updated 8/6/2009 11:20:53 AM ET 2009-08-06T15:20:53

COUNTDOWN

August 5, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guests: Eugene Robinson, Jeremy Scahill, Chris Hayes, Hillary Mann Leverett

(BEGIN VIDEOTAPE)

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

Mob rule: The leader of the freshmen Democrats in the House says one congressman has already been physically assaulted by a phony grassroots agitator. "When you look at the fervor of some of these people who are all being whipped up by the right-wing talking heads on FOX, to me, you're crossing a line," said Representative Gerry Connelly of Virginia. "They are inciting people to riot."

In this atmosphere, the president is criticizing Democratic criticism of the blue dog Democrats and still chimerically clinging to bipartisanship.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I would prefer Republicans working with us on that because I think it's in the interests of everybody.

(END VIDEO CLIP)

OLBERMANN: Making a sow's ear out of a silk purse: Conservatives trying to spin the release of Euna Lee and Laura Ling into a diplomatic disaster-and Limbaugh asks if President Clinton hit on them.

(BEGIN VIDEO CLIP)

LAURA LING, RELEASED JOURNALIST: We saw standing before us, President Bill Clinton.

(APPLAUSE)

(END VIDEO CLIP)

OLBERMANN: Blackwater continues. More charges against founder Eric Prince: running a jihad against Muslims, involved in a murder of witnesses testifying against his company, and tonight, while supposedly protecting Americans in Iraq, illegally dealing arms there.

Gitmo-after threatening, torturing and imprisoning without charge or evidence, could the Bush administration possibly have sunk lower? Yes, they bought fake testimony from witnesses with cash and shoes.

The bubble-headed bleach blond comes on at six.

(BEGIN VIDEO CLIP)

GRETCHEN CARLSON, FOX NEWS: In my home state of Minnesota, so far, only two of these deals have actually been approved by the government.

(END VIDEO CLIP)

OLBERMANN: Close, Ms. News Actress. Two percent, not two -- 2 percent. That would be different.

And speaking of Minnesota, the man who nearly unseated Michele Bachmann last year will not run against her next year. I am really torn.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN ®, MINNESOTA: I may not always get my words right, but I know that my heart is right.

(END VIDEO CLIP)

OLBERMANN: A Bachmann-apalooza and more-now on COUNTDOWN.

(BEGIN VIDEO CLIP)

BACHMANN: Would love to see an expose like that.

(END VIDEO CLIP)

(END VIDEOTAPE)

OLBERMANN: Good evening from New York.

Days after a pro-abolition newspaper editor named Elijah Lovejoy was murdered and his printing presses destroyed in 1837, a professor of theology at Western Reserve College named Laurens Hickok told a memorial service that the crisis has come. The question now before the American citizen is no longer alone can the slaves be made free but are we free, or are we slaves under southern mob law?

In our fifth story on THE COUNTDOWN: As those debating health care at town halls, news conferences and other gatherings are shouted down, it happened again last night, as Democratic congressmen are hung in effigy and even threatened and perhaps assaulted as the carefully orchestrated campaign funded by people like Jack Abramoff's former money launderer Tim Phillips and disgraced former Columbia Health Care boss Rick Scott continues-the president of the United States is more worried about Democrats not attacking other Democrats for their collaboration in the vigilantism than he is about today's new question to the American citizen:

Are we free or are we slaves under conservative mob law?

More details emerging from the president's strategy luncheon with Senate Democrats today, including that the president told the Democrats he wanted the left to back off.

The White House official who was at the luncheon is telling "Politico" that the president, quote, "said he didn't like to see left-wing groups attack fellow Democrats."

Speaking of attacks, Congressman Gerry Connelly, the president of the Democratic freshman class saying today that a least one freshman Democrat has been physically assaulted at a local town hall meeting on health care. He did not name his assaulted colleague.

The office of another Democrat, Congressman Brad Miller, says it has been receiving threatening phone calls including a death threat over the health care bill. Congressman Miller had not even been planning any town hall meetings anyway.

In north Houston, Texas, Democratic Congressman Gene Green doing Yeoman's work at a packed town hall meeting, taking more than an hour of questions, always managing to maintain order, always managing to inform, including about the legislative process, itself.

(BEGIN VIDEO CLIP)

REP. GENE GREEN (D), TEXAS: The original bill is available on the Web.

UNIDENTIFIED MALE: Yes. You know, that's my question, because what you have in there, you seem to be disagreeing with what several of us talked about or argued about earlier.

GREEN: This was the original bill that was introduced.

UNIDENTIFIED MALE: I don't want to find out that you voted for something and we looked at this and it's a different bill completely (INAUDIBLE).

(CROSSTALK)

GREEN: Well, this was the bill that was introduced, it's been amended at least 60 times in our committee.

UNIDENTIFIED MALE: The official book that you have, and you say, "This is what Gene Green is going to vote on."

GREEN: Well, now, I wish I could tell you that, but, you know the legislative process, you start with a bill, and like I said, in our committee, we amended, I think we have 70 amendments.

