updated 2/5/2009 11:19:33 AM ET 2009-02-05T16:19:33

Guest: Arianna Huffington, Chris Hayes, Christian Finnegan, Richard Wolffe, Lawrence O‘Donnell High: Which of these stories will you be talking about tomorrow?

DAVID SHUSTER, GUEST HOST (voice over):  Which of these stories will you be talking about tomorrow?

For whom the bell tolls: The president‘s plan to curve the latest round of Wall Street excess, a $500,000 salary cap for executives of companies that received government‘s bailout money.

(BEGIN VIDEO CLIP)

PRES. BARACK OBAMA, UNITED STATES OF AMERICA:  But what gets people upset—and rightfully so—are executives being rewarded for failure, especially when those rewards are subsidized by U.S. taxpayers, many of whom are having a tough time themselves.

(END VIDEO CLIP)

SHUSTER:  The mea culpa.

(BEGIN VIDEO CLIP)

OBAMA:  Did I screw up in this situation?  Absolutely.  And I‘m willing to take my lumps.

(END VIDEO CLIP)

SHUSTER:  President Obama makes the rounds apologizing for the Daschle appointment, a refreshing departure from Bush administration‘s bluster.  But will owning up work with the public?

And, will Obama‘s economic team own up to their role in the deregulation mess?  Some of the president‘s appointments helped create the current crisis, so how are they going to fix it?  This is change we can believe in?  Chris Hayes helps us sort it all out.

Still fear-mongering after all these years: Former Vice President Dick Cheney warns of the high probability of another terrorist attack and said the Obama administration‘s policy will put the country at a greater risk.

(BEGIN VIDEO CLIP)

DICK CHENEY, FORMER U.S. VICE PRESIDENT:  Sometimes that requires us to take actions that generate controversy.  I‘m not at all sure that that‘s what the Obama administration believes.

(END VIDEO CLIP)

SHUSTER:  Out of office and still out of his mind.  The Rod Blagojevich mystifying media tour continues as the former governor sits down with Letterman.

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, TV TALK SHOW HOST:  Why exactly are you here?  Honest to God.  What?

(LAUGHTER)

ROD BLAGOJEVICH, FORMER ILLINOIS GOVERNOR:  Well, you know, I‘ve been wanting to be on your show in the worst way for the longest time.

LETTERMAN:  Well, you are on in the worst way.  Believe me.

BLAGOJEVICH:  That‘s right.

(LAUGHTER)

(END VIDEO CLIP)

SHUSTER:  All that and more—now on COUNTDOWN.

(BEGIN VIDEO CLIP)

BLAGOJEVICH:  And that wasn‘t all that funny, with all due respect.

LETTERMAN:  What?

(END VIDEO CLIP)

SHUSTER (on camera):  Good evening, everybody.  I‘m David Shuster. 

Keith Olbermann has the night off.

You would think that President Obama was requiring financial executives to work for nothing and that the United States Treasury was forcing the firms they work for to take your taxpayer-funded bailout money against their will.

Our fifth story on the COUNTDOWN: The president announces a half million dollar limit on executive pay for any company that wants TARP funds.  President Obama, who makes $400,000 a year, this morning, capped composition at 500,000 for any firm in such dire condition that feels it needs a federal handout.

Last week when it was revealed that Wall Street executives handed out more than $18 billion in year-end bonuses after they received bailouts, President Obama called their behavior shameful and the height of irresponsibility.  Today, he aimed to limit their options.

(BEGIN VIDEO CLIP)

OBAMA:  This is America.  We don‘t disparage wealth.  We don‘t begrudge anybody for achieving success, and we certainly believe that success should be rewarded.  But what gets people upset—and rightfully so—are executives being rewarded for failure, especially when those rewards are subsidized by U.S. taxpayers.

(END VIDEO CLIP)

SHUSTER:  If an executive at a bailout firm wants to give out a bonus above $500,000, he—it is usually a “he”—is going to have to use company stock that cannot be sold until the U.S. government has been paid back.  And if he wants to buy a private plane, he‘s going to have to disclose it.  But the rules are not retroactive.  So, any bank that took money in the first bailout does not have to comply.

Despite that, President Obama seems accused of all but sending corporate executives to Guantanamo Bay.  “That is pretty Draconian,” as what the founder of a compensation consulting firm told the “New York Times.”  “$500,000 is not a lot of money, particularly if there is no bonus.”

For the record $500,000 is 10 times what the average American worker makes.  As it stands now, the average CEO earns 350 times what the average worker does.

And on CNBC, one Wall Street veteran said of the executive pay restrictions, quote, “The consequences of it are going to be a massive brain drain of senior talent from those companies that have taken TARP money to those companies that have not.”  If the guys who made all the bad investments are only sticking around for the money, doesn‘t it time to give someone else a shot at running things?

But wait, there‘s more.  Republican Senator Olympia Snowe of Maine said she will offer an amendment to the stimulus bill that would force any firm that took bailout money and then handed out excessive bonuses to pay the government back.  No word yet on whether that will make it any easier for President Obama to win bipartisan support for the legislation.

This morning, he answered critics who want more tax cuts with a reminder of who won the election.

