updated 10/17/2008 12:05:53 PM ET 2008-10-17T16:05:53

THE RACHEL MADDOW SHOW

October 16, 2008

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

Guests: Claire McCaskill, Kent Jonesth

RACHEL MADDOW, HOST: Bye, Keith. Thank you.

And thank you at home for staying with us this hour.

Today, of course, is the first day of the end of the presidential campaign.

(voice over): The day after the last debate. When you leave behind the spin and the snap polls and the dial responses in the pundit core, the way to tell who won is to look at what the campaigns are telling the American people today, the day after.

(BEGIN VIDEO CLIP, OBAMA CAMPAIGN AD)

NARRATOR: Keep spending $10 million in Iraq while our own economy struggles? Same as Bush.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, MCCAIN CAMPAIGN AD)

SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE: The last eight years haven't worked very well, have they? I'll make the next four better.

(END VIDEO CLIP)

MADDOW: So, after the last debate, the argument today is about George Bush and John McCain. Not Barack Obama and whatever you slim balls they're trying to link him to.

(BEGIN VIDEO CLIP)

MCCAIN: If you wanted to run against President Bush, you should have run four years ago.

(END VIDEO CLIP)

MADDOW: John McCain's zinger of the night, sets the worst possible stage for the last 19 days of his campaign. McCain had both the zinger of the night and the "oh, no he didn't" moment of the night, too.

(BEGIN VIDEO CLIP)

MCCAIN: That's the extreme pro-abortion position, quote, "health."

(END VIDEO CLIP)

MADDOW: Did McCain just use sarcastic air quotes around the word health-women's health? John McCain's women problem just got worse. Pollster Celinda Lake joins us to analyze.

And the single thing that's hurting John McCain most as Election Day approaches?

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN, ® VICE PRESIDENTIAL CANDIDATE: We will balance the federal budget by the end of our first term.

(END VIDEO CLIP)

MADDOW: Sarah Palin might have been a good choice if there weren't a global economic meltdown, but there is a global economic meltdown. That's made Sarah Palin a bigger political liability than anyone knew to expect. Rosa Brooks of the "L.A. Times" takes us inside the poll numbers for a view of the real trouble the McCain campaign has gotten itself into.

THE RACHEL MADDOW SHOW starts now.

(on camera): What happens when you're prepared zinger, your knock-them-out-scribble-it-down-so-you-don't-forget-it debate line backfires. The McCain campaign is learning the answer to that today.

Many months ago, as Obama v. McCain was just getting underway, it seems clear that the big, important, determinative question to ask about this presidential race was: Would this be a referendum on Barack Obama, which would probably mean the Republicans would win, or would this be a referendum on George W. Bush and McCain which would probably mean the Democrats would win?

Each side battled to define the race. Obama is the issue, look how naive he is. No, McCain's the issue, he's just like Bush. That has been the overall meta/big picture fight here from the beginning-which, apparently, John McCain's campaign forgot when it came to zinger-prepping time for last night's debate.

(BEGIN VIDEO CLIP)

MCCAIN: Senator Obama, I am not President Bush. If you wanted to run against President Bush, you should have run four years ago.

(END VIDEO CLIP)

MADDOW: What do you call a zinger when it works backwards? Would that be a (INAUDIBLE)? Wittingly or unwittingly, Senator McCain, with that line, commented this election as a referendum on himself and, by extension, President Bush.

Do you need further evidence of that? Well, how about the two instant response post-debates brand-spanking new TV ads that came out today? Both of them about President Bush and John McCain.

First: The Obama campaign ad.

(BEGIN VIDEO CLIP, OBAMA CAMPAIGN AD)

MCCAIN: Senator Obama, I am not President Bush.

NARRATOR: True, but you did vote with Bush 90 percent of the time, tax breaks for big corporations and the wealthy, but almost nothing for the middle class. Same as Bush. Keep spending $10 billion a month in Iraq while our economy struggles? Same as Bush. You may not be George Bush, but.

MCCAIN: I voted with the president over 90 percent of the time, higher than a lot of my Republican colleagues.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

MCCAIN: The last eight years haven't worked well, have they? I'll make the next four better. Your savings, your job, and your financial security are under siege. Washington is making it worse.

(END VIDEO CLIP)

MADDOW: So, here we are. By both campaigns' agreement, the election is now officially a referendum on President Bush and how much John McCain is or isn't like him-which, of course, is exactly where Barack Obama wants things. Big advantage goes to Obama, unless, of course, you ask Obama.

He told a group of donors today, quote, "For those of you feeling giddy or cocky or think this is all set, I have just two words for you: New Hampshire. I've been in these positions before when we were favored, and the press starts getting carried away and we end up getting spanked."

Spanked? Wow.

Senator Obama does, however, have a clear advantage, if not a lead pipe cinch in a new round of battleground polls. "Time" magazine and CNN have him 10 points ahead in Virginia, five points ahead in Florida, and trailing McCain by just one point in the great state of Missouri.

