updated 10/13/2009 11:43:24 AM ET 2009-10-13T15:43:24

COUNTDOWN

October 12, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guest Hosts: Lawrence O'Donnell, Howard Fineman

Guests: Wendell Potter, Steve Clemons, Dan Savage, Eric Burns

(BEGIN VIDEOTAPE)

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

Last-minute attack from the insurance industry: On the eve of the health care reform vote in the Senate Finance Committee, the insurance industry rips the legislation, saying it will cost you, the consumer, too much. So now, the insurance industry has your best interest at heart.

Howard Fineman on the politics in D.C.; Wendell Potter on the real motivations of the insurance companies.

Prize patrol: Liz Cheney defines the real reason the Nobel committee awarded President Obama the Peace Prize.

(BEGIN VIDEO CLIP)

LIZ CHENEY, DICK CHENEY'S DAUGHTER: They'd like to live in a world in which America is not dominant. They may believe that President Obama also doesn't agree with American dominance and they may have been trying to affirm that belief with the prize.

(END VIDEO CLIP)

O'DONNELL: "Don't ask, don't tell" and don't hold your breath.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I will end "don't ask, don't tell." That's my commitment to you.

(CHEERING)

(END VIDEO CLIP)

O'DONNELL: But with no timetable to end the policy, some critics wonder when it will ever happen. The politics involved here with Dan Savage.

Rush on the record: Rush Limbaugh sits down for a rare interview with Jamie Gangel. He says he's not running the Republican Party and responds to those within the party who see him as the problem.

(BEGIN VIDEO CLIP)

JAMIE GANGEL, NBC NEWS: They say you are ruining the Republican Party.

RUSH LIMBAUGH, RADIO TALK SHOW HOST: (YAWNING)

(END VIDEO CLIP)

O'DONNELL: And fed up and fighting back: The White House versus FOX News.

(BEGIN VIDEO CLIP)

ANITA DUNN, WHITE HOUSE COMMUNICATIONS DIRECTOR: The reality of it is that FOX News often operates almost as either the research arm or the communications arm of the Republican Party.

(END VIDEO CLIP)

O'DONNELL: What's next in the war of words?

All that and more-now on COUNTDOWN.

(BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: I'm so busted!

(END AUDIO CLIP)

(END VIDEOTAPE)

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

It is the most damning report yet about the state of the health care industry. One that confirms health care premiums will continue to rise with or without the Baucus bill, and that the current reforms being proposed do not do enough to contain costs.

Our fifth story on the COUNTDOWN: The study in question was actually commissioned by the health insurance industry lobby. Without intending to giant companies that are trying to maintain their stranglehold on health care may have made the most compelling argument yet for a public option.

With the Senate Finance Committee set to vote on its bill tomorrow, the health insurance industry is now warning against the incomplete reforms the committee is considering because-among other things-they will leave 20 million people uninsured. And the insurance industry insists-I should say promises-premiums for the rest of us will still go up under the plan, not that they wouldn't go up without reform, just that they'll go up much more if the bill should become law.

The AARP said today that the study is not worth the paper it's printed on. The California Nurses Association, largest nurses union in the country, responded that our legislators should, quote, "stop coddling a useless industry whose sole function is to make enormous profits from the pain and suffering of patients while providing little in return."

The spokesman for the Democratic majority on the Senate Finance Committee called the report, quote, "a health insurance company hatchet job, plain and simple."

The White House adding, quote, "This is a distorted and flawed report from the insurance industry and cannot be taken seriously. This so-called analysis appears on the eve of a vote that may eat into the insurance industry's profit. It conveniently ignores critical policies that will lower costs for those who have insurance, expand coverage and provide affordable health insurance options to millions of Americans who are priced out of today's health insurance market, or are locked out by unfair insurance company practices."

But it's not as if the insurance industry thinks the Baucus bill cannot be saved. Its solution-force millions more people to buy its insurance at government subsidy expense.

(BEGIN VIDEO CLIP)

ROBERT ZIRKELBACH, AMERICA'S HEALTH INS. PLANS: More on the cost.

There is not a lot that really focuses on making coverage more affordable. We strongly support the insurance market reforms so that everybody has guaranteed access to cover. There are no more pre-existing conditions exclusions. But to make it work, everybody needs to be required to participate and we need to have system-wide efforts to make health care coverage more affordable.

(END VIDEO CLIP)

O'DONNELL: And so, the health care reform debate of 2009 has taken its latest ironic turn. Democrats in the House, the Senate, and the White House began this year's crusade by instantly giving up on universal coverage, giving up on Medicare for all, aspiring instead to cover little more than half of the uninsured.