(BEGIN VIDEO CLIP)

OBAMA:  Now, in the past few days, I‘ve heard criticisms that this plan is somehow wanting, and these criticisms echo the very same failed economic theories that led us to this crisis in the first place—the notion that tax cuts alone will solve all our problems.  I reject those theories, and so did the American people when they went to the polls in November and voted resoundingly for change.

(END VIDEO CLIP)

SHUSTER:  Time now to call in our own political analyst, Richard Wolffe.

And, Richard, good evening.

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

SHUSTER:  Richard, in the wake of today‘s announcement by the president, we did not hear reaction from any executives at banks that have been bailed out or might still be looking for bailouts.  Is that a sign of how enormously unpopular Wall Street has become?

WOLFFE:  Well, I‘d like to think it‘s a sign that they‘ve finally woken up and smelled the coffee, and realize that there is no argument you can make for higher pay for bank executives.  But I suspect there‘s also a recognition here of something that some of those experts on CNBC maybe didn‘t realize, which is that these companies are essentially bankrupt, and if they don‘t take government money in this round and subsequent rounds then there is no company to run.

So, they‘re in a desperate position.  And if they don‘t take this money now, not only will they not get compensated and not get bonuses in the future, there won‘t be a company to speak of.  So, they have to behave.

SHUSTER:  No actual penalties are listed in the plan.  Does the White House believe that disclosure alone will force compliance, that Wall Street can be shamed into behaving honorably?

WOLFFE:  Yes, the White House does think there is a shaming effect of all the reporting that is going on and, of course, there is the shaming effect of having the treasury secretary, Tim Geithner say, call you up on the phone and say you cannot take that plane that you have ordered for $50 million even if it‘s going to cost you several millions to cancel the order.  So, there is a public shaming effect here.  Whether or not it‘s enough, I‘m not so sure.

I think you are going to see public reaction and there‘s a populist element to this, let‘s face it.  And public reaction will apply first to the members of Congress and down the line, you‘re going to see some penalties.

SHUSTER:  Senator Snowe‘s amendment to this stimulus bill, might that be an indication that at least one Republican, a moderate Republican could be planning to vote for it?

WOLFFE:  Yes.  I think you‘re going to see some of those moderate Republicans, the few of them who are left in the northeast at least, who are going to peel off.  They‘re also going to have to offset or at least nullify some of these conservative Democrats who are going on the other side.  So, there‘s a lot of horse trading that‘s going to go on here.  But they do need to get to 60 votes because they are facing a filibuster here.  They‘re going to have to—the White House has to get this special majority to get this through, and otherwise everyone in Washington, the White House and members of Congress are going to be to blame.

SHUSTER:  And, Richard, speaking of horse trading, does all of the debate, the horse trading, the back-and-forth over the stimulus bill, does it seem to lose sight of the fact that the economy is in freefall, that Americans are suffering and they want the government to do something about it?

WOLFFE:  Right.  And we have not even begun the blame game yet.  And that‘s going to begin whether or not the stimulus is passed—certainly, whether it‘s not because, you know, people are going to be pointing fingers at each other.  But even if it‘s passed, this recover is going to take so long, all the economists agree that it‘s going to be really towards the end of this year, maybe the start of next year when people start to see it.  That means there‘s a lot of blame to go around, a lot of time for people to point fingers.

SHUSTER:  Richard, you‘ve been covering Barack Obama, now President Obama for almost two years.  The idea that he would essentially still be short on votes for the stimulus plan, do you think, is the reporting that this number has essentially caught them by surprise that they don‘t have the votes for this, given all the dire economic consequences we‘re looking at?

WOLFFE:  I think it has.  And it‘s really exposed, I think, something of a hole in their strategy which is, I think, they felt that because of the president‘s popularity, because of the economic need here, that the argument was almost already made.  In fact, they have lost control of the definition of this debate, of the framing of it.  So, anything that doesn‘t seem to be stimulative or defined as stimulus is deemed excessive or unwarranted.  So, they got into the weeds of what should be in and what should be out by losing control of the language.  They have to, some extent, lost control of this.  They need to get that back.

SHUSTER:  And as far as the $500,000 cap, it puts enormous political pressure on any Republican who doesn‘t want to be in a position of saying, “Oh, I voted, essentially, to allow these executives to continue with these exorbitant sums that they are getting paid.”

WOLFFE:  Yes.  You don‘t hear Republicans being free-market at this point saying, “American capitalism is going to die.  We are not going to have this pool of talent.”  Remember, one of those CNBC guys said, “All of these folks are not going to go companies who take TARP money.”  Well, any company, any bank that needs this financial assistance is in such a bad position that talented people should be looking elsewhere, otherwise they are not talented in the first place.

SHUSTER:  MSNBC political analyst, Richard Wolffe—and, Richard, thanks for your time tonight.

WOLFFE:  Thank you, David.

SHUSTER:  One story that seemed to have been pushed down of the headlines, the Tom Daschle controversy, raising the question of just how effective it had been have the president apologize to all five TV news organizations last night.  It certainly was a novelty to hear a commander-in-chief say that he screwed up.

Here at COUNTDOWN, we can think of at least one former chief executive for whom being president of the United States means never having to say you‘re sorry.