Want to know if the campaigns are reading those same polls? Well, look at where they are campaigning with less than three weeks to go. Senator Obama is pouring money into supposedly red, red states like West Virginia and Kentucky, even flirting with the idea of challenging McCain in North Dakota and Georgia.

The McCain camp, on the other hand, is playing defense in the red states. Governor Palin campaigned today in North Carolina, she's headed to Ohio and Indiana tomorrow.

North Carolina, Indiana? These states need Republican defending?

Also, the Republican National Committee has pulled its money out of Wisconsin all together.

So, where does the McCain campaign go from here? Apparently, not far from the ugliness it has pretended to leave behind.

Here's a new RNC robocall airing in battleground states focusing on-who else-Bill Ayers.

(BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: I'm calling for John McCain and the RNC because you need to know that Barack Obama has worked closely with domestic terrorist Bill Ayers, whose organization bombed the U.S. Capitol, the Pentagon, a judge's home, and killed Americans.

(END AUDIO CLIP)

MADDOW: Remember when Senator McCain said last night on national TV that he has repudiated every out of bounds attack on Senator Obama. Does that mean that he works with terrorist's ad seem in bounds to Senator McCain? Because that's his own campaign's robocall.

Also, according to Politico.com on Saturday, McCain is set to appear with the Virginia Republican Party chairman who encouraged his volunteers to compare Barack Obama to Osama bin Laden. Is that not out of bounds, either?

And how about this material that was peddled by the Sacramento County, California Republican Party? Again, comparing Obama to Osama bin Laden and suggesting the festive idea that McCain supporters ought to waterboard Barack Obama.

Or how about this depiction of Obama from a San Bernardino County, Republican group featuring Senator Obama on a food stamp, surrounded by what's that-a bucket of fried chicken, ribs, Kool-Aid and some watermelon?

Now, are these last, utterly disgusting, racist campaign materials part of some grand strategy from McCain headquarters? Probably not. Frankly, that doesn't seem to be a grand strategy there of any kind. But, is that effective? That maybe the new, yet to be answered big question of this race.

We have settled whether it's going to be a referendum on Bush-McCain or on Obama, apparently. Now, we need to know if the fringy, wing-nutty, Obama-hearts-terrorist strategy could be effective anyway.

Joining us now is Missouri senator, Claire McCaskill. She is a national co-chair of the Obama campaign.

Senator McCaskill, thank you so much for coming on the show tonight.

SEN. CLAIRE MCCASKILL, (D) MISSOURI: Thanks for having me, Rachel.

MADDOW: So much is changing in this race. The news cycle seems like it's getting faster and faster and faster. But one thing seems to me to be settling into a constant, and that is the attack strategy of the McCain campaign.

In the last couple of days, we've got one California Republican group apologizing for their "waterboard Obama" materials, another sending out a racist caricature of Obama on a food stamp ticket surrounded by fried chicken and watermelon. We got an official McCain RNC robocall saying "Obama works closely with terrorists."

They are not giving up on this strategy. Is that because it might work?

MCCASKILL: I don't think so. I think they are-you know this is in the closing days of a campaign where, frankly, it's very hard for John McCain to talk about his policies. He doesn't have any new ideas; he has George Bush's ideas.

So, they are turning to the old playbook, the Karl Rove playbook of personal attack. It certainly gives new meaning to the word "honor." It's very sad, I think. And I think he's underestimating the American people by running the campaign like this.

MADDOW: Were you surprise that in last night's debate, the third debate, third and final debate, we still did not hear the phrase "middle class" pass through John McCain's lips? He never once said that phrase in all three debates.

MCCASKILL: You know, it's very interesting to me. It's almost like he's being stubborn about it. You know, it's like he's so angry, he refuses to acknowledge it's about strengthening the middle class.

And Barack Obama has been so steady, so calm, so thoughtful, and has had real solutions moving forward, how we do two things-create more American jobs and strengthen the middle class, which is the strength of our economy, which underlies everything.

And John McCain, clearly, is refusing to acknowledge that the middle class is hurting and that's what we need to be focusing our attention.

MADDOW: That said, and I take your point on what's been working for these two candidates, we are now seeing some tightening of the polls in some battleground states. We saw a poll out yesterday about your home state of Missouri showing John McCain up in Missouri by one point. Is Senator Obama doing what he needs to do in the swing states? Does he need some sort of defensive strategy to deal with the attack strategy of McCain that maybe what the accounting for the tightening?

MCCASKILL: Well, I think there's going to be some tightening. You know, that's why this campaign is working so hard. So many more campaign appearances than John McCain. This is not a campaign, it's-we've always been the underdog, we've always been the long shot. And Barack Obama is going to campaign that way, to be a champion for those middle class families all the way to Election Day.

And, by the way, Rachel, if it's not close in Missouri, you know, the sun doesn't come up in the morning. You know, one point in Missouri has been known to be called a landslide. So, we are close in Missouri. That's where we always are. We weren't this close four years ago, frankly.

