(END VIDEO CLIP)

OLBERMANN: On Sunday, McCain implied that Palin's answer did not count because she was only talking to a voter. Tonight, he and Palin together amplified that rationale for Katie Couric of the CBS Evening News.

(BEGIN VIDEO CLIP)

MCCAIN: Look, I understand this day and age gotcha journalism. It was at a pizza place in a conversation with someone who you didn't hear the question very well, you don't know the context of the conversation. Grab a phrase. Governor Palin and I agree that you don't announce that you're going to attack another country.

KATIE COURIC, CBS EVENING NEWS: Are you sorry you said it, governor?

MCCAIN: Wait a minute. Before you say, is she sorry she said it, this was a gotcha sound bite that-

COURIC: It wasn't a gotcha. She was talking to a voter.

MCCAIN: She was in a conversation with a group of people, and talking back and forth. I'll let Governor Palin speak for herself.

PALIN: In fact, you're absolutely right on. In the context, this was a voter, a constituent hollering out a question from across an area asking, what are you going to do about Pakistan; you better have an answer to Pakistan. I said, we're going to do what we have to do to protect the United States.

(END VIDEO CLIP)

OLBERMANN: Governor Palin, of course, knew she had taken the media with her on the photo op, and in fact, she had already given the same answer, saying that even if Pakistan disapproved, all options were on the table. This during her sit-down interview with Charlie Gibson, during which he did not holler any of his questions from across an area. And in fact the Bush administration is known to have been following Obama's policy for months, specifically at least since January 29th, when after several attempts failed to win Pakistan's cooperation, a CIA drone in Pakistan did exactly what Obama and the Pentagon had argued the U.S. should do. It fired two Hellfire missiles, killing Abu Laith al Libbi, the al Qaeda director of a deadly 2007 attack on a U.S. base in Afghanistan. Let's turn to Chris Hayes, Washington editor of "The Nation Magazine." Chris, good evening.

CHRIS HAYES, "THE NATION": Hey, Keith.

OLBERMANN: Seven years after 9/11, no bin Laden, al Qaeda is as strong as ever, Republican candidate gets the history of Pakistan wrong and the president's name wrong on Friday, says the Democrat is too tough on terror, and now disowns his own running mate, when she happens to agree with that candidate and also the current administration. The question I guess, in sum, is why is John McCain so soft on terror?

HAYES: Well, I-I-I can't answer that question. I mean, this whole Pakistan debate has always been bizarre from the very beginning. You go back to the speech in which Obama originally proposed a cross border policy. It was clear that he was doing that both because he believed in that substantively, but also it was a bit of political opportunism to stress his hawkish bona fides. Then out of nowhere, McCain, who obviously manifestly would agree with that policy, saw an opportunity for a very discreet short term political cheap shot to go after Obama. And now, months and months and months and months later, it's kind of cemented into some principle policy, when it's obviously not what he actually believes.

OLBERMANN: Obama and Kerry said it years ago. The American people and Defense Secretary Gates agree with them. Even Mr. Bush seems to get it, that border, Afghanistan and Pakistan, is priority number one, region number one. It's the area you want to shout across when it comes to terror. How does Governor Palin triangulate between that position and McCain's when this subject almost inevitably comes up in the debate Thursday?

HAYES: That's going to be a tough one. And I feel sorry for Governor Palin in the sense that this so-called gaffe is really not of her own making. The reason it's a gaffe is because the McCain campaign has a policy that doesn't make sense, particularly coming out of their own world view. It's only a gaffe because they have taken this highly idiosyncratic position on this one particular discreet issue. Sarah Palin, who, as we know, is not the world's greatest foreign policy expert, was probably reasoning out of a core set of basic principles that would lead her to believe that this was the right way to go.

OLBERMANN: The word is the governor is heading for the Sedona ranch of Senator McCain tonight, reportedly so the campaign can undo the preps that it claims now gave us her Gibson and Couric interviews, with the goal of making her more or letting her be more of herself. Number one, what could that mean? Number two, what possible strategy could they try now for this debate? Number three, could that old Bush have a beer with them approach really get her through a debate when she apparently, according to a story in the "Washington Post" today, could not in that CBS interview, in an unaired portion, could not come up with the name of another Supreme Court decision besides Roe v. Wade?

HAYES: I don't know what they're going to do about this debate, frankly. I mean, there is videotape on the Internet that shows her debate in the Alaska gubernatorial race, in which she acquitted herself quite well. As we know, she is sharp. She is charming. But when you think about what Sarah Palin's life must be like right now, I mean, presumably there's a briefing book of 600 pages, and she's cramming for this kind of exam on Thursday that no human being, no matter how smart, no matter how capacious in memory and wit would ever really be able to pull off in the short amount of time she has. So all she can do is fall back on these obviously rote, canned responses and people see through that.