In the Clinton health reform crusade of 1994, universal coverage, coverage for all, was the daily rallying cry. But in the final act of this year's drama, it is oddly only the health insurance industry that is still pushing for universal coverage.

When it gets this weird, it is time to call in MSNBC political analyst Howard Fineman, also, senior Washington correspondent for "Newsweek" magazine.

Good evening, Howard.

HOWARD FINEMAN, MSNBC POLITICAL ANALYST: Hi, Lawrence.

O'DONNELL: Lot of twists and turns in this story so far. But to come to the point where it is the health insurance lobby-only-that is advocating universal coverage, that was not something you could have predicted at that time outset of this year, could you?

FINEMAN: No. No. You couldn't. And I think the health insurance industry needs to appreciate what they're really arguing for here because everybody says-and that's what the administration has been trying to say when they are willing to talk about the public option-that it's only through competition with the public option that you can, in fact, drive health care costs down.

What's really going on here, Lawrence, is that there is a battle going on for the band of profit in health care among the health insurers, the clinicians-meaning doctors, nurse, et cetera-and another category, the hospitals and the drug manufacturers, and the medical equipment manufacturers. They are all fighting for that pie, and what's really happened is that the health insurance industry thinks that they are not getting their slice big enough because they don't have enough people to cover, and also because they feel that the finance committee did not lean heavily enough on those other stakeholders in the game.

That's sort of what's going on here. There is a big fight for that band of profit.

O'DONNELL: Now, Howard, the White House echoed the AARP, saying this study isn't worth the paper it's printed on. But might they be playing this the wrong way? Might they not grab this study and say, "Look, this is proof that we need the public option"?

FINEMAN: Yes.

O'DONNELL: Use this study-use the insurance industry's own prediction about what it will do.

FINEMAN: Yes.

O'DONNELL: . as the reason why we need the public option.

FINEMAN: Well, that-the thought occurred to me yesterday as I was listening to Karen Ignagni, who's the head of the health insurance lobby here, make her complaint, that she was driving right into that possible argument.

But the thing is that the administration has been extremely wary to talk about the public option. Now, they will not promise the health insurers that it will never happen. But you've not heard them really forcefully advocating at the White House for it.

But you're right. This is the strongest argument you could make for it.

O'DONNELL: They'd rather.

(CROSSTALK)

FINEMAN: Yes, go ahead. I'm sorry.

O'DONNELL: OK. Well, a new poll from CBS News shows that 45 percent of those surveyed -- 45 percent of people with health insurance-believe that the health care reform would have no effect on them personally. Now, it seems to me that this study is directed exactly-directly at those people, trying to get that 45 percent to think that this is going to be a harmless thing for them to worry that their premiums are going to skyrocket. Isn't that what they are aiming for here?

FINEMAN: Sure it is. And the big question now is what they're going to do publicly about it. Are they going to mount another advertising campaign? Harry and Louise are currently occupied because they've been rented by the drug companies. But there might be another couple available that will be willing to scare everybody who has a health care plan about rising premiums. Sure.

And it's been very interesting to watch all these different players in this game. They've tried to be cooperative until something really gets at their core interests. And I-it's possible that the health insurance companies are being a little too cute by half here. They haven't gotten the public option yet. That's what they dread if they overplayed their hand here, they could end up reinforcing the chances of getting it.

O'DONNELL: Now, Howard, I've been saying all year that the so-called support from stakeholders in the reform effort has been a mirage. That these stakeholders, like the insurance industry, are with you right up until the point where you do anything that crosses them in any way. And so, now, the insurance industry has bolted. They may mount a big advertising campaign against health care reform.

Who's next? Who else who that the industry-that the White House thinks they have in-on the team might abandon them, like, say, the pharmaceutical industry?

FINEMAN: Yes. Well, I gave you the run-down of the players. I would keep my eye on the drug manufacturers, on the big pharma. They did kick in $80 billion on to the table here, and they thought, by giving that $80 billion up, that they would buy peace with the Congress all the way through the rest of the process.

But in the finance committee, there was a 13 to 10 vote about allowing Medicare to charge-to negotiate drug prices. That's been defeated in the committee and it's going to come back again. If that gets anywhere near consideration again, expect big pharma to bolt.

O'DONNELL: You know, the White House, Howard, today said that they felt blindsided by the health insurance industry pulling this last-minute move. If they had just been watching COUNTDOWN, it would have been no surprise to them at all.