So, I'm going to be working really hard in Missouri to make sure we get it across to finish line. Barack Obama will be back in Missouri on Saturday, both in Kansas City and St. Louis. We hope we have big crowds at both of those rallies. And then, I believe, that President Clinton is going to visiting our state pretty soon. And so, we're in play and we are going to work hard to get across the line for the values that we hold dear, which, frankly, are not nasty, personal attacks.

MADDOW: The thing for senator to say right now, and it is predictable, but it's probably wise for his supporters to hear it is, "let's not get cocky." Today, he raised that prospect, he made that admonition and then said, you know, "In New Hampshire, we were cocky, we may have been cocky heading to New Hampshire, a lot of people and the media thought that we were going to win in New Hampshire and we got spanked there."

Is there a palpable fear in the campaign that a repeat of New Hampshire in the primaries is possible? Is there a distrust of the polling numbers?

MCCASKILL: Well, this whole campaign has come from the bottom up. It didn't come from Washington; it came from people's living rooms in Iowa, from people with small business in rural Nevada. This campaign really did come bottom up.

And when that happens and you become the front-runner, it feels weird. And so, I think that we are just reacting to this notion that we could really be substantially ahead. And it doesn't feel like we should ever behave that way. This is about connecting with real people out there with real problems.

And, I think, as long as Barack stays as focused as he has been, as disciplined as he's been about what's important here, and frankly, nobody needs to worry. He is not going to turn this campaign into personal attacks against John McCain. It's not in his nature.

MADDOW: He may not be turning it to personal attacks against John McCain, but John McCain's campaign is sticking with the personal attack strategy against Barack Obama. And I understand that if it is, thus far, worked for Barack Obama to essentially sort of ignore those attacks, to make sure that the facts are out there to debunk what needs to be debunked, but to keep campaigning in a positive way on issues like the economy, on what he wants to do in terms of policy.

Is there a panic button to hit on this campaign, though? If the personal attacks really do start taking a chunk out of the polling numbers in states that Senator Obama really needs to win, is there a Plan B strategy that he will turn to if he needs to change course?

MCCASKILL: Well, first of all, you don't go toe-to-toe like Barack Obama has done over the past two years with a lot of political power in this country if you don't have a strong backbone. And Barack Obama will stand up to anybody, whether it's a foreign leader or whether it's a nasty campaign. And he will stand up strong and he will fight back, but he'll never do it with personal attacks. It's just not what we need in America right now. And that's not why he is running. He's running to bring people together, not to divide this country.

MADDOW: Democratic Senator Claire McCaskill of Missouri, national co-chair of the Obama campaign, thank you so much for your time tonight.

MCCASKILL: Thank you.

MADDOW: John McCain's campaign may have 99 problems, but I bet he thought that by picking a woman for vice president, his standing with women voters wouldn't be one of them. He is behind by 15 points among women voters. And that was before last night. Stay tuned.

And, tonight, I'm going to have to just come right out and say it moment, is that I think Sarah Palin may be the "numero one," ichiban, number one reason John McCain is so far behind in this election right now. And I say the poll numbers agree with me. You betcha. Doggone it.

First, though, one more thing about last night's final presidential debate, specifically those customary shout-outs each candidate does at the beginning, well, Senator McCain did a nice thing last night. He sent extra well wishes to a former first lady who had a fall, yesterday.

(BEGIN VIDEO CLIP)

MCCAIN: By the way, our beloved Nancy Reagan is in the hospital tonight. Our thoughts and prayers are going with you.

(END VIDEO CLIP)

MADDOW: Hear, hear, we all wish former First Lady Nancy Reagan a speedy recovery. But someone else was hospitalized yesterday, and he did not get a shout-out from either candidate. That would be Dick Cheney, treated yesterday for an abnormal heartbeat. They sedate him, stop his heart, restart the heart. It's kind of a big deal. But at that debate, no love for vice, apparently, from either candidate.

Well, Mr. Vice President, we hope you feel better and very soon. And fair warning, we have a cameo in tonight's misinformation.

(COMMERCIAL BREAK)

MADDOW: Back in July, John McCain admitted that he doesn't know how to get on to the online machine by himself. He said the e-mail is not his strong suit; even "Golden Girl" Betty White busted him on that.

(BEGIN VIDEO CLIP, THE LATE LATE SHOW IWHT CRAIG FERGUSON, OCT. 9TH)

BETTY WHITE, ACTRESS: John likes to do all his communicating via carrier pigeon. Lately, we've been having a problem with Sarah Palin shooting them down.

(LAUGHTER)

(END VIDEO CLIP)

MADDOW: The problem is bigger than just the senator. According to the email marketing firm, Click Mail, McCain's campaign e-mailings to its supporters are only getting through to it 2/3 the rate that Barack Obama's do. They are apparently using computers with unauthorized I.P. addresses, so your average e-mail program thinks McCain campaign e-mails are spam.

