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American Morning

Second-Term Blues; Disaster Loans

Aired October 27, 2005 - 08:33   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ZAIN VERJEE, CNN ANCHOR: Those second-term blues, every second term president in the last 33 years has run into trouble after re- election, and the headlines show that the Bush administration is really no exception. So what are Republican's advising President Bush to do? Joining me is CNN's senior analyst Jeff Greenfield.
Jeff, when you look back today on the Reagan administration, on the Clinton administration, an how they dealt with scandals in their second terms, what is it that you think Republicans are calculating as to how this White House should deal with it?

JEFF GREENFIELD, CNN SR. ANALYST: For the Republicans, the template is Ronald Reagan caught up in Iran-Contra, the Senate had gone Democratic, as the House. What do you do? In his case he cleaned house. He brought in some veteran Washington insiders, Ken Duberstein a well-known Republican operative, Howard Baker, the former Senate majority leader, to make him chief of staff, to give him instant credibility with the press, with the Congress, with his own party. And he also went before the country and gave a pretty candid speech about Iran-Contra, saying I think be screwed this one up. Those weren't his exact words.

Clinton in his first term, well before anyone ever heard of Monica, there was a White House in disarray. He brought in Leon Pineta, a former congressman. The idea there was to signal that you were making the White House different. But then the other question is, all right, after the personnel, what do you do?

VERJEE: Exactly. You focus on the agenda.

GREENFIELD: Right. Now, in Reagan's case, he was able to pivot to a whole new relationship with the Soviet Union, thanks to his own policy, thanks to Mikhail Gorbachev. With Bush, it gets a little trickier. His principle domestic agenda item, Social Security reform, was dead long before the leak story began to hit critical mass, and his -- on two ways he has really split his base: Harriet Miers, the Supreme Court nominee, immigration reform. We don't talk about that much, but that's caused a huge fissure in the Republican Party. So the idea he can, you know, do plan b, suddenly reconstitute a bold agenda is a little trickier for him I think.

VERJEE: Is the idea to stay focused, and say, you know what, it's business as usual here, this is all swirling around me, but I am the president and I'm focused on my job?

GREENFIELD: That's what they always say, you know. This Watergate thing is not going to distract us. That Monica, no, no, we're not really paying attention to it at all. Pay no attention to the guy behind the curtain.

Here's the trickiest issue. I had thought that this whole swirl of events might actually help Harriet Miers in the sense the White House could say to the Republican senators, don't inflict another wound on this White House. But if you want to re-establish your conservative base, the most important thing for any president in trouble is to keep the base. That's how Clinton survived Monica, that's how Reagan survived Iran-Contra. Maybe what they to do is figure out a way, maybe with the presidential paper issue, and say, you know what, we're going to protect executive privilege, we're withdrawing Harriet Miers, and we're putting up a well-known, clear judicial conservative, and that rallies the base.

VERJEE: What about keeping the president's energy up in periods like this, when you look back on Reagan and Clinton? How did they manage themselves?

GREENFIELD: Take a look at every president when he comes into office and when they leave, and they've aged more than four or eight years. One of the interesting things is the same qualities that people love when you're riding high in the polls have a different cast. I mean, people used to talk about Bush's moral clarity, his supporters; now they talk about his stubbornness. And one of the real issues, I think, among Republicans, is, is this president capable of saying, we're on a bad direction, we've got to change course, because that's not clear in his -- in the way he's conducted himself. When the base liked him, it was this man stays with what he believes. Now it's...

VERJEE: bringing morals, and ethics and character to the White House, right.

GREENFIELD: Right, and strength and he knows that he's not going to yield.

VERJEE: And finally, why do presidents in their second term inevitably run into trouble.

GREENFIELD: Couple of reasons. One is that when they get re- elected, they begin to think they can do no long. By they way, you (INAUDIBLE) 33 years, FDR got in serious trouble after his second term after a landslide. He tried to pack the Supreme Court. The staff gets a little weary, and your own base once you've been re-elected says now we've got to look to the next election. We're not going to rally around the president to protect his second term. He's got that. Now we can proceed on our own agenda. So there are institutional reasons.

But I'll remind you, Bill Clinton started his relationship, if that's the word, with Monica Lewinsky in the first term. It's just that we didn't find out about it until the second term. So presidents are perfectly capable of botching things up, even before they get re- elected.

VERJEE: Our senior political analyst, Jeff Greenfield. Thank you so much. Good to see you -- Miles. O'BRIEN: We've been telling you about the federal response, in some cases lack of thereof, in the wake of Hurricanes Katrina and Rita, and an emergence right now, Wilma. One of the issues we focused on is the Small Business Administration and the high number of applications and yet the few number of checks, loans that have ultimately been granted to those who have been seeking them.

