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OLBERMANN: Let`s hope so. John Dean translating his book - "Broken Government" to television here on COUNTDOWN and this recurring series by the same name. As always, John, great thanks.

DEAN: Thank you.

OLBERMANN: The sliming of a 12-year-old was not enough. Now, a two- year-old appearing in an "S chip ad" leads the National Review to suggest she should never have been born. And the efforts of Senator McConnell and its involvement of swift voting of Graeme Frost -- the smoking email is now available. Talking about smoking, how not to respond to a critic of your Republican congressman - a critic carrying and using a video camera. You are watching COUNTDOWN on MSNBC.

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OLBERMANN: If you thought the right wing could not get lower than attacking 12-year-old Graeme Frost and his family, think again in a moment. The two-year-old girl now under fire for getting federal s chip coverage to pay for life-saving heart surgery. But first on our fore story tonight: The "S Chip" battle has let a spokesman for Senate Republican leader Mitch McConnell to attack without actually naming both myself and our next guest -- Paul Krugman. Our sins - last week, we each reported that a McConnell aide emailed false and personal information about the Frost to the media. His source, an unnamed blogger. Our source, Abcnews.com. Today, the aide`s spokesman Don Stewart wrote without irony, quote, "a liberal talk- show host and a liberal opinion columnist at The New York Times parroting the same anonymous sources, credited our office with playing a role in starting the investigation. That is not the case." As I point to reporters more than a week, the Frost family is legit. Mr.Stewart fails to mention why he pointed that out. He was retracting his email sent just hours before the very same email we reported on which said, quote, "Apparently there`s more to the story to the kid, Graeme Frost. Bloggers have done a little digging and turned up that the dad owns his own business. Which also included the lie about Graeme Frost private school tuition," quoting again, "Despite the news profiles reporting a family income of only 45 k for the Frosts. Could the Dems really have done that bad of a job vetting this family?" Mr. Stewart now claims he was voicing skepticism on the attacks on Graeme, which might make sense if Stewart or McConnell had publicly denounced those attacks or the new ones on two-year-old, Bethany Wilkerson -- subject of a new "S Chip" ad whose family makes less than 34,000 and owned even less. They rent their home and who`s lack a health insurance like 47 million other Americans lead the National Review today to declare that they shouldn`t have had any children. Let`s turn now to the other target of Mr. McConnell`s office today, "The New York Times" columnist, Paul Krugman, author of most recently of "The Conscious of the Liberal." Great thanks as always for your time tonight, sir.

PAUL KRUGMAN, THE NEW YORK TIMES: Great to be on.

OLBERMANN: Before we get to Graeme Frost, this latest attack that Bethany Wilkerson`s parents should not have conceived her because they lacked the requisite health insurance. Do you have a more eloquent response than speechlessness?

KRUGMAN: Well, you know, I`m not so speechless because this is actually standard operating procedure. You know, the fake scandals, we had lots of that in the 90s and the making mock of people in trouble. Look, Ronald Reagan with his welfare queen driving a Cadillac who never existed that goes back to the 70s. Ronald Reagan in 1964, making fun of John F. Kennedy`s claim that millions of Americans going to bed hungry every night saying - "Ah, they were probably all on a diet." This is not one of the things I say in my book, the (inaudible), there hasn`t been any change. They have been the same for the past 40-plus years.

OLBERMANN: Why though not attack the policy? It certainly would seem to have some roots in actual conservatism, a disagreement with how much money is being spent. Why is it a Pavlovian need to attack personally anyone who advocates the policy enforce?

KRUGMAN: Because in the past, it has worked. I mean, what`s unusual about this case is that you and I and the progressive blogger sphere were able to mount effective quick counter attack and because email is better than, you know, we were able to get a hold of that email from McConnell`s aide. So, it`s the - the difference is not in the heartlessness and viciousness of the tactics. The difference is this time they got caught red-handed.

