updated 10/29/2009 9:57:00 AM ET 2009-10-29T13:57:00

COUNTDOWN

October 28, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guest Host: Lawrence O'Donnell

Guests: Sen. Sherrod Brown, Rep. James Clyburn, Markos Moulitsas, Clarence Page, Shannyn Moore

(BEGIN VIDEOTAPE)

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

The public option battle: We know Senator Lieberman will at least allow health care to make it to the Senate floor for debate, there are still a handful of Democrats who aren't sure they will go even that far.

Meantime, Republican Senator Jon Kyl says he could support a public option with an opt-in.

The state of the health care fight tonight on Capitol Hill-we have both chambers covered. Our special guests: from the Senate, Sherrod Brown of Ohio; from the House, James Clyburn of South Carolina.

More shots fired in the GOP civil war.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER ®, MINORITY LEADER: There's no question that New York 23 is a bit of a mess.

(END VIDEO CLIP)

O'DONNELL: What's still more? National Republicans dividing their endorsements between the Republican and the conservative party candidates. Why is the GOP making what should have been a "slam-dunk" win into a political party's worst nightmare?

Speaking of nightmares.

(BEGIN VIDEO CLIP)

LEVI JOHNSTON, BRISTOL PALIN'S EX-FIANCE: There are some things that I have that are huge.

(END VIDEO CLIP)

O'DONNELL: Levi Johnston is not talking about his-feet. He's talking secrets-Sarah Palin's secrets.

(BEGIN VIDEO CLIP)

JOHNSTON: I have things that could-you know, that would get her in trouble and could hurt her, will hurt her.

(END VIDEO CLIP)

O'DONNELL: And the historical significance of today's Congressional Gold Medal winner-how a Republican senator helped pave Barack Obama's road to the White House.

All that and more-now on COUNTDOWN.

(END VIDEOTAPE)

O'DONNELL: Good evening from New York. I'm Lawrence O'Donnell.

Keith Olbermann has the night off.

With the House of Representatives expected to announce tomorrow that its bill will match the Senates in offering Americans the option of a government-run health care plan, the handful of moderate Democrats yet to say they will allow an up-or-down vote on the public option are under intense pressure tonight. Luckily for them, of course, they already have health insurance.

Our fifth story on the COUNTDOWN: The "filibuster five," dancing as fast as they can. The leader of the pack, Senator Joe Lieberman, the only senator to say so far that he will join Republicans to deny Americans an up-or-down vote on the public option, elaborating today on his defection, saying essentially that if the public option squeezes any savings out of the health care system, health care companies will just turn around and raise rates on other people.

And when asked about Senate Majority Leader Harry Reid's implication yesterday, that Lieberman will come around once the bill goes to the floor and senators have a chance to add amendments or strip provisions from the bill, Lieberman identified specifically what he wants: no public option.

(BEGIN VIDEO CLIP)

SEN. JOE LIEBERMAN (I), CONNECTICUT: Just take this government-created, government-run health insurance company that will cost the taxpayers, premium payers and the dead a lot of money-take it off the table. We can come back in three or four years if the reforms-the other reforms we adopt are not working. But I think they will. And so-that's my position and I'm sticking to it because I think it's best for our country and my constituents.

(END VIDEO CLIP)

O'DONNELL: Lieberman is certainly the most definitive senator when it comes to breaking ranks. Four others, four Democrats say they may join him.

Senator Mary Landrieu of Louisiana refusing to tell "Politico" whether she would even vote for a routine motion to allow debate on health care reform to begin. Senator Blanche Lincoln, up for re-election in Arkansas, is saying she will, quote, "have tremendous troubles," end quote, supporting moving forward. Arkansas's junior senator, Mark Pryor, also not committing to his party, telling "Politico," he'll be, quote, "talking to Lincoln through this process," end quote.

And Nebraska Senator Ben Nelson also noncommittal, under pressure, not just from the left to support his party, but from multiple sources on the right, taking out ads in his home state as well as those of other senators, calling health care reform a tax increase, calling on him to block it and honor his pledge not to raise taxes.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Thank Ben Nelson. Tell him to keep fighting for Nebraska taxpayers. Tell him it's time to keep the pledge.

UNIDENTIFIED MALE: Call your senators. Tell them to say no to a government-run health care bill.

UNIDENTIFIED MALE: Call your senators and ask them.

UNIDENTIFIED FEMALE: Haven't America's seniors sacrificed enough?

UNIDENTIFIED MALE: Don't pay for health care reform on the backs of our seniors.

(END VIDEO CLIP)

O'DONNELL: "Politico" reports that Senator Evan Bayh's support for an up-or-down vote on a public option is now a possibility. Thanks to Reid's decision to reduce proposed new fees on makers of medical equipment. Bayh, who joined two Democrats and a Republican senator in opposing those excise taxes in the letter last month, represents Indiana-home of several makers of orthopedic implants and the cardiac device manufacturing, Boston Scientific.