(BEGIN VIDEO CLIP)

BRIAN WILLIAMS, NBC NEWS ANCHOR:  You lost two nominees, two appointments today.  Did that make you angry, I imagine?

OBAMA:  Oh, it made me angry and disappointed.  And, you know, it‘s something I have to take responsibility for.

UNIDENTIFIED MALE:  After 911, what was your biggest mistake?

GEORGE W. BUSH, FORMER U.S. PRESIDENT:  I wish you have given me this written question ahead of time so I can plan for it.

(LAUGHTER)

WILLIAMS:  Do you feel you messed up in letting it get this far?

OBAMA:  Yes.  I think I made a mistake.

BUSH:  I‘m sure something will pop into my head here in the midst of this press conference of all the pressure of trying to come up with an answer.

OBAMA:  I think I messed up.  I screwed up.

BUSH:  I‘m sure historians will look back and say, “Gosh, he could have done it better this way or that way.”

OBAMA:  We‘re going to have some glitches and I understand that‘s what people are going to focus on, and I‘m focus on it because I don‘t want glitches.  We can‘t afford glitches.

BUSH:  The biggest regret of all the presidency has to have been the intelligence failure in Iraq.  You know, I wish the intelligence had been different, I guess.

OBAMA:  So, I consider this a mistake on my part, and one that I intend to fix.

DAVID ASMAN, FOX NEWS:  What do you think your greatest error was?

BUSH:  Well, I would rather go, you know, disappointments rather than errors.

OBAMA:  The era of responsibility is not never making mistakes, it‘s owning up to them and try to make sure you don‘t repeat them.

CHARLIE GIBSON, ABC NEWS:  Do you feel in any way responsible for what‘s happening?

BUSH:  You know, I‘m the president during this period of time, but, I think, when the history of this period is written, people will realize a lot of decisions that were made on Wall Street took place over, you know, a decade or so before I arrived in president, during I arrived in president.  I‘m sorry it‘s happening, of course.

OBAMA:  Everybody has responsibilities.  In this situation, I take responsibility for it.

BUSH:  Now, you asked what mistakes—I made some mistakes in appointing people.  But I‘m not going to name them.  I don‘t want to hurt their feelings on national TV.

OBAMA:  And I‘m here on television saying I screwed up.

(END VIDEO CLIP)

SHUSTER:  Let‘s turn now to Arianna Huffington, cofounder and the editor of the “Huffington Post,” and author of the “Huffington Post:

Complete Guide to Blogging.”

And, Arianna, thanks for your time tonight.

ARIANNA HUFFINGTON, THE HUFFINGTON POST:  Thank you.

SHUSTER:  A president who actually said, “I screwed up,” something we‘re not used to hearing.  Was it refreshing to hear a president admit to making a mistake?

HUFFINGTON:  It was very refreshing.  It was a teachable moment.

And actually, Barack Obama has offered us multiple teachable moments.  You know, not holding a grudge with his appointment of Hillary Clinton as secretary of state, bringing the first granny into the White House, teaching how he can bring grandparents into the bringing up of our children, staying unflappable while being criticized as a socialist, the terrorist during the campaign and now this one—admitting a mistake.

How refreshing.  As the mother of two teenage daughters, I really welcome that moment.

SHUSTER:  Did it make it possible for President Obama to put the Daschle controversy behind him and move back to the economy?

HUFFINGTON:  I think it is the combination of admitting a mistake, saying “I screwed up” and introducing a very significant new measure today, the capping of executive compensation.  The combination of those two factors, yes, made it possible for him to put the Daschle mistake behind him.

SHUSTER:  It was also somewhat jarring to see that clip especially when it‘s intercut there with President Bush.  Will some people see Obama‘s admission perhaps as a sign of weakness?

HUFFINGTON:  Well, interestingly enough, many people on the right including at the “National Review,” including Brit Hume at FOX, found it, again, refreshing.  I think it‘s almost as if after eight years of what you just showed us, you know, the president refusing to ever admit a mistake and staying the course and taking us over the cliff with him, it is really refreshing, especially when the president said that he doesn‘t want to repeat mistakes.  You know, I have a sign on my desk that says make new mistakes.  So, as long as the president makes new mistakes and admits it, I think the public will be with him.

SHUSTER:  His presidency is only two weeks old.  How many times does President Obama get to say he screwed up?

HUFFINGTON:  Well, more than you think.  But let‘s be careful here.  I don‘t think he has a lot of room for nominating somebody else to his cabinet who has a tax problem.  I think that mistake has happened often enough.  So, time for new mistakes.

SHUSTER:  Arianna, I wonder if he benefits because it was essentially a personnel decision.  I mean, a lot of Americans out there don‘t really follow the intricacies of who‘s going to be Health and Human Services secretary, and if it‘s easier to essentially say “I messed up, I apologized for that mistake,” when it seems so removed from folks.  Whereas, if this stimulus doesn‘t work and the economy doesn‘t get better, then you sort of talking about a different category of asking for people to forgive you, right?

HUFFINGTON:  Of course.  But also, this is a significant mistake because as President Obama said last night, he needs to make it very clear there aren‘t two sets of rules, you know, one for the political elite and one for ordinary Americans.  So, in that sense, it was not an insignificant mistake.  Of course, the possibility of the stimulus package and the next tranche of the bailout will not work is a mistake of a different order and magnitude because it affects the lives of millions of Americans.