You now, the Google is one thing, but the e-mail? They are like, 112-year-old in Kazakhstan who know how to do email now. And, senator, that 3:00 a.m. phone call might be an e-mail. Maybe you want to take a course, or something.

(COMMERCIAL BREAK)

MADDOW: We're taking you to a live news event right now. And John McCain is speaking now at the Alfred E. Smith Memorial Foundation Dinner in New York City. Traditionally, a night of life, humor, and politicking. Both candidates are expected to speak tonight.

John McCain is now speaking now. You see Hillary Clinton there in the audience.

Let's go to John McCain's speech.

MCCAIN: For Senator Obama are less restrained in their enthusiasm-even in the media. Over-usually, it's table 228, for example, is my old friend and greenroom pal, Chris Matthews. He used to like me, but he found somebody new, somebody who opened his eyes. So, somebody who gave him a thrill up his legs.

(LAUGHTER)

MCCAIN: And we've talked about it. I told him, "Maverick, I can do, but messiah is above my pay grade."

(LAUGHTER)

(APPLAUSE)

MCCAIN: You know-it's going to be a long, long night at MSNBC, if I manage to pull this thing off.

(LAUGHTER)

(APPLAUSE)

MCCAIN: For starters.

(APPLAUSE AND CHEERS)

MCCAIN: I understand that Keith Olbermann has ordered up his very own "mission accomplished" band. And they can hang that in whatever padded room that's been reserved for him.

(LAUGHTER)

Seriously, Chris, if they need any decorating advice on that banner, ask Keith to call me, so I can tell him right where to put it.

(LAUGHTER)

MCCAIN: So, you know, I have fun with the media and we all know the press is really an independent, civic-minded, and nonpartisan group.

(LAUGHTER)

MCCAIN: . like ACORN.

(APPLAUSE)

MCCAIN: In case you haven't been following my opponent's "get out to vote" campaign, ACORN is helping to register groups previously excluded, overlooked, and underserved, second graders.

(LAUGHTER)

MCCAIN: . the deceased, Disney characters. In Florida, they turned up an ACORN voter that bore the name of one Mickey Mouse. We're checking the paw prints. Although I might let that one go, I'm pretty sure the big rat is a Republican.

Anyway, we all know that Senator Obama is ready for any contingency, even the possibility of a sudden and dramatic market rebound. I'm told that at the first sign of recovery, he will suspend his campaign and fly immediately to Washington to address this crisis.

(APPLAUSE)

MCCAIN: All this will be for the voters to decide very soon. And though, I do trust we can keep the turnout amongst the decease and fictional voters to a minimum, I have come out on both sides of the elections and I've never lost my confidence in the judgment of the American people.

In the military, they worked pretty hard to impress the chain of command on their way of thinking. And one way or another, on the 4th of November, word will come down from the top of the chain and Senator Obama and I will both receive our orders. I don't want it getting out of this room, but my opponent is an impressive fellow in many ways.

Political opponents have a little trouble seeing the best in each other, but I have had a few glimpses of this man at his best. And I admire his great skill, energy, and determination. It's not for nothing that he's inspired so many folks in his own party and beyond.

Senator Obama talks about making history, and he's made quite a bit of it already. There was a time, when the mere invitation of an African-American citizen to dine at the White House was taken as an outrage and insult in many quarters. Today, it's a world away from the cruel and type of bigotry of that time and good riddance. I can't wish my opponent luck, but I do wish him well.

(APPLAUSE)

MCCAIN: Whatever the outcome next month, Senator Obama has achieved a great thing for himself and for his country and I congratulate him.

In his own day, Governor Al Smith achieved great things as well and traveled a harder path than most any presidential candidate before or since. America will always remember the boy born in an old tenement on South Street in Brooklyn, who was four times elected governor of his state and the newsboy and fishmonger who went to St. James Parochial School, and at this death, received an apostolic benediction from the Pope himself.

At the Al Smith Foundation and at the New York Archdiocese, you're carrying on the spirit and work of this good man with your service to the poor, your comfort for the sick and needy, your belief in the dignity of life, especially your gallant defense of the rights of the unborn. I'm proud to count myself as your friend and ally.

(APPLAUSE)

MCCAIN: With that-with that, my friends, let me make way for my opponent, who, tonight, is making a comedy debut that I guess we could call the final test of this campaign.

(LAUGHTER)

MCCAIN: Now, a copy of the senator's Cumby (ph) routine was left on the table this evening, and I have to confess, your eminence, I looked at it.

(LAUGHTER)

MCCAIN: Now, of course, it would be unfair and even a little unkind to put my opponent on the spot before he gets up here, or to throw him off his game with unreasonably high expectations.

(LAUGHTER)

MCCAIN: But I do need to warn you, ladies and gentlemen, you all are all out about to witness the funniest performance in this.

(LAUGHTER)

MCCAIN: .in the 63-year history of this event.