(LAUGHTER)

FINEMAN: Sure, too.

O'DONNELL: Howard Fineman of MSNBC and "Newsweek"-as always, great thanks tonight.

FINEMAN: Thank you, Larry.

O'DONNELL: For more on the report commissioned by the insurance industry lobby, let's bring in 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.

Thanks for joining us again tonight.

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

O'DONNELL: The spokesman for the Democratic majority in the finance committee, in other words, spokesman for Chairman Baucus, said that today's study is just health insurance industry hatchet job.

Now, you were there last time around, and when the health insurance industry was faced with this kind of thing. But it was-it was different this time because the health insurance industry was in the room with Chairman Baucus for much of the year. They had great access to him in writing this bill, and it seems to me that when you get down to the wire, one piece of it goes wrong for them or a couple of pieces go wrong for them and they abandon it.

Are you-you are as unsurprised by this as I am?

POTTER: Oh, absolutely unsurprised. This is exactly what I anticipated if it was-I knew that if something were to happen-they didn't get everything that they wanted, they would go ballistic, which they've done.

O'DONNELL: And what do you see as their motive for releasing this study at this time? The timing in this as the finance committee is about to vote tomorrow.

POTTER: Well, clearly, they think that they're going to influence votes on this and maybe try to get the committee to reconsider the actions that it took to reduce the penalties that we would all have to pay if we didn't buy overpriced insurance. But I think they've-I think they've maybe overplayed their hand here.

O'DONNELL: Well, you know, it's-at this stage of the game and delicacy of the finance committee vote coming up, it seems to me, if they were trying to improve the bill, they would have continued to play the inside game, maybe make some public comments about it, but not introduce this so-called devastating study. The introduction of the study looks to me, Wendell, like their mission now is to kill the bill, that they want nothing to pass.

POTTER: I think you're right. The number one priority would be to try to get something passed that would make all of us buy their insurance and not have-and not have the option of a public option. They got out this bill-they got the public option out of the finance committee bill. But now, they're not happy with this.

I think you are exactly right. They would rather all of us suffer under the same dysfunctional system than to have reform that might help the rest of us if it meant that they might not get all the profits that they think they can get.

O'DONNELL: Now, if you're in the room with them over the weekend making this decision-as you used to be-how difficult a call do you think this was? I mean, strategic problem here is that this is the only bill-the finance committee bill is the only bill that left out the public option, and now, they are abandoning even that. That must have been a tough call for them to make.

POTTER: It would have been and I'm surprised that Karen Ignagni got rolled on this. And I think that she did. I think that she-if she were to be honest would say that she would prefer not to have done this. But I suspect she was pressured from the big insurance companies, the CEOs, the big for-profit companies, because they were under pressure from Wall Street.

The investors were getting a little bit concerned that this Baucus bill might not be quite as good as they originally thought, after some of the actions of the last couple of days. Some analysts, the financial analysts, have some reports to that effect. And that's what's going on. They-this bill was not quite meeting Wall Street's expectations.

O'DONNELL: Health insurance whistleblower Wendell Potter, formerly of CIGNA Healthcare, now at the Center for Media and Democracy-great thanks for your time tonight.

POTTER: Thank you. Thank you, Larry.

O'DONNELL: And a quick update tonight. Since Keith called last week for people to donate to the National Association of Free Clinics, 5,625 people have responded, donating $450,000. That will pay for at least one free health fair. The goal is to hold them in cities represented by Democratic senators who have not yet said they will oppose a Republican filibuster of the public option. The biggest cost, securing the arena-sized venues needed.

Right now, they are focusing on New Orleans and Little Rock. And any help securing a large facility and either city will go a long way. I hope you heard that, Bill Clinton, Little Rock.

You can get more details or give what you can at FreeClinics.us, or COUNTDOWN.MSNBC.com.

Coming up: The Peace Prize backlash. Liz Cheney presumes to offer advice to President Obama on what he should do with his award from the Nobel committee.

And later: President Obama says that he'll end "don't ask, don't tell." But it's what the president left out of his speech that has worried many gay activists.

Ahead on COUNTDOWN.

(COMMERCIAL BREAK)

O'DONNELL: Liz Cheney is concerned with America's leadership and the world after President Obama won the Nobel Peace Prize. Cheney also explains why the president should not accept the award.

Dan Savage joins us to explain why the president's speech to a gay rights group ended up angering gays and the religious right.

And later: Jamie Gangel's exclusive interview with Rush Limbaugh.