Bayh also echoed the threat of Senate Republican Leader Mitch McConnell yesterday that even voting to let the Senate debate a health care plan with a public option in it is equivalent to supporting the entire bill, itself. Bayh said he will look at those two things, quote, "as one and the same."

We asked Bayh's office today whether he has voted to allow debate on any other bill he has opposed, a common Senate practice. As of this evening, his office said it was still researching that question.

Joining us tonight is Ohio Senator Sherrod Brown, who co-wrote the public option language for the Senate bill.

Thanks for joining us tonight, Senator.

SEN. SHERROD BROWN (D), OHIO: Lawrence, good to be back. Thank you.

O'DONNELL: Senator Lieberman is saying that the public option will cost taxpayers. How much will it cost?

BROWN: Well, it won't cost taxpayers. The public option saves money because it does several things. It's simply an option. It gives people a choice.

They can choose Aetna or CIGNA, one of the insurance companies from Senator Lieberman's state, or they can choose the public option. And that will mean the insurance companies will no more gaming the system. It will make them more honest and will save money because it injects competition.

There is a-there are two-in southwest Ohio, Lawrence, in the Cincinnati area, two insurance companies have 85 percent of the market. Good old-fashioned competition, a public option there will cause them to compete better; will be better quality and lower prices. That's why the Congressional Budget Office scored the public option as $25 billion saved, not costing money for taxpayers.

O'DONNELL: Senator Lieberman seems to be saying that the public option could be so successful in attracting new customers that insurance companies will have to raise premiums on everyone else to make up for their big lost profits. How are you going to answer that one on the Senate floor?

BROWN: Well, the first way you answer it is-the last six years, insurance company profits have gone up 480 percent. They've quintupled-if that's the right word-in the last half a decade or so.

Second, you know, Senator Lieberman might be right. The CEO of Aetna is not going to make $24 million again next year. The top 10 big insurance companies, the largest in the country, their CEOs aren't going to average eight-figure, $10 million, $11 million, $12 million a year income.

So, there are going to be some costs rung out of it but that's what we want. We want the insurance companies, because of competition from the public option-again, it's an option-we want them to bring their prices down. We want them to get more efficient. We don't want them having these bureaucrats in these insurance companies figuring out how to deny people coverage.

We don't want those in the insurance industry. We want a much more leaner insurance industry where the profits are, frankly, more in line with most of the rest of the economy. The public option will help prices come down, and everybody's better off except the insurance industry. And, frankly, I represent 11 million Ohioans; most of them don't work for big insurance industry.

O'DONNELL: Now, Senator Lieberman has at least made it clear what he needs to support going forward on the bill-to support cloture in the Senate, and that is getting rid of the public option. Does this mean, without 60 votes in the Senate, that the Democrats are going to have to back down on the public option? Give Lieberman what he wants to go forward?

BROWN: No, I don't think we're going to have two or three members of the Senate, the Democratic side, tell the other 55 of us, not to mention the country, which is overwhelmingly for the public option; doctors, 70 percent for the public option-we're not going to have a few-you know, one small tail wagging the dog here.

I think what happens is this bill starts on the Senate floor, we get 60 votes to bring it to the floor. We begin the debate. The people against the public option get an even shot at taking it out of the bill. They will fail because we're going to get-Chairman Harkin thinks 55 votes for the public option, something around that number. They had their chance.

I think in the end-I don't think that my Senate colleagues want to be on the wrong side of history. I don't think on a procedural vote they're going to vote to kill the top priority of the president of the United States. I don't think they're going to vote to kill the most important domestic initiative of their political careers on a procedural vote.

I don't think they want to be on the wrong-on the wrong side of history, Lawrence.

O'DONNELL: Now, we saw that Senator Nelson is under pressure on the tax side of the bill. Do you think that Democrats in the Senate can support the Baucus "tax on union" health care plans even over the objections of labor unions that have supported Democratic candidates so strongly in the past?

BROWN: I don't want to see us taxing working families-even working family plans that are-that are pretty-you know, that are-that are generous. These are-understand, in union households, they negotiated these health care plans. They gave up wages so they could have a better pension. They gave up wages to they could have decent health care. And taxing these plans is not really the fair deal here.

But there are other ways to do it. We're not going to follow the Baucus bill down the line. We're going to have more, frankly, of the bill that we wrote in the health, education, labor, pension committee on the public option, on the Class Act, on some more of the components of this bill that I think serve the middle-class much better, frankly, than the finance committee bill does.

O'DONNELL: Just quickly, Senator, how would you raise the $200 billion that the Baucus bill raises through that tax on health care plans?