(LAUGHTER)

MCCAIN: Let's not add to the mounting pressure he must be feeling.

(LAUGHTER)

MCCAIN: Just prepare yourself for nonstop hilarity.

(LAUGHTER)

MCCAIN: The funniest 15 minutes of your life or any other.

I think he knows that anything short of that would mar the evening, insult our host, and perhaps even cost him several swing states. Senator Obama, the microphone is all yours.

(APPLAUSE)

MADDOW: The Alfred Smith Dinner, this is an annual fundraiser for Catholic charities in New York. Al Smith was the New York governor, he was the first Catholic presidential candidate. He ran in 1928. Al Smith is a famous politico-laden (ph) event-you see the archbishop there-the cardinal, excuse me. In which we've got an audience full of politicos, the speeches are quite customarily quite funny.

We are due to hear, in just a moment, from Senator Barack Obama as well. We will be bringing you that live here on MSNBC.

ALFRED A. SMITH IV, AL SMITH'S GREAT GRANDSON: (INAUDIBLE) Tina Fey.

(LAUGHTER)

SMITH: Our next speaker, Senator Barack Obama has garnered an adoring support from people all over the country and even from some not who are not in the media.

(LAUGHTER)

SMITH: He first came to the national prominence in 2004 as a candidate for U.S. Senate seat in Illinois. He delivered an elegant keynote address at the Democratic convention. His oratory and charisma impressed Americans of all political stripes.

Most of us are aware of Senator Obama's compelling life story. Born in Hawaii to a mother from Kansas and a father from Kenya. He was raised by his maternal grandparents. He had to live (ph) for a time with his mother in Indonesia.

He's a graduate of Occidental College, Columbia University, and Harvard Law School. He was the first African-American president of the Harvard Law Review. He settled in Chicago in 1993. You know Chicago, the city where four out of every two people vote Democratic.

(LAUGHTER)

SMITH: I married somebody from Chicago, so we had three votes in family.

He went to lecture (ph) at University of Chicago Law School. He won an Illinois State Senate seat in 1996.

In February, 2007, Senator Obama announced in Springfield, Illinois that he was running for president.

His entry into the contest was the beginning of a campaign that injected excitement into the presidential race.

Ladies and gentlemen, please join me in welcoming, Senator Barack Obama.

(APPLAUSE)

MADDOW: The man who just introduced Barack Obama is Alfred A. Smith IV. He is the great son of former New York Governor and presidential candidate, Al Smith, for whom this dinner is named.

Now, we'll hear from Senator Obama, himself.

OBAMA: Thank you. Thank you so much. Thank you so much. Thank you to Al and to Ann, to your eminence, to Governor Paterson and Mayor Bloomberg, to Senator and Mrs. McCain, to my wonderful colleague, Senator Clinton and Schumer, to all the distinguished guests, there is no other crowd in America that I'd rather be palling around with right now.

(LAUGHTER)

I'm sorry he couldn't be here, but I send regards to my running mate, Joe Biden - or as Sen. McCain noted, he now actually likes to be called Joe the Senator. I was thrilled to get this invitation and I feel right at home here because it's often been said I share the politics of Alfred E. Smith and the ears of Alfred E. Neumann.

(LAUGHTER)

But, I have to say tonight's venue isn't really what I'm used to. I was originally told we'd be able to move this outdoors to Yankee Stadium. And can somebody tell me what happened to the Greek columns that I requested?

(LAUGHTER)

(APPLAUSE)

I do love the Waldorf Astoria, though. You know, I hear that from the doorstep, you can see all the way to the Russian tearoom.

(LAUGHTER AND APPLAUSE)

It is an honor to be here with Al Smith. I obviously never knew your great grandfather, but from everything Sen. McCain has told me, the two of them had a great time together before prohibition. So, wonderful stories.

(LAUGHTER)

The mayor of this great city, Michael Bloomberg, is here. The mayor recently announced some news - made some news by announcing he's going to be rewriting the rules and run for a third term which caused Bill Clinton to say, "You can do that?"

(LAUGHTER)

The president's better half, Sen. Hillary Rodham Clinton is also here. I'm glad to see you made it, Hillary. I'm glad to see that you have made it because I heard Chuck Schumer actually try to tell you we really did move this event to the Yankees Stadium.

(LAUGHTER)

But, I'll tell you all from personal experience, Hillary Clinton is one of the toughest presidential and most formidable presidential candidates in history. She's broken barriers and inspired millions.

(APPLAUSE)

She is the primary reason I have all this gray in my hair now. I am also glad to see Sen. Schumer is here and I see he's brought some of his loved ones. Those would be the folks with the cameras and the notebooks in the back of the room.

(LAUGHTER)

Of course, I'm especially honored to be here tonight with my distinguished opponent, Sen. John McCain. I think it's a tribute to American democracy that with two weeks left in a hard fought election, the two of us could come together and sit down at the same dinner table without preconditions.

