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Lou Dobbs Moneyline
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Aired October 24, 2001 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JAN HOPKINS, CNN ANCHOR: Good evening. I'm Jan Hopkins, in for Lou Dobbs.
Neither rain, nor sleet, nor snow, nor anthrax -- the postmaster general vows that postal deliveries will continue even as anthrax anxiety intensifies.
Bayer agrees to cut Cipro prices. What will that mean for Barr Labs, which has the rights to produce a generic version of the drug? We'll ask Barr Labs Chairman Bruce Downey.
We'll have a report on how American companies are changing some aspects of doing business overseas.
And your e-mails: An overwhelming response to last night's report on relief money donated to charities. Tonight, a follow-up on that report. And we'll share some of your comments.
On Wall Street, the markets ending higher, but concerns about corporate earnings kept those gains in check.
Now for the latest on the war against terrorism: American bombs explode around Kandahar and the Afghan capital of Kabul as well as Taliban frontline military positions. The Pentagon says targets in recent days have included Taliban barracks, warehouses and armored vehicle positions.
The Pentagon also says the U.S. has information the Taliban may try to poison humanitarian food supplies being brought into Afghanistan and then blame it on the United States.
For more on the bombing in Kandahar and other developments in America's war against terrorism, Sheila MacVicar joins us now from Islamabad -- Sheila.
SHEILA MACVICAR, CNN CORRESPONDENT: Jan, we know a little bit tonight of what is happening in one very small corner of Afghanistan. CNN staff in Kandahar report that a number of hours ago they heard what they described to us as sustained bombing, bombing that went on for 25 or 30 minutes in the northeast section of city. That's a section of the city where they said that there are large fuel dumps located. And as these bombs came down, they described seeing flares of flames going up in the sky. Now they are extremely restricted in their movements, Jan. They're not able to move easily around. They are taken only to see those target sites that Taliban authorities choose to take them to. And so they have not been able to go out and take a look at what's happened there.
Earlier today, they told us they saw other raids taking place in the countryside. Again, not able to go and take a look at what those targets are.
Now, at a news conference here in Islamabad, Pakistan, the United Nations staff, again, raised a question that has been disturbing them for a couple of days. And that is an American air raid that apparently seems to have resulted in cluster bombs, small bomblets dropped on a village outside the Afghan city of Herat. Now this particular village lies between the city of Herat and a military compound that was also the target of an American raid.
The cluster bombs, though, have been left lying in the streets unexploded. And U.N. aid workers working for the Mine Action Clearance Group -- they have been working in Afghanistan for years -- have gone out to take a look at these munitions and try to see what they can do.
Now the U.N. is saying the munitions on the ground pose a danger to civilians. They believe there may have been some casualties. They do not know how many casualties. Information is extremely difficult to come by. And they're urgently asking that the Pentagon provide the U.N. with the information that the mine clearance teams on the ground can use to diffuse these bomblets before they cause any graver risk to civilian life.
Now here in Pakistan today, we have seen the impact of one of yesterday's bombing raids that took place over Kabul. Now the U.S. apparently struck a building in Kabul which was housing a number of members of a group called Harakat ul-Mujahedeen. Now the Harakat ul- Mujahedeen is a primarily Pakistani group. And it is on the State Department's list of terrorist organizations. Apparently, 22 members of that group were killed.
Today we saw large demonstrations in Pakistan of people angry about that raid and demanding to see the bodies of those killed -- Jan.
HOPKINS: Sheila MacVicar with the latest from Islamabad. Thank you very much.
And now the latest developments in the anthrax investigation: A second case of cutaneous anthrax has been confirmed at the "New York Post."
The latest victim is a mail room worker. Sources say the anthrax apparently came from the same letter that infected an editorial assistant at the "New York Post."
Earlier today, the postmaster general said there was no need to shut down the postal service despite the increasing number of anthrax cases.
Meanwhile, Health and Human Services Secretary Tommy Thompson says everything is being done to improve safety for postal workers.
(BEGIN VIDEO CLIP)
TOMMY THOMPSON, HEALTH AND HUMAN SERVICES SECRETARY: We're also going to lend the U.S. Postal Service our scientific expertise in developing ways to protect postal workers as they sort and deliver the mail as well as what technology might help in making mail rooms more safe.
(END VIDEO CLIP)
HOPKINS: Thompson also announced today that the Bush administration reached a deal with Bayer to cut the anthrax antibiotic Cipro to 95 cents a pill. That's about half the original discounted price.
There are now 13 known anthrax infection cases. Seven of those are cutaneous cases. The other six are from inhalation. Three of the inhalation cases resulted in death. There are 32 known exposures to the bacteria, 28 of those are from the U.S. Senate Hart Building.
Susan Candiotti joins us now with more on the anthrax investigation.
Susan, are they making progress?
We'll get Susan in a moment.
As we told you earlier, Bayer today agreed to cut the price of Cipro to 95 cents a pill. But can the company supply enough of the anthrax medicine?
Bruce Downey is the chairman and CEO of Barr Laboratories. That company has the rights to produce a generic version of Cipro.
So, Bruce, do you think that Bayer can produce what the government needs?