That's next. This is COUNTDOWN.

(COMMERCIAL BREAK)

O'DONNELL: President Obama's Nobel Peace Prize-on one hand, Secretary of State Hillary Clinton today explained that he won for changing America's relationship with the world. On the other hand, Dick Cheney's talkative daughter Liz explained that he won for changing America's relationship with the world.

In our fourth story tonight: Why the left and right are fighting over their agreement on the Nobel Prize.

The Nobel committee was pretty explicit. "Multilateral diplomacy has regained a central position. His diplomacy is found in the concept that those who are to lead the world must do so on the basis of values and attitudes that are shared by the majority of the world's population."

In other words, personal presidential certainty of American awesomeness is no longer the guiding philosophy of American foreign policy. Secretary Clinton endorsed that explanation today.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, SECRETARY OF STATE: The fact that they recognize that his attitude towards America's role in the world, his willingness to challenge everyone to kind of step up and take responsibility, really restores an image and appreciation of our country.

(END VIDEO CLIP)

O'DONNELL: Liz Cheney yesterday agreed with Secretary Clinton, but said restoring America's image is a bad thing, and suggested that a dead soldier's mother accept the prize-an ironic advocacy of visibility from a woman whose father denied military families the right to media coverage when their soldiers' coffins came home.

(BEGIN VIDEO CLIP)

CHENEY: I think what he ought to do, frankly, is send the mother of a fallen American soldier to accept the prize on behalf of the U.S. military, and, frankly, to send a message to remind the Nobel committee that each one of them sleeps soundly at night because of the U.S. Armed Forces, because of the U.S. military is the greatest peacekeeping force in the world today.

I think what the committee believes is that they'd like to live in a world in which America is not dominant. And, I think, if you look at the language of the citation, you can see that they talk about, you know, President Obama ruling in way that makes sense to the majority of the people, the world. You know, Americans don't elect the president to do that. We elect a president to defend our national interests.

And so, I think that, you know, they may believe that President Obama also doesn't agree with American dominance and they may have been trying to affirm that belief with the prize. I think, unfortunately, they may be right. And I think it's a-it's a concern.

(END VIDEO CLIP)

O'DONNELL: A quick footnote to Ms. Cheney's claim that Norway is free today, exclusively, thanks to the U.S. military. It was the Norwegian resistance who crippled a Nazi heavy water plant in occupied Norway and then sank this ship when the Nazis tried to ferry the plant home-meaning: Norwegian fighters kept the Nazis from obtaining the heavy water they needed to build an atomic bomb, thereby ensuring that the Cheney family which has steadfastly avoided military service can sleep soundly at night.

Let's bringing in Steve Clemons, senior fellow of the New America Foundation and director of their foreign policy program, also author of "The Washington Note" blog-thanks for your time tonight.

STEVE CLEMONS, NEW AMERICA FOUNDATION: Great to be with you.

O'DONNELL: So, the Cheney family and Secretary Clinton agree that President Obama won the prize for reducing the American impulse to go it alone in the world. The Cheney family logic, though, is that the most pro-American guy is the one who says, "Everything America does is great, so why should we listen to anyone else?"

Now, where-where did they get that idea since no other presidential administration other than Bush/Cheney has ever looked at the world that way?

CLEMONS: Look, there is a strain of pugnacious nationalism that's disdainful of the rest of the world, of the international system of the United Nations, of international obligations that runs deep in some corridors of Congress.

Jessie Helms of North Carolina was chairman of the Senate Foreign Relations Committee for many years. And many of these folks that have come into their own today, particularly in the Bush administration, were essentially tutored by Helms to bring, you know, somewhat of a "Fortress America" attitude to the comments, which are, I think, quite unpatriotic.

I think when your president is given another tool to help take what is one of clearly one of the worst portfolios, both economic and foreign policy, that any president of the United States has ever inherited from another, when they talk about power, Bush had power and lost it. Cheney had power and lost it. And so, to some degree, Barack Obama needs to reinvent America's leverage in the world. So I think it's rooted in sort of Jessie Helms-ism, if you will.

O'DONNELL: Well, and to what extent has that perception of American dominance, that "Fortress America" image-to what extent has that helped us? And in what ways has it hurt us around the world? I mean, did it, for example, help us with the Soviet Union and then hurt us in other areas?

CLEMONS: Well, during the Cold War, we tried to fashion ourselves as a great alternative to what the Soviets were doing.