(LAUGHTER)

You know, recently, one of John's top advisors told "The Daily News" that if we keep talking about the economy, McCain is going to lose. So, tonight, I'd like to talk about the economy.

(LAUGHTER)

I must say I have a great deal renting the whole outfit from the Treasury Department at a very good price. Looking around tonight at all the gourmet food and champagne, it's clear that no expenses were spared. It's like an executive sale meeting at AIG.

(LAUGHTER)

But I don't need to tell any of you that's been a scary time on the stock market where people are losing their investments, their entire fortunes. It has gotten so bad Bloomberg now has to take the subway.

(LAUGHTER)

And while the collapse of the housing market has been tough on every single homeowner, I think we all need to recognize that this price has been eight times harder on John McCain.

You know, we have been debating a lot on these economic issues over the course of the campaign, but lately, things have been getting a bit tougher. In the last few weeks, John has been out on the campaign trail asking the question, who is Barack Obama? I have to admit I was a little surprised by this question. The answer is right there on my Facebook page.

(LAUGHTER)

But, look, I don't want to be coy about this. We're a couple weeks from an important election. Americans have a big choice to make. And if anybody feels like they don't know me by now, let me give you some answers.

Who is Barack Obama? Contrary to the rumors that you've heard, I was not born in a manger.

(LAUGHTER)

I was actually born on Krypton and sent here by my father Jor-el to save the planet earth.

(LAUGHTER)

Many of you know that I got my name, Barack, from my father. What you may not know is Barack is actually Swahili for "that one."

(LAUGHTER)

And I got my middle name from somebody who obviously did think I'd ever run for president.

(LAUGHTER AND APPLAUSE)

And today, my greatest strength, I guess, would be my humility.

(LAUGHTER)

Greatest weakness - it's possible I'm a little too awesome.

(LAUGHTER)

One other thing, I have never, not once, put lipstick on a pig or a

pit bull or myself. Rudy Giuliani, that's one for you. I mean -

(LAUGHTER)

Who would have thought a cross-dressing mayor from New York City would have a tough time winning the Republican nomination. So it's shocking.

(LAUGHTER)

That was a tough primary you had there, John. Anyway -

(LAUGHTER)

Anyway, that's who I really am. In the spirit of full disclosure, there's a few October surprises you'll be finding out in the coming weeks. First of all, my middle name is not what you think. It's actually Steve.

That's right, Barack Steve Obama.

Here's another revelation, John McCain is on to something. There was a point in my life when I started palling around with a pretty ugly crowd. I've got to be honest. These guys were serious were deadbeats. They were lowlifes. They were unrepentant. No good punks. That's right, I've been a member of the United States Senate.

(LAUGHTER)

Come to think of it, John, I'd swear I saw you in one of our meetings. But, I know Sen. McCain agrees that some of the rumors out there are getting a bit crazy. I mean, Rupert, the other day, of Fox News, actually accused me of fathering two African-American children in wedlock.

(LAUGHTER)

By the way, John, I'm just curious. Is Fox News included in the media because I'm always hearing about this love. Just curious.

Then, in one of these campaign rallies, someone in the crowd started yelling, "Obama," announcing to everyone in the room that I shouldn't be the Democratic nominee because there were far more qualified candidates. I really wish Joe Biden hasn't done that.

But at least, we have moved past the days when the main criticism coming from the McCain camp was that I'm some kind of celebrity. I have to admit that that really hurt. I got so angry about it I punched a paparazzi in the face on my way out of Spago's. I'm serious. I even spilled my soy latte all over my Shih Tzu. It was really embarrassing.

But, in all seriousness, I'm so glad I could make it tonight and I'm honored to be among such wonderful public servants. I want to especially say a word of thanks to Sen. McCain. We are in the midst of a tough battle right now. And American politics, at the presidential level, is always tough.

But I've said before and I think it bears repeating, that there are very few of us who have served this country with the same dedication, honor and distinction as Sen. McCain. And I'm glad to be sharing the stage with him tonight. (UNINTELLIGIBLE)

And before I close, I'd like to recognize one such servant that's not here with us tonight, but who was mentioned earlier, and that's our good friend, Tim Russert. I know that Luke and Maureen are here. I know that Tim enjoyed these dinners very much. I also know how much he would have enjoyed covering this election.

And I know that John and I would have been quaking in our boots preparing for our appearances on "Meet The Press." His absence is not just a personal for so many who knew him and loved him, but a profound loss for the country. And we continue to miss him very much.

(APPLAUSE)

You know - the fact that each October, in the closing weeks of a hard fought campaign, people of all political persuasions can come to the dinner, and share a meal and honor the work of this foundation, underscores the reality no matter what differences or divisions, or arguments we're having right now, we ultimately belong to something bigger and more lasting than a political party. We belong to a community. We share a country. We are all children of God.

