My solution:

    lines = [line for line in open("bible.txt")]
    words = [word for line in lines for word in line.split()]
    counts = {word:0 for word in words}
    for word in words:
        counts[word] += 1

No imports needed. Linear time. A bit inefficient in the dictionary comprehension, but easy to read.

The "lines=" and "words=" can be compressed into one line, but I figure this is a bit easier to read for people who aren't familiar with nested list comprehensions.