BRUCE DOWNEY, CHAIRMAN & CEO, BARR LABORATORIES: Well I'm not sure I'm the person who could answer that question. What I can say is that if they can't produce enough product on time, we could help very significantly produce it on a faster schedule.
HOPKINS: But it's interesting, Bayer has really reduced the price, 95 cents a pill. Is that less than you would be charging for the generic version?
DOWNEY: Well we could produce and sell a generic version for less than that price. And we haven't exactly priced it all out.
But we have the capability to produce around 40 million tablets a month beginning in about 6 weeks. So if the need is there, we're willing to pitch in, help supply that product either to buy or to supply to the government or directly to the government.
HOPKINS: Now, have you talked with Tommy Thompson and made yourselves available, basically.
DOWNEY: I have not spoken with him, but we have written the secretary, described our capabilities and our willingness to help in this crisis. And they have acknowledged that letter and so they know of our ability to stand by and help out.
HOPKINS: Now there are, I think, five other companies that are prepared to do the generic form of Cipro, including an Indian company that would produce it at much less cost.
This means a lot of competition for you, right, in the future?
DOWNEY: Well, in the future, when the generic competition enters the marketplace, there will be a number of competitors including all five of us tentatively approved right now. But we think we have a very strong competitive position and we'll do quite well when the product is launched.
HOPKINS: But it's interesting, your stock price has been falling in the last couple of days as investors are concerned about all of this competition for Cipro.
And also because you have an agreement with Bayer, a patent agreement, that actually pays you something every year.
Is it possible that that money -- it's something like $30 million a year -- that that would go away?
DOWNEY: No, this would be independent of any effort on our part to make the product now. That's the result of a prior settlement of a lawsuit and gave us the right to enter the market six months in advance of other generic companies in 2003. Producing that would be unrelated to that agreement. It wouldn't jeopardize it at all.
HOPKINS: Now how do generic companies work? You check and see when the patents are expiring and then you kind of go out and figure out what the formula is for these drugs?
DOWNEY: Yes.
You take the -- basically, the format is that brand products prove themselves safe and effective -- we develop products that are the same as the brand products. And we look out in advance if a patent is free, do our clinical work, demonstrate the clinical success of our product, file it with the FDA in time to be approved in advance of patent expiration.
And that's what we have in Cipro, we have a tentative approval and that tentative approval will become final when their patent expires.
HOPKINS: So, basically, what you're saying is we're ready, or almost ready, to produce Cipro if it's needed and we can produce it at a little less than Bayer is offering it.
DOWNEY: That's correct.
And we can help supply the need. If a buyer can't get enough tablets fast enough, we could pitch in and get several -- tens of millions of tablets over the next two or three months. So, I think Bayer did the right thing in cutting the price to the government. I'm glad they did. As a citizen, I'm glad we have this protection. And as someone in the business, I'd be happy to help if we could.
HOPKINS: Thanks very much, Bruce Downey, the chairman and CEO of Barr Laboratories. Thanks.
DOWNEY: Thank you, Jan.
HOPKINS: Susan Candiotti joins us now with more on what's going on, on that anthrax investigation.
Susan, what progress is being made?
SUSAN CANDIOTTI, CNN CORRESPONDENT: Well not very much, Jan, but we can tell you this: A second case of skin anthrax now confirmed at the "New York Post", a mail room employee who is being treated with anthrax.
You'll recall another employee who works for the editorial board contracted skin anthrax. Both "New York Post" workers are taking antibiotics.
In Trenton, New Jersey, where three anthrax letters were postmarked, investigators say they're shifting their focus from an infected mail carrier's route to a facility in Hamilton Township. The theory is the mail carrier came in to contact with anthrax there, perhaps not from one of her customers where she picked up mail.
Postmaster General John Potter says there is no need to shut down the Postal Service. Postal inspectors predict new machines that, in essence, would irradiate mail are expected to be in place within the next five weeks.
Today, FBI Director Robert Mueller was asked by a mayor's conference whether that general terrorist threat issued 12 days ago was referring to the anthrax cases.
(BEGIN VIDEO CLIP)
ROBERT MUELLER, FBI DIRECTOR: It is conceivable, although there is no evidence necessarily to support it, that the advent of the anthrax attacks is what this source was talking about. But there -- I must emphasize, there is no evidence, as I said in my talk, there is no evidence to support the presumption at this point that the anthrax attacks were the result of organized terrorism.
(END VIDEO CLIP)
CANDIOTTI: And this day, President Bush says the investigation so far cannot connect the September 11 attacks to the anthrax attacks.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm oftentimes asked by our friends in the press, do I know if there's a direct connection between what took place on September the 11th and what's happening today, I have no direct evidence. But there are some links.
Both series of actions are motivated by evil and hate. Both series of actions are meant to disrupt Americans' way of life. Both series of action are an attack on our homeland. And both series of actions will not stand.
(END VIDEO CLIP)
CANDIOTTI: Finally, some good news to end this update. 73-year- old Ernesto Blanco, a mail room employee of American Media in Boca Raton, Florida, who was seriously ill with inhalation anthrax, went home Tuesday night. He's back home, and his family says he's doing fine -- Jan.
