Here's an article from MediaMatters.org that explains one way Barack's words words were cut, spliced, and twisted.

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Thu, Sep 11, 2008 5:30pm ETS
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Summary: In a New England Cable News video posted on the Boston Globe website, two comments by Sen. Barack Obama are spliced together, falsely suggesting that his comment that "[y]ou can put lipstick on a pig; it's still a pig" immediately followed a reference to Gov. Sarah Palin. In fact, the "lipstick" comment immediately followed Obama's comments about Sen. John McCain's policies and political tactics.

In a New England Cable News (NECN) video posted on the Boston Globe website, two comments by Sen. Barack Obama at a September 9 campaign event in Lebanon, Virginia, are spliced together, falsely suggesting that his comment that "[y]ou can put lipstick on a pig; it's still a pig" immediately followed a reference to Gov. Sarah Palin. The NECN video shows Obama remarking that the "[t]he only [state] I haven't been to [during his presidential campaign] now is Alaska, and I realize now -- maybe I should have been up there." The video then cuts directly to a clip of Obama saying, "But you know, you can't -- you know, you can put lipstick on a pig; it's still a pig." But the "lipstick" comment did not immediately follow a reference to Alaska or Palin; the "lipstick" comment immediately followed remarks Obama made about Sen. John McCain's policies and political tactics. The video posted on the Globe site omits entirely the comments criticizing McCain's policies and tactics, which consist of at least 65 words.

The NECN video, as posted on the Globe website, includes the following remarks by Obama at the September 9 campaign event in Lebanon, Virginia:

OBAMA: Now, Lebanon, I've been running for president for about 19 months now. That's a long time. That means that there are babies who've been born and are now walking and talking since I started running for president. And so, as I travel around the country, people always ask me, "What have you learned from, you know, all these travels and meeting so many different people?" And I tell them, "Well, first of all, I've learned that the United States, it's big. I mean, I've been to 49 states now. The only one I haven't been to is Alaska, and I realize now -- maybe I should have gone up there. [splice] But you know, you can't -- you know, you can put lipstick on a pig; it's still a pig.

A video clip posted on YouTube contains Obama's comments directly preceding his use of the term "lipstick on a pig." The NECN video includes only the bolded remarks: [posted here in all caps]

OBAMA: "Let's just list this for a second. John McCain says he's about change, too. Except -- and so I guess his whole angle is, "Watch out, George Bush, except for economic policy, health-care policy, tax policy, education policy, foreign policy, and Karl Rove-style politics. We're really gonna shake things up in Washington." That's not change. That's just calling some -- the same thing, something different. BUT YOU KNOW, YOU CAN'T -- YOU KNOW, YOU CAN PUT LIPSTICK ON A PIG; IT'S STILL A PIG."

PolitiFact.com wrote of Obama's lipstick on a pig comments ...

"It is simply impossible to view the complete remarks by Obama and conclude that he's making a veiled and unsavory reference to Palin. Her name never is used in the preceding sentence. In fact, it's hard to see how one could interpret Obama's lipstick-on-a-pig remark as referring directly to McCain, either. We think it's very clear that Obama was saying McCain's effort to call himself the "candidate of change" is like putting lipstick on a pig, trying to dress up a bad idea to look better. Agree or disagree with Obama's point, but his remark wasn't the smear that McCain's people have tried to make it.

If anyone's doing any smearing, it's the McCain campaign and its outrageous attempt to distort the facts. Did Obama call Palin a pig? No, and saying so is Pants on Fire wrong.

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