SHUSTER:  And, Arianna, how do you see that going?  I mean, how much did the president essentially been done by Daschle and how much did he recover by the apology, and how does that influence then public views over the debate, the big debate over this stimulus plan?

HUFFINGTON:  Well, the big debate has to do with the fact that the stimulus plan may not be big enough and bold enough to deal with the problems we are facing.  After all, it promises 3.5 million jobs.  So, just about 2 percent in the up employment rate, a 2 percent improvement of the unemployment rate.  That‘s not enough when you already have over 7 percent unemployment and if these current trends continue, we are soon going to have double-digit unemployment.  So, that‘s the main problem that I see in the stimulus package.

SHUSTER:  Arianna Huffington of the “Huffington Post”—and, Arianna, great to see you.  Thanks for coming on tonight.

HUFFINGTON:  Thank you so much.

SHUSTER:  You‘re welcome.

When it comes to the economy, President Obama says, “We‘ve dug a deep hole for ourselves.”  So, in some cases, why he is looking for help from the very people that helped create the hole in the first place?

That and a new transition of power record.  It only took former Vice President Cheney two whole weeks after the inauguration to diss the Obama administration.  Way to hold it in there, Mr. Cheney.

Details ahead on COUNTDOWN.

(COMMERCIAL BREAK)

SHUSTER:  President Obama wants to bring change to Washington, but when you are bringing along some of the same people that wrecked the economy, is that really change we can believe in?  And remember that big Ponzi scheme orchestrated by Bernie Madoff?  You know, the one no one could have seen coming?  Well, it turns out not only did someone see it coming; the government was warned about it, too.

That and Dick Cheney isn‘t thrilled with the Obama administration.  Go figure.

All that and more—ahead on COUNTDOWN.

(COMMERCIAL BREAK)

SHUSTER:  Limiting executive pay might reduce the incentives to take big risks with their company‘s future and our economy, but it‘s only one part of the Obama economic remedy.  The other part is restoring those old FDR-style rules that used to stop Wall Street from gambling away our future.

But in our fourth story tonight: There is mounting concern that the people President Obama wants to restore those rules are the same people who demolished them.  As Keith reported last summer, gas prices spiked in part because the CFTC, Commodity Futures Trading Commission, let speculators hijack the gasoline market, that Republicans like Phil Gramm are both responsible for it and advising John McCain on it.

But Democrats played a part in that, too—especially when the CFTC‘s lack of oversight on derivatives, bets that speculators make about different markets.  That‘s then helped turn the mortgage crisis into a financial meltdown.  Clinton‘s Treasury Undersecretary Gary Gensler helped make that happened, opposing CFTC efforts at greater regulation.

So, who is Mr. Obama appointed to head his CFTC?  Clinton Treasury Undersecretary Gary Gensler.  His confirmation hearing has not yet been scheduled, but today, he‘s written replies to Senate questions last week were released.

Asked whether he agreed with other former deregulators that mistakes were made, Gensler wrote, quote, “Market participants, i.e. trader and speculators, have failed at their own risk management and in their obligation to protect their customers, their investors‘ money, their shareholders and even their franchises.  Our regulatory system also failed.”

In that answer and others, not only did Gensler failed to admit any mistake, but he continued to suggest the U.S. market should rely on market participants living up to obligations instead of following the rules.

Let‘s bring in Chris Hayes, Washington editor of “The Nation,” who failed to get Mr. Gensler to speak on the record for his recent article on this issue.

And, Chris, thanks you for your time tonight.

CHRIS HAYES, THE NATION:  Thank you, David.

SHUSTER:  Have I got it about right on Gensler?  Can you flesh out what we should understand about this particular Obama nominee?

HAYES:  Yes.  I mean, you‘ve got it right.  Basically, you know, the biggest issue, the biggest regulatory issue that the Commodity Futures Trading Commission has faced in the about the last 10, 20 years was whether or not they were going to regulate swaps, these complicated financial instruments, subsection of which are credit default swaps which has seen become notorious because they were essentially what brought down AIG and have created, they have spread tremendous systemic unrest throughout the system.

In ‘98, the head of the CFTC at that time said, “Hey, look, these things are dangerous.  We should do something about them.”  And what happened was, the people inside the Clinton administration from Robert Rubin, Larry Summers, Gary Gensler, Alan Greenspan, and Phil Gramm in the Senate basically, said, “No, no, no.  We‘ve got to keep them unregulated.”  And we have seen the results of that.

SHUSTER:  What—is it just against (ph) that we‘re talking about—

I mean, what is President Obama‘s track record on the people he‘s picking to fix the economy?

HAYES:  Yes, Gensler, in some ways, is a very small story, a small part of a much larger picture.  I mean, he‘s a smart and competent guy, and he may very well be a good regulator in the future.  The problem is, when you go up the chain, you get the same thing over and over.

I mean, Larry Summers, who everyone now acknowledges is essentially the head honcho of economic policy, he was behind most of the major deregulatory pushes of the late Clinton administration, and a lot of the stuff that brought us to the moment we are at and there‘s very little sign that he has really had the kind of a “Come to Jesus” moment where he realizes the error of his ways.