BROWN: I think the best way is some kind of a-of a-you know, 1 percent or 2 percent tax on people making over $30,000 or $400,000. Still, their tax rate will still be lower than it was before George Bush did his tax cuts for the rich. So, we can-we can raise significant amount of money with the 1 percent or 2 percent or 3 percent add on tax for people making over $400 million, $500 million a year.

Produce the revenue, have a much fairer plan that really does work for the middle class. Get people in my state of Ohio and Congressman Clyburn's state of South Carolina-get them in a much better situation. Those who don't have insurance, helping them; and those who already have insurance, an insurance policy that works better for them.

O'DONNELL: Senator Sherrod Brown of Ohio-thank you very much for joining us tonight.

BROWN: Thank you, Lawrence.

O'DONNELL: And thank you for not dodging the tax question, which is a very common Senate practice. Thanks, Senator.

Of course, as I mentioned at the top of the hour, the House is about to bring forward at least the broad contours of its bills tomorrow. House Speaker Nancy Pelosi expected to announce that the House version of the public option will largely mirror the Senate's. Even more suspense, though, surrounds the issue of taxes in the House bill.

Let's bring in someone who knows what the speaker will unveil tomorrow. Congressman James Clyburn, whose job as House whip is to count and corral and cajole Democratic votes.

Good evening, Congressman.

REP. JAMES CLYBURN (D), SOUTH CAROLINA: Good evening. How are you, Lawrence?

O'DONNELL: Good to have you on tonight.

CLYBURN: Thank you.

O'DONNELL: Nancy Pelosi has repeatedly and confidently, throughout the year, promised a robust public option in the House bill. How robust will it be?

CLYBURN: It's going to be a very strong public option. We are going to cover with our version of the public option a little better than 10 million more people than the Senate bill will cover. It's going to be much better for children than the Senate bill, as currently proposed.

It's going to be-it is going to be a good bill, strong public option, and the coverage, I think, is going to be great. We are going to start to cover, to close that donut hole for seniors, and we'll do it faster-five years faster than anything that's been proposed thus far. This is going to be a very good bill.

O'DONNELL: Congressman, as you know, it is rare to bring a bill to the floor of the House without knowing that you already have the 218. But it does sometimes happen. Is this going to be one of those instances where you put the bill out there, you're close to 218, and on the floor, you have to whip up the rest of those votes to get to 218?

CLYBURN: I think we'll be at 218 long before we get to the House with it. We plan to roll it out tomorrow. We approached it for 72 hours. And I think that when people look in on this bill during that 72-hour period, there will be more and more people gravitating toward.

As you know, already, more than 60 percent of the American people say they want a health care reform with a public option. When they see this public option, see how strong it is, see how many people it will be covering, I think that we will pick up support. And by the time we get to the floor with this bill, we'll have much better than 218.

O'DONNELL: Congressman, let's get to what could be the more difficult side of the bill, the tax side of the bill. The ways and means committee in the House did what Sherrod Brown just said he would like to do, which was impose a higher income tax rates at the very high earners on the income scale. The Baucus tax is a tax on health care plans-a lot of them union health care plans, eventually covering maybe 40 percent of the union plans out there, which Sherrod Brown is now opposed to. The House has been opposed to it.

What is the tax side of this bill going to look like when Nancy Pelosi unveils it tomorrow?

CLYBURN: Very close to what Sherrod Brown just mentioned. We will be looking at couples who make more than $1 million a year and individuals that make more than $500,000 a year. About 1.5 percent-I forgot exactly what the percentage is. There will be a small increase in their income taxes, which will then take them back a ways, but not far-as far back as they were before Bush gave them the tax cut. They'll still be benefiting from part of the Bush tax cut, but not as much.

O'DONNELL: Now, in President Obama's speech to the Congress, he specifically endorsed the Baucus tax on those health insurance plans. Do you think the president is willing to move in the House's direction toward taxing high income instead of taxing union health care plans?

CLYBURN: I certainly hope so, because I do not want to see anything jeopardize the president's promise not to raise taxes on the middle-class. And that could very well get us there. So, I would hope that he would see his way clear to come toward us on this because we are way over-in fact, twice the $250,000 that he kept mentioning during his campaign.

O'DONNELL: Congressman Clyburn, you know CBO is overwhelmed by the amount of work it has to do on the different bills in the House and Senate.

CLYBURN: Yes.

O'DONNELL: It's going to take them a while to get the Pelosi bill scored. When do you expect to actually get this bill with a CBO score on the House floor?

CLYBURN: Well, I expect to get it, as I said, we'll start the first 72 hours tomorrow. Then after that, we will probably do a manager's amendment and then put that out there for another 72 hours. And so, I suspect that this will get to the floor maybe Thursday of next week, maybe Friday, and who knows. We plan to stay here over into the weekend to get it done if we don't do it next Thursday and Friday.