OLBERMANN: Help explain the difference here if you would. Why does a group of people proclaiming themselves pro-life see no barrier to preserving the life of fetuses or of Terry Schiavo but when it`s actual people who are already up and running, kids like Bethany and Graeme Frost, they literally want them. In Graeme Frost case, somebody called for public hanging. In this little girl`s case, the argument was -- they didn`t have sufficient medical insurance so she shouldn`t have been conceived. Why - how - where is - is there any straight line in there?

KRUGMAN: I never know what to make of that. What I do know is the essence of what these people are about is they hate the idea that we our brother`s keepers. They hate the idea that society has some responsibility to take care of those less fortunate. And the thing that really drives them crazy about those stories, I mean, it`s exactly the fact that the stories are so good about children in need. That`s why they feel this, you say Pavlovian but it`s actually a strategy. They have to debunk you know the progressives have been doing a very good job of putting a human face on the policies they want.

OLBERMANN: Is there - am I also missing something else here regarding the strategy? And I asked this of the Frosts, Graeme Frost`s parents last night. Here is a kid who was in terrible shape, still has partial paralysis of a vocal cord, he`s got brain damage and in a couple of years, however he got there, he is able to make a speech on national radio and just to function under those circumstances. It seems to me if you are opposed to what a particular medical plan and aspect of health care, wouldn`t you go farther strategically by complimenting this kid, congratulating him, rejoicing in his recovery and then slamming what he is saying as opposed to slamming him?

KRUGMAN: Well, you know, they - it just drives them crazy. I mean, the Democrats have managed to put a human face on socialized medicine if you like you know. That`s a slander. But on the kinds of things they want to do. The Republicans are talking abstraction. We don`t want socialized medicine, private initiative and the Democrats are showing you a 12-year- old kid who was saved by this program and it drives them crazy.

OLBERMANN: Despite the efforts of these two families and the little girl and Graeme, the House on Thursday is not expected to get these additional 20 votes that would make this veto-proof. What is the impact on the 4 million kids that won`t be protected here?

KRUGMAN: Well, it`s, you know, I - we don`t know quite how this works out. I mean, the original Bush proposal would actually lead to a contraction of the programs. So there would be hundreds of thousands of kids who would otherwise have coverage who won`t even under the original funding. Now, you know, this additional thing, they`re going to have to wait. I can`t believe this is going to stand for very long because I think the American public is going to demand. We are talking about children here. But, it`s amazing. They really are. The Republicans are going to uphold Bush on this incredible veto.

OLBERMANN: And lastly, Mr. Stewart of Mr. McConnell`s office now taking credit for retracting a slanderous email to reporters containing story tips he never vented in the slightest just a couple hours after he sent that proverbial lie of Mark Twain out around the world. Does he seem to you to have any idea that he works for a United States Senator, that there is some sort of privilege and responsibility that comes with that job?

KRUGMAN: You know, what was amazing was the last sentence of that email. Is it possible that they did such a poor job of venting? And he of course committed that very same sin. But, you know, they`ve done this very same thing many times. I say it`s a -- if you just look - and this is not actually exceptional in its viciousness on their part. It`s normal in its viciousness. What`s exceptional is that they got caught.

OLBERMANN: Paul Krugman of "The New York Times," one of the people who caught them and author of the new book - "The Conscious of a Liberal." Always a pleasure to have a chance to have a conversation with you, sir.

KRUGMAN: Great to be on.

OLBERMANN: Programming note: Tomorrow night we will be speaking with Bethany Wilkerson`s parents. Dale and Dara Wilkerson, Bethany will be here to we are not expecting a full interview with her. The first television of the family on the eve of the faithful s-chip showdown of the House that`s tomorrow tonight on COUNTDOWN. Different kind of political reaction: The chief of staff of a Republican Congressman telling an annoying protester with a camera that he is un-American and not a citizen. You see, the camera was recording at the time. And, honey, I shrunk the pigs. The breeder who took that phrase - "This little piggy" way too literally. Next on COUNTDOWN.

Originally broadcast, 10.16.07