UNIDENTIFIED FEMALE: You told us to read that.

GREEN: . and some of them were voted and passed, some of them were not.

(END VIDEO CLIP)

OLBERMANN: When one protestor asked for a show of hands from those in the room who oppose any form of socialized or government-run health care, Congressman Green then asked for another show of hands from anyone in the room with Medicare. Many of the same hands went up.

Tea party protestors who believe they are against government-run health care either don't know or don't care that they are at this moment receiving government health care. Whether public or private, the overwhelming majority of protestors at Congressman Green's town hall meeting already had health care coverage.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I'd like to know, how many people in this room do not have health insurance of some kind? I think that's the answer to the question. I think the people who are objecting are the people who.

UNIDENTIFIED MALE: Have insurance.

UNIDENTIFIED FEMALE: Yes. Exactly.

(END VIDEO CLIP)

OLBERMANN: Time now to call in our own Eugene Robinson, Pulitzer Prize-winning columnist and associate editor of "The Washington Post."

Gene, good evening.

EUGENE ROBINSON, MSNBC POLITICAL ANALYST: Good evening, Keith.

OLBERMANN: Does Congressman Green there deserve a sort of medal? I mean, he not only handled the protestors well, but he also worked so hard to inform them and the ones on the other side of the health care issue. Everybody who turned up at that meeting looking for information got information.

ROBINSON: I know. The order of the golden stethoscope, I think, we'd like to give Congressman Green.

You know, this is-what's really troubling about this whole episode is that this is really important stuff. As you have noted, likely in your "Special Comment" on Monday and as I have written and others, as everybody agrees, this is an important debate.

And so, whatever side you're going to take on the debate, is fine. But drowning out the debate so that people can't get information on which to base a decision is to me unconscionable and should not be allowed.

OLBERMANN: Why, when other Democrats are being assaulted in connection to the town hall meetings, when Senator Grassley used Senator Kennedy's brain tumor as a scare tactic on radio, why is the president asking for Democrats and the left to back off instead of supporting their efforts to fight back?

ROBINSON: I'm not sure that I know. The-I'm not sure that that is-that is certainly not what I would advise. The president has said back off the blue dog Democrats, and presumably believes that they could be brought into the tent. And what price, however, if the price of bringing them into the tent is emerging with the health care reform that really isn't health care reform, then I'd say it's not worth it.

Now, the caveat here is that, I recall several times during the

campaign last year when I believed and when you believed and others

believed that the president should fight back more strongly against attacks

and, you know, it turned out quite well for him in the end. This time, it's a different opponent. It's 535 members of Congress who are funded by gazillions of dollars from the health care industry. Different situation, I think, calls for different tactics.

OLBERMANN: Is it possible the White House is trying to have it both ways on this? Because those left-wing groups said today, they have not heard from anybody at the White House saying don't run those ads that are pressuring the blue dogs about this subject.

ROBINSON: Well, I would hope so. I would hope that, you know, there are situations in which perhaps a little duplicity goes a long way, but, you know, I see no reason to take the gloves off. Again, this is the moment. This is a huge issue, and if it gets squashed this time, if nothing happens, how long will it be before we have health care reform in this country? You know, your guess is as good as mine.

OLBERMANN: Back to that town hall with Congressman Green. Many of the protestors there received Medicare-which I guess they think falls out of the sky or something. Almost every single protestor there had health care insurance of some kind going in.

Should we be surprised or is it a shame or is it both that these are the people who are actively showing on behalf of corporations-big money corporations who are trying to derail an effort to bring the millions of Americans who do not have the insurance, the benefits that even those people in that room do into the fold?

ROBINSON: It's astounding. It's astounding to me that-surely, on some level, those people must realize, but I guess they don't, that Medicare is, in fact, socialized medicine-far beyond anything that's being contemplated in the health care reform bill.

Beyond that, however, the other people in that room who raised their hands who have health insurance, have they stopped to ask themselves, you know, "How much am I paying for that this year as opposed to last year? How many times has my employer changed the plan in someone else's favor but not in my favor? How big a deductible am I paying now? These-and how long am I going to have that health insurance if something isn't done?"

And that message that your health insurance is at risk if something isn't done, somehow has not penetrated. And I think you have to-you have to blame the White House for that. They haven't got that message through.

OLBERMANN: Yes. The question to those people at Congressman Green's meeting, the next one could have been: how many of you have had an x-ray this year and paid through the nose for it, you know? Raise your hand then.

Gene Robinson of "The Washington Post"-it's been too long. Thank you, sir.

ROBINSON: Great to be here, Keith.

OLBERMANN: President Obama and others in his administration spread out across the country today, pointing to effects of the stimulus as well as some other positive signs in the economy, but have they missed the irony that after all the talk of bipartisanship, the stimulus was passed by Democrats with a mere three out of 219 Republicans joining them?

So, why push health care bipartisanship in the face of Republican brinksmanship?

