updated 9/23/2009 11:17:08 AM ET 2009-09-23T15:17:08

Guests: Wendell Potter, James Peterson, Hillary Mann Leverett, Penn Jillette

           

(BEGIN VIDEOTAPE)

LAWRENCE O‘DONNELL, GUEST HOST (voice-over):  Which of these stories will you be talking about tomorrow?

Mark-up mania hits the Senate Finance Committee.  Senator Max Baucus hints he could support a public option trigger.  Most Republicans continue to object to just about everything.

(BEGIN VIDEO CLIP)

SEN. CHUCK GRASSLEY ®, IOWA:  I find it utterly and completely appalling.

SEN. JON KYL ®, ARIZONA:  This bill is a stunning assault on liberty.

(END VIDEO CLIP)

O‘DONNELL:  The stunning letter from big insurance.  The bill described as the sweetheart deal for insurance apparently not sweet enough for them.

And in comedic perfect timing, Will Ferrell in “Funny or Die” parody, the plight of the insurance companies.

(BEGIN VIDEO CLIP)

WILL FERRELL, ACTOR:  Health insurance executives are getting a bad rap.

UNIDENTIFIED FEMALE:  As the health care debates heat up.

UNIDENTIFIED MALE:  . we need to remember who the real victims are.

UNIDENTIFIED MALE:  Health insurance executives.

(END VIDEO CLIP)

O‘DONNELL:  Meantime, today‘s biggest health care developments happen well outside the beltway.  Massachusetts is a step closer to naming an immediate successor to Ted Kennedy‘s seat.  The importance of getting the 60th Democratic vote back in the Senate for Harry Reid.

The race debate in the health care fight.  First, it was former President Carter.  Now, it‘s former President Bill Clinton weighing in.

(BEGIN VIDEO CLIP)

WILLIAM J. CLINTON, FMR. U.S. PRESIDENT:  I believe, if he were not an African-American, all the people who are against him on health care would still be against him—because they were all against me, too.

(END VIDEO CLIP)

O‘DONNELL:  Health care not a big enough problem to tackle?  President Obama also hits climate change and Middle East peace today.

The U.S. scores a diplomatic win getting the Israelis and Palestinians not only in the same room but also shaking hands.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  It is past time to talk about starting negotiations.  It is time to move forward.

(END VIDEO CLIP)

O‘DONNELL:  And how low will he go?  Tom DeLay dons the sequins and takes the floor on “Dancing with the Stars.”

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Left, left, left, that way.

TOM DELAY ®, FORMER HOUSE MAJORITY LEADER:  Going left for me is absolutely outrageous.

(END VIDEO CLIP)

O‘DONNELL:  Hammer, don‘t hurt him.

All that and more—now on COUNTDOWN.

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O‘DONNELL:  Good evening.  From Los Angeles, I‘m Lawrence O‘Donnell, in for Keith Olbermann.

President Obama has spoken frequently about there being agreement in Congress about 80 percent of what needs to be done to achieve health care reform.  What the president does not say, that only one thing would need to go against them before many supporters would withdraw their support.  Our fifth story on the COUNTDOWN: Just one of many things to keep an eye on as the Senate Finance Committee considers the 564 amendments to its health care reform bill.

That process began this morning on what is the only bill essentially

that President Obama has endorsed.  Forget the grand rhetorical flourishes

of the town hall meetings that dominated the debate in August.  At this

stage of the legislative process, the Republicans will attempt to kill the

bill, not with hysterical shouting about death panels, but with calm,

relentless repetition of the ugliest three-letter word in American politics

·         T-A-X.

           

(BEGIN VIDEO CLIP)

SEN. MIKE CRAPO ®, FINANCE COMMITTEE:  The proposal itself states that the consequences for not maintaining insurance would be an excise tax, and it makes it clear that the excise tax would be assessed through the tax code as—and applied as an additional amount of federal tax owed.

(END VIDEO CLIP)

O‘DONNELL:  The health insurance industry lobby has weighed in on the Baucus bill and—no surprise—it pretty much likes what it has seen.  In a 13-page letter, Karen Ignagni, the head of the industry‘s largest trade group, thanked the Senate Finance Chairman Max Baucus for his bill, while expressing concerns with key aspects of the proposal, of course, including a provision to raise money by taxing health insurance companies.

Senator Al Franken, meanwhile, has lobbied Chairman Baucus on behalf of the medical device makers in his home state of Minnesota.  Senator Franken told Chairman Baucus that he opposes—along with four other senators—a provision in the bill that would impose $4 billion on annual fees on the makers of products, like heart pacemakers and artificial hips.

And labor unions and some Democrats have also joined Republicans in pushing to scale back or kill the provision that would impose a tax on high-cost insurance plans, this so-called “Cadillac tax.”

Other Democrats on the committee pointing out that the current proposal does not offer enough choice to consumers.