SHUSTER:  Is it—maybe not a question of mistakes and judgment but rather groupthink.  I mean, Clinton and Biden flipped on Iraq, Gensler is now pro-regulation.  But is that part of the problem?  I mean, they are always in the mainstream rather than ahead of it.

HAYES:  That‘s right.  In 1998, when had a bull market and everybody was celebrating the unceasing beauties of global capitalism unleashed, everybody thought that or a lot of people in power thought that deregulation was the way to go.  But it‘s really important to note as well that there were strong interests pushing for this deregulation regime because they were making a lot of money of it.  I mean, the people that were trading these swaps in unregulated markets made a lot of cash of it and they didn‘t want the government nosing around.

And so, the problem is—in the future, when we are going to have a fight over reregulating these sectors, you need people that are firmly committed to this regulatory regime, otherwise it‘s going to be very easy to shrink in the face of the pressure that‘s going to be brought to bear.

SHUSTER:  And as far as Gary Gensler, never mind his sort of judgment on that particular issue, I wonder if he‘s got a political judgment problem because how difficult can it be in a written questionnaire when you are asked, “Do you agree with these people who say it was a mistake,” to say, “Yes, I agree it was a mistake.”  I mean, his failure to do that seems breathtaking.

HAYES:  Yes.  I mean, Alan Greenspan who is as ideologically fixed as almost anyone in Washington got up before an oversight committee and said, “Yes, I was wrong and I made a mistake.”  And I think that the people who are chairing the agriculture committee that are eventually going to oversee the hearings for Mr. Gensler, that‘s what they want to hear because they want to be sure that there has been an internal change, an internal understand of just how much things have changed in the last 10 years and how much we have to change the system to make sure it doesn‘t happen again.

SHUSTER:  And how do they go about doing it at the hearing?  I mean, what are the specific lines of questioning that you think the senators ought to be asking Gensler so that they have that sort of confidence that he believes that?

HAYES:  Yes, I mean, the two things to do are—one, ask about the policy prospectively.  I think Senator Levin did in the questions that he submitted and Mr. Gensler had some very good responses.  I mean, the most important thing is that we move credit default swaps, these instruments, onto regulated exchanges.  It gets rid of a lot of the hidden risks that‘s brought down the system.

The second question is to really probe him about what his understanding of what brought us to this moment is, and to try to sort of illicit a better sense of what exactly his world view is about the nature of regulation and the nature of markets‘ ability to regulate themselves.

SHUSTER:  It‘s going to be an interesting hearing.  Christopher Hayes of “The Nation”—thanks for coming on.  We appreciate it.

HAYES:  Thank you, David.

SHUSTER:  Tigers and men do not co-exist very well behind bars at the zoo, but what about tigers and snowmen?

And in Still Bushed—correcting the miscues of Monica Goodling.  She fired a lawyer because of sexual orientation and then the Justice Department launched the national search for a replacement.  Guess who they picked?

Ahead on COUNTDOWN.

(COMMERCIAL BREAK)

SHUSTER:  Today marks the anniversary of the ultimate landslide in American presidential elections.  In fact, it was a complete shut out.  February 4th, 1789, George Washington received 100 percent of all electoral votes to become this nation‘s first president.  On the other card, John Adams was elected vice president and Alexander Hamilton was named the first treasury secretary, after the first guy pulled out during the confirmation process for not paying 100 Shillings in back excises on a heard of milking oxen.  Let‘s play Oddball.

(BEGIN VIDEO CLIP)

SHUSTER:  We begin at the Old Zoo in Philadelphia, where only three staffers were mauled during the building of this snowman.  No, no, no injuries.  Just a mother tiger and her three cubs frolicking with old Frosty, who was put together by staff over night, while the cats were fast asleep.  Just look at how gentle and cuddly these big kitties are.  Frosty, no!  Sorry, kids.  Let‘s move on. 

More stupidity in the snow.  This time we‘re over in London, England, where a mob of people have constructed the biggest and dirtiest snowball you have ever seen.  What is better than a big, dirty snowball rolling down a hill, you ask?  How about a big, dirty moron riding a snowball down the hill.  The Yahoo just missed getting rolled over by the ball, which, just like in cartoons, kept rolling down the hill, getting larger, eventually swallowing the entire town below. 

Finally to Boulder Junction, Colorado.  You know, they all made fun of David Kuski (ph) for having a unicorn feeder in his backyard.  Who‘s laughing now?  Actually these aren‘t mythical beasts.  It is a herd of deer featuring a few of your garden variety brown deer and seven white deer.  Animal experts say spotting one animal like that is rare, but seven in a herd is, well, unheard of.  Experts also note that the beautiful white fur is the result of a rare recessive gene or one of the deer‘s parents got jiggy with a polar bear.  We may never know for sure. 

(END VIDEO CLIP)

SHUSTER:  OK, it is not seven white deer, but it‘s still just as rare and shocking.  Former Vice President Cheney is supposed to be enjoying retirement.  But, apparently, he took time from shuffle board to continue to play the terror card and discuss the naivete of the Obama administration. 

And later, the Blagojevich bliss.  The disgraced governor didn‘t want to face questions at his impeachment trial.  Could he face a grilling from David Letterman?  Coming up on COUNTDOWN.