HOPKINS: That is good news. Thanks. Susan Candiotti
And still to come on MONEYLINE, a follow-up to last night's report on charities. More than a billion dollars donated to help families after the attacks. Many aren't receiving that aid. We'll tell you why.
We'll also report on how American companies are conducting business overseas since September 11th.
And Congress is trying to revive a sluggish economy. Some are pushing for war bonds. But our next guest says we should "Ban the Bonds."
ANNOUNCER: Next Jan speaks with "New York Times" columnist Paul Krugman.
(COMMERCIAL BREAK)
HOPKINS: Bush administration officials are calling on lawmakers to act on their proposal to solve a looming crisis in the insurance industry. Treasury Secretary Paul O'Neill warning that companies could face sky-high premiums for terrorism insurance or lose their coverage altogether. The Bush administration proposing the government share a portion of the losses over the next three years. The proposal drawing mixed reactions in Congress so far.
Late today, the House passed a $100 billion economic stimulus package. The margin was narrow: 216 to 214. The package contains a number of tax breaks for big business that are certain to face a tough time in the Senate.
Tim O'Brien has the report from Washington.
(BEGIN VIDEOTAPE) UNIDENTIFIED MALE: The majority having voted in the affirmative, the bill is passed.
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): The Republican bill the House approved today is unabashedly pro-business.
REP. SAM JOHNSON (R), TEXAS: If we're going to help our economy, we must help our businesses, from Wall Street to Main Street.
O'BRIEN: The bill includes a modest cut in long-term capital gains taxes, from 20 to 18 percent; relaxed depreciation rules; but most controversial, retroactive elimination of the alternative minimum tax for business. That alone cost some $25 billion. A handful of the country's largest corporations would get more than a billion dollars each. Democrats weren't buying it.
REP. DENNIS KUCINICH (D), OHIO: We need to take care of unemployed workers. We recognize that. They say, "Let's take care of the biggest corporations in America!" What hogwash!
Not to the bill's sponsor, who sees big business as a machine for creating jobs.
REP. BILL THOMAS (R-CA), CHAIRMAN, WAYS & MEANS COMMITTEE: What else would these job creating machines do with the money besides reinvest it so that they can continue to be in business? They actually might take some of that money to keep some of their employees on the payroll.
O'BRIEN: Bipartisanship evaporated.
REP. NANCY PELOSI (D), CALIFORNIA: ... 86 percent of this benefit goes to the wealthiest Americans.
UNIDENTIFIED MALE: The time has expired.
PELOSI: Vote no on this shameless Republican package.
UNIDENTIFIED MALE: The gentleman from California.
REP. PETE STARK (D), CALIFORNIA: Would you rather help the unemployed while you sit with your fat-free health benefits that you're getting? Or would you rather give the 25 billion to your friends in the big corporations?
O'BRIEN: And as the debate became more rancorous, one Republican lawmaker felt his patriotism had been impugned.
REP. J.D. HAYWORTH (R), ARIZONA: There is no place for that dialogue on this floor. Shame on you for those comments. Shame on you for those actions. Join us together to at least disagree in civil fashion.
O'BRIEN: A spokesman for Representative Hayworth said later the comments were directed more at the tone of the debate than at any individual speaker. (END VIDEOTAPE)
President Bush today urged the Senate to act swiftly on the measure, but Senate Democrats who control have developed their own plan with less emphasis on taxes, and greater emphasis on extending unemployment benefits, health benefits and job training.
Though there is movement in both houses of Congress on an economic stimulus package, but right now, Jan, it seems to be in opposite directions.
HOPKINS: So lots of conferences ahead.
O'BRIEN: Indeed. The Senate is hoping to get this settled by the end of next week. But given the differences between the House and the Senate, it could take a good deal longer than that.
HOPKINS: Thanks. Tim O'Brien in Washington.
It seems one of the best-intentioned of proposals may be to sell war bonds to help Americans fight the war against terrorism. After all, the government has used bonds to cover its costs since the Revolutionary War. But Princeton economist Paul Krugman is critical of the war-bond proposal passed in the House yesterday.
Writing in today's "New York Times," he calls for a ban on the bonds.
Paul Krugman joins us now.
So what's the problem?
PAUL KRUGMAN, "NEW YORK TIMES" COLUMNIST: War bonds -- you know, the government is going to issue bonds. It does that all the time. War bonds are what you do when you want people to pitch in and make a common sacrifice, when the government is short of money. And as we just saw in that previous segment, at least the House of Representatives, which also passed a bond measure, thinks the government has plenty of money.
Hey, you can hand out 25 billion with no strings attached to big corporations. So this -- this just feels bad. This is just going to feed cynicism if we start having war bonds at the same time that we're, you know, the government is not at all short of money.
HOPKINS: But presumably, the government is going to have to sell bonds in order to pay for the stimulus. Why wouldn't you call it war bonds?
KRUGMAN: Well, first of all, you can buy those bonds. Those bonds are fine.
War bonds can be one of two things. They can either be ordinary bonds that just have a little logo on them that says "War Bonds," in which case it's just like that "United We Stand" postage stamp that we have now. You know, fine, but it doesn't make any difference. Or there are bonds that actually offer a lower rate of return, in which case you're saying that, you know, people who are foolish enough to buy these low-return bonds, which is going to be ordinary people and not big investors, are out there subsidizing -- well, what? They're not subsidizing the war effort. The federal government has plenty of money for that. They're subsidizing things like these big tax breaks for corporations.