After speaking at an R.V. plant in Wakarusa, Indiana, today the president spoke of our own Chuck Todd who asked him if he would insist on bipartisanship to the end.

(BEGIN VIDEO CLIP)

OBAMA: I am glad that in the Senate Finance Committee, there have been a couple Republicans-Chuck Grassley, Mike Enzi, Olympia Snowe-who have been willing to negotiate with Democrats to try to produce a bill. But they haven't yet. I think, at some point, sometime in September, we're just going to have to make an assessment.

(END VIDEO CLIP)

OLBERMANN: But many Democrats openly wonder why those Senate health care negotiators, the so-called "gang of six," are shutting out other Democrats from their own committee, like Senator Jay Rockefeller-quoting him, "All the attention is going to those three Republicans. You just watch as this bill diminishes. Those three won't be there when the bill passes."

Let's turn to the Washington editor of "The Nation" magazine, Chris Hayes.

Chris, good evening.

CHRIS HAYES, THE NATION: Good evening, Keith.

OLBERMANN: Has Senator Rockefeller summed this up? And if so, why hasn't the administration learned its lesson from the stimulus package?

HAYES: Well, I think he has summed it up. I mean, first of all, I think he is stating the obvious point, which is that Mike Enzi and Chuck Grassley-Olympia Snowe is sort of another story-Mike Enzi and Chuck Grassley are not going to vote for this bill. I mean, you can-I'd be willing to bet a lot of money on that final outcome. There's just no way.

Mike Enzi is a very, very conservative Republican representing a conservative state. There's no reason for him to vote for a big, controversial health care reform proposal that is propounded by a Democratic president.

So, the idea politically, I think, is this notion of, quote-unquote, "cover," that you're going to sort of somehow create some kind of risk-hedging politically by getting the consent of Republicans and that somehow is going to ensure everyone from partisan attacks come the midterms. But I think it's a crazy notion because they're going to run against this bill no matter what.

OLBERMANN: Is that-is that idea of cover-I asked roughly the same question I asked Gene just now-that element cover part of this, that Democrats are getting pummeled figuratively or literally by mobs sent on the wings of the industry status quo, but the president is expressing concern about the progressive Democrats putting legitimate pressure on the regressive ones. Why is he doing that? Do you have any idea?

HAYES: Well, I find it really frustrating. I mean, my sort of immature responses that no one asked you really, that, you know, this is democracy and people have their commitments and their vision for how they want to see legislation enacted and these are citizens mobilizing. And that's true on both sides.

My second point is a sort of one which is that, you know, what typifies this campaign and what made the Obama campaign so sort of magical and, I think, inspiring was how much it was focused on winning a battle out in the country and small "d" sort of democratic people power mobilization.

In the last six months, the strategy on health care has been a very inside strategy. It's been about making these deals internally among stakeholders on Capitol Hill. It's like we bring in the American Medical Association. We got the insurers. We're going to get pharma. And they've kind of dropped the ball, I think, outside in the rest of the country. Now, they have to turn around and go resell the bill popularly, and I think they're a little-they've been caught a little bit flatfooted.

OLBERMANN: And with the-with the clock being about five, six weeks on this, is it-is there a risk here that once we reach the end game, that with all of those compromises and the political gamesmanship on this, that it might be too late to salvage an actual real health care bill and we are going to lose this opportunity for the next 15 years?

HAYES: Well, something is going to pass. It's going to be called health care reform, and people are going to pat themselves on the back as a victory. The question is: will it be a good bill? And this cannot be overstated.

The political imperative is to provide good policy that makes people's lives better. That will be of the greatest political benefit in the long run. Sure, calling something health care reform, patting yourself on the back, and having a signing ceremony is going to provide some short-term political gain, but if it's not good policy, it's going to backfire. So, those Democrats should concentrate on getting the best possible bill they can get and getting it passed-if it takes one vote to pass it in each House, if they have to ram it through in reconciliation, that's what they should do.

OLBERMANN: Chris Hayes of "The Nation"-as always, Chris, many thanks.

HAYES: Thank you, Keith.

OLBERMANN: The premise of the staged health care event interruptions with their coached agitators bussed in, expenses paid by the health care industry, is, besides this year, conservatives (INAUDIBLE) at the thought of mob rule, the concept of turning a positive into a negative. In this case, a not-for-profit insurance co-op that would not only provide an alternative to the insurance giants, but also necessarily force those giants to lower their premiums and increase their payouts.

In the next case, the goal is a similarly monstrous one, taking the rescuing of two Americans from 12 years at hard labor and putting a first crack in the xenophobic Bush freeze on talks with North Korea and claiming that that was a diplomatic disaster-as we'll see next.

(COMMERCIAL BREAK)

OLBERMANN: For supposed diplomats like John Bolton invested in the "shot first, ask questions later" model for ruling the world, the Bill Clinton trip to free jailed Americans in North Korea needs to be attacked. Good luck with that. Next.

More of the Blackwater nightmare-Eric Prince was smuggling arms into Iraq and selling them in the black market? And which of the many far-right radio whack jobs has just threatened to send his wife over to beat me up? "Worst Persons" and a Michele Bachmann highlight ahead.