O'DONNELL: Congressman James Clyburn, the House majority whip-thanks very much for your time tonight.

CLYBURN: Well, thank you so much for having me.

O'DONNELL: Coming up: If all those headlines on health care weren't enough, today, Republican Senator Jon Kyl breaks ranks with his party and talks about under what conditions he could support the public option.

And speaking of Republican problems, there is an even bigger one in the House. No one should have ever heard of these obscure candidates for the 23rd congressional district in New York. But now, the GOP has taken what should have been an easy win and given the Democrats a shot at an upset-details ahead on COUNTDOWN.(COMMERCIAL BREAK)O'DONNELL: Coming up: Making sense of where the health care reform debate stands tonight. My guest, Markos Moulitsas of the Daily Kos.Also, the GOP mess that is the race for New York's 23rd congressional district is even messier. The conservatives versus the Republicans continues.And later: Levi Johnston versus Sarah Palin. We'll talk about the bombshell he dropped on TV this morning. That's next.This is COUNTDOWN.(COMMERCIAL BREAK)O'DONNELL: Despite President Obama's pledge of openness and transparency in the overhaul of the nation's health care system, the real work right now-the horse trading and bargaining-the real legislating is happening behind closed doors as it always does. The five bills debated in open committee meetings are unrecognizable now-cannibalized, added to and chopped up by the party's leaders in the consolidated versions that the House and Senate are expected to begin debating within the next week or so.And so, in our fourth story tonight, the question: where do we stand and what are the prospects for moving forward?Democrats are hardly united about where to go now-as we just told you, Senator Lieberman, who, remember, is technically an independent, remains committed to denying Democrats a straight up-or-down vote on a public option version of health care reform. At least four other Democrats in the Senate refused to say whether they will join him.Joining us tonight is Markos Moulitsas, creator of DailyKos.com and author of "Taking on the System: Rules for Radical Change in a Digital Era."Thanks for joining us tonight, Markos.MARKOS MOULITSAS, DAILYKOS.COM: My pleasure. Thank you very much.O'DONNELL: Markos, how surprised are you at the lack of transparency? When we get down to crunch time, they have closed the doors. They are writing the bills in the backroom. This is not what the president promised when he was running for office last year. But he didn't exactly have control of how they do things in the House and Senate now, did he?MOULITSAS: No. You can't put this on Obama. And, really, if you're going to have tough negotiations over what's going to go in his bill, including fairly controversial components, you're going to have to really do this behind closed doors. It doesn't make sense to have cameras in your face when you're trying to do some horse-trading to get votes.So, I don't expect transparency at this point in the game. I do like the fact that the House Democrats are giving 72 hours to look at the bill. There's going to be time for amendments. And that's all going to be open and transparent. And that I think is what's important in this process, not exactly what's happening behind closed doors at this moment.O'DONNELL: Now, we have yet to see either bill. We just got a very strong indication from Congressman Clyburn, for example, that they will not have the Baucus tax in the Pelosi bill. What else do you expect to be or not be in the Pelosi bill tomorrow? And what would be a deal breaker for you?MOULITSAS: Well, the deal breaker would be the lack of a robust public option. And I think there's a strong group of committed progressives in the House that have basically made that point. And I think they're the heroes in this fight. If it wasn't for them, we would not have a public option on the agenda at this point.So, their strength and unity on this issue has been critical. So, I think, moving forward, that's key.Now, do they have the votes for the most robust public option? Congressman Clyburn just said that he does. I've heard reports that maybe they don't. I'd love to see a list of which Democrats are holding out because I'd be happy to help with the whip efforts to get those people aboard.O'DONNELL: Now, the strangest development of the week, if not the month, if not the year, we have Senator Jon Kyl, Republican who's in charge of coordinating his party's cohesiveness on message and on votes in the Senate said today that he supports the opt-in version of the public option, in which states could just proactively say, "Yes, we want to be part of this."What is Kyl up to here? This cannot be a simple volunteering of "here's the public option I would like." There's some kind of trap here. I haven't figured it out.MOULITSAS: Well, his office has already walking his back, saying that he was taken completely out of context when he made those comments. Of course, unfortunately for Kyl, there was a recording of that-of that interview and some other reporters have listened to it and they said that it was accurate. What "The Hill" reported was actually accurate.Now, what's he doing? I don't know. Maybe he was being momentarily honest.I think there's a lot of Republicans in the