It's just not something you want to do. It's just -- it's a symbol that can so easily turn into a sick joke as you look at what's happened over the last, you know, a year from now. It's really just not something that we ought to do right now.
HOPKINS: You know, it's interesting, though: We have very different bills passed by the House and the Senate. So what's likely to really come out of this stimulus? All of the tax cuts or not very many of them or what?
KRUGMAN: Frankly, I just don't know. I mean, the House bill was so extreme. I mean, there's almost kind of admirable purity in it.
You know, we've been saying for years why doesn't Congress just drop the pretense and just give, you know, large checks to the corporations with the best lobbyists. And that's what they just did. They -- you know, these are no strings attached. $1.4 billion to IBM with no requirement that they stop layoffs, no requirement that they invest.
That is so different from what the Senate Democrats think a stimulus package ought to look like that I don't know how you reconcile this.
HOPKINS: But it may be you end up some place in the middle.
KRUGMAN: Well, you know, it's a long ways apart. You know, the -- as I understand the Senate Democratic proposal, has got about 33 billion in help for the unemployed in the form of unemployment benefits and health benefits. This House bill, if I understand correctly, has got about 3 billion. So, you know, we're talking about a ratio of 10 to 1 on that side.
And of course, we have this enormous corporate tax -- corporate rebate really on the other side. That's not something you easily negotiate away. It's not something you say, well, let's split the difference. These are philosophically completely in different universes.
HOPKINS: Lots of argument ahead. Thanks. Paul Krugman of Princeton University.
Coming up on MONEYLINE, the attacks against the United States left many families in need of financial aid. But some aren't getting it. We'll tell you where the money is going.
More layoffs today. We'll tell you which companies are cutting back and what it means for the economy. And during this time of national crisis, where are the nation's CEOs? We'll tell you what's been occupying their time.
(COMMERCIAL BREAK)
HOPKINS: Multinational corporations recently have increased security measures recently. Those measures now include advising employees to keep a low-profile overseas.
While many Americans stateside are wearing red, white and blue, Americans abroad are urged to "blend in."
Kitty Pilgrim has the story.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): McDonald's in Indonesia, the world most populous Muslim country. Employees take their breaks carrying prayer rugs. Meat is prepared according to religious guidelines. The McDonald's double arch is replaced by a culturally inspired single one.
All that does not protect it from bitter anti-American protests like this one.
Once, during a mob attack on the store, this picture of the franchise owner and his wife was displayed to prevent vandalism.
BAMBANG RACHMADI, PRESIDENT, MCDONALD'S INDONESIA: Our store manager taking the picture of me and my wife in the store, and show it to them that this is owned by an Indonesian Muslim. And they say, "Oh, we thought this was owned by Americans." And so they leave.
PILGRIM: Wackenhut, one of the top security companies, provides guards for firms like Bank of America in London.
ALAN BERNSTEIN, CHIEF OF OPERATIONS, WACKENHUT: What we're advising all corporations at this time is to be cautious in movement and in allowing their people to move around the country and try to keep a very low profile.
PILGRIM: Among the tips: limit shopping in areas that are commonly frequented by Americans, boost home security, use a bodyguard if necessary, use videoconferencing or the Internet if possible.
Many security firms say U.S. companies are lowering their own profiles.
ROBERT STRANG, MANAGING DIRECTOR, DECISION STRATEGIES: They're very cautious about how they interact in the community, how they display their company logos, you know, and how they basically flaunt the fact that their Americans.
PILGRIM: And many say it will never be business as usual again, at least not overseas. MICHAEL CHERKASKY, CEO, KROLL: American industry has now clearly -- has been clearly identified as a part of the American establishment that it is, in fact, going to be targeted. And they can't act as if they're in the Midwest in the United States.
(END VIDEOTAPE)
PILGRIM: Corporate security experts say this situation has all the earmarks of affecting permanent change. Just like previous terrorist attacks in the 1980s resulted in a lot of changes to physical safety, such as concrete barriers around buildings, this situation will effect permanent change in thinking about corporate security -- Jan.
HOPKINS: And a lot of extra spending on their security.
PILGRIM: It is a big ticket to put in all this personnel.
HOPKINS: Thanks very much, Kitty Pilgrim.
In the face of a national crisis and with the economy slipping into a recession, many of corporate America's leaders have been uncharacteristically silent. Now, some chief executives are creeping back into the spotlight.
Casey Wian has the story from Los Angeles.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): A day after taping an episode of the sitcom "Frasier," Microsoft founder Bill Gates opened Nasdaq trading this morning. Jeff Bezos discussed Amazon's fortunes yesterday on CNNfn and other business networks.
(on camera): Perhaps these are signs the nation's CEOs are returning to the public eye, because since September 11th many high- profile business leaders have been strangely silent about their companies and global events.
(voice-over): Jay Conger has written nine books on corporate leadership.