And in this country, there are millions of fellow citizens, our brothers and sisters who need us very much, especially now. We are being battered by a very serious economic storm. And for many Americans, it's only deepened the quiet storms they have been struggling through for years.

Beyond the walls of this hotel, on the streets of one of the greatest cities in the wealthiest nation on earth, there are men, women and children who have fallen on hard times and hard luck, who can't find work or even a job that pays enough to keep a roof over their heads, and some are hanging on just by a thread.

Scripture says, "God creates us for works of service." We are blessed to have so many organizations like this one, and the Catholic diocese that perform these acts of God every day. But each of us also has that responsibility. Each of us has that obligation, especially now.

So no matter who we are or what we do, what I believe is each of us, in this room, asks for and hopes for and prays for enough strength and wisdom to do good and to seek justice and play our small part in building more hopeful and compassionate world for the generations that will follow.

Before Al Smith was a candidate who made history, he was a man who made a difference, a man who fought for many years to give Americans nothing more than a fair shake and a chance to succeed. And he touched the lives of hundreds of thousands - of millions, as a result. Simply put, he helped people.

That's a distinction that we can all aspire to and we can all achieve, young or old, rich or poor, Democrat or Republican or independent. And I have no doubt that if we come together at this moment of crisis with this goal in mind, America will meet this challenge and weather this storm, and in the words of Al Smith, "walk once more in eternal sunshine."

Thank you so much, everybody. God bless you.

(APPLAUSE)

RACHEL MADDOW, HOST: What you just saw there was Sen. Barack Obama addressing the Al Smith dinner - the Alfred E. Smith memorial dinner that takes place every year in New York City at the Waldorf Astoria. It's a fund-raiser for Catholic charities, famous for attracting the leading lights and even the not-so-leading lights.

It's an incredible array of politicos. The speeches, are always, without exception, funny. There were no presidential candidates at the 2004 dinner Al Smith dinner. John Kerry was in a dispute with the Catholic Church over his policy positions as an active Catholic. And because the Catholic Diocese of New York did not want to invite John Kerry, they thought it would also not be fair to invite George W. Bush. So we didn't have this four years ago, but it is back on this year.

We're going to take a quick break right now. But when we come back, we're going to have the full John McCain Al Smith speech, which honestly, was very funny. We're going to have that for you when we come back. This is MSNBC, the place for politics.

(COMMERCIAL BREAK)

MADDOW: Welcome back. This is MSNBC, the place for politics. And tonight, a sort of strange venue for politics. At the Waldorf Astoria Hotel, just blocks from our studio at 30 Rock, every year, there's an Alfred Smith dinner, an Alfred E. Smith memorial foundation dinner in New York. It is a fund-raiser for Catholic charities.

Alfred E. Smith was the first Catholic to run as a presidential candidate in the United States. It was 1928; he ran as the nominee of the Democratic Party. He was also a governor of New York. And every year, to honor his memory, the diocese throws him this memorial dinner which serves as a fundraiser.

In an election year, you will not find a higher concentration of American politicos anywhere. The good news watching at home is that the ground rule for the speeches at the Al Smith memorial dinner is that they have to be funny.

And Barack Obama and John McCain are presidential candidates who know how to tell a joke. Whatever you think about either of them, they are both pretty good at this. And they both sort of look good in white ties and tails.

We jumped into John McCain's speech about half way through it a moment ago. We're going to be fair. And because it's funny, we're going to go to back at the beginning of John McCain's speech now. Here he is tonight, just moments ago, addressing the Al Smith dinner at the Waldorf Astoria Hotel.

(BEGIN VIDEO CLIP)

MCCAIN: And this is a very distinguished and influential audience and as good a place as any to make a major announcement. Events are moving fast in my campaign. And yes, it's true that this morning, I dismissed my entire team of senior advisors. All of their positions will now be held by a man named Joe the Plumber.

(LAUGHTER)

Already - but already, my friends, my opponents have been subjecting Joe to their vicious attack machine. His veracity has been questioned by Barack Obama's running mate, Joe the Six-Term Senator. He claims that this honest, hard-working small businessman could not possibly have enough income to face a tax increase under the Obama plan. What they don't know - what they don't know, is Joe the Plumber recently signed a very lucrative contract with a wealthy couple to handle all the work on all seven of their houses.

(LAUGHTER AND APPLAUSE)

This campaign needed the common touch of a working man. After all, it began so long ago with a heralded arrival of a man known to Oprah Winfrey as "The One." Being a friend and colleague of Barack, I just called him "That One."

(LAUGHTER)

My friends, he doesn't mind at all. In fact, he even has a pet name for me - George Bush.

(LAUGHTER AND APPLAUSE)

It's been that kind of contest and I come here tonight to the Al Smith dinner knowing that I'm the underdog in these final weeks. But if you know where to look, there are signs of hope. There are signs of hope, even in the most unexpected places, even in this roomful of proud Manhattan Democrats. I can't - I can't shake that feeling that some people here are pulling for me.