Senate and in the House that would be happy to vote for effective health care reform, because they know America needs it and people need it. But once the caucus discipline comes down and they get swatted in the face and you get these hard-right activists that are demanding nothing but the status quo, then they come back in line.And I think that's maybe what happened here with Kyl, that maybe he was honest for a second, and then reality hit him. He's a Republican. He's not allowed to have his own opinions. He's not allowed to try to make this a better country.O'DONNELL: Now, after the public option battle is over in the Senate, it will either be stripped out of the bill by amendment or it won't. The bill will continue to progress on the Senate floor. What is the next battle line for liberals?MOULITSAS: I mean, it's a complicated bill. There's a lot of moving parts. I think a key one, though-moving forward to the 2010 elections -is moving up the date of execution.I mean, they're talking about having this begin in 2013, which is pretty ridiculous from an electoral standpoint, not to mention from a moral and policy standpoint. I mean, there's a problem in the country. The health care system needs to be fixed. So, you want to fix it as soon as possible.Move it up to 2010. There's no need to wait until 2013. People are hurting. And we need to get re-elected in 2010. So, run on this and show people the benefits of the public option and of health care reform.O'DONNELL: Markos Moulitsas of the Daily Kos-thanks for joining us tonight.MOULITSAS: My pleasure. Anytime.O'DONNELL: An extraordinary interview this morning on the CBS "Early Show." Levi Johnston says he's got dirt on Sarah Palin, stuff that will hurt her. Palin's response: Are you really going to believe the guy who's taking it off for "Playgirl?"And the very other end of the political spectrum-a moving ceremony on Capitol Hill today. Coming up: the significance of honoring Ed Brooke with the Congressional Gold Medal.(COMMERCIAL BREAK)O'DONNELL: On November 6th, 1962, Ted Kennedy won the Senate seat his brother, Jack, had held until he won the presidency. It was a big night for the Kennedy family. But President Kennedy was more interested in another candidate on that same Massachusetts ballot. When he saw that Republican Edward Brooke had won the race for attorney general, the president said, that's the biggest news in the country. Ed Brooke had just become the first African-American to win a statewide election in Massachusetts. He went on to be the first African-American elected by popular vote to the United States Senate. Today, in an all too rare bipartisan moment in the Capitol, he was awarded the Congressional Gold Medal, to the full approval of the leadership of both parties. When I was a kid growing up in Boston, I can't tell you how many times I heard people say, I'm not a racist; I voted for Brooke. They were still racists, but Ed Brooke was the first person who nudged them toward enlightenment. Barack Obama has acknowledged that he was able to win the presidency only because he was standing on the shoulders of many braver people who, years before him, had taken the first steps, the more difficult steps, toward racial progress in this country. He stood with Ed Brooke, today, because he knows there would be no President Obama if there had been no Senator Brooke. Coming up, the top Republican in the House admits that the race for New York's 23rd congressional district is a mess. So why is the GOP taking an obscure seat in upstate New York and turning it into an embarrassing front-page headline? Speaking of embarrassing, Sarah Palin forced to, yet again, take on a 19-year-old, who happens to be the father of her first and only grandchild. Levi Johnston threatens the former governor, and she responds with the equivalent of, I know you are, but what am I? (COMMERCIAL BREAK)O'DONNELL: The battle for party purity has succeeded in producing party chaos for the GOP. In our third story on the COUNTDOWN, the division grows deeper in the Republican party over whether to support the Republican candidate or the Conservative Party candidate, in what should have been an obscure special election easy win for Republicans. Even the Republican leader in the House calls the whole thing a mess. You may recall that Dede Scozzafava is the Republican candidate for New York's 23rd district. She is fiscally conservative, and has the endorsement of the NRA. Former House Speaker Newt Gingrich has, of course, already been quite vocal in his support. Today, RNC Chairman Michael Steele endorsed the Republican candidate, which would not normally be news. But the third-party entry into the race, conservative party candidate Doug Hoffman, continues to get endorsements from national Republican figures, because the Republican candidate just isn't conservative enough for them. The list of Hoffman backers now includes Alaska blogger Sarah Palin, Minnesota Governor Tim Pawlenty, former senator, sometimes actor and failed presidential candidate Fred Thompson, former NRCC chair Tom Cole, Senator Jim DeMint, Congressman Dana Rohrabacher of California, and Congressman Todd Tiahrt of Kansas, along with former Pennsylvania Senator Rick Santorum, and former House Majority Leader Dick Armey. Where does that leave the Republican leader in the House, John Boehner? (BEGIN VIDEO