(COMMERCIAL BREAK)

SHUSTER:  Barely two weeks after literally being wheeled out of office, in our third story in the COUNTDOWN, Dick Cheney is back, trying to justify his tenure in a 90-minute talk with “Politico.”  Despite repeatedly indicating that he did not want to criticize the new president, Mr. Cheney spent a good part of the interview doing precisely that, deriding the stimulus, labeling the possibility of Mideast peace unlikely, and saying of Obama‘s emphasis on diplomacy saying, quote, “I think there are some who probably actually believe that if we just go talk nice to these folks, everything is going to be OK.” 

A direct repetition of the Republican attack line during the campaign, despite the fact that no one on the campaign or in the administration has ever advocated just talking nice to anyone.  Then, after repeating the already debunked statistics that 61 former inmates at Guantanamo have returned to terrorism, he proceeded to bash Obama‘s plan to close the facility.  Quote, “if you release the hardcore al Qaeda terrorists that are held at Guantanamo, I think they go back into the business of trying to kill more Americans and mount further mass casualty attacks.  If you turn them loose and they go kill more Americans, who is responsible for that?” 

Actually, Dick, you are.  If anyone has started killing Americans after leaving Gitmo, it is because you and Mr. Bush let them out.  How about all the infringement, illegal and otherwise, Cheney and his cronies inflicted on the American Constitution? 

(BEGIN VIDEO CLIP)

DICK CHENEY, FMR. VICE PRESIDENT OF THE UNITED STATES:  If it hadn‘t been for what we did with respect to the terrorist surveillance program or enhanced interrogation techniques for high value detainees and the Patriot Act and so forth, then we would have been attacked again.  Those policies we put in place, in my opinion, were absolutely crucial to getting us through the last seven-plus years without another major casualty attack on the U.S.

(END VIDEO CLIP)

SHUSTER:  In his opinion.  Except there has been no proof, no evidence that any of those thing truly prevented another attack.  So why would Cheney bring them up?  To essentially threaten the new president into keeping illegal wiretapping and torture. 

(BEGIN VIDEO CLIP)

CHENEY:  There‘s a challenge there for the Obama administration; whether or not they take the time to understand what we did and why we did it and how we did it, before they run off and start taking down programs that I think are essential to the security of the nation. 

(END VIDEO CLIP)

SHUSTER:  We are joined now by MSNBC political analyst Lawrence O‘Donnell.  Lawrence, thanks for your time tonight. 

LAWRENCE O‘DONNELL, MSNBC POLITICAL ANALYST:  Good to be with you, David. 

SHUSTER:  First off, am I hearing things?  Did the former vice president just say the new president, by undoing some of Bush‘s programs, is putting America at danger?  Is that not an outrageous charge? 

O‘DONNELL:  It is beyond outrageous, David.  We are left at this stage with no good choice about Vice President Cheney.  He is either a pathological liar or he is completely unhinged.  His friends, people who have known him a long time, prefer the unhinged description.  They will tell you that the man they knew before 9/11 is not the man they recognize now. 

I‘d like to direct the audience and you David to one more thing that Dick Cheney said about President Obama and the Obama administration.  He said they are, quote, “people who are more concerned about reading the rights to an al Qaeda terrorist than they are with protecting the United States.” 

More concerned with reading rights to an al Qaeda terrorist than protecting the United States.  You see in the vice president, there is a pattern where when he is cornered, when he is feeling most defensive, that‘s when he tells his worst and most outrageous lies.  There is no one in that administration who is more concerned with giving Miranda warnings to al Qaeda, who by the way, don‘t get Miranda warnings under anybody‘s plan, than protecting the United States. 

You see this when Tim Russert cornered him on “Meet the Press” about why we are going to into Iraq.  And Cheney said we will be greeted as liberators.  He said that on the basis of absolutely nothing; made it up when cornered, invented, lied, in that case before the fact.  In this case, lying to the American public about who just got elected president and who is working for him. 

SHUSTER:  Never mind the lies and never mind possibly being unhinged, isn‘t there some kind of rule, some kind of etiquette to stop the former administration from bashing the new guys two weeks in?  After all, President Bush has kept quiet so far? 

O‘DONNELL:  You will not find disparaging comments from Al Gore or any comment from Al Gore about the Bush administration for the first year.  You won‘t find something from Hubert Humphrey attacking Richard Nixon in his first year.  Gore and Humphrey and Walter Mondale are former vice presidents who actually lost, were defeated in their race for the presidency.  They were not provoked to say anything like this.  And at no time have any one of them ever said anything like this, questioning the fundamental ability of the Obama administration to protect the United States. 

No former vice president has ever questioned the ability of the current administration to protect the United States.  This is something that—for which unprecedented is a mild word. 

SHUSTER:  Cheney hit all the old Republican talking points: Democrats are dangerous on national security; Obama is naive on security; closing Guantanamo puts America in danger.  Regardless of Dick Cheney being unhinged or whatever is motivating him, are these talking points a taste of what to expect in 2010?  Or have these talking points lost their ability to literally frighten the electorate? 