Joining us now is Herbert Mitchell, he is with the Small Business Administration -- excuse me the U.S. Small Business Association, and he's the SBA associate administrator for disaster assistance.

Mr. Mitchell, good to have you with us.

HERBERT MITCHELL, U.S. SMALL BUSINESS ASSN.: Good to be here.

O'BRIEN: Now you're changing the rules a little bit. Let's try to walk through this. First of all, I have -- we printed up some of the application process here, and it is truly mind numbing. If you think doing your taxes is fun, you'll love this. You're making it easier, though. How are you changing things?

MITCHELL: Well, We've changed that we're no longer requiring applicants to submit three years of tax returns or cash-flow projections on a monthly basis.

O'BRIEN: All right, you still need the most recently filed income tax return, though, if available. What if you can't find that? And I guess an alternative question I have is, the government already has that somewhere in a file, doesn't it?

MITCHELL: That's exactly right. We've worked with IRS. We will get that information directly from IRS. And then we will reconstruct your financial condition to make a determination.

O'BRIEN: Where else are loosening things to make this easier?

MITCHELL: We've changed our internal process. Historically we've treated every loan the same way, whether borrowing $155,000 or $1.5 million. For loans under $100,000 we will forgo our credit underwriting analysis and simply make a decision on satisfactory credit history and the fact that you have the ability to repay the loan.

O'BRIEN: All right, let's talk about the numbers. As of October 17th, SBA had approved 1,697 loans. I don't know the number of checks that have been received, but at least approval. But there are 116,320 disaster-related applications post-Katrina and Rita. That's 1.5 percent.

MITCHELL: OK.

O'BRIEN: You got to admit with me that's not satisfactory.

MITCHELL: Well, I think you to put it in perspective. When we look at the numbers and rate of the applications, for example, with Hurricane Rita, 80 percent of the applications have just come in in the last two weeks. With Hurricane Katrina, 100,000 applications have in come in which represent 70 percent of the total that are just coming in in the last three weeks.

O'BRIEN: So let me just interrupt. Mr. Mitchell, you're saying that's a satisfactory performance?

MITCHELL: It's a performance that's on track based on the volume that we're faced with and the number of applications coming in at a rate of anywhere from five to 15,000 applications a day.

O'BRIEN: But is it on track with the level of need and the scope of the disaster? In other words, does the urgency of the SBA match the urgency of the need?

MITCHELL: There is no question that homeowners, renters and businesses around the country are in need. The process, for example, we've conducted 30,000 on-site inspections. Those applications are moving through the system. We've made 37,000 decisions already. And the bulk of the applications we're dealing with are those that have come in within the last three weeks, and they're moving through the process. We're actually approving almost $20 million a day.

Now, that doesn't mean checks are issued. In fact, we make most of our dispersals through electronic deposit. And the money is available when the borrower needs the money, when they have construction permits, they have a contract in place. The money can be placed into their account within three days.

O'BRIEN: I'm not getting it. You say your performance is fine and yet you're also saying you're changing the rules to make it work better. Which is it?

MITCHELL: We're changing the rules to recognize the volume and to basically manage the risks in terms of loans that are under $100,000. We're going to be able to move quickly through the process. Those that we need to underwrite and take a full analysis of, we will do that.

O'BRIEN: And that does bring me to the final point. Some of this money you're giving out is mine and yours, taxpayer money. As you loosen things up, surely there will be more people who will ultimately default. How big a concern is that, and is that why things have been slow?

MITCHELL: Well, it's not a concern. I mean, we approach every disaster the same way, except in this case the volume has exceeded anything we've faced in the past. There is a balance between providing disaster assistance, and it is a loan program, and ensuring that there is a reasonable expectation that the loan is going to be repaid and individuals have satisfactory credit history.

O'BRIEN: Herbert Mitchell is the associate administrator for disaster assistance at the Small Business Administration. Thank you for your time, sir -- Zain.

MITCHELL: Thank you very much. VERJEE: Miles, coming up, the people behind the Marlboro Man get into health care. We'll be speaking to Andy Serwer. He's "Minding Your Business."

O'BRIEN: Interesting.

George Clooney stopping by to talk about his new movie, and there was a painful injury that almost kept him from making it.

Stay with us.

(COMMERCIAL BREAK)

VERJEE: Here's a twist for you. Big Tobacco getting into the health business. What? Andy Serwer is "Minding Your business."