OLBERMANN: That leads to this question. What do you think-how long are the odds that this debate does not happen as scheduled on Thursday? Some of the right have demanded that she should withdraw from the ticket for McCain's sake. Either that way or a convenient or bona fide crisis that postpones this thing. I know obviously that must have been part of the whole game plan last week in the hope of postponing the first presidential debate.

HAYES: Right. Well, the most creative solution I've seen proposed is to send Sarah Palin to Washington to hammer out the bailout deal. But I don't think the press or the voters would go for that. I mean, yes, there's certainly a chance it won't happen. A lot of it depends on what the heck happens in Washington these next few days and with the news cycle, which has been totally and completely unpredictable for a good week and a half now. So we'll see.

OLBERMANN: Got to be 10 to one, something like that. Chris Hayes, Washington editor of "The Nation." Thank you, Chris.

HAYES: Thank you, Keith.

OLBERMANN: Sarah Palin's other problem. Problem's name is Tina Fey. And there are still five more editions of "Saturday Night Live" before we vote. And the stunner from the Worst Person's committee, the board of irresponsible people. Senator Barack Obama has made tonight's worst persons list. First, the big headline breaking in the administration's 50 running scandals, Bushed.

Gonzo-gate; Attorney General Michael Mukasey has today appointed a special prosecutor to pursue possible criminal charges against Republicans involved in the purging of attorney generals. His report criticized his predecessor, Alberto Gonzales, named the firing of David Iglesias of New Mexico as the most troubling of the attorneys firing, and mentioned Senator Pete Domenici and Bush operatives Harriet Myers, Kyle Sampson, Monica Goodling and Karl Rove as impediments to the investigation. You know this movie where there's a sudden outbreak of blindness. Whatever the opposite of that would be, it apparently just struck the attorney general's office.

(COMMERCIAL BREAK)

OLBERMANN: Has "Saturday Night Live" branded Senator McCain and Governor Palin with impossible to overcome images? We'll look word for words at the parts of the Palin/Couric interview and the Tina Fey Palin impression that were virtually identical. That's ahead, but first time for COUNTDOWN's number two story tonight, tonight's worst person in the world. The bronze to Senator Barack Obama of Illinois. Said Saturday, quote, "finally, thank you to my wife, Michelle Obama, for putting up with me. We'll be celebrating our 15th anniversary next week. And she just about has me trained almost." This statement from Michelle Obama's spokesperson, quote, "16th," unquote. 16th anniversary, not 15th. Oops. If he suspends his campaign, now you'll know why. Our runner-up, Sean Hannity of a Fixed News. Actual analysis slipped into the propaganda machine over there. He asked Dick Morris who won Friday. Morris said, I have to unfortunately say I think Obama won the debate. Hannity cut him off. "Well, I would disagree. I don't know what debate you were watching, Dick." Morris then said, "Obama came across as really knowing and caring about the problems of the average person. I also thought McCain blew it by not focusing on why he suspended his campaign." Hannity also said he thought Obama had only shown book knowledge and was somebody regurgitating lines and they were fed to him and memorized by him. Hmm, wonder if he's going to use phrases like that on Thursday night. But our winner, Karl Rove of Fox Noise, with the absolute most over the top, so ludicrous it has to be continued on the next pundit rationalization for Governor Palin, previewing the vice presidential debate on Thursday. He said, quote, "the real question on this debate going to be, from Palin's perspective, is Palin going to go out there and are we going to see the woman that we saw at Dayton, Ohio, and at the convention, comfortable in herself, or are they going to have to over-prepped her, stuffed too much information in her mind and made her a little uncomfortable, because she's really good when she's just talking with people." Wait. By in Dayton, Ohio, Mr. Rove means the speech she gave the day McCain chose her. By at the convention, Rove means her speech there. These are the examples of Governor Palin being really good when just talking with people. She was reading a teleprompter, like I'm reading a teleprompter now. This is not just talking with people. It's reading aloud off a machine. And if she was over-prepared for the Katie Couric interview, if too much information had been stuffed in her mind for the Katie Couric interview, then the Palin credibility gap is so much greater than we could possibly imagine that if she is elected we will all, all 305 million of us, have to evacuate the country. Karl "Governor Palin was over-prepared" Rove, today's worst person in the world.

(COMMERCIAL BREAK)

OLBERMANN: In 1975 and 1976, Chevy Chase single handedly established the indelible comedic caricature of President Gerald Ford as an unending physical risk, a man who might fall down or trip over something at any moment. Last winter, "Saturday Night Live" established a meme of a media in the tank for Barack Obama, which promptly begat a conversion of the Clinton campaign into a serious version of that same martyrdom, and has, in a kind of political grandchild, the nonstop whining of the McCain campaign of media bias, even though most of that seems to benefit its own candidate.

Our number one story in the COUNTDOWN, public ridicule as a critical political component, and here it comes again with what is reportedly week two of a seven week cameo of Tina Fey as Sarah Palin. Some of her lights-out impression did not even require any new material.