(BEGIN VIDEO CLIP)

SEN. RON WYDEN (D), FINANCE COMMITTEE:  The bill does not hold insurance companies accountable.  The bill does not force insurance companies to compete for our business.  The bill denies choice of coverage to over 200 million Americans.  This bill, in its current form, stipulates that while you can keep what you have, if you don‘t like what you have, you‘ve got to keep it.  You‘re stuck.  You‘re denied the chance to get something better.

(END VIDEO CLIP)

O‘DONNELL:  That‘s what support sounds like on the Senate Finance Committee.

A new senator from the state of Massachusetts could be announced as early as Thursday now that both houses of the state legislature have approved a measure allowing the governor to appoint someone to fill the seat held by Ted Kennedy.  Final approval is expected tomorrow.

Much to talk about tonight with MSNBC‘s political analysts Howard Fineman.  He is also, of course, senior Washington correspondent for “Newsweek” magazine.

Good evening, Howard.

HOWARD FINEMAN, MSNBC POLITICAL ANALYST:  Hi, Larry.

O‘DONNELL:  Howard, we have moved past the August recess cow shouting and now we‘re down to the nitty-gritty details.  Nice, calmed, reason discussion in the Senate Finance Committee.  Does that make things any better for the Democrats?

FINEMAN:  No, it means the Republicans are trying to move in for the kill.  As you pointed out, and since you worked on the Hill for Senator Moynihan and know the finance committee and the Senate as well as anybody on the planet, you know what‘s going on.  As you pointed out, for Republicans, taxes are worse than death.  You know, death and taxes, taxes are worse.  They think they can try to kill it off.

And as one top Democrat told me on the phone a little while ago, he said the sharks are in the water, and they would be not just Republicans but some Democrats, too.

O‘DONNELL:  Well, it does seem that it‘s all in the language at this point.  It‘s all in the framing.  Certainly, when you get to public opinion on this—you heard Republican senators today constantly using the word tax, where Democrats prefer to use the word fee.  And in our NBC poll, we showed that support for the Obama health care reform proposal fluctuates anywhere from 46 percent—as low as 46 percent—to as high as 73 percent, depending exclusively on how you phrase it.

So, this is, as much as anything else, a battle of the semantics with the Republicans, it seems to me, having a much easier angle here going for their simpler descriptions of everything.

FINEMAN:  Well, that‘s right.  They‘re shouting fire in a crowded theater.

I would say on that poll—if you look at the poll number closely, I think it‘s a little troubling, though, for the Obama team because the public doesn‘t seem to like as much the sales pitch for a public plan based on the idea that it would provide competition to private plans, which is the basis upon which Obama‘s been selling it.  But I think a lot of people are concerned when it‘s phrased that way because they‘re concerned about their own health care that they already have.  They don‘t want anything in this plan to jeopardize that.  And that‘s—that‘s the delicate line Obama‘s been trying to walk, not always successfully.

O‘DONNELL:  And, Howard,, we see liberal senators, like our friend Al Franken, opposing specifics of the bill.  He‘s opposed to the fee on medical device makers because he has a few of those in his state.

FINEMAN:  Right.

O‘DONNELL:  We have—we see big labor pushing back against the “Cadillac tax” on the health care.  We see big pharma trying to hold on to its piece of the bill.

And it seems to me, what you—what you see is a series of individual items that could provoke an individual senator to vote against final passage, if those things are in there.  In other words, there may be 50 to 60 different ways for this bill to come apart among the Democrats.

FINEMAN:  Yes, there could be.  And I don‘t know that Max Baucus, the chairman, is helping things because he seems to be changing all of the details on the fly, and that‘s troubling, too.  And they‘re giving ammunition to the other side because I know, just this evening—I think this afternoon—the head of the Congressional Budget Office is saying that there‘s so much in it and so confusing, it‘s going to take them two weeks to figure out how much the whole thing costs.  If the Senate Finance Committee slows down now and waits for that time, that alone could kill the bill.

O‘DONNELL:  And, you know, when we talk about 80 percent agreement, what I‘ve noticed is, there‘s been virtually no discussion up to now about how to pay for it.  Paying for it is 50 percent of the bill, and there‘s no agreement between the House and the Senate on that 50 percent of the bill.  What the bill actually does in the health care policy is the other 50 percent of the bill, and that‘s where most of the agreement seems to reside.

But the finance committee is the first committee to fully consider all of the ways.

FINEMAN:  Right.

O‘DONNELL:  . of paying for this, and that, it seems to me, is where most of the struggle is going to be in this mark-up, isn‘t it?

FINEMAN:  I think that‘s right.  And that‘s why that thing from the budget director today is significant.

The other—the other thing about this is, that the way it looks right now, the—people are going to be taxed or they‘re going to pay fees, call it what you will, to help pay the insurance companies to acquire most customers.  That‘s sort of the bottom line right now, without a public option or anything like that.  So that‘s why the left wing of the Democratic Party‘s upset because of that.  And the right wing is upset because of the amount of money it‘s going to cost.

The only winners—when Karen Ignagni, who is a terrific lobbyist, ends up being the main winner for the health insurance industry in this thing, that‘s a sign that the whole thing could fall apart.  Mark my words.

O‘DONNELL:  And, Howard, quickly, the senator from Massachusetts—whoever he or she may be—could arrive as early as next week.  Is that a game-changer?

FINEMAN:  No, because the Democrats all can‘t agree, even if they have 60.  It‘s not the Holy Grail.

O‘DONNELL:  All right.  Howard Fineman of MSNBC and “Newsweek”—thanks for your time tonight.

FINEMAN:  Thank you, Lawrence.

O‘DONNELL:  And a new report by the White House National Economic Council says that over the last 10 years, insurance companies have raised their premiums anywhere from 90 percent to 150 percent, depending on which state you live in; while inflation has risen a mere 28 percent in the same period.  Wages, meanwhile, have risen only an estimated 38 percent in the last decade.  That means premiums—which are still skyrocketing—strongly outpace the rise of American earnings in every single state over the past decade.

In Washington today, Vice President Joe Biden said that this disparity does not just crush families, does not just cripple the businesses who also pay those premiums.  It also hurts the country, subsidizing insurance company profits at the expense of American competitiveness.

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES:  To make up for the higher premiums, you know what companies have to do, they either pass those premiums on to their employees, a larger share—they pass them on to their customers, making their products even less competitive.  And, again, during the recession, they‘ve had to do that, which puts American businesses at a distinct competitive disadvantage.  To state the obvious, this is simply an unsustainable position.  Families, businesses, state budgets, our national economy—all demand a significant change.

(END VIDEO CLIP)

O‘DONNELL:  Let‘s turn now to a veteran of the insurance industry, Wendell Potter, former communications director at CIGNA Healthcare, now senior fellow on health care at the Center for Media and Democracy.

Many thanks for your time tonight, Wendell Potter.

WENDELL POTTER, CENTER FOR MEDIA AND DEMOCRACY:  Thank you, Larry.

O‘DONNELL:  Insurance companies responded to this by saying today that

·         in effect, that their premiums are simply rising in tandem with the underlying costs in the health care sector.  What‘s the evidence on this?  How do you rule this one?

           

POTTER:  Well, that‘s what they always say.  If you recall back 15 years ago, the insurance industry said, let‘s not do reform like the president proposed—or President Clinton at that time, Mrs. Clinton—let‘s let the invisible hand of the market work its magic.  We, the insurance companies, can control medical costs and keep those premiums down.

Well, obviously, it wasn‘t something they could do.  They eventually ran out of tricks and, in fact, it was—it was not even possible that they could manage to do it with what they have tried to do.  So, they—what they do is now price their premiums above what they expect medical inflation to be, and they always price it enough above that to be able to guarantee their investors a profit.  So, that‘s why it‘s been going up as much as it has.

O‘DONNELL:  And does the Baucus bill as you see it now do anything to control the rise of these premiums?  And should it do something to control those—the rise of those premiums?

POTTER:  Oh, it should.  But, no, it doesn‘t.  In fact, it gives the insurance industry broad latitude to keep raising premiums and doesn‘t do very much at all in terms of cost control.

O‘DONNELL:  You know, as you know, Wendell, I worked at the finance committee 15 years ago when they were actively opposing the legislation.  And what I‘ve been sensing in the last year in the run-up to this legislation is, they just got smarter in the P.R. in the last 15 years, and they just decided going into this thing, the bill is probably going to die of its own weight anyway.  Let‘s not be revealed as opponents of it.  Let‘s pretends that we‘re on board and then when it gets down to it, if they put anything in the bill that we don‘t like, we will absolutely go all out and try to destroy the bill.

I mean, isn‘t that the way they‘re playing this all the way through here?

POTTER:  Oh, absolutely.  That‘s what I have been saying from the beginning, that they, on the one hand, are conducting a charm offensive saying they are for reform.  But behind the scenes, they‘re really working to kill it.  And we‘re seeing—we‘ve seen evidence of that along the way.

I don‘t think the bill is dead, though.  I disagree with that.  I think that there—that there really are enough reform advocates in the Senate and on Senate Finance Committee and certainly in the House that we might be able to see some reform that actually benefits Americans and might cost the insurance industry a little bit of money this time.

O‘DONNELL:  Can you—can they pass a bill that pleases the insurance industry and musters the necessary Democratic support in the Senate?

POTTER:  No.  No, there‘s not a possibility.  The Baucus bill, as originally written, was, like I said before, quite a gift to the insurance industry.  I was mistaken.  I thought that they had just about everything they wanted.  But as we see, the letter from Karen Ignagni points out that there are a few things more they would like to have or not have, depending on what they see wrong with the bill.

But, no, the insurance industry has as its motive, its objective to be able for those companies to continue to be profitable, to meet Wall Street‘s—Wall Street‘s expectations.  And that is not the same objectives that most lawmakers and the public has.

O‘DONNELL:  Wendell Potter, insurance industry whistle-blower, former head of P.R. for CIGNA—thank you for staying on the case for us.

POTTER:  Thank you very much, Larry.

O‘DONNELL:  Meantime, how important is racism when it comes to opposing the reforms President Obama wants to make to health care?  Former President Clinton doesn‘t see eye to eye with former President Carter‘s assessment.  We‘ll examine Clinton‘s comments and discuss whether there is some political benefit for Obama in President Clinton‘s remarks.

And later, President Obama and Middle East peace—he arranges a high-profile handshake between the Israelis and the Palestinians.  Can Obama turn that handshake into the—into headway in the peace process?  Next on COUNTDOWN.

(COMMERCIAL BREAK)

O‘DONNELL:  Coming up: Former President Clinton says it‘s the policy, not racism that is driving objections to President Obama‘s health care overhaul.

Also, President Obama steps into the Middle East peace process in a major way.

And Tom DeLay steps out on “Dancing with the Stars” with his version of the cha-cha.  That‘s next.

This is COUNTDOWN.

(COMMERCIAL BREAK)

O‘DONNELL:  This country‘s previous two Democratic presidents were white men who managed to win in part because they came from the South.

And tonight—in our fourth story on the COUNTDOWN: Bill Clinton and Jimmy Carter are both now talking about their Southern perspective on racism, but reaching different conclusions about the role racism has played in fueling the small but intense opposition against President Obama on health care reform.

The official White House line is that opposition to health care reform is based on policy disagreements, not on the color of the president‘s skin.  But after a South Carolina Republican yelled “You lie!” during Mr. Obama‘s speech, a virtually unprecedented breach of protocol and its public disrespect for the president, some black leaders suggested the insult would not have occurred with a white president.

And last week, former President Jimmy Carter of Georgia agreed and said some of the opposition to the president‘s efforts on health care is rooted in racism.

Today, Mr. Clinton was asked whether he agreed with Mr. Carter‘s specific statement that, quote, “an overwhelming portion of the animosity towards President Obama is racially motivated.”

(BEGIN VIDEO CLIP)

CLINTON:  Here‘s how I would say it: I think some of the extreme right who oppose him on health care also are racially prejudiced.  And if you listen to some of the—look at some of the signs and listen to some of the rhetoric, there‘s no question that that‘s true.

But I believe if you were not an African-American, all of the people who are against him on health care would still be against him—because they were all against me, too.  He believes that.

I sympathize what President Carter‘s coming from.  If you‘re a white Southerner and you fought these battles a long time, you‘re super sensitive to any kind of manifestation of discrimination based on race.

But what‘s driving the opposition to President Obama on health care is not race.  Some of his opponents have racial discrimination in their heart.  But that‘s not what driving them.

What‘s driving them is they don‘t want health care.  They don‘t want the government, one more time, to take care of people who are left out and left behind.  They are philosophically or emotionally or whatever opposed to it.

(END VIDEO CLIP)

O‘DONNELL:  With us tonight is Professor James Peterson, professor of African-American studies at Bucknell University.

Thanks for your time tonight, Professor.

PROF. JAMES PETERSON, BUCKNELL UNIVERSITY:  Good evening.

O‘DONNELL:  Professor, which one of our former presidents do you think is pointing us closer to the truth here?

PETERSON:  That‘s an excellent question.  I tend to side with and agree with more former President Carter on this issue, not that it‘s overwhelming but that it‘s certainly worth us thinking about, and there‘s some serious things for us to consider when we see the kind of imagery, the size, the language, and the vitriol that‘s been espoused around the country directed at President Obama.

I think part of the question here is, how do we figure out what the “some” is—the S-O-M-E is—that President Clinton is talking about.  How do we qualify that or how we do quantify that, and then I think we can rest a little bit easier about the conversations that we‘re having or not having about race in this country right now.

O‘DONNELL:  It seems to me, President Clinton has a point in that people who are—who had racist tendencies would probably be heading in a more conservative direction on health care anyway, and they would probably oppose health care anyway.  But wouldn‘t racism explain some of the energy, some of the vitriol, some of the incredibly over-the-top imagery that we have seen in this opposition to President Obama this year?

PETERSON:  Racism certainly explains and describes some of it.  Again, I think we need to measure what that “some” is before we move on.

But I think we also need to understand that President Clinton has a mission here, and essentially what he‘s doing is he‘s toeing the line of the Obama White House, which is let‘s move this discussion or center this discussion around health care.  Let‘s move away from race, because we all know that, unfortunately, race can contaminate and dominate the discourse in this country because of the long history that we‘ve had and we‘ve tried to wrestle with these things and haven‘t really worked through them all.

O‘DONNELL:  And do you see that as more politically problematic for a black president to try to deal with this stuff in public statements than it would be for a white president?

PETERSON:  Of course, yes.  This is—discussions around race are a lose/lose proposition for President Obama unfortunately.  He will never really be able to politically satisfy certain communities, certain aspects of the black community, certain folks on the left, who really want to have an honest, constructive, open dialogue about race that we can‘t really have at this particular point or we‘re not mature enough or ready to have.  He can never satisfy them.

And then on the other side or flip side of that, any time that he does enter into a discourse about race, some of his opponents on the right will try to exploit that to continue to try to marginalize him and to fragment our communities so that we can‘t have the productive conversations about things on his platform, such as health care.

So, it‘s an extraordinarily complex moment.  We felt as if we made such an aspirational rational jump in electing President Obama, but we really actually made—took a couple steps backwards in our ability, or our lack of ability to have constructive conversations around race.

And if you look at the different incidents over the course of the summer, including Gates and including, even Kanye West debacle a few weeks ago, it‘s very, very difficult for us in this particular moment to have constructive dialogues about race.  I think Obama and the Obama White House understand that, and unfortunately, race has become one of these political footballs.  It will get tossed back and forth, and it will be leveraged against President Obama in terms of what he‘s trying to accomplish on his agenda.

O‘DONNELL:  Now, given that during my lifetime alone from President Nixon forward, there have been some incredible lies told publicly out of that White House.  What was it like in the black community to have the first black American president up there on the podium, and for him to be the first one—when he‘s mentioning a provision in a health care reform bill, he‘s the first one in this forum ever to be called a liar by a member of Congress?

PETERSON:  Well, it‘s stunning, it‘s startling and disrespectful.  A lot of my friends mobilized really, really quickly.  We didn‘t even know who Joe Wilson was prior to that, but mobilized really, really quickly to find out how do we redress or readdress the situation.  But, I think, what you need to understand is, depending upon where you live, what region of the country, what community, depending upon your ethnic background, yes, that‘s going to inform how you‘re going to respond to certain situations.

And so, basically what we need to do is understand the complexities of our history in order to better grasp this particular political moment.

O‘DONNELL:  James Peterson, professor of African-American studies at Bucknell University—thanks for your time tonight.

PETERSON:  Thank you for having me.

O‘DONNELL:  Coming up: The power of parody in the health care fight.  The folks at FunnyorDie.com team up with Move On to produce an ad championing the cause of big insurance.

And the struggle for Middle East peace—President Obama‘s first big, high-profile step into the age-old conflict.  Where does the president take the process from here?  Ahead on COUNTDOWN.

(COMMERCIAL BREAK)

O‘DONNELL:  A president doesn‘t get to choose global conflicts, but he must choose how to deal with them.  And in our third story on the COUNTDOWN, today, for the first time since his election, President Barack Obama inserted himself directly into Middle East peace negotiations.  The ultimate goal, an Israeli/Palestinian two-state solution that remains a distant dream. 

On the same day as Mr. Obama‘s first appearance at the United Nations General Assembly as president, he tried to restart negotiations on the most intractable problem of our time, the Israeli/Palestinian peace process.  President Obama held bilateral meetings at the Waldorf Astoria Hotel in New York today with Israeli Prime Minister Benjamin Netanyahu and with Palestinian Prime Minister Mahmoud Abbas. 

The president then brought those two leaders together for a trilateral meeting that began with handshakes all around, as well as a new sense of urgency from the president. 

(BEGIN VIDEO CLIP)

OBAMA:  Simply put, it is past time to talk about starting negotiations.  It is time to move forward.  It is time to show the flexibility and common sense and sense of compromise that‘s necessary to achieve our goals. 

Permanent status negotiations must begin and begin soon.  We cannot continue the same pattern of taking tentative steps forward and then stepping back.  Success depends on all sides acting with a sense of urgency. 

(END VIDEO CLIP)

O‘DONNELL:  President Obama also directed his Secretary of State Hillary Clinton and the special envoy to the region, George Mitchell, to meet again with Israeli and Palestinian negotiators next week.  Mr.  Mitchell had just returned to Washington after a week of shuttle diplomacy that had produced little from either side. 

President Obama has asked Secretary Clinton to report on the status of the new negotiations in mid-October. 

Let‘s bring in the former National Security Council Director for Iran and the Persian Gulf, Hillary Mann Leverett.  Thanks for your time tonight. 

HILLARY MANN LEVERETT, FMR. NATIONAL SECURITY COUNCIL DIRECTOR:  Thank you for having me. 

O‘DONNELL:  Now, was this just a photo-op at the Waldorf today or was this a real restart of the process? 

LEVERETT:  I think this was more than a photo-op.  I think this was—this was the power of Obama, his compelling rhetoric, his strategic use of symbols, the media communication.  This was the power of Obama to try to bring people forward, bring them together. 

I think it was a good start.  That said, though, there are serious flaws in the strategy, in the policy that I think may prevent President Obama from really achieving an Israeli/Palestinian and broader Arab/Israeli settlement. 

O‘DONNELL:  Now, the president‘s been criticized for taking on too much too soon.  Why is the president pushing this perennial problem that no one‘s ever made real progress on while he‘s got health care reform in front of him?  He has to deal with troop levels in Afghanistan and other urgent issues.  Why now on this one? 

LEVERETT:  Well, I think that President Obama does really understand the Middle East.  I think he studied it in college.  I think he really does understand it.  And there have been moments of progress, some real achievement in Arab/Israeli peace in our history.  The cardinal rule, though, in Arab/Israeli peace making, to really make progress, is that a president must engage the Palestinians and Israelis, the Arabs and Israelis, in serious negotiations in his first year, maybe first year and a half, because if he doesn‘t do it then, the American political calendar takes over, first with the midterm Congressional elections, which for Obama will be 2010, and then the presidential re-election in 2012. 

Those elections, that American political calendar, will overwhelm and paralyze any Arab/Israeli process if it‘s not already in a serious state of negotiations in the first year. 

O‘DONNELL:  And is there any reason to believe that President Obama can actually achieve headway here where his predecessors have failed? 

LEVERETT:  Well, not unless he has a serious coherent strategy to achieve a settlement.  And here I think he does have some significant problems, both on the Israeli side and on the Arab side.  First on the Israeli side, his focus on settlements, while important, has only been enough to really annoy the Israeli prime minister, Netanyahu, and to alienate a very large swathe of the Israeli public. 

There‘s a poll out today, this morning, that says only four percent—that‘s four, not 40 -- four percent of Israelis think that Obama is a friend of Israel.  The Israelis I think, by and large, have been alienated by the settlement policy.  But Obama hasn‘t done enough on settlements to achieve a breakthrough. 

Similarly on the Arab side, the Obama administration I think has had a misplaced focus on Arab states, particularly Saudi Arabia.  Trying to get them to front load concessions or gestures to the Israelis which aren‘t going to happen.  Instead, they should be focused on the Palestinians, on making sure that they‘re dealing with the Palestinians who control territory and have popular support, so that they can get about the business of actually creating a Palestinian state. 

O‘DONNELL:  And dealing with the Palestinians is far more complicated than shaking Mahmoud Abbas‘ hand.  He doesn‘t actually represent effectively all of the players that need to be controlled on that side of this conflict, does he? 

LEVERETT:  That‘s absolutely correct.  This is a major flaw in the policy.  We are only talking to one representative of the Palestinians.  He only controls part of the territory in the West Bank.  Hamas, the other Palestinian political movement of significance, controls the entirety of territory in the Gaza Strip and controls the popular sentiment support of a lot of Palestinian—Palestinians in both the West Bank and Gaza. 

Without a policy where we have—where we have Hamas at the table, it‘s doomed to failure to really bring about a Palestinian state. 

O‘DONNELL:  Hillary Mann Leverett, former staffer for the National Security Council, thanks for your time tonight. 

LEVERETT:  Thank you very much. 

O‘DONNELL:  Coming up, is laughter the best medicine for solving America‘s health care crisis?  Will Ferrell does a tongue in cheek public service announcement defending the status quo in health care. 

Tom Delay‘s “Dancing With the Stars” problem.  His number of pounds lost practicing for the show exceeds the number of points he earned for his debut dance. 

And when Rachel joins you at the top of the hour, the health care fight within the Democratic party, as liberal Dems urge more conservative Dems to stand together in the reform battle. 

(COMMERCIAL BREAK)

O‘DONNELL:  On the scorecard of celebrity endorsements, the 2008 presidential election was never even close.  Obama had the likes of Oprah, Barbra and Steven in his corner.  John McCain had Wilford—yes, Brimley.  In our number two story, the celebrity factor has been a non-factor during President Obama‘s campaign for health care reform.  But with a new ad out today, Will Ferrell and friends hope to change that. 

The public service announcement is called “Something Terrible is Happening,” and stars Will Ferrell and “Mad Men‘s” John Hamm, among others.  It is a collaboration between MoveOn.org and Will Ferrell‘s website FunnyOrDie.  We leave it to you to decide whose side Mr. Ferrell is on this time. 

(BEGIN VIDEO CLIP)

JOHN HAMM, “MAD MEN”:  Something terrible is happening. 

WILL FERRELL, COMEDIAN:  Something terrible is happening. 

UNIDENTIFIED FEMALE:  Something terrible is happening. 

UNIDENTIFIED FEMALE:  Something terrible is happening. 

FERRELL:  Health insurance executives are getting a bad wrap. 

UNIDENTIFIED FEMALE:  As the health care debate heats up—

UNIDENTIFIED MALE:  We need to remember who the real victims are, health insurance executives. 

UNIDENTIFIED MALE:  People are saying a lot of really mean things about health insurance companies and their executives.  And it‘s got to stop. 

UNIDENTIFIED FEMALE:  These great businessmen are American heroes. 

FERRELL:  So why is Obama trying to reform health care when insurance companies are doing just fine making billions of dollars of profit? 

UNIDENTIFIED FEMALE:  Insurance companies need our support because they keep our selfish priorities in check when we can‘t. 

UNIDENTIFIED MALE:  Please, doctor, my daughter‘s dying!  She needs medication!

UNIDENTIFIED FEMALE:  Think about somebody else for once. 

UNIDENTIFIED MALE:  If my kid falls off his bike and breaks his leg, he should have to pay that money out of pocket, out of his allowance. 

UNIDENTIFIED FEMALE:  How else is he going to learn not to fall off that bike? 

FERRELL:  Insurance companies are detailed oriented enough to deny claims for things like typos.  If you spell something wrong, do you really deserve surgery?  I don‘t think so. 

MANN:  Eighty percent of the American public support the public plan because it would give quality care people could actually afford. 

UNIDENTIFIED MALE:  But when you think about it, who‘s really supporting it, other than 80 percent of the American people? 

UNIDENTIFIED FEMALE:  And the public option would make insurance companies lower their prices and give better service in order to compete. 

UNIDENTIFIED FEMALE:  Health insurance companies are huge. 

MANN:  They need to make big profits so they can afford to give their employees health insurance. 

UNIDENTIFIED FEMALE:  Believe me, that stuff is not cheap. 

UNIDENTIFIED MALE:  It makes sense. 

FERRELL:  Insurance company CEOs have a right to their American dream. 

UNIDENTIFIED MALE:  Five houses. 

UNIDENTIFIED MALE:  A private plane. 

UNIDENTIFIED FEMALE:  Five hundred million dollars in your pocket. 

FERRELL:  And a mini-zoo in your backyard for exotic animals like a white tiger and pygmy horses. 

UNIDENTIFIED FEMALE:  Insurance companies offer you variety. 

UNIDENTIFIED MALE:  They can change the price or your plan at any time or stop covering you altogether. 

FERRELL:  So join us in the fight to protect our insurance company profits.  They‘ve looked out for our best interests for so long—

GROUP:  Now we should look out for theirs. 

UNIDENTIFIED MALE:  And I‘m not being sarcastic, not at all. 

(END VIDEO CLIP)

O‘DONNELL:  Coming up, Tom Delay‘s debut on “Dancing With the Stars.”  Why the heck is he doing this?  For the answer, we turn to my special guest tonight, “Dancing With the Stars” graduate Penn Jillette. 

(COMMERCIAL BREAK)

O‘DONNELL:  Decked out in rhinestones, growling at the camera, and grinning like he was posing for another mug shot, our number one story, where do you go after leaving the halls of Congress in disgrace?  The answer now, “Dancing With the Stars.”

Indicted Tom Delay making his dancing debut on the show‘s season premiere.  But before indicted Tom Delay stepped out onto the dance floor, the audience got a peek at the rehearsals. 

(BEGIN VIDEO CLIP)

TOM DELAY, FMR. HOUSE SPEAKER:  One thing I wasn‘t prepared for in learning to dance was getting in touch with my feminine side. 

UNIDENTIFIED FEMALE:  Left, left, left—that way. 

DELAY:  Going left for me is absolutely outrageous.  I have been a conservative all my life, but if I‘m going to do a good cha-cha, I have to vote with the Republicans and party with the Democrats. 

(END VIDEO CLIP)

O‘DONNELL:  Then it was time for indicted Tom Delay to perform.  Mr.  Delay reportedly sporting a spray pen and wearing a costume that the former Congressman himself described as Elvis meets animal print.  Alongside partner Sheryl Burke (ph), it was finally time to cha-cha-cha. 

(BEGIN VIDEO CLIP)

(SINGING)

(END VIDEO CLIP)

UNIDENTIFIED MALE:  Wow!  Moments I‘d never thought I‘d see on television.  OK, Bruno. 

UNIDENTIFIED MALE:  You are crazier than Sarah Palin!  Bloody hell, what‘s going on!  Actually, the little cha-cha-cha you did wasn‘t too bad.  The rest, I am not sure. 

UNIDENTIFIED FEMALE:  That was surreal.  It was like, wow, Tom Delay, you‘re a wild thing.  That‘s kind of—OK.  You know—no, no.  I‘m not done.  The basic was very nice.  I thought your New York was nice.  You‘re very light on your feet.  Cheryl, I‘m impressed.  You have a natural grace to you, which blows me away.  And you‘re rocking it towards the older crowd to judge. 

UNIDENTIFIED MALE:  Parts were magic, parts were tragic.  Actually, the cha-cha-cha part was very, very good.  As for all of that other stuff, Tom, it wasn‘t up my alley.  I didn‘t enjoy that.  But the cha-cha. 

DELAY:  You didn‘t like my—

(END VIDEO CLIP)

O‘DONNELL:  Wild thing indeed.  A valiant effort considering the former Congressman is actually recovering from a pre-stress fracture of his right foot.  However, indicted Tom Delay was not able to whip the much-needed votes to stay at the top of the pack.  After a Vietnamese Waltz group relay, Tom Delay finished the night in third for the last place.  Fans will have to wait until Wednesday night‘s result show to see if indicted Tom Delay will live to dance another day. 

Joining me now, former “Dancing With the Stars” contestant and one half of the magician duo Penn and Teller, Penn Jillette.  Penn, thanks for joining us tonight. 

PENN JILLETTE, PENN AND TELLER:  Thanks for having me.  I feel like cha-cha-chaing all over again.  I was reliving my “Dancing With the Stars” time. 

O‘DONNELL:  And did you a cha-cha, as I recall on “Dancing With the Stars.”

JILLETTE:  I did.  It is actually cha-cha-cha, Lawrence.  There are three chas. 

O‘DONNELL:  There is. 

JILLETTE:  I did a cha-cha-cha.  And the cha-cha-cha I did pretty well.  It was the two step the next week that was my—my Waterloo.  That took me down to Chinatown. 

O‘DONNELL:  Well, yes, the two-step.  OK, listen, you have made the insane decision to go on “Dancing With the Stars.”  Can you—can you explain to me Tom Delay‘s insane decision of going on “Dancing With the Stars?”  I really don‘t get this in his case. 

JILLETTE:  What‘s insane about it?  He no longer has a job. 

O‘DONNELL:  With you—with you I understand it.  You—you told me that you sold more tickets to your Vegas show because ABC was running promos of you on “Dancing With the Stars.”

JILLETTE:  Oh, yes. 

JILLETTE:  Well, I imagine he does public speaking.  And his name being more recognized.  But also I can‘t, of course, discuss the actual figures, but what does—what does a Congress person make?  What do they make a year? 

O‘DONNELL:  Figure in the House of Representatives he was making about 170,000 a year. 

JILLETTE:  Well, it‘s more than that a week to be a loser on “Dancing With the Stars.”  You even get paid for rehearsal.  So if you‘re in show business, how bad is it to spend five hours a day in an air conditioned room with a beautiful woman?  There is a little bit of humiliation.  But you know as well as I do, in show business, no matter who you are, there‘s always a little bit of humiliation. 

So he‘s getting a taste of that.  And it can‘t hurt more to have those judges say what they said than it is to be indicted.  I mean, he can take that, right?  So why not get paid? 

O‘DONNELL:  And you—did you get in touch with your feminine side as much as Tom Delay seems to have done? 

JILLETTE:  I just love—

O‘DONNELL:  I know you were already in touch with your feminine side, but did this increase that contact? 

JILLETTE:  I don‘t even know what he‘s talking about.  There are very masculine people who dance.  I guess the idea that moving your body makes you a homosexual as part of his platform or something.  I don‘t get it at all. 

O‘DONNELL:  And where does he go from here?  I mean, is there—is he just going to make the tour of the reality shows now?  When you leave “Dancing With the Stars,” do the other reality competition shows want you? 

JILLETTE:  I think I have been asked to do—I think I have been asked to do ones that are more humiliating.  I mean “Dancing With the Stars” is really not that bad.  You are going on the show, doing something by definition you‘re not good at.  And to be fair to Tom, I went on the show and really, besides all of the reasons of commerce, I really enjoyed learning something that I had no natural talent at.  And I really enjoyed working on it.  And it‘s possible that whatever you think of Tom, that his motives in this one case, just on ABC‘s “Dancing With the Stars,” only here that his motives are fairly pure.  He may have wanted to dance. 

O‘DONNELL:  No!  I don‘t know. 

JILLETTE:  Only here.  Only here.  I‘m not saying he has any other pure motives anywhere in his life.  But in this little circumscribed area, maybe there was some purity there.  I don‘t know. 

O‘DONNELL:  All right.  You‘re his coach.  What are the two things you would tell him to guide him through the rest of the way here? 

JILLETTE:  Suck up to the judges. 

O‘DONNELL:  OK. 

JILLETTE:  Do not answer back.  Do not make fun of them.  Suck up to the judges.  Smile a lot.  And get those votes in.  But no one understands the voting system, so maybe he can do some gerrymandering or something and up his chances.  I never understood how the voting even worked.  I just worked.  I just tried to dance as well as I could, which was not very well. 

And let‘s remind everybody, I was the first person off.  So if he even goes past the first cut, he‘s doing better. 

O‘DONNELL:  And as I recall, quickly, sucking up to the judges was something you neglected to do when you were on the show? 

JILLETTE:  Yes, I didn‘t get that memo. 

O‘DONNELL:  And that has something to do with you being the first one off.  Penn Jillette of Penn & Teller.  Thanks so much for joining us tonight from Las Vegas, Nevada.  That will do it for this Tuesday‘s edition of COUNTDOWN.  I‘m Lawrence O‘Donnell, in for Keith Olbermann.  Our MSNBC coverage continues now with “THE RACHEL MADDOW SHOW.”

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

END   

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