JAY CONGER, MARSHALL SCHOOL OF BUSINESS, USC: A lot of CEOs today are basically on survival mode, or many of their businesses now have seen earnings drop dramatically and in some cases revenues drop dramatically. And in some industries, like airlines, hovering, some of them, on the edge of bankruptcy. And like all good CEOs, you've got to focus on the business first to make sure it gets through very difficult times.
WIAN: Conger says CEOs are missing an opportunity to lead and contribute ideas during a national crisis. One reason, corporate public relations departments are cautious. PR executive Michael Sitrick defends the low-profile strategy.
MICHAEL SITRICK, CHAIRMAN, SITRICK & CO.: While they may be brilliant in terms of running their own businesses, the question is how much they have to add in this area. And I think it's the smart CEO who says, "This isn't my area of expertise, and so I'm going to keep my mouth shut."
WIAN: Some big names such as Disney's Michael Eisner and Gateway's Ted Waitt dispute the idea they've been laying low. Oregon Senator Ron Wyden is recruiting CEOs for an emergency technology group, patterned after the National Guard.
SEN. RON WYDEN (D), OREGON: Individuals like Andy Grove of Intel think that this is exactly the kind of thing they ought to be doing. I talked with Steve Jobs of Apple and a number of other executives. I got a consistently good response where they said, we want to make a difference.
WIAN: Those who've clearly bucked the trend include Oracle's Larry Ellison, who's promoting the idea of a national ID card, and eBay's Meg Whitman, who's trying to raise $100 million for charity through online auctions.
Casey Wian, CNN Financial News, Los Angeles.
(END VIDEOTAPE)
HOPKINS: Last night, we aired a report on charities and where the money you sent in to help victims of the September 11th attacks is really going. We received an overwhelming response from you, including this e-mail from Craig Thacker, who writes: "Since your report on the September 11th Fund, I now feel like a damn idiot for giving that fund any money and support."
Coming up next, we'll share more of your e-mails on the subject, and Peter Viles will have a follow-up report. And more corporate layoffs announced today. We'll tell you what's behind the growing trend, when MONEYLINE continues.
(COMMERCIAL BREAK)
HOPKINS: Now for the latest on the anthrax investigation. A second employee at "The New York Post" has been confirmed to have cutaneous anthrax. This latest victim is a mail room worker. The government cuts a deal with Bayer to buy the anthrax antibiotic Cipro at almost half the original discounted price. Officials say that means a larger supply will be available if needed.
Also today, Johnson and Johnson announced it's seeking approval for Levaquin for treatment of anthrax. J&J says if it gets approval, it will donate 100 million tablets to the government.
The postmaster general says there's no need to shut down the nation's postal service, but says he can't guarantee mail safety and suggests Americans wash their hands after handling mail.
Meanwhile, six employees of a Brentwood mail processing center in Washington, D.C. are being treated for suspected anthrax. Two other Brentwood workers are in serious condition, battling inhalation anthrax.
In corporate news tonight, the CEO of United Airlines under fire. The board of parent company UAL huddling, amid the worst crisis in the company's history. CEO James Godwin causing an uproar with a letter saying that the airlines will perish if it can't stem huge losses. Two United unions now calling for Godwin's removal.
The slowing economy and rising competition are softening conditions for the nation's biggest chocolate maker. Hershey's announcing a $275 million restructuring. The company plans to shut down three plants and a distribution center. Job cuts are coming, too. The company is asking for volunteers first.
Restructuring and layoffs also the story at Sears. The nation's fourth biggest retailer announcing almost 5,000 layoffs, part of a three year plan to make Sears less like a traditional department store and more like a discounter in the mold of Wal-mart.
The layoff news we've just told you about, only the latest in a growing wave of job cuts. Hillary Lane has a closer look at this trend.
(BEGIN VIDEOTAPE)
HILLARY LANE, CNN CORRESPONDENT (voice-over): One look at the line for this job expo last week for workers displaced by the World Trade Center's attacks, and it's clear an already bad situation is turning worse by the day. Since September 11, layoffs announced at a major company every business day, but two. Cuts in excess of 240,000 jobs, on top of the million plus positions employers shed in the eight months before the terrorist attacks across industries and across the country.
JOHN CHALLENGER, CHALLENGER, GRAY & CHRISTMAS: We have seen a snowballing of the downsizing announcements recently, certainly since the attack. Day be day, a new flurry and new rounds of job cuts are coming in a number of industries, not only manufacturing and high tech, but also travel and retail.
LANE: Sears and Roebuck now saying it will slash 22 percent of its salaried work force, 4,900 jobs in total. And if the consumer pulls back, which many economists expect, the economy could slide further down. And the unemployment rate higher up.
EDWARD MCKELVEY, GOLDMAN SACHS: We're seeing layoffs that are approximately the peak of what we saw in the 1990 recession in terms of people actually losing jobs and in terms of people who are collecting unemployment benefits, it looks like we've actually surprised the levels of back then.
LANE (on camera): In a wartime economy, it's likely to businesses in the defense, security and health care sectors that would be do any hiring. Drugmaker Eli Lilly, for one, just announcing it plans to add 5,000 new jobs to its global sales force over the next three years.
Hillary Lane for CNN Financial News, New York.