CLIP)REP. JOHN BOEHNER ®, HOUSE MINORITY LEADER: Well, there is no question that New York 23 is a bit of a mess. Listen, I'm the Republican leader in the House. The seven Republican county chairmen up in upstate New York decided that Dede Scozzafava ought to be the candidate. So they named her as the candidate. (END VIDEO CLIP)O'DONNELL: It should be noted that the 23rd district, in its current form, has never-repeat, never-been held by a Democrat. Its most recent representative, Republican John McHugh, resigned to accept the post of Army Secretary from President Barack Obama. Thus setting off a chain reaction that might well result in the Republican and conservative party candidates splitting just enough votes to elect the possibly otherwise unelectable Democrat, Bill Owens. Let's bring in "Chicago Tribune" editorial board member and a Pulitzer Prize winning syndicated columnist, Clarence Page. Thanks for joining us tonight, Clarence. CLARENCE PAGE, "THE CHICAGO TRIBUNE": Thank you for having me, Lawrence. Great to see you. O'DONNELL: Clarence, I doubt you've been to the 23rd, stretching all the way up to the Canadian border. I've been up there, especially when I used to work with Senator Moynihan, who had to campaign up there. What's going on there now? John Boehner has correctly called a mess. It does not seem to be an accident. Did Barack Obama or, more likely, Rahm Emanuel know that this was going to happen when they offered a Republican Congressman the job in the administration? PAGE: Well, Lawrence, if I was Rahm Emanuel, I would certainly claim credit for it, because it sure looks like it. You know? As you well know, this was Rahm Emanuel's strategy that he used to great effect in the '06 races, going around, finding vulnerable districts where Democrats might have a shot. This is one where you normally wouldn't say that, because I think it's 1871, I think, Republicans have held this district, or, you know, under some similar configuration. But here you have a case where Dede Scozzafava was the sort of Republican that Democrats have to love, because she has really ignited the conservative base up there so that Doug Hoffman, now-from what I hear from the Democrats here in Washington watching that race, it's a dead heat now between Hoffman and the Democratic candidate, and Scozzafava is in third place behind this tie. And this was something more than I think Obama or Rahm Emanuel could have expected. O'DONNELL: Now, how much does this civil war in the Republican party over, you know, one Congressional seat like this reflect what we might be seeing next year in the midterms? PAGE: Well, first of all, you're seeing what I call the Tea Party effect. I guess, I'm not the first person to call it that. Certainly, you're seeing an aroused base behind the Tea Party movement and folks who have gotten excited behind Glenn Beck and various other people whipping up the bushes in anger over the moderates, who have not been delivering for them as far, as they're concerned, and anger over Barack Obama's win. They see Dede Scozzafava as someone who's a half-stepper, that she-while she has the NRA endorsement, she also endorses Card Check. She has SEIU support. She supported of the stimulus package. These are things that-also gay rights-these are things that the values voters on the right and the Club For Growth, very good example, things they don't like. Club For Growth, according to "Politico," ran a phony ad on Scozzafava's behalf, ostensibly, talking about how progressive she is, mainly designed to stir up the right in anger at her for being so progressive. O'DONNELL: Now, Clarence, if the Democrats do grab this seat, what will be the lesson for the Republican party? To drop these ideological purity tests? Or to push further in the direction of ideological purity and conservatism, and they'll make the argument that we lost it because we didn't go conservative enough? PAGE: Well, this is the debate going on inside of the Republican and conservative circles right now. I said in my blog, somewhat facetiously, that conservatives would do just fine if Republicans wouldn't get in the way. That's the attitude of a lot of people on the conservative wing. When you have Tim Pawlenty up in Minnesota, a pragmatic Republican who is thinking about running for president, and he is on the side of Hoffman against Newt Gingrich, who is on the side of Scozzafava and party loyalty, then you can see something of a preview of what's going to happen next year. O'DONNELL: Clarence Page, Pulitzer Prize winning columnist for the "Chicago Tribune," thanks for joining us tonight. PAGE: Thank you Lawrence. O'DONNELL: As Sarah Palin gets ready for a trip to Iowa, she gets a very direct warning from her ex-future-son-in-law: if you talk about Levi, Levi will talk about you. NASA celebrates a success today with the launch of a new rocket. Will the celebrations be short lived? And when Rachel joins you at the top of the hour, the backlash against Senator Joe Lieberman. Glen Greenwald joins her to talk about why Lieberman should be stripped of his leadership positions. (COMMERCIAL BREAK)O'DONNELL: The first space shuttle launched into orbit more than 28 years ago. And the last will probably be sometime next year. After that, NASA plans to resume using rockets to take men and women into space, as it did before the space shuttle