You're watching COUNTDOWN on MSNBC.

(COMMERCIAL BREAK)

OLBERMANN: If tomorrow, a Democrat were to find the secret to eternal healthy life and share it with the world, an hour later, a conservative would call it a failure because that Democrat had yet to give tax breaks to anybody who actually achieved immortality.

In our fourth story tonight: Former President Clinton's cameo diplomacy success in North Korea, the reporters are home, the ice is broken with that regime, and, of course, to the far-right the news is the damage done to their precious ice. The former president here is getting a big hug from his former vice president returned, to the U.S. on a private jet this morning, bringing with him journalists Laura Ling and Euna Lee after securing their release from North Korea yesterday.

Ms. Ling's vivid description of the women's last day in captivity.

(BEGIN VIDEO CLIP)

LING: Thirty hours ago, Euna Lee and I we prisoners in North Korea.

We feared that at any moment, we could be sent to a hard labor camp.

(END VIDEO CLIP)

OLBERMANN: The two journalists were taken into a separate room.

Ms. Ling describing the moment when they knew they were going to be free.

(BEGIN VIDEO CLIP)

LING: When we walked in through the doors, we saw standing before us President Bill Clinton.

(APPLAUSE)

LING: We were shocked but we knew instantly in our hearts that the nightmare of our lives was finally coming to an end, and now, we stand here home and free.

(END VIDEO CLIP)

OLBERMANN: Mr. Clinton said not a word. The proverbial feel-good buzz was promptly harsh by critics from the right. Dick Morris, when asked how to get the women home, saying, quote, "Maybe they don't come home. Maybe they go to North Korea and live with the consequences."

Former U.N. ambassador-never consented to by the Senate-John Bolton, in a "Washington Post" op-ed, "While the United States is properly concerned whenever its citizens are abused or held hostage, efforts to protect them should not create potentially greater risks for other Americans in the future. Yet that is exactly the consequence of visits by former presidents or other dignitaries as a form of political ransom to obtain their release."

We're joined now by the Hillary Mann Leverett, the former National Security Council director for Iran and the Persian Gulf.

Thanks again for your time tonight.

HILLARY MANN LEVERETT, FMR. NSC STAFFER: Thank you.

OLBERMANN: Was there risk here for the U.S. giving an ailing, possibly dying dictator a photo-op in exchange for the freedom of two Americans, and maybe some sort of diplomatic icebreaker?

LEVERETT: I don't think so. I think there was very little risk here. That was a Bush administration, neoconservative canard, that somehow, talking to problem governments actually legitimates them and props them up.

There is no basis in reality here with that claim. Effective, diplomatic engagement works. It has worked historically in several other cases. There is no reason here to believe that a high-profile visit would not have been able to secure their release as it has done here. It produced results.

OLBERMANN: And not to be too cynical, not to suggest that Americans anywhere in captivity might ever be a good thing, but is it not true that large-scale diplomatic measures often begin in something relatively small on the human level that in a situation and as the one that faced Ms. Lee and Ms. Ling, that included within that conceivably can be an opportunity?

LEVERETT: Well, I hope there is an opportunity there but we really should distinguish and look back that there is a difference between humanitarian diplomacy, diplomatic engagement and strategic diplomatic engagement. For example, even during the Bush administration, 2004, 2005, there was an earthquake in Bam, Iran. Then-Deputy Secretary of State Armitage called the Iranian U.N. ambassador and said we would like to help. The next day, the very next day, there was a U.S. military aircraft on the ground in Iran with relief supplies. That was an effective instance of humanitarian diplomatic engagement.

But the Bush administration was unwilling and unable to translate that, expand it into a strategically grounded serious diplomacy. It remains to be seen whether the Obama administration can do that with this opening with North Korea.

OLBERMANN: Yes. But, of course, the difference is, this administration may try and previous one probably didn't want to try.

LEVERETT: That's right.

OLBERMANN: About Mr. Bolton's remark, if you apply that to fairly recent history about going into try to relieve hostages, shouldn't we have just left, say, the U.S. hostages at the embassy in Iran for the last 30 years?

LEVERETT: I think that is the logical conclusion as well as to have left these two American citizens inside North Korea. The problem that Bolton and the neoconservatives have here is that diplomatic engagement works. It has worked historically, and worked here and could work on a numerous-on a range of issues like the nuclear issue with Iran and several other issues.

The problem though, is that because diplomatic engagement works, it undermines their fantasy that isolating, insulting, and cursing problematic governments will somehow make them disappear and make our problems disappear along with it. That is pure fantasy.

OLBERMANN: Lastly, are we in something new territory-wise about internal protocol on stuff like this? I mean, are there rules when a secretary of state is operating on the formal track, but there's a former president who happens to be her husband was operating on an informal track?