(BEGIN VIDEO CLIP)

PALIN: Every American I'm speaking with were ill-

TINA FEY, "SATURDAY NIGHT LIVE": Like every American I'm speaking with, we are ill.

PALIN: But ultimately, what the bailout does is help those who are concerned about the health care reform that is needed-

FEY: But ultimately, what the bailout does is help those that are concerned about the health care reform that is needed to help shore up our economy.

PALIN: Helping the-it's got to be all about job creation.

FEY: It's got to be all about job creation, too.

PALIN: -- to shoring up our economy and putting it back on the right track.

FEY: Also to shoring up our economy and putting Fannie and Freddie back on the right track.

PALIN: So health care reform and reducing taxes-

FEY: And so health care reform and reducing taxes-

PALIN: And reining in spending.

FEY: And reining in spending.

(END VIDEO CLIP)

OLBERMANN: But this was hardly just parroting. As the rest of us fiddled around with analogies to Mina Birds and talking Caribu Barbie Dolls, Seth Myers and the writers hit the analogy right on the head.

(BEGIN VIDEO CLIP)

FEY: Katie, I'd like to use one of my life lines.

UNIDENTIFIED FEMALE: I'm sorry?

FEY: I want to phone a friend.

(END VIDEO CLIP)

OLBERMANN: Let's turn now to Emily Heil, who writes the "Heard on The Hill" column for "Roll Call," the newspaper of record for Capital Hill. Thanks for your time tonight, Emily.

EMILY HEIL, "ROLL CALL": Glad to be here, Keith.

OLBERMANN: Satire is one thing, but as big a laugh as anything else in that sketch was the word for word from Governor Palin's interview from Katie Couric. Is that the lowest it can get for a politician, when your serious words, with almost no embellishment, bring back cascades of laughter?

HEIL: You know, I'm not ever going to say that anything is lowest it can get for a politician, because I think you and I both know there's no limit to how low that bar can go. But honestly, it is interesting and very significant when you don't even have to write punch lines, when the candidate writes them him or herself. I think it really reminded me of George H.W. Bush. You remember Dana Carvey using all those great lines that were actually mined from actual presidential speeches. "Read my lips," those kind of things. And they really rang so true, because they actually came from the candidate's mouth. And I think with Sarah Palin the danger is even greater, because most of the time when you see a satiric version of a political figure, you have the real version to compare it to. In this case, we don't. In the same way that sort of Dana Carvey sort of owned the persona of George H.W. Bush, it seems that it's easier for Tina Fey to own the persona of Sarah Palin, at least for a little while, until we actually see the real Sarah Palin.

OLBERMANN: If. When the S&L skit was in her favor, Senator Clinton tried to pick up the ball and run with it. She referenced that whole in the tank for Obama and get him another cushion thing in an actual debate. It went over like a lead balloon. Is there anything the governor can do with this? Can she try to pick it up? Can she have fun with it, go on the show, embrace this somehow?

HEIL: Well, I'm really not in the business of giving advice, but I think there would be probably a big upside to her sort of going along with the joke. It's so much better, I think, from a public perspective to be in on the joke and not to be sort of the butt of it. And you see John McCain doing this to some extent. He makes old man jokes every now and then to sort of blunt the impact of the jokes that are inevitably going to be made about him. So it's sort of that way of giving a wink and a nod and sort of owning that joke, as opposed to just being the sort of clueless victim of it. So maybe we'll see the real Sarah Palin appearing alongside Tina Fey. It might be a smart thing for her to feel like she's in on the joke instead of just the butt.

OLBERMANN: Is it always a bad thing to have this happen? Because obviously the Gerry Ford reference, while they were harpooning him every week, he went from 33 points down to 31 points at the end against Carter. Is there some way this could work, even a sympathy measure for Governor Palin?

HEIL: That's a great point. It very well might. It depends on the audience. I think for some people being the butt of a joke from the elite liberal Manhattan folks, maybe that's sort of a badge of honor as opposed to being a bad thing. People might rush to her defense, particularly if she does better than a lot of people are expecting her to in the debate. So this may be actually a badge of honor and not a bad thing. People might actually sympathize.

OLBERMANN: At this rate, the way expectations are going for Thursday night, if she's still standing at the end of 90 minutes, she'll have done better than people expect. Emily Heil, columnist for "Roll Call," thank you, Emily.

HEIL: Glad to be here, Keith.

OLBERMANN: That's COUNTDOWN for this 1,979th day since the declaration of mission accomplished in Iraq. I'm Keith Olbermann, good night and good luck.

Copy: Content and programming copyright 2008 MSNBC. ALL RIGHTS RESERVED. Transcription Copyright 2008 ASC LLC ALL RIGHTS RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user's personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon MSNBC and ASC LLC's copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

Watch Countdown with Keith Olbermann each weeknight at 8 p.m. ET

Discuss:

Discussion comments

,