(END VIDEOTAPE)
HOPKINS: Still ahead on MONEYLINE, a follow-up to last night's report on charities. More than a billion dollars has been raised since the terrorist attacks. Only a fraction is going to the victims' families. We'll trace where the money is going.
And earnings season is in full swing. Stocks edge higher today, despite plunging profits at some major corporate players.
(COMMERCIAL BREAK)
HOPKINS: Our report last night on charities raising and disbursing money after the September 11 attacks raised a lot of questions. We want to try to answer as many of them as we can. So Peter Viles with here with the answers -- Pete.
PETER VILES, CNN CORRESPONDENT: And we hope so again. One of the issues that is most troubling is that it now appears many families still have not received any direct aid. Another question, if some of the money is not going to those families, well, then, where is it going?
(BEGIN VIDEOTAPE)
(voice-over): In the aftermath of September 11, the American Red Cross made a grim budget, planning to write emergency checks to 6,000 families, totaling $100 million. But it has been six weeks and the Red Cross has written only 2200 of those checks, totaling about $40. The problem, according to the Red Cross, is that is simply cannot find hundreds of families.
Working with city and state officials, the Red Cross does have a list of more than 4,000 victims. It has found and made gifts to 2200 families, contacted another 500 families that have said they did not need aid right now, but has not been able to locate the rest, an estimated 1500 families.
The Red Cross has been running newspaper ads trying to find them. Says one official, "It is frustrating to us and to everyone in the process."
BERNADINE HEALY, PRESIDENT & CEO, RED CROSS: In this time of need, the American Red Cross is profoundly grateful for your generous outpouring of support.
VILES: In that appeal for donations, the Red Cross does not mention September 11 or aid to victim's families. And right now only 20 cents of every dollar raised by the Red Cross since September 11 is budgeted for direct aide to those families.
So where will the Red Cross money go? It says it plans to spend $90 to $100 million on immediate disaster relief, including housing and food for 42,000 relief workers. $100 million in direct gifts to families given based on immediate needs, such as rent or mortgage payments. $11 million in international family assistance, including travel expenses for families of foreign nationals.
$50 million on blood banks and blood reserves for future disasters. $4 million for aid to Armed Services workers and their families. $16 to $26 million on community outreach, including programs promoting what the Red Cross calls neutrality and unity. $29 million on indirect relief costs, such as telephone hotlines and computer systems. And lastly, $200 million set aside for preparedness for future disasters and emerging needs, such as aid to families of current anthrax victims.
(END VIDEOTAPE)
(on camera): Jan, the Red Cross argues that it is important to hold in reserve some money for emerging needs, pointing out that it is still providing aid to some families in Oklahoma City, now more than six years after the terrorist attack there -- Jan.
HOPKINS: Pete, the appeal from the Red Cross is pretty vague. Do you think that the people that gave understood that some of this money would go for things other than September 11?
VILES: It is clear from the e-mails we received last night and this number that a number of people either did not understand that or do not agree with that. People who say, "I don't care what the policy is. Give this money to the victims' families." Or, "Geez, I thought I was giving this money to the victims' families."
Clearly, some people thought that. We're not aware of anything misleading the Red Cross did in their appeals. They're a disaster relief organization. But still, the idea is out there that the money would go to the victims, at least on the part of some of the people who gave.
HOPKINS: Now some of the other funds for the firemen, the 9/11 fund, those are specifically for victims, right?
VILES: We're aware of some direct funds that go directly to city workers who've died, the families of city workers. Another one directly for orphans. And in the days and weeks ahead, we want to talk about some of those funds very explicitly, funds where the money is going either entirely to victims' families or some large percentage where we can say that we trust that a certain amount of this money will go to victims, not to organizations, not to the fund-raisers..
HOPKINS: Well, and it's interesting that some 500 people said they didn't need the money.
VILES: Right, they said they didn't need it right away. And the Red cross has found this in the past that sometimes people either aren't ready, they haven't identified a need, and they will come back in the future, and some of those people will need money.
But a lot of people in this country, very generous country, but also a lot of proud country. A lot of people in America don't like to take charity.
HOPKINS: Thanks. Peter Viles.
VILES: Sure.
HOPKINS: Coming up after the break, semiconductor stocks boosting the Nasdaq. We'll bring you the latest from Wall Street. And we've been flooded with responses, as we've said, to our report last night on what's happening to the money given to charities after September 11. We'll share some of them with you.
ANNOUNCER: After the break, Jan is joined by Rik Kirkland, managing editor at "Fortune" magazine.
(COMMERCIAL BREAK)
HOPKINS: The markets closed slightly higher today. Blue chips struggling for direction most of the session, after several Dow components reported a sharp drop in quarterly profits. But the Dow industrials ended the day up about five points.
Semiconductor stocks leading the advance on the Nasdaq. It gained more than 1.5 percent. While the broader S&P 500 inched up less than a point.
For details, Christine Romans is at the New York Stock Exchange and Greg Clarkin at the Nasdaq marketsite.
Christine, you first.
CHRISTINE ROMANS, CNN CORRESPONDENT: Well, Jan, there's not a lot you can really say about a five point advance on the market, except to say that everyone is calling this market resilient and saying in the face of so much uncertainty, stocks are doing pretty well, also in the face of a very big quarterly reporting season.