LEVERETT: There are no-there are no protocol rules here that I know of. I think we are on entirely new ground, but I think it is a hopeful sign that perhaps this administration can use all of the elements of our diplomatic and strategic power, not just the military that the Bush administration used, but all of the-all of the levers that we have diplomatically to deal with our very serious problems with some problematic governments worldwide.

OLBERMANN: It worked and it's a good lesson that it worked.

Hillary Mann Leverett, formerly of the NSC-as always, great thanks for your time.

LEVERETT: Thank you.

OLBERMANN: Remember the night Walter Cronkite died and all the obituaries mentioned how newscasters in Holland and Sweden were thus called "Cronkiters"? It turns out they weren't.

And the torture we knew about, the threats we knew about, but buying false testimony to send people to Gitmo? "Bushed" returns-next on COUNTDOWN.

(COMMERCIAL BREAK)

OLBERMANN: Coming up: "Bushed" and the news that the administration's operatives allegedly suborned perjury to keep a teenager on ice in Gitmo.

And, in a moment "Best Persons," Walter Cronkite was a great newscaster but a noun meaning newscaster was never named after him.

And please add to the charges against Blackwater's founder, illegal trafficking of arms in Iraq.

And now that her 2008 opponent has dropped out of the 2010 race, tonight-the greatest hits of Congresswoman Michele Bachmann.

These stories ahead.

But first, time for COUNTDOWN's Top Three Best Persons in the World.

Dateline: Sao Paolo. Number three: Best news for men worldwide. The environmental group SOS Mata Atlantica has urged men and boys in Brazil to save water, to save the rain forest by urinating while in the shower. Guys, we were right all along.

Dateline: The CBS News control center in New York. Number two: Best urban legend debunked. Ben Zimmer, the executive producer of "Visual Thesaurus" and for the death of Walter Cronkite, you heard it everywhere. It was even in his obituary run by "The Associated Press." He was so connected to the role of newscaster worldwide that anchormen in Sweden and Holland were called "Cronkiters."

No offense to the late and great journalist, but it turns out it was not true. Mr. Zimmer, who writes a language blog, says there is no evidence that many people in either country had ever heard of him, that the legend traces back to books written by Gary Paul Gates and David Halberstam in the late '70s. Not to kick even further, but Mr. Zimmer notes that the poll that earned Mr. Cronkite the title the most trusted man in America was conducted in 1972, it offered as choices mostly politicians. It only had one newscaster in it and that was Walter Cronkite.

And dateline, Joseph Farrah's (ph) parallel universe. Number one, best new wing nut conspiracy theory. Farrah's World Net Daily has published the latest one, that the Bible identifies the anti-Christ and actually invokes the word Barack. There is a biblical quote often translated as "I beheld Satan as lightning fall from heaven." Farrah reports one note has discovered-nut, rather, has discovered that the Greek word for lightning is estrape, and the Hebrew equivalent is Bareq, and the word for heaven or high place is Bamah.

Wow. OK then. Except the guy is wrong. Strong's Hebrew Dictionary, which is used to translate the King James Bible, says Bareq means an Israelite, and Bamah means a height or a wave, meaning Bareq Bamah could also be translated as an Israelite doing the wave. Surf's up, anti-Christ dude.

(COMMERCIAL BREAK)

OLBERMANN: We told you last night about the sweeping allegations by former Blackwater employees, first reported by "The Nation" magazine, against the mercenary firm, deployed by a fundamentalist Christian to kill Iraqis, while running a broad ranging criminal enterprise. In our third story tonight, COUNTDOWN has now read those affidavits. We have new details.

It has been alleged before that former CEO Erik Prince, a right wing evangelical Christian, had been smuggling weapons into Iraq. Two Blackwater employees pleaded guilty last year and turned government witness. A former Blackwater insider at the time told ABC News about the smuggled weapons, quote, "it's a war over there and our guys need them."

That's not the only arms smuggling Blackwater did, according to the affidavit of John Doe number two, reportedly a four-year Blackwater executive. Quote, "Mr. Prince generated substantial revenues from participating in the illegal arms trade." In other words, he was an illegal arms dealer, a gun runner.

Army officials told ABC last year at least one of Prince's M-4 assault weapons ended up in the hands of insurgents. And the weaponry Blackwater used, quote, "Mr. Prince obtained illegal ammunition from an American company called Lemas. The company sold ammunition designed to explode after penetrating within the human body. Mr. Prince's employees repeatedly used this illegal ammunition in Iraq to inflict maximum damage on Iraqis."

Responding, in a statement, Blackwater, which now calls itself XE, spelled X-E, called these accusations slander and said it looks forward to fighting them in a court case, for which, by the way, it is seeking a gag order. Returning here tonight, Jeremy Scahill, who broke this story as a contributor to "The Nation," and who also wrote "Blackwater, the Rise of the World's Powerful Mercenary Army."

Thanks for coming in again.

JEREMY SCAHILL, "THE NATION": Thanks for having me back.

OLBERMANN: The previous assumption that Blackwater had smuggled in weapons for its own use, at least in some sort of pretext of what we had sent them and spent money on them for, where does that stand now?