You know, we tried to-you know, demonstrate by our norms, by habeas corpus, by the way we dealt with those charged with crimes, we tried to be benign force in the world, creating a kind of beneficial globalization, if you will, as an alternative to some of the darker practices we saw in heavily controlled states where people weren't free. To some degree, after the Soviet Union has fallen, the United States has tried a lot less to maintain those same sort of core values of the American DNA. And I think that this is-this is quite damaging to us.

So when we were benign and doing good things and delivering good global public goods, that was great. But when you are sort of-you know, take on the side that, you know, like the Bush and Cheney administration did, where it sort of like the Borg in "Star Trek" where they either want to assimilate other cultures by force or destroy them, I think that really sends some tremors to the rest of the world. And I think the Nobel Prize said we're very relieved that age is over.

O'DONNELL: And then, to what extent do you think the Obama administration really is moving away from the notion of American exceptionalism? Is it just in the speeches or is there something real in policy terms?

CLEMONS: Look, the biggest thing Barack Obama is doing is he's trying to establish a vision of a better global system. This is sort of a moment in time, and I think a lot of our institutions and our global social contracts with the rest of the world needs to be reinvented, because America is in a very constrained position. We're limited economically, morally, with Abu Ghraib and Guantanamo still in near memory, and I think militarily. And to some degree, we've got to make ourselves matter again.

I think that the-that the, you know, fundamental issue with where the United States goes from here and this question of American dominance is to show that we can deliver good public goods for the rest of the world and that we can be a benign force for positive ends.

O'DONNELL: Steve Clemons, author of the foreign policy blog, "The Washington Note"-thank you very much for your time tonight.

CLEMONS: Good to be with you.

O'DONNELL: Coming up: President Obama's communications director warns we shouldn't confuse what FOX News does with real news. Why is the White House opening up a public fight with FOX?

Also ahead: A rare interview with Rush Limbaugh. Rush on anything good President Obama has done and whether Rush himself is helping or hurting the Republican Party.

(COMMERCIAL BREAK)

O'DONNELL: On Saturday night, President Barack Obama spoke to the last remaining group in the United States that is legally treated as second class citizens. And in our third story in the COUNTDOWN, the president promised gay right advocates that he would end the military's don't ask, don't tell policy. To the disappointment of many of his supporters, he offered no timeline for stopping that ridiculous practice.

Before 3,000 guests at the annual Washington dinner of the Human Rights Campaign, the nation's largest gay rights organization, the president said that he did not expect advocates to be patient on the vital issue of basic human rights. And the president took the opportunity to repeat campaign promises.

(BEGIN VIDEO CLIP)

OBAMA: We are moving ahead on don't ask, don't tell. We should not be punishing patriotic Americans who have stepped forward to serve this country. We should be celebrating their willingness to show such courage and selflessness on behalf of their fellow citizens, especially when we are fighting two wars.

So I'm working with the Pentagon, its leadership and the members of the House and Senate on ending this policy. Legislation has been introduced in the House to make this happen.

I will end don't ask, don't tell. That's my commitment to you.

(END VIDEO CLIP)

O'DONNELL: But the president's offered no timeline or deadline on that. Nevertheless, the Human Rights Campaign, in a statement, welcomed the full embrace and commitment of the president. The only other president to speak to the organization was Bill Clinton, the author of Don't Ask, Don't Tell.

But other gay rights advocates have noted President Obama's foot dragging on key issues, including the repeal of the so-called Defense of Marriage Act. The weekend's events were tied to Sunday's march on Washington. The National Equality March drew tens of thousands of gay rights supporters, including many who pointedly identified themselves as heterosexuals who were tired of witnessing intolerance towards their friends and family members.

The focus of the march was a push for national rather than piecemeal legislation. The co-chairman of the march saying, quote, "we are not settling. There's no such thing as a fraction of equality. We want equal protection under the law."

But the march also coincides with key votes that are coming up in Washington, D.C. and Maine on same-sex marriage.

Let's bring in activist and columnist Dan Savage, author of "The Commitment, Love, Sex, Marriage and My Family." Good evening, Dan. Thanks for joining us.

DAN SAVAGE, AUTHOR: Good evening. Thanks for having me.

O'DONNELL: Even recent public opinion polls are way ahead of where the politicians are on Don't Ask, Don't Tell. So this particular problem the president has of still holding on to this military, this-this crazy military procedure, is-how long can he do that in the face of a public that's willing to make this change?