O‘DONNELL:  I think the Obama administration would welcome them as the strategy recycled in the next election, since they failed so miserably this time around.  In 2004, this was the technique.  This was the vice president in 2004 who said, if you elect the Democrat, if you elect John Kerry, we will be hit again.  He uttered the most vile statements of that campaign. 

And let‘s remember they won in a very, very close race.  That was almost a rejected strategy in 2004.  You know, you flip 60,000 votes in Ohio and John Kerry would have been president.  That election wasn‘t decided until the next morning.  So it is not as if it was an overwhelmingly successful technique then. 

It certainly was repudiated in 2008.  So if Republicans want to keep trying it, I‘m not sure Democrats shouldn‘t just welcome it. 

SHUSTER:  Lawrence O‘Donnell of MSNBC and “The Huffington Post,” thanks as always. 

O‘DONNELL:  Thanks, David.

SHUSTER:  Rod Blagojevich won‘t go quietly into the night either.  After giving late night comedians tons of material, Blago decides to go straight from the frying pan into the fire. 

And Congress hears today that the Bernie Madoff Ponzi scheme should not have surprised the government.  A whistle-blower says the SEC had plenty of evidence of wrongdoing, but looked the other way.  Details in Still Bushed. 

And when Rachel Maddow joins you at the top of the our, he tried to abolish the department, among other sins.  So why on Earth pick Judd Gregg for commerce secretary?  That is all ahead.  This is COUNTDOWN on MSNBC. 

(COMMERCIAL BREAK)

SHUSTER:  Somewhere in America, there is a TV camera on, ready for air, red light on and everything, and Rod Blagojevich is in a cold sweat, desperately trying to find it.  The most entertaining excuse-paloosa hits “The Late Show With David Letterman.”  That‘s next. 

But first, because they may be gone, but their deeds outlive them, the headlines lingering from the previous administration‘s 50 running scandals, our number two story tonight, still Bushed. 

Number three, justice delayed-gate.  In 2006, Monica Goodling, senior counsel to Bush Justice Department and a graduate of the Pat Robertson School of Law, decided to end the year by year contract of Leslie Hagan (ph), a liaison on Native American affairs, despite Hagan‘s excellent performance reviews.  NPR and then the Justice Department‘s inspector general concluded that Goodling fired Hagan for being a lesbian.  To fill the position, Justice posted a job and conducted a national search, drawing applicants from around the country.  After several rounds of interviews last year, the Bush Justice Department finally identified the best person for the job: Leslie Hagan.  The paperwork became official Monday.  Now the job is permanent.  Ms. Hagan, welcome back. 

Number two, protecting our borders-gate.  The Bush Homeland Security official in charge of New England ports was indicted Tuesday because of her illegal immigrant house keeper.  The charge, not that she had one or that she knew about it, but that she encouraged her house keeper to stay in the country illegally.  Oh, and the 670-mile fence Mr. Bush built to protect our land order; today‘s “Wall Street Journal” reports illegal immigrants have actually invented a way to get over the fence.  It‘s called a ramp. 

Number one, Fox not guarding the hen house-gate.  An independent investigator of financial fraud, Harry Markopolous, who first raised questions about Bernie Madoff almost ten years ago, testified before Congress today about Madoff and the SEC, the Securities and Exchange Commission, which is supposed to regulate people like Madoff. 

His criticisms included the latter years of the Clinton era.  And Markopolous praised some SEC officials in Boston.  But here is part of his testimony, primarily about the Bush SEC in his own words: “I gift wrapped and delivered the largest Ponzi scheme in history to them.  And somehow they couldn‘t be bothered to conduct a thorough and proper investigation.  There was an abject failure by the regulatory agencies we entrust as our watchdog.  A group of 3,500 chickens tasked to chase down and catch foxes, which are faster, stronger and smarter than they are.  SEC securities lawyers, if only through their ineptitude and financial illiteracy, colluded to maintain large frauds, such as the one to which Madoff later confessed.

“They looked at Madoff and said, he‘s a big firm.  We don‘t attack big firms.  They haven‘t earned their paycheck and they need to be replaced.”  Finally, “as currently staffed, the SEC would have trouble finding first base at Fenway Park if seated in the Red Sox dugout and given an afternoon to find it.” 

(COMMERCIAL BREAK)

SHUSTER:  Maybe the end has finally come for the media tour of former Governor Rod Blagojevich.  Since David Letterman told him something that might have been on the minds of all those other interviewers, which was basically, the more I see you saying you did nothing wrong, the more I think something is wrong here.  But in our number one story on the COUNTDOWN, since the former governor will probably keep on talking, consider this a pit stop. 

Blagojevich‘s publicist claims the opportunities are hardly drying up, saying, quote, every day we get several offers of something he could do or would like to, and there are certainly no shortages of people who would love to speak with him.  The former governor had his shot on “The Late Show” last night. 

(BEGIN VIDEO CLIP)

DAVID LETTERMAN, “THE LATE SHOW”:  Why exactly are you here?  Honest to god. 

ROD BLAGOJEVICH, FMR. ILLINOIS GOVERNOR:  Well, you know, I have been wanting to be on your show in the worst way for the longest time. 

LETTERMAN:  Well, you are on in the worst way.  Believe me. 

BLAGOJEVICH:  I will be vindicated.  I did nothing wrong.  I did nothing wrong.  And I will have an opportunity to go into court and prove that I did nothing wrong. 