SCAHILL: Let's remember that Erik Prince has modeled his company after the United States military. He had a security division. He has his own private CIA called Total Intelligence Solutions, which is headed by Bush's former head of counter-terrorism, the man who was charged with finding bin Laden and failed to do so. He's now running Prince's private CIA.

Prince also has a fleet of private planes. One of the allegation that we have here is that Prince was using his private planes to bring weapons into Iraq without the U.S. military being aware of it. They were wrapping them in some kind of plastic wrap and they were stored in dog food bags. Now, John Doe number one, who was in the Marines and then served as a security operator for Blackwater, said right when he got there to work for Blackwater, one of the first things he saw in the Blackwater armory was people removing weapons from these dog food bags.

We know that Blackwater has been under investigation since 2007 on allegations that they may have been involved with gun smuggling. At the time, the allegation was that the weapons Blackwater brought into Iraq ended up in the hands of a designated terrorist organization, the PKK. Henry Waxman, who is chair of the oversight committee, launched an investigation and then publicly accused the State Department inspector general-bush's State Department inspector general of hindering the Justice Department investigation into the allegations that Blackwater was involved with arms smuggling.

Keith, in June of 2008, Blackwater's armory here in the United States was raided by ATF agents and they seized 17 AK-47s. You can't have an AK-47 unless you're military active duty, you're some kind of government official, or you're law enforcement. So now that, combined with this testimony, really, really begs for a very serious investigation of Blackwater and weapons.

OLBERMANN: So does this story about the exploding bullets. We know now about them. One Blackwater employee had already pleaded guilty to unwarranted shooting of Iraqis in that Baghdad massacre in September of 2007. What else does John Doe number one, the former marine who worked for them, say about the killing of the Iraqis?

SCAHILL: Can I tell you something about this Lemas ammunition? I wrote about this in my book years ago. A Blackwater operative by the name of Ben Thomas bragged openly of having used these weapons while he worked for Blackwater to shoot an Iraqi in the buttocks, and it killed him. And Ben Thomas described it exploding the entire left side of his body.

He went on to talk as though he was working for the company. The military had not been authorized to use these weapons and yet Blackwater operatives are using them in Iraq to apparently explode the bodies of individuals by shooting them in the buttocks.

When it comes to the questions of what else these individuals were doing, John Doe number one described several specific instances of one of his Blackwater colleagues using a squad automatic weapon, a saw automatic weapon, which is the kind of gun you use to mow people down, to shoot at civilians that were not posing a threat to Blackwater.

He then says that the Blackwater operatives covered it up with the State Department, and tried to act as though it was a justifiable kill, rather than the murder that he says it was.

OLBERMANN: You used the term hot wash. I mentioned it yesterday without going into explanation. Can you provide that?

SCAHILL: Keith, you're a sports guy. After a basketball game, the team sometimes gets together and they watch videotape of the game. The military, they do the same thing. A hot watch is basically when soldiers get together after action, usually when bullets are fired, and they go over what happened during the course of the action.

In Blackwater's case, they videotaped these actions. They would watch them and then they would take the hot wash and turn it into a white wash. They would essentially erase the videotapes, according to John Doe number one, and then not pass them on to the State Department.

What it sounds like is that he is alleging that they were killing civilians who were not posing a threat to Blackwater, and then covering up what were essentially extra-judicial killings or executions, and then covering it up to the State Department when they would be asked about it.

OLBERMANN: It just occurs to me now, is there an implication in this between what we know-nothing provoked what happened in the square in Baghdad in 2007. Is there an implication here that that or other events that these people participated in, shooting people for practice, was it practice?

SCAHILL: It doesn't seem like it was shooting people for practice. I have heard that people go out on these practice runs and they brag of killing rag heads or Hajis, as they call them, using very racist, derogatory terms. And one allegation against Prince is that he knowingly sent men over there that he believed would participate in his war against Islam and his quest to, quote, eliminate Muslims, in the words of John Doe number two.

These are very, very serious allegations. The last thing I'll say, Keith, is we can talk about Blackwater until we're blue in the face. Who deployed Blackwater? Who hired Blackwater? Who? Unfortunately, President Obama continues to pay Blackwater millions of dollars on the federal payroll.

OLBERMANN: The mind reels. Jeremy Scahill of "The Nation" and the author of the definitive work on this company. Again, thanks for coming in.

SCAHILL: Thanks for having me.

OLBERMANN: On the one hand, she is a positive menace in the House. On the other, news that her last opponent will not try again to unseat her next year means we might get to still have Michelle Bachmann to laugh at.

And Boss Limbaugh asks if Bill Clinton hit on two reporters he helped free from a North Korean prison. Worst persons coming up.

When Rachel joins you at the top of the hour, her special guest, Governor Mark Sanford's press secretary, just resigned from that job today.

But first, because they may be gone, but their deeds obviously outlive them, the breaking headlines still lingering from the previous administration's 50 running scandals, Still Bushed.