I want to look at some of the movers here, the active stocks. Enron down another 17 percent today. And after the bell, it announces it's going to have a new chief financial officer. Now the analyst I'm talking to saying they think that that's probably good news for this company. Its stock has fallen by half in the last week or so. But again, it is slipping a little bit after hours.
AT&T stock falling again. A drop in profits and warning economic softness and stiff competition is going to hurt its telephone business through 2002.
Pharmacia rallying with the rest of the drugs. And ExxonMobil lower with the rest of the oil stocks.
I want to talk quickly about the defense stocks as well. Another big day for these. Lockheed and Boeing competing for a $200 billion Pentagon contract, Seville fighter jets. We're going to hear who won that on Friday. Today's bet was on Lockheed Martin on Wall Street. Northrop Grumman wants to close the deal with Newport News within a month after completing due diligence. This comes the day after the Department of Defense recommended that Northrup Grumman be allowed to acquire Newport News. The Justice Department, though, is the one who's going to have the final say. All of these stocks rallying nicely here today.
Jan, a lot of talk about sector rotation. Whole groups seeing money coming in and out, as people are trying to figure out where they want to be positioned, if there's going to be some sort of recovery next year.
HOPKINS: Thanks, Christine Romans at the New York Stock Exchange.
As we said, the Nasdaq posted a gain of 1.5 percent. Better showing for the Nasdaq. Chip stocks leading the advance.
Greg Clarkin is at the Nasdaq marketsite with more -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: And Jan, it was indeed those chip stocks that really powered this rally today. Now following an industry report, we saw a number of research notes this morning on the chip sector. Merrill Lynch saying that they believe chip orders for chip equipment at this point have hit a bottom. That led to a nice underpinning for the move today.
And if you look at some of the chip stocks, you'll see how they performed. These are the chip equipment companies on top. KLA Tencor, Novellus, Applied Materials, all gaining nicely. And then Intel, posting a 48 cent a share gain.
Now we also did see the Nasdaq rising about 1.5 percent. It was good for a 27 point gain. It's up at 1731. That's the highest level in seven weeks.
These were some of the other movers today. Amazon.com down 20 percent. That, after the company matches estimates for their earnings report, but they do say that the critical Christmas season will come in below expectations in terms of revenue, sales. And that stock selling off sharply.
Q-Logic, a storage company, solid earnings report. That stock rallied, as did the broader storage and networking arena, really. Cisco and Juniper a testament to that. So we did see a composite that was a fairly strong session. It closes above 1700 again. And Jan, this is the best close in about seven weeks or so. Traders very encouraged by the activity they're seeing these days.
HOPKINS: Nasdaq's doing well. Thanks, Greg Clarkin.
The nation's central bank today, the Federal Reserve, confirming what economists have feared for weeks. The terrorist attacks last month hit the economy hard, but the long-term effects are not clear yet.
Kathleen Hays joins us now with an economic checkup -- Kathleen.
KATHLEEN HAYS, CNN CORRESPONDENT: Well as a matter of fact, Jan, as you know, before each policy meeting, the Federal Reserve compiles anecdotal economic reports from its 12 district banks. It's called the beige book, because that's the color of it's cover. And what we saw was pretty bleak. The attacks definitely hit the economy hard. In fact, this report covers the period from September 10 through October 15. On the retail side, we saw that retail sales softened in 9 of the 12 districts. Discounters fared better than luxury sellers.
New York noted its sales were below a year ago levels, although Chicago pointed, you know, it's not the attacks. It's the fact that unemployment is rising and stock prices are falling.
On the manufacturing side, 10 of 12 districts reported weaker industrial activity, saying it was broad-based, from semiconductors in Boston, Dallas and San Francisco, to steel in Chicago and Cleveland. Lumber in Atlanta. Even auto parts in St. Louis.
Taking a look at housing, home building, weaker in eight districts. Though Boston noted that their decline followed a strong summer. So they're still above year-ago levels. That's probably the caveat for the housing sector, Jan.
I guess the bottomline is that when the Federal Reserve meets in just a couple weeks, this just underscores peoples' expectations that they're going to cut interest rates again. And if anything, maybe they'll say this argues more for a larger half percentage point cut, instead of a quarter point cut. That remains to be seen.
HOPKINS: But are there any signs that things started to improve at the end of the period, that maybe they were worse at the beginning and better at the end?
HAYS: Well, they didn't note that things like air cargo shipments bounced back. Overall though, I would say it was fairly a bleak report. Let's contrast the word they used in their last review of the economy: sluggish, stagnant activity. Now they just called it weak across the country.
HOPKINS: Kathleen Hays, thanks.
Joining us now to talk about the economy and the government's efforts to boost the economy is "Fortune" managing editor Rik Kirkland.
So Rik, we have a House version of a stimulus package and a Senate version of a stimulus package. Big difference between the two. Paul Krugman, we talked to him earlier, pretty pessimistic that there's going to be real compromise. What do you think?
RIK KIRKLAND, EDITOR, "FORTUNE": Well, you know, after an unprecedented period of unity, we're back to business as usual. And it's shocking to find that there's politicking going on in Washington. That's my take on this.
There's not a Senate bill yet, actually. It hasn't been formally approved. There's a proposal for one. But the House is setting up a position. They want all tax cuts and very little spending, and they want a lot of their favorite Republican tax breaks included. I'm assuming they know they're going to have -- it's only passed by two votes. And it was a party line vote. And to get through the Democratic Senate, they're going to have to cut some kind of a deal.
HOPKINS: So the position of the House is tax cuts. And the position of the Senate is stimulus, unemployment, that kind of thing.
KIRKLAND: Right. The Senate wants 50/50 in the versions that has been floated of spending and tax cuts. And they don't want to see things like capital gains tax cut. And they don't want to see things like this repeal of the alternative minimum tax, which puts $25 billion into the hands of some large corporations and let's them basically get a break on stuff that happened 15 years ago.
HOPKINS: And actually, the House version is a lot larger than the administration wants?
KIRKLAND: Right. And that's the other thing. I mean, I think the administration probably quietly would like to see this thing come back closer to the $75 billion that Bush asked for, initially. So I think the main thing though is, despite the wide gap, I do think the President was out there today on the stump, speaking to the Dixie cup folks. And part of what he said was we need to get this bill in time for Christmas. It's very important psychological...
HOPKINS: Do you think that'll happen?
KIRKLAND: I think it's got to happen. He's going to make it happen. 90 percent approval ratings. I think he can wave his big stick, if he's willing to compromise a little bit, and get this done before Thanksgiving.
HOPKINS: Before Thanksgiving.
KIRKLAND: Yes, it's got to be done before Thanksgiving, otherwise you just -- it's not going have much effect on the Christmas season.
HOPKINS: We had a story about CEOs being pretty silent in this time. Why do you think that is?
KIRKLAND: A couple reasons. I think as your report suggested, they've got a lot of problems in their own companies. And top of the economy, people are really rattled by all this. And they need that presence. They need leadership. They need reassurance.
Whether you're running a giant company or you're running a small firm. And so I think they're sticking to what their first priority is.
There's also a problem, when you get out in the time of crisis and you start pushing something like Larry Ellison, who I think believes in this national security card, you can also be accused of pushing your company's interests. And he's also going to sell Oracle servers. So I think it's probably appropriate to hang back. And finally, there's this myth we have. One of the things that's changed since September 11 is this myth that business ruled the world, that Alan Greenspan was the most powerful man in the world. Well, that was before.
I mean, now it's pretty clear the most powerful man in the world is the President of the United States. And only he and political leadership can tackle this terrorist threat.
HOPKINS: Very interesting. Thanks. Rik Kirk, "Fortune."
And "WOLF BLITZER REPORTS" begins in a few minutes. For a preview, let's go now to Wolf in Washington -- Wolf.
WOLF BLITZER, HOST, CNN'S "WOLF BLITZER REPORTS": Thanks very much, Jan. We'll have extensive coverage of the latest anthrax scare in Washington. This one affecting the White House. President Bush says he doesn't have anthrax. We'll get details from our John King.
Also, I'll talk with -- we'll have a debate on should the U.S. use tactical nuclear weapons if in fact Osama bin Laden and his al Qaeda organization are responsible for bioterrorism. That and much more coming up next -- Jan.
HOPKINS: Thanks, Wolf.
And still ahead tonight, your thoughts on the distribution of charitable donations, plus a look at what's coming up tomorrow.
(COMMERCIAL BREAK)
HOPKINS: Tomorrow, more companies' quarterly results. Tomorrow, we're expecting to hear from JDS Uniphase, Worldcom and Amgen. Durable goods for September are expected to drop by 1 percent on retail inventory excesses. Existing home sales also anticipated to fall in September by more than 5 percent.
Our story on how charities are distributing the money you gave for the victims of September 11 is drawing an enormous response. Marshall Hack in North Carolina writes, "I was outraged to hear your report on the American Red Cross and the September 11 Fund not getting to the contributions to the families. I gave to both with the understanding the money was going directly for relief from the disaster."
Ann Field says, "How dare the Red Cross use the money that was donated by Americans for use on other things? The money donated was meant for the survivors and should not be used for any other purpose."
From Canada, Charles Boudreau writes, "The Red Cross does a wonderful job, but it has no right to change the course of monies given in good faith."
Craig Sharp in Texas says, "I, along with many other citizens, responded when we were asked to donate. I find it appalling that many victims are having difficulty obtaining assistance." Lynda Pitchford in Virginia says she's outraged at what she calls the Red Cross' plan to, what she calls, "skim" donated money and set it aside for other emergencies. Bottom line, Linda says, "All of the money was donated and intended to go directly to the victims. And everyone else should keep their hand out of the cookie jar."
Kate Schroeder says the cookies are for everyone to share. She writes, "It's important to note that when some of us contribute to an organization such as this, we know that it's going toward future use and not just the immediate problem." And Kate points out her local Red Cross chapter made it clear her donation was going into a general fund.
Tell us what you think. Send us an e-mail. Our address is moneyline@cnn.com.
And that's MONEYLINE for this Wednesday evening. Thanks for joining us. I'm Jan Hopkins in for Lou Dobbs. Good night from New York. "WOLF BLITZER REPORTS" begins right now.
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