(CHEERS AND APPLAUSE)

I'm delighted to see you here tonight, Hillary.

(APPLAUSE AND LAUGHTER)

Where's Bill, by the way? Can't he take one night off from his tireless quest to make the man who defeated his wife the next president?

(LAUGHTER)

The man is a relentless advocate for the Obama campaign and he has a subtle approach to making the case. When a reporter asked him if Sen. Obama was qualified to be president, Bill Clinton pointed out, "Sure, he's over 35 years of age and a U.S. citizen." He was pandering to the strict constructionist crowd.

He's also been hammering away at me with epithets like "American hero" and "great man." And with all the cameras running, he warmly embraced me at that global initiative of his. My friends, this is nothing but a brazen attempt to suppress turnout among anti-Clinton conservatives.

(LAUGHTER)

Finally, when Larry King asked President Clinton a couple weeks ago, what was the delay, and why wasn't he out there on the trail for Barack? Bill said his hands were tied until the end of the Jewish high holidays.

(LAUGHTER)

Now, you've got to admire that ecumenical spirit. I just know Bill would like to be out there now, stumping for Barack until the last hour, the last day. Unfortunately, he is constrained by his respect for any voters who might be observing the Zoroastrian New Year.

(LAUGHTER)

(END VIDEO CLIP)

MADDOW: That's where we joined John McCain as he addressed the Al Smith dinner at the Waldorf Astoria, a fund-raiser for Catholic charities. This is MSNBC, the place for politics. We brought you both of those speeches tonight. We're talking about them with our in-house political comedy expert, my friend Kent Jones, when we come back.

(COMMERCIAL BREAK)

MADDOW: Tonight, after an eight-year drought, we finally got to hear presidential candidates once again address the Alfred E. Smith memorial foundation dinner in New York City. It's held annually and it is a tradition that every four years, presidential candidates address that gathering. Usually, it's someplace swanky like the Waldorf Astoria.

And politicos from all over the country from every left, right and center stripe of politics that we have show up. And usually, you'd laugh because these speeches are supposed to be funny. It's a bit like comedy as political comebacks because you do have this difficulty of the candidates each speaking. And then you have the brutal reaction shot of the other candidate to find out if they are laughing along.

I enjoy these things very much, but I'm not an expert on these subjects. My friend who is, is Kent Jones. Kent, thanks for being here.

KENT JONES, POP CULTURIST: Sure, Rachel. Good to be with you.

MADDOW: I think that Sen. McCain is good in these settings.

JONES: I do, too.

MADDOW: In part, I think he looks better in a bow tie than he does in a normal suit. I think it suits him.

JONES: Exactly.

MADDOW: But I also think he's good at dead-pan telling a joke. Who do you think did a better job tonight?

JONES: I think McCain did. I think comedy is important to him. He has been on "The Daily Show" I don't know how many times. He goes on "David Letterman." He's been on all of the talk shows. I think it's important to him.

And I think there's some part of him that's proud of it. I think there's a point of pride at being able to deliver the jokes, and he certainly does, you know. The timing on the, "He's been hired by a wealthy couple to take care of all seven of my houses," you know? He has the timing, and he knows.

MADDOW: And the thing that is difficult about this politically - the political risk here is that you need to be rough enough, edgy enough to be funny but not so rough that you're going to get in trouble.

JONES: No, you're wearing a white tie. You can only be so rough when you're wearing a white tie and drinking champagne in front of people.

MADDOW: Right. But we did - we joined McCain's speech while he was taking his shots at MSNBC including one that was unfunny and nasty toward Keith Olbermann.

JONES: Yes.

MADDOW: But then, he ended up going back to the funny after that. We saw Barack Obama take a shot, a much, more gentle shot at Fox News.

JONES: Yes.

MADDOW: And they do sort of have to weave in serious points alongside the jokes and shots that they're taking.

JONES: Yes. For instance, Obama talked about his middle name.

MADDOW: Yes.

JONES: Hussein, which is frequently being used as a weapon in some quarters. And I loved his joke. He says, "My middle name is actually Steve" and he said it over again, "Barack Steve Obama" ...

MADDOW: Barack Steve Obama -

JONES: As if trying to reinforce that, you know. Maybe we can make that happen.

MADDOW: One last technique question. McCain is deadpan, Obama tends to laugh at his own jokes a little bit. Is that a problem or is that OK?

JONES: No, no, no. I think it's all ice cream flavors. You know, it's whatever works.

MADDOW: I guess so, too.

JONES: And I think given who Obama is and the sort of low-key fellow he is, I think he did fine.

MADDOW: Well, thank you, Kent.

JONES: Sure.

MADDOW: And thank you for watching tonight at home. We'll see you here tomorrow night. Until then, you can E-mail us, rachel@msnbc.com . You can hear my Air America Radio show, 6:00 p.m. Eastern, coast to coast. "COUNTDOWN WITH KEITH OLBERMANN" starts right now. Good night.

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

END

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.

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