program. In our number two story on the COUNTDOWN, this morning, the first prototype for that brand new rocket made a successful launch. The Ares I rocket won't be ready any time soon, and its funding is still in question. But if mankind is ever to return to the Moon or make it to mars, today's launch may mark an important beginning. NBC's Kristen Dahlgren has the rest. (BEGIN VIDEOTAPE)UNIDENTIFIED MALE: Navigation system is activated. KRISTEN DAHLGREN, NBC NEWS CORRESPONDENT (voice-over): For America's newest rocket, it was down to the wire. UNIDENTIFIED MALE: Good weather availability is extremely narrow. DAHLGREN: The launch window just half an hour from closing, when finally-UNIDENTIFIED MALE: Four, three, two, one, ignition. Liftoff. DAHLGREN: A break in the clouds and a spectacular blastoff. The unmanned test flight sent the huge Ares I-X test rocket barreling away from the Kennedy Space Center at almost mock five. Just as engineers planned, the pieces of the rocket separated and dropped into the ocean; 725 censors capturing every move of the short two-minute flight to see just how well Ares would do. CHARLIE PRECOURT, RETIRED ASTRONAUT: This vehicle is proving, as of today, to be exactly what we wanted it to do in terms of performance. DAHLGREN: Even as the launch pad shrunk away in the distance, potential problems are looming large for the program. Last week, a presidential panel called Ares the wrong rocket and the Moon the wrong destination for NASA. UNIDENTIFIED MALE: We don't have decisions at this point. DAHLGREN: Until the president makes that decision, Ares is the rocket NASA is working with. After its successful launch, spirits were flying high. UNIDENTIFIED MALE: It was really special. Thanks for everything you do. I just couldn't be more pleased. DAHLGREN: Even if Ares' future does remain up in the air. Kristen Dahlgren, NBC News, Kennedy Space Center. (END VIDEOTAPE)O'DONNELL: Coming up, Sarah Palin wants to get Levi Johnston a one-way ticket to Mars and beyond. Today, he throws down the gauntlet before Palin goes on Oprah. Levi says he knows things about the former governor that will-not could -- will hurt her and get her in trouble. Reaction from Alaska next on COUNTDOWN.(COMMERCIAL BREAK)O'DONNELL: First there was the ad selling nuts; then the "Playgirl" pledge to show off in a big way; and now this. Our number one story, Levi Johnston says he's holding back something huge. Palin's ex-future son-in-law embarking on yet another media blitz, this time-sharing his wisdom on CBS' "Early Show," and elaborating on his claim that Sarah Palin would repeatedly joke about her youngest child with Down Syndrome. (BEGIN VIDEO CLIP)LEVI JOHNSTON, EX-FUTURE-SON-IN-LAW OF SARAH PALIN: She'd be like, where's my retarded baby, all this. It just wasn't right. I mean, I didn't ever say anything to her. But at the same time, we were all just kind of like-UNIDENTIFIED FEMALE: Can you understand why that's really hard to believe, that a mother would say that? JOHNSTON: It is hard to believe, yes. I mean-But, yes, I can give you-I couldn't tell you-I have no proof of showing you it's true, but I know it is. I was just in shock for the first time I heard it. Then it kind of-she'd say it, you know, regularly. It was just like-you know, she was -I think she was joking, but it still doesn't make it right. (END VIDEO CLIP)O'DONNELL: Hard to believe indeed. This afternoon, the Palin camp responded to Levi's accusations, "Trig is our blessed little angel who knows it and is lovingly called that every day of his life. Even the thought that anyone would refer to Trig by any disparaging name is sickening and sad. Consider the source of the most recent attention getting lies. Those who sell their body for money reflect a desperate need for attention, and are likely to say and do anything for even more attention." But Levi didn't stop there. He says the Palins have back stabbed him and claims he knows things. (BEGIN VIDEO CLIP)UNIDENTIFIED FEMALE: Are you hurt by all of this? JOHNSTON: I was, yes. Now it's just gotten like, all right, well, now it's my turn. UNIDENTIFIED FEMALE: What do you mean by that? JOHNSTON: Well, like I-in "Vanity Fair," I'm going to go out-I told a little bit of stuff. I'm just not going to take it anymore. UNIDENTIFIED FEMALE: You really sound like somebody who is dead set on hurting these people the way they hurt you. JOHNSTON: No, I'm not really in it to hurt them, though. UNIDENTIFIED FEMALE: That's what it sounds like, like somebody bent on revenge and getting even; now it's my turn. JOHNSTON: Well, you know, that's part of it, I guess. But at the same time, you know, if she's going to go out there and say stuff to me-about me, I'm going to leak some things on her. I mean, that's just how it is. UNIDENTIFIED FEMALE: Are you going to continue saying things? Could you say more that you haven't said? JOHNSTON: There are some things that I have that are huge. And I haven't said them because I'm not going to hurt her that way. UNIDENTIFIED FEMALE: So you draw the line somewhere? JOHNSTON: Yes. I mean, I have things that can-you know, that would get her in trouble and could hurt her-will hurt her. But I'm not going to go that far. If I really wanted to hurt her, I could very easily. But there's-I'm not going to do it. I'm not going that far. UNIDENTIFIED FEMALE: Things that