LETTERMAN:  Other people will say, what he‘s doing now, he is working on the jury pool for the Spring trial.  He is trying to plead his case, prejudice a group of people, so that it will be difficult to get an impartial jury for that trial.  Anything? 

BLAGOJEVICH:  No.  Your audience obviously likes you.  Everything you say, they laugh at.  And that wasn‘t all that funny, with all due respect. 

LETTERMAN:  What?

BLAGOJEVICH:  I believe that impeachment that they did last week was a hijacking of a governor elected twice by the people, without proving any wrongdoing, without giving that governor, elected by the people—not so much about me, but the people who elected me, the right to show that I didn‘t do anything wrong. 

LETTERMAN:  Do you use shampoo and conditioner?  Or is it two separate

because they got a thing.  I use it—

BLAGOJEVICH:  Right. 

LETTERMAN:  Like I said earlier, the more you hear a guy say, I‘ve done nothing wrong, and the more you hear a guy say, I didn‘t have a chance to defend myself, the more you begin to think, something wrong here. 

BLAGOJEVICH:  Well, let me say two things.  One, that‘s the truth. 

Two, I‘m glad you are not going to sit on that jury in Illinois. 

LETTERMAN:  Yes.

(END VIDEO CLIP)

SHUSTER:  Let‘s bring in comedian Christian Finnegan.  Christian, good evening. 

CHRISTIAN FINNEGAN, COMEDIAN:  Good evening to you, David. 

SHUSTER:  Other then, well, jail, if that ever happens, is there any chance Rod Blagojevich will knock it off? 

FINNEGAN:  Good lord, I hope not.  This man is my bread and my circus.  I have come up with a word I‘d like to get in circulation.  It‘s Blaglorious.  This describes the phenomenon of something being so ridiculous and shameful that it actually crosses over into being beautiful.  Other examples might be the VH-1 show “Tool Academy” or the rock career of Russell Crowe. 

SHUSTER:  Blagojevich can obviously be entertaining.  When it comes to subjecting himself to one interview after another, should we give him credit for being a masochist? 

FINNEGAN:  It was so weird seeing him squirm around on Letterman‘s couch.  He was simultaneously humiliated and excited, which obviously means he grew up Catholic.  Honestly, I don‘t even know if masochist is the right word.  Usually, when you see someone voluntary put himself in a position this uncomfortable, he‘s wearing a leather mask with a zipper. 

SHUSTER:  The former governor does indeed seem intent on reaching the ears of any person who might conceivably wind up on his jury.  You would think by these interviews, Blagojevich is worried he might go to trial in every state of the union. 

FINNEGAN:  You know, he is just trying to cover all of his bases, catch every demographic.  He did “Letterman,” “The View.”  He did Rachel‘s show.  I believe he‘s on “Thomas the Tank Engine” next week.  Then he‘s going to stop by Sabado Gigante (ph).  Then he‘ll pop up on a Filene‘s Basement security camera. 

SHUSTER:  Of course, Blagojevich has previously compared himself to Gandhi, Nelson Mandela and Martin Luther King.  And in another recent interview with Greta Van Susteren, he said, quote, as it is written in the Bible, the truth will set me free.  Is it only a small matter of time before the former governor compares himself to the messiah? 

FINNEGAN:  Hey, you got to save something for sweeps week.  You can only go to that well once.  OK, so I think it‘s going to—we‘re going to have to wait until the trial before they play the J-card.  In fact, I‘m going to make a bold prediction right here on COUNTDOWN, right now: on the day of closing arguments, the former governor of Illinois, Rod Blagojevich, will arrive at the courthouse wearing sandals and a long robe.  Bank on it. 

SHUSTER:  And walk across the fountain and not sink his feet.  Blagojevich‘s publicist said there are plenty of interview offers still out there.  But that still raises the question: is this a guy who just, for whatever reason, he cannot say no? 

FINNEGAN:  Who are we to question?  Maybe there will be a movie based on his life some day.  In fact, I actually have this theory that the Christian Bale tirade that has been making the circuit was actually just him lobbying for the role of Rod Blagojevich.  Sort of like when Sean Young dressed up as the Cat Woman.  It is pretty genius, if you ask me. 

SHUSTER:  Assuming he doesn‘t end up in jail, what are some of his future career options? 

FINNEGAN:  Well, what couldn‘t he do?  This is the quintessential American story.  What is it that we teach our kids?  We tell them to never back down, and to stand up for yourself.  If you get knocked down, get back up again.  Maybe we should sort of re-evaluate what we teach our kids.  From now on say, sometimes when you get knocked down, maybe just stay down for a while. 

SHUSTER:  Comedian Christian Finnegan, thanks for your time tonight. 

Great stuff as always.  We appreciate you coming on. 

FINNEGAN:  Thank you.

SHUSTER:  That is it for this Wednesday edition for COUNTDOWN.  Thank you for joining us.  I‘m David Shuster, in for Keith Olbermann.  You can usually catch me week nights at 6:00 Eastern on “1600 PENNSYLVANIA AVENUE.”  Our MSNBC coverage continues now with “THE RACHEL MADDOW SHOW.”  Hey, Rachel.

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

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