Number three, attorneys-gate. Remember the name Rachel Peloze (ph)? She was the 33-year-old former office assistant to Alberto Gonzalez, best friend of Monica Goodling, the theocrat with a law degree from box top university? Somehow Peloze wound up as the U.S. attorney for Minnesota, where she mishandled classified information and gave an employee enough ammunition for 96 discrimination lawsuits, by referring to that employee with terms like fat, black, ass and lazy, and where four of her top lieutenants demoted themselves in protest.

Miss Peloze is working for us again. She has been hired by the Miami Regional Office of the Securities and Exchange Commission, and in her new job, she does not even have to use a mop.

Number two, Bush? Bush who-gate. At least eight former Bush administration staffers now running for office, according to "The Hill." At least one is running away from his past. Tim Nank, former Bush counter-terrorism staffer, now running for the Virginia House of Delegates, saying, quote, "President Bush's popularity rating is obviously very low and I think the people in my district would probably not look favorably on that. I haven't had a lot of people ask me where I worked. They usually ask me where I work."

If it comes up, just say you were in some sort of witness relocation program. It'll sound better and it's kind of true.

Number one, bear false witness win shoes-gate. Muhammad Jawad is the kid detained in Gitmo since 2002 who claims he was only 12 years when we took him there. He was detained in Afghanistan for reportedly throwing a grenade at U.S. soldiers. Afghan officials threatened to kill him and his family if he did not confess.

That is not a wild story. Even the U.S. military investigated it, found it to be true, and threw out the confession. But Jawad remained at Gitmo. He might be 19 now. Maybe he's 25. Regardless, he's been there nearly seven years. Now comes an accusation filed by his U.S. military lawyers that may be as shocking as any charge of brutality or rendition or torture. The testimony that he threw the grenade comes from a series of witnesses who Jawad's attorney, a Marine Corps major, has now been able to interview.

He says the witnesses have something odd in common. One was paid 400 dollars by the U.S. government for cooperation. Another got a new pair of shoes. A third needed an operation and was transported to this country and got it. In short, when our ally threatened to kill him and the resulting fake confession didn't work, we sent Jawad to Gitmo and then tortured him. When that didn't work, we went out and bought witnesses to testify against him.

The Bush administration not only suborned perjury to find another scapegoat and cover up their own crimes, but they paid for it. Paid. Thanks to these men and women, we, you and I, are in the bribery business and we are in the paying to break the Eighth Commandment business. As if any of the phony Bible thumpers left over from that medieval period of American history would care about that.

(COMMERCIAL BREAK)

OLBERMANN: The dilemma, a man who might have made a great Congressman drops out of the race to unseat Michele Bachmann. On the other hand, think of how much less insane the Republicans would look without Michele Bachmann. The latest from Minnesota's Sixth Congressional District next.

But first COUNTDOWN;s number two story, tonight's worst persons in the world, brought to you tonight by Rupert Murdoch, reporting a drop for News Corp in profits, from a billion in profits last year to 200 million in losses this year, and by Fixed News, celebrating eight days without having fired Glenn Beck, even after he called the president of the United States a racist, and even after Fox led the attempt to blacklist Dixie Chicks in 2003, because one of them merely said she was ashamed George Bush came from her native Texas.

The bronze tonight to Lou Dobbs. I've never actually seen a full fledged on the air nervous breakdown before. But as Lou sheds still more viewers and more sanity, it seems to be coming to that and quickly and about me. "The real stories are just waiting to come out on his tenure at CNN, if he wants to play those games. If you're wondering why I'm a little annoyed with the punk, he attacked my wife and my daughters. I just can't think why in the world this guy would risk infuriating, annoying, and provoking to anger my wife, because she would whip his sorry butt. I guarantee you that. So we're going to be having a lot of fun with Mr. Olbermann, I'm sure, for some time to come. I want to throttle him."

OK. I got my first job at CNN in part because Lou was out of the office on one of his stories, if you'd like to play that game, Lou. And I attacked your wife and daughters by mentioning that they were Hispanic? And, Lou, Debbie is going to attack me? Maybe with that gun she tried to bring onto the flight in Newark six years ago? You're going to throttle me? Are you threatening somebody younger than you? Isn't your current age range for insane physical violence now men aged 80 to 206?

The runner up, Gretchen Carlson, super genius of Fox News. Here we go again. Topic, the Cash for Clunkers program. Listen.

(BEGIN VIDEO CLIP)

GRETCHEN CARLSON, FOX NEWS ANCHOR: By the way, I did my own crack research yesterday. Spent tremendous amount of time on this yesterday finding out information. In my home state of Minnesota, so far only two of these deals have actually been approved by the government.

Two in the entire state of Minnesota. Then you wonder about whether or not these dealers feel like they're going to get their money from the government. Not so sure.

(END VIDEO CLIP)

OLBERMANN: Two percent, not the number two. Two percent of all the Cash for Clunkers deals in Minnesota were already approved, despite red tape. That would mean about 150 of the first 75 transactions in Minnesota had made it through the government red tape in only one week. Not two of them, 150 of them. She went to Oxford. I always thought she meant the university in England. I am beginning to think she actually means the shoe. I did my own crack research yesterday.