ANDY SERWER, "FORTUNE" MAGAZINE: Man bites dog. This is a fascinating story, Zain. A "Wall Street Journal" exclusive this morning. Philip Morris is getting into the health care business. Specifically, they are designing a cutting-edge inhaler that would work on various diseases, and of course who knows more about lungs than Philip Morris. And I'm being serious here. The company has studied lungs and how they work for years and years and years. They have an inhaler product called the aria apparently. It's a next- generation product, which will be to treat lung diseases and asthma, but also could deliver other medicines, such as insulin and painkillers. So far, the medical establishment, perhaps not so surprisingly, is looking rather askance (ph) at this. But...

VERJEE: Can they do it effectively?

SERWER: In fact, they probably could. And I think at some point this effort will be taken seriously, but for now it's -- people are skeptical.

VERJEE: Ex-HealthSouth CEO indicted on four charges.

SERWER: One of our favorite characters on this program, Richard Scrushy, the former CEO of HealthSouth, has been indicted again. Richard Scrushy and the former governor of Alabama, Don Siegelman, Alabama being Scrushy's home state. There's he and his wife -- have been indicted along with several of Siegelman's aides. This is an old-fashioned racketeering bribery case brought by the feds.

Basically, in one instance, the charges here are that Scrushy paid the former governor $500,000 to get on a key medical advisory board. What else is going on here? Siegelman is planning to run for governor 2006. He says the charges are totally trumped up, and he will fight them vigorously. Scrushy, of course, was acquitted last June in a massive accounting fraud case that provided all sorts of interesting particulars for us to cover. Went on and on.

VERJEE: And on.

SERWER: And on.

VERJEE: Andy Serwer, thank you -- Zain.

SERWER: Thanks, Zain.

VERJEE: Up next on the program, George Clooney on AMERICAN MORNING, wrote and directed "Good Night and Good Luck." So why didn't he make himself the lead? Edward R. Murrow. That's ahead.

But first, a quiz for you. George Clooney made his TV debut on what show. Was it, a, "The Facts of Life," b, "ER," or c, "Roseanne?" The answer after the break. Stay with us.

(COMMERCIAL BREAK)

O'BRIEN: All right, before the break, we asked what show George Clooney made his TV debut on. And the answer is "E.R." but it's a trick question. Who had this right in the crew? Every -- multiple, multiple people. This is excellent. Clooney played a medical technician in the '84- '85 CBS comedy "E.R.," the precursor of E.R." Of course, ten years later he joined the other "E.R.," which was a little bigger hit, you might say.

All right, Zain, I have some good news and bad news from you.

VERJEE: What's the bad news?

O'BRIEN: Well, we have George Clooney interview, but George Clooney's not here.

VERJEE: What?

O'BRIEN: He's not here. He's already been here. Been here, done that.

VERJEE: Oh, no. Bad timing on my part.

O'BRIEN: So let's watch.

(BEGIN VIDEOTAPE)

SOLEDAD O'BRIEN, CNN ANCHOR: George Clooney, nice to see you, thanks for talking with us.

GEORGE CLOONEY, ACTOR: Thanks for letting me be here.

S. O'BRIEN: I was surprised. You wrote the movie, you directed the movie. How come you're not the star of the movie, Edward R. Murrow?

CLOONEY: Well, I thought David Strathairn is a much better actor for the role and I thought best to get a good actor. It's also not very fun to direct yourself, quite honestly. Who do you talk to when you're in trouble?

S. O'BRIEN: More me, that's all I want to see. Much more me.

CLOONEY: We need a close-up of me. S. O'BRIEN: But this is obviously a project that's close to your heart. Your dad's been -- was an anchorman for a long time and reporter, too.

CLOONEY: He still writes for the news.

S. O'BRIEN: Why did you want to tell this particular story of journalism?

CLOONEY: Because when I was growing up, this was -- broadcast -- in terms of broadcast journalism, one of the two great high points in my growing up. I wasn't born when it happened, but my father always talks about this moment of taking on McCarthy and sort of taking his knees out.

(BEGIN VIDEO CLIP)

DAVID STRATHAIRN, ACTOR: The actions of the junior senator from Wisconsin have caused alarm and dismay amongst our allies abroad and given considerable comfort to our enemies. And who's fault is that? Not really his. He didn't create this situation of fear, he merely exploited it, and rather successfully.

(END VIDEO CLIP)

CLOONEY: I always liked the idea of moments that singularly changed the American psyche.

S. O'BRIEN: So Murrow himself was sort of hero to you, or is that a fair statement?

CLOONEY: Sure. That's a fair statement. I think most journalists I know, he is.

(END VIDEOTAPE)

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