could get her in trouble as far as what? JOHNSTON: Just things she has done while she was governor. UNIDENTIFIED FEMALE: That are illegal? JOHNSTON: Yes. I'm just not even going to talk about them. UNIDENTIFIED FEMALE: But are they illegal or immoral? JOHNSTON: I'm not going to talk about them. UNIDENTIFIED FEMALE: Or unethical? So why do you draw the line? Why are some things OK and yet others not okay? JOHNSTON: You know, cause-a lot of things I said weren't that huge. I mean, those are just little things I put in "Vanity Fair." You know, all the big things I've got, I'm keeping it in-it's just something that probably will never come out. UNIDENTIFIED FEMALE: Has Bristol talked to you since you said all that stuff in "Vanity Fair?" JOHNSTON: Yes, we've talked. We don't talk like-it's like, hey, how is the kid-how is the baby doing? Can I come pick him up? That kind of thing. UNIDENTIFIED FEMALE: And she never brought up the "Vanity Fair?" JOHNSTON: No. UNIDENTIFIED FEMALE: That seems odd. It was such a public thing and you said such damning things about her family. JOHNSTON: I'm sure Sarah has got something planned. She said, don't say anything to him. I'm sure she has something coming for me. UNIDENTIFIED FEMALE: What do you think she has coming for you? JOHNSTON: I don't know. She might put a few things in the book. I'm not worried about her saying anything about me. I've never done anything bad. I don't have anything to hide. So, you know, she can go on and say what she wants. (END VIDEO CLIP)O'DONNELL: Joining me now from Anchorage is radio talk show host and contributor to the "Huffington Post," Shannyn Moore. Thanks for joining us tonight, Shannyn. SHANNYN MOORE, "THE HUFFINGTON POST": Good evening, Lawrence. O'DONNELL: How do we-or can we ever pick a side to believe in this kind of credibility contest? MOORE: Well, you know, it is difficult. It's the classic he said/she said. So we're looking at this. You know, I don't know that Levi is lying, but I know that Sarah Palin has definitely had her challenges with the truth. Where-on simple things, whether it be the Bridge to Nowhere, airplanes or the fact that she was found guilty of abuse of power. So, you know, it's really difficult to tell. This is sort of the Hatfield/McCoy Alaska style. O'DONNELL: Are there any ethics investigations in Alaska that are still open on Sarah Palin, where they might be interested in talking to Levi, after hearing what he had to say today? MOORE: I don't know that there are. I know that there's up to two years for people to file ethics complaints. But as far as investigations, I'm not sure. O'DONNELL: And when he says that he's not afraid of Sarah Palin, what does he expect? He clearly is expecting her to do something. I mean, say negative things about him in the book. But he definitely has the feeling -what can Sarah Palin do to Levi at this point? MOORE: Well, you know, I talked to Levi today, actually, on the phone, and asked him about this. You know, Sarah Palin, this isn't the first time one of her in-laws has been gauged as an outlaw to her. She did the same thing to her former brother-in-law. And so looking at that, you know, he was a trooper who can't even be protected enough in his own job. He now has a desk job. So I don't know what Sarah can do to Levi, and we'll see what information he has that he wants to put out, to see how much it's going to hurt her. O'DONNELL: And Sarah Palin is on her way to Iowa soon, to give a speech in Iowa. That's frequently regarded as a first step in a presidential race, get yourself booked for a speech in Iowa. With Levi's comments basically trailing her everywhere she goes, is this doing any damage, do you think, to her family values image in the national Republican party? MOORE: Well, you know, Levi is a 19-year-old kid who really got pulled out of the Alaska wilds and on to the public stage. I think Sarah Palin's failings come when she's reacting to him. Like today, she put out a press release basically saying, I'm ignoring you. Look how much I'm ignoring you, like a child saying-you know, with their hands over their eyes, you can't see me. I think she actually damages her own. And when it comes to Iowa, well, you know, Sarah Palin divided the party here in Alaska. She's now dividing it in, I think-what is it-district 24 in New York. And I think she could potentially do that for the country. O'DONNELL: Her memoir got a 1.25 million dollar advance, "Going Rogue," which compares terribly to Bill Clinton, who got 15 million. Hillary Clinton got eight million. George W. Bush got seven million. Laura Bush-Laura Bush got 1.6 million for her memoirs. Did publishers conclude that "Going Rogue" was going to be more boring than Laura Bush's memoirs? MOORE: Maybe they thought that they'd have 400 pages, and she'd quit halfway through, or maybe they figured it was a pop-up book for Republican men. I don't know. So-but it's already on sale, I think, for less than 10 dollars. O'DONNELL: Shannyn Moore, radio talk show host and contributor to the "Huffington Post." Thanks for joining us tonight from Alaska. MOORE: My pleasure. O'DONNELL: That will do it for this Wednesday edition of COUNTDOWN. I'm Lawrence O'Donnell, in for Keith Olbermann. Good night and good luck. 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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