But our winner, Boss Limbaugh. "I want to say what everyone else is thinking, and I know you are thinking it, because everybody's thinking it. Did Bill Clinton hit on those two female journalists on the long flight home from North Korea? I'm not saying-how can I say it-I'm not saying he did. But given his past, it does cross one's mind."

So by that logic, Rush, given your past, doesn't it have to cross one's mind that as you said that today, you might have been stoned on illegally obtained prescription drugs, while planning to smuggle them in from another country again? I mean, everybody is thinking it.

Boss Limbaugh, today's worst person in the world!

(COMMERCIAL BREAK)

OLBERMANN: Yes, yes. I know. I'll be in Page Six tomorrow in the Post, "New York Post." Yes. I know it'll be a lie. Again, I know. I know circulation there is down 20 percent and they're going to fire everybody. I know. But this is the way-yes, I know I'm repeating everything you are saying. Yes, I know it's annoying. Yes, I'll stop it finally.

And yes, the democracy would be safer and saner without her, but with Sarah Palin a civilian, Joe the Plumber unable to get any campaign traction going, and Mark Sanford hiking the old Appalachian Trail, what on Earth would we do without Michele Bachmann?

In our number one story, Elwin Tinklenburg, the man who nearly unseated her last year, says he will not try to do so next year, ending his candidacy eight days after it started, citing a crowded Democratic field. "In a difficult district during tough financial times, we will be spending large amounts of time and money trying to defeat each other, rather than defeating Michele Bachmann. That is a campaign I want to wage. Nor is it the kind of campaign that strengthens our chances of electing a Democrat next fall."

Funny, you'd think that even if we can put together a highlight reel like this one that you're going to see, Michele Bachmann would be self-defeating.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, FMR. PRESIDENT OF THE UNITED STATES: Our cause in the world is right. And tonight that cause goes on. God bless.

UNIDENTIFIED MALE: One Minnesotan spent some serious time at the president's side after his State of the Union Address.

BUSH: You want me back in Minnesota?

REP. MICHELE BACHMANN ®, MINNESOTA: Absolutely.

OLBERMANN: Mr. Bush tries to ignore her. Ms. Bachmann is not giving up. Then finally, the poll. And we're going to get-no, she gets a kiss. There's a kiss.

BACHMANN: The president and I enjoy a great relationship. When he and I were back visiting the collapsed bridge, he reached over because he wanted to give me a kiss when we were down at the site. And I had pulled back and he said, what?

I have experience that throughout my political career, being labeled a kook. Michael Steele, you be the man. You be the man. I don't think it has been established yet as a fact that global warming is the issue of the day. But there isn't even one study that can be produced that shows that carbon monoxide is a harmful gas.

She is committed to her global warming fanaticism, to the point where she has said she is just trying to save the planet. We all know that someone did that over 2,000 years ago. They saved the planet. We don't need Nancy Pelosi to do that.

Carbon dioxide, Mr. Speaker, is a natural by product of nature.

OLBERMANN: You know what else is a natural product of nature, Congresswoman? Disease, anthrax, fatal lightning strikes, being eaten by wolves, and stupidity.

BACHMANN: Really, now in Washington, I'm a foreign correspondent on enemy lines.

Because this columnist Michael Barone has called. He said now we've moved into the rem of gangster government. We have gangster government, a gangster government. I want people in Minnesota armed and dangerous on this issue of the energy tax. We now have an imperial presidency, where the American people need to get outraged. We have to rise up and say no more. Not on my watch. Thomas Jefferson told us having a revolution every now and then is a good thing.

It's the mover of all ironies that the kids who voted in mass for Barack Obama are the ones being fitted with shackles and chains.

Not all cultures are equal. Not all values are equal.

OLBERMANN: Michele Bachmann is back, and on her latest paranoid quest that if you fill out the census, you might wind up in an internment camp.

BACHMANN: That's how the Japanese were rounded up and put into the internment camps.

I may not always get my words right.

Remember, it was Michelle Obama who said she is only recently proud of her country. So these are very anti-American views.

CHRIS MATTHEWS, MSNBC ANCHOR: Do you believe that Barack Obama may have anti-American views.

BACHMANN: Absolutely, I'm very concerned he may have anti-American views. Chris Matthews laid a trap and I walked into it. I wish the American media would take a great look at the views of the people in Congress, and find out, are they pro-America or anti-America?

ALAN COLMES, FOX NEWS ANCHOR: You have said you were concerned during the campaign that Obama had anti-American views. You said the news media should do a penetrating expose and take a look at the views of the people in Congress, and find out if they're pro-American or anti-American.

BACHMANN: That's not what I said at all. This is an urban legend that was created.

(END VIDEOTAPE)

OLBERMANN: That's COUNTDOWN for this the 2,288th day since the previous president declared mission accomplished in Iraq. I'm Keith Olbermann, good night and good luck.

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

END

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