SAVAGE: Well, Don't Ask, Don't Tell was a law passed by Congress and signed by Bill Clinton. The law has to be repealed by Congress and signed by Obama. In the interim, however, Obama could issue an order suspending enforcement of Don't Ask, Don't Tell, a stop loss order. He has the authority as the commander in chief. And 78 members of Congress sent him a letter asking him to do just that while they work on rescinding it.

We're discharging gay and lesbian service members at the rate of two a day, Arab linguists, people we need in the forces right now while we are fighting these two wars. So a lot of people in the gay and lesbian community, activist community, think it is terrific that Obama is willing to repeat and repeat and repeat his campaign promises. But we want to see some action.

And he made promises about the Defense of Marriage Act, about the HIV travel ban, about gay and lesbian people adopting. There are a lot of promises that he made to the gay and lesbian community. This is the one where he can show that he is sincere, by taking action now and suspending the enforcement of Don't Ask, Don't Tell now, just like Janet Napolitano, the head of the Department of Homeland Security, has suspended enforcement of the widows penalty.

It's this issue and really the HIV travel ban, which the administration is dragging its feet on rescinding, where they can show that it is not just talk, that they intend to follow through on these promises.

O'DONNELL: Dan, I noticed on health care reform this year that the Obama administration's strategy seems to be first check what the Clintons did, then do the opposite. Is this an instance where the Obama administration is looking at the problems Bill Clinton got into early in his administration, by getting caught up in this issue? And so they have decided we are not going to do that in year one. We are going to do that in year three, year two?

SAVAGE: We have no guarantees. There's no guarantee that in year two, three, four, they are going to have the majorities in Congress that they have right now. Next year, we are going to be told it's 2010 and we're facing midterms and we can't act on this right now. And then in 2011, we are really into the re-election campaign. And then when-when are they going to act on the promises.

You know, there's a lot of old Clinton hands in the White House. And they think it is still 1993. They need to look at the polling data. It is not 1993 on this issue anymore. Broad majorities, really super-majorities, of the American public support the repeal of Don't Ask, Don't Tell and would support the president in suspending its enforcement, including broad majorities the conservatives, independents, even weekly church-goers.

This is really low-hanging fruit, if I can use that expression in the context of this conversation. The president should reach for it and do it now, and prove that this promise and all his other promises to the gay community aren't just hot air, but really action he intends to take.

O'DONNELL: Now, the-Barack Obama is only the second president to address the Human Rights Campaign. Bill Clinton being the first. Surely it is better to have a president who is willing to come and talk and address the issue than a Republican president, for example, who would never even come close to it. At what point does this-the feeling of, you know, good cheer and support of President Obama's election and his administration turn into something negative, turn into anger in this community?

SAVAGE: It is already turning into anger. You saw that anger in the streets. It is not a perfect division. There were people at that dinner who cheered the president and cheered his words who also marched the next day, and marched passed the White House and carried signs of banners.

But there is really kind of a Stonewall 2.0. There really is a growing division in the gay community about tactics. We played nice. We've gotten along to get along. We've allowed the Democratic party to cash our checks and accept our votes, and then tell us to our faces, once they are in power, that they really can't act right now, that they need to worry about preserving eternally the majority, and never using their majority.

What's in it for us, this majority? Why should we support the Democratic party in the numbers that we do, if you are gay or lesbian, if there is never any follow-through from the Democratic party on the promises that are made to us every two and four years?

O'DONNELL: Author and activist, Dan Savage, thanks for joining us tonight.

SAVAGE: Thank you for having me.

O'DONNELL: Rush Limbaugh on the spot. Can he name anything good President Obama has done? Anything. Can he say anything good about the president at all?

The White House opens up a fight against Fox News. What's next after the White House says Fox doesn't really do news, and they are an arm of the Republican party? Up next.

(COMMERCIAL BREAK)

O'DONNELL: He claims he doesn't have that much power, but says his critics are powerless. He claims he's not the leader of the Republican party, but says the GOP is off message, his message. Our number two story on the COUNTDOWN, these conflicting bloviations and more courtesy of Rush Limbaugh.

Viewer discretion advised. Here now Jamie Gangel's interview with Rush Limbaugh.

(BEGIN VIDEOTAPE)

JAMIE GANGEL, NBC NEWS CORRESPONDENT: Are you the leader of the Republican party?

RUSH LIMBAUGH, RADIO TALK SHOW HOST: I am not the leader of the Republican party. I don't want to be the leader of the Republican party. These people think that they can discredit the Republican party by making me the head of it. All they are doing is elevating me.

It is silly for them to keep talking about how I'm the leader of anything. It is just creating more curiosity about me. Twenty one years, more popular than ever. Lord, thank you for my enemies.

GANGEL: These days, his favorite target is the president of the United States.

LIMBAUGH: America will once again succeed when Obama admits his policies and his arrogance have failed.

GANGEL: Beyond politics, were you moved in any way to see an African-American elected president?

LIMBAUGH: Yes, but I got over it very quickly. He's president of the United States. His skin color doesn't matter to me. It is his policies that matter. The idea that we've had a very historic thing was wonderful when it happened, absolutely.

But I will be honest with you, I predicted to you it was going to exacerbate racial problems and it has. Any criticism of President Obama is going to be said to be oriented in racism. If you don't like his health care bill, it is racist. I opposed when Clinton and Hillary were trying to do it. They aren't black. It is all about ideas.

I think these are dark days for the country. I think his economic policies are-I think he's shepherding the decline. He's not observing it.

GANGEL: Is there anything good he has done?

LIMBAUGH: Maybe. I can't think of it. But let's see.

GANGEL: Anything good that you would say about him?

LIMBAUGH: He has a great voice. Great, great voice. Reads a teleprompter like no one I have seen read a teleprompter. I am dazzled by that.

GANGEL: You caused a firestorm before he was even inaugurated by saying the four words-

LIMBAUGH: I hope he fails.

GANGEL: Right. And then just recently, again, when you were gloating that Chicago didn't get the Olympics.

LIMBAUGH: Man, oh man. The worst day of Obama's presidency, folks.

The ego has landed.

GANGEL: Your critics, here we go-your critics-

LIMBAUGH: Who are impotent and powerless. Yet they-it's like shooting a battleship with bee-bees. Go ahead. Tell me what they say.

GANGEL: Your critics say it is unpatriotic.

LIMBAUGH: It is quite the opposite.

GANGEL: Because?

LIMBAUGH: Trust me, Jamie, every one of these critics knew and knows exactly what I meant. They are taking this as yet another opportunity to say whoa, Limbaugh wants America to fail. That's such BS. I want this country to succeed. It won't happen if he succeeds with his agenda.

So perhaps a more politically correct way to say this, I want health care under Obama to fail. I don't want Obama owning automobile companies. I don't want him running Wall Street and setting compensation level.

GANGEL: Then why don't you say it that way? Is it for ratings?

LIMBAUGH: I just did! I do every day! I say it every day. I-I -

I-what I now say I hope he fails is to tweak the media. I know how to do it.

GANGEL: Someone recently called you Kryptonite for the Republican party. That if-if Rush Limbaugh defines the Republican party and politics, moderate Republicans say that they will never be able to attract moderates, the independents, the women to win national elections. They are saying you are ruining the Republican party. OK. Your turn.

LIMBAUGH: Oh, you are through? The Republican party nominated the ideal, the perfect Mr. Republican candidate in 2008, John McCain. He was the guy that was going to go get the moderates. He was going to get the independents. He was going to walk across the aisle. He could work with the Democrats.

The Republicans got shellacked. The Republican party is not a party of liberal independent moderates. The Republican party wins when it is unabashedly conservative. It is going to continue to lose-it is going to continue to lose until it realizes that.

(END VIDEOTAPE)

O'DONNELL: Coming up on COUNTDOWN, the White House takes on Fox News, taking issue with its news judgment. Any chance Fox News will now try to be fair and balanced in covering the Obama administration? Or will this just add fuel to Glenn Beck's bonfire of the insanities? That's next.

(COMMERCIAL BREAK)

O'DONNELL: If you want evidence that the Fox News Channel views itself as an arm of the Republican party, listen to the man behind the curtain: former Republican party media adviser Roger Ailes. In March of this year, Glenn Beck told the "L.A. Times" that before he was hired at Fox News, that network's president told him how he saw Fox's coverage of the Obama administration. Quote, "I view this as the Alamo. If I just had somebody who was willing to sit on the other side of the camera until the last shot is fired, we would be fine."

In our number one story, the Obama administration is officially fighting back by publicly calling out the Fox News Channel for what it is. And in an interview with "Time Magazine" last week, White House communications director Anita Dunn called Fox News, quote, "opinion journalism masquerading as news."

Dunn's criticism sent her not on the network's news gathering capacity. She has no problem with White House reporter Major Garrett, for example. The problem the White House sees is pervasive in the channel's entire programming lineup, in its opinion shows and news, and the problem begins with story selection.

From CNN's "Reliable Sources" yesterday.

(BEGIN VIDEO CLIP)

ANITA DUNN, WHITE HOUSE COMMUNICATIONS DIRECTOR: If we went back a year ago to the fall of 2008, to the campaign, that-you know, it was a time this country was in two wars. We had a financial collapse probably more significant than any financial collapse since the Great Depression. If you were a Fox News viewer in the fall election, what you would have seen would have been that the biggest story and biggest threat facing America were a guy named Bill Ayers and something called Acorn.

The reality of it is that Fox News often operates almost as the research arm or the communications arm of the Republican party.

(END VIDEO CLIP)

O'DONNELL: When asked if the president would appear on Fox News Channel again, Dunn said the following.

(BEGIN VIDEO CLIP)

DUNN: The answer is yes. Obviously, he will go on Fox because he engages with ideological opponents, and he has done that before and he will do it again. I can't give you a date, because, frankly, I can't give you dates for anybody else right now.

But what I will say is that when he goes on Fox, he understands he is not really going on it as a news network at this point. He is going on to debate the opposition.

(END VIDEO CLIP)

O'DONNELL: Joining us now is Eric Burns, president of Media Matters for America, a not-for-profit group that monitors conservative misinformation in the media. Welcome.

ERIC BURNS, PRESIDENT, MEDIA MATTERS: Thank you.

O'DONNELL: Why has the White House finally come out and stated the obvious, that the Fox News Channel is opinion journalism masquerading as news?

BURNS: Look, Anita Dunn has it exactly right with her description of Fox News. I said as much on this program just two weeks ago. But I take it a step further, Lawrence. I think that what we have all thought of as a conservative news organization has really morphed itself this year into a 24/7 political operation with a very specific goal. And that is to destroy this presidency, and destroy any sort of progressive policy agenda that the American people voted for in November.

That's their goal. They have set it. You saw it at the top of the clip. And I think that that's what we are dealing with. And so Anita Dunn is absolutely right to call them out for that.

O'DONNELL: Strategically for the White House, why would they choose now to raise attention to Fox's attacks on the White House?

BURNS: Well, you know, Fox's attacks on the White House-attacks on the White House have gotten more and more vicious. They have been going on for quite a while. But they have gone on a czar witch-hunt, which we have all seen. Most of it based on specious facts or no facts at all, especially in the case of the recent case of Kevin Jennings, Department of Education official, that Sean Hannity repeatedly claimed condoned statutory rape. Media Matter was able to completely disprove that.

And they've got-they've got a big board of 30 or so of these folks that they have actively targeted and said they are going to go after and try to get fired.

That doesn't sound like a news organization. That's a political operation. I certainly, Lawrence, have been involved in campaigns, as you have. And that certainly sounds a lot more like what you see out of a political campaign.

O'DONNELL: Is part of the White House method here to, in effect, quarantine the misinformation Fox News puts out? Because sometimes Fox News will generate one of these phony controversies, and then other outlets will pick it up, because they are covering the controversy? They don't-not covering the thing that started it, the falsehoods that Fox promoted to start it.

BURNS: I think quarantining Fox News is something that is very

important. We have worked to do that, the misinformation coming out of Fox

News. It's very important. It's something we have worked to do very hard

at Media Matters, and I think successfully in the past. As I said, it is -

Fox News has really morphed and changed into a political organization.

They're much more dangerous. They're much more powerful. So I'm not sure that's enough to get the job done. Folks are going to have to really go at Fox News.

And really Fox News isn't a story. You have to understand that we have, you know, Mike Huckabee and others, you know, Dick Morris, openly raising money for their political action committees on Fox News. We have Fox News hosts, like Glenn Beck, organizing political activists-partisan political activist protests, the 9/12 rallies, the Tea party protests. Fox did 22 segments promoting those Tea party protests, 37 paid teaser advertisements on that.

They are deeply, deeply involved in the political activities of the conservative movement. And I would say that they are essentially directing them, from all available evidence.

O'DONNELL: I think there is very little evidence that Fox is going to respond in any kind of positive way to this White House criticism. Don't you agree with that?

BURNS: I don't think so. I will tell you what, from the guy that-that created the Willie Horton ad, who is running Fox News, I don't know what anybody can really expect. We are going to have to get tough-

O'DONNELL: Yes, not much to expect there. Right. Eric Burns, president of Media Matters for America, thanks for your time tonight.

BURNS: Thank you, Lawrence.

O'DONNELL: That will have to do it for this Monday edition of COUNTDOWN. I'm Lawrence O'Donnell, in for